Pfizer 2005 Annual Report Download - page 30

2005 Financial Report 29
Financial Review
Pfizer Inc and Subsidiary Companies
Summary of Cash Flows
YEAR ENDED DEC. 31,
_____________________________________________________
(MILLIONS OF DOLLARS) 2005 2004 2003
Cash provided by/(used in):
Operating activities $14,733 $16,340 $ 11,727
Investing activities (5,072) (9,422) 4,850
Financing activities (9,222) (6,629) (16,909)
Effect of exchange-rate
changes on cash and
cash equivalents —(1) (26)
Net increase/(decrease) in
cash and cash equivalents $439 $288 $ (358)
Operating Activities
Our net cash provided by continuing operating activities was
$14.7 billion in 2005 compared to $16.3 billion in 2004. The
decrease in net cash provided by operating activities was primarily
attributable to:
•the payment of $1.7 billion in taxes associated with the
repatriation of approximately $37 billion of foreign earnings
under the Jobs Act; as well as
•the timing of other receipts and payments in the ordinary
course of business.
Our net cash provided by continuing operating activities was
$16.3 billion in 2004 compared to $11.7 billion in 2003. The
increase in net cash provided by operating activities was primarily
attributable to:
•higher current period income from operations, net of non-
cash items, which reflects the increased revenues attributable
to Pharmacia products for the full-year 2004 compared to
recording sales of Pharmacia products in 2003 from the April
16, 2003 acquisition date;
•lower voluntary pension plan contributions; and
•timing of tax payments,
partially offset by:
•litigation-related payments in 2004 related to Rezulin and
Neurontin that were accrued in 2003.
In the cash flow statement, Other non-cash adjustments includes
adjustments for non-cash items such as valuation adjustments.
Investing Activities
Our net cash used by investing activities was $5.1 billion in 2005
compared to $9.4 billion in 2004. The decrease in net cash used
by investing activities was primarily attributable to:
•adecrease in net purchases of investments (a decreased use of
$4.9 billion), due primarily to higher redemptions of investments
in 2005 to provide funds for the repatriation of foreign earnings
in accordance with the Jobs Act; and
•lower purchases of plant, property and equipment (a decreased
use of $495 million),
partially offset by:
•lower proceeds from the sales of business, product lines and
other products (a decreased provision of cash of $1.1 billion).
Our net cash used in investing activities was $9.4 billion in 2004
compared to net cash provided by investing activities of $4.9
billion in 2003. The increase in net cash used in investing activities
was primarily attributable to:
•an increase in net purchases of investments (an increased use
of $6.1 billion);
•net cash paid of $2.3 billion relating to the acquisitions of
Esperion, Campto/Camptosar, and other entities compared to
cash and cash equivalents acquired in the Pharmacia acquisition
of $1.8 billion (an increased use of $4.1 billion); and
•a decrease in the proceeds from the sale of business and
product lines (an increased use of $4.3 billion).
Financing Activities
Our net cash used in financing activities increased to $9.2 billion
in 2005 compared to $6.6 billion in 2004. The increase in net
cash used in financing activities was primarily attributable to:
•net repayments of $321 million on total borrowings in 2005 as
compared to total net borrowings of $4.1 billion in 2004, as
funds from the repatriation of foreign earnings were used to
finance domestic activities, thereby reducing our reliance on
short-term borrowings;
•an increase in cash dividends paid of $473 million as compared
to 2004 due to an increase in the dividend rate; and
•a decrease of $610 million in the proceeds from the exercise of
employee stock options,
partially offset by:
•a decrease of $2.9 billion in purchases of our common stock in
2005 as compared to the same period in 2004.
Our net cash used in financing activities, decreased to $6.6 billion
in 2004 compared to $16.9 billion in 2003. The decrease in net cash
used in financing activities was primarily attributable to:
•a decrease in common stock purchases under our share-purchase
programs of $6.4 billion; and
•an increase in net borrowings of $4.7 billion, due primarily to
an increase in net short-term borrowings of $2.9 billion
(including the November 2004 issuance of $1.0 billion in senior
floating-rate unsecured notes) and net long-term debt of $1.8
billion (including the issuances in February 2004 of $1.5 billion
in senior unsecured notes and in September 2004 of $1.0 billion
in senior unsecured floating-rate notes),
partially offset by:
•an increase in cash dividends paid of $729 million as compared
to 2003 due to an increase in the dividend rate.