Pfizer 2005 Annual Report Download - page 29

28 2005 Financial Report
Financial Review
Pfizer Inc and Subsidiary Companies
Debt Capacity
We have available lines of credit and revolving-credit agreements
with a group of banks and other financial intermediaries. We
maintain cash balances and short-term investments in excess of
our commercial paper and other short-term borrowings. At
December 31, 2005, we had access to $3.0 billion of lines of
credit, of which $1.1 billion expire within one year. Of these lines
of credit, $2.8 billion are unused, of which our lenders have
committed to loan us $1.7 billion at our request. $1.5 billion of
the unused lines of credit, which expire in 2010, may be used to
support our commercial paper borrowings.
As of February 24, 2006, we had the ability to borrow
approximately $1 billion by issuing debt securities under our
existing debt shelf registration statement filed with the SEC in
November 2002.
Goodwill and Other Intangible Assets
At December 31, 2005, goodwill totaled $23.8 billion (20% of our
total assets) and other intangible assets, net of accumulated
amortization, totaled $27.8 billion (24% of our total assets).
The components of goodwill and other identifiable intangible
assets, by segment, at December 31, 2005 follow:
HUMAN CONSUMER ANIMAL
(MILLIONS OF DOLLARS) HEALTH HEALTHCARE HEALTH OTHER TOTAL
Goodwill $20,919 $2,789 $ 56 $ 10 $23,774
Finite-lived
intangible
assets, net 22,883 201 175 101 23,360
Indefinite-
lived
intangible
assets 2,834 1,342 246 4 4,426
Finite-lived intangible assets, net include $22.0 billion related to
developed technology rights and $1.0 billion related to brands.
Indefinite-lived intangible assets include $3.9 billion related to
brands.
Developed Technology Rights
Developed technology rights represent the amortized value
associated with developed technology, which has been acquired
from third parties, and which can include the right to develop, use,
market, sell and/or offer for sale the product, compounds and
intellectual property that we have acquired with respect to
products, compounds and/or processes that have been completed.
We possess a well-diversified portfolio of hundreds of developed
technology rights across therapeutic categories primarily
representing the amortized value of the commercialized products
included in our Human Health segment that we acquired in
connection with our Pharmacia acquisition in 2003. While the
Arthritis and Pain therapeutic category represents about 28% of
the total amortized value of developed technology rights at
December 31, 2005, the balance of the amortized value is evenly
distributed across the following Human Health therapeutic
product categories: Ophthalmology; Oncology; Urology; Infectious
and Respiratory Diseases; Endocrine Disorders categories; and, as
a group, the Cardiovascular and Metabolic Diseases; Central
Nervous System Disorders and All Other categories. The significant
components include values determined for Celebrex, Detrol,
Xalatan, Genotropin, Zyvox, and Campto/Camptosar. Also included
in this category are the post-approval milestone payments made
under our alliance agreements for certain Human Health products,
such as Rebif, Spiriva, Celebrex (prior to our acquisition of
Pharmacia) and Macugen. These rights are all subject to our
impairment review process explained above.
In 2005, we recorded an impairment charge of $1.1 billion related
to the developed technology rights for Bextra, a selective COX-2
inhibitor (see Notes to Consolidated Financial Statements—Note
6, Other (Income)/Deductions—Net).
Brands
Significant components of brands include values determined for
Depo-Provera contraceptive, Xanax, Medrol and tobacco
dependence products.
In 2004, we recorded an impairment charge of $0.7 billion related
to the Depo-Provera brand (See Notes to Consolidated Financial
Statements—Note 6, Other (Income)/Deductions—Net).
Selected Measures of Liquidity and Capital
Resources
The following table sets forth certain relevant measures of our
liquidity and capital resources as of December 31:
AS OF DECEMBER 31,
__________________________________
(MILLIONS OF DOLLARS, EXCEPT RATIOS AND PER COMMON
SHARE DATA) 2005 2004
Cash and cash equivalents and
short-term investments and loans $22,736 $20,546
Working capital(a) $13,448 $12,630
Ratio of current assets to
current liabilities 1.47:1 1.48:1
Shareholders’ equity per
common share(b) $8.96 $9.19
(a) Working capital includes assets and liabilities held for sale, which
were not significant, as of December 31, 2005 and December 31,
2004.
(b) Represents total shareholders’ equity divided by the actual
number of common shares outstanding (which excludes treasury
shares, and those held by our employee benefit trust).
The increase in working capital in 2005 as compared to 2004 was
primarily due to:
•an increase in net current financial assets of $1.9 billion,
primarily reflecting a shift from long-term investments to short-
term investments, which was effected as part of our repatriation
strategy under the Jobs Act;
•an increase in accounts receivable of $398 million, which is a
result of revenue growth in our international markets, growth
of our generic product sales and the impact of their longer
payment terms, and increased alliance-related receivables due
in part to the launch of Macugen in 2005 and growth in Spiriva
revenues;
partially offset by:
•the timing of tax obligations and payments, reflected in a $1.6
billion increase in income taxes payable.