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2007 Financial Report 59
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
The decrease in the 2007 U.S. qualified pension plans’ net periodic
benefit cost compared to 2006 was largely driven by a higher 2006
actual investment return, the increase in the discount rate and the
impact of our cost-reduction initiatives.
The decrease in the 2007 international plans’ net periodic benefit
cost compared to 2006 was largely driven by a settlement gain at
our Japanese affiliate. Japanese pension regulations permit
employers with certain pension obligations to separate the social
security benefits portion of those obligations and transfer it,
along with related plan assets, to the Japanese government.
During 2007, our Japanese affiliate completed this transfer and
effectively received a subsidy from the Japanese government of
approximately $168 million. This subsidy was the result of the
transfer of pension obligations of approximately $309 million
(excluding the effect of any future salary increases of
approximately $9 million) along with related plan assets of
approximately $141 million. This transfer resulted in a settlement
gain of $106 million.
B. Components of Net Periodic Benefit Costs and Other Amounts Recognized in Other Comprehensive (Income)/Expense
The annual cost and other amounts recognized in other comprehensive (income)/expense of the U.S. qualified, U.S. supplemental (non-
qualified) and international pension plans and postretirement plans for the years ended December 31, 2007, 2006 and 2005, follows:
PENSION PLANS
U.S. SUPPLEMENTAL
U.S. QUALIFIED (NON-QUALIFIED) INTERNATIONAL POSTRETIREMENT PLANS
(MILLIONS OF DOLLARS) 2007 2006 2005 2007 2006 2005 2007 2006 2005 2007 2006 2005
Service cost $ 282 $ 368 $ 318 $27 $43 $37 $ 292 $ 303 $ 293 $42 $47 $38
Interest cost 447 444 410 55 60 59 349 307 309 137 127 113
Expected return on plan assets (693) (628) (594) ———(381) (311) (297) (36) (28) (23)
Amortization of:
Actuarial losses 65 119 101 45 45 39 96 106 95 42 36 21
Prior service costs/(credits) 8910 (2) (3) 1 —2 (1) 111
Curtailments and
settlements—net 58 117 12 5(8) 4 (155) (17) 19 56—
Special termination benefits 16 17 5 ———29 14 29 17 12 2
Less: amounts included in
discontinued operations (27) (81) (15) —4 (2) —15 (2) —9 (4)
Net periodic benefit costs 156 365 247 130 141 138 230 419 445 208 210 148
Other changes recognized in
other comprehensive
(income)/expense(a) (582) ——(134) 12 2 (808) 431(311) ——
Total recognized in net
periodic benefit costs
and other comprehensive
(income)/expense $(426) $ 365 $ 247 $ (4) $153 $140 $(578) $ 423 $ 476 $(103) $210 $148
(a) For details, see Note 9. Other Comprehensive Income/(Expense).
The following table presents the amount in Accumulated other comprehensive income/(expense) expected to be amortized into 2008
net periodic benefit costs:
PENSION PLANS
U.S. SUPPLEMENTAL POSTRETIREMENT
(MILLIONS OF DOLLARS) U.S. QUALIFIED (NON-QUALIFIED) INTERNATIONAL PLANS
Actuarial losses $34 $35 $44 $25
Prior service costs/(credits) and other 3 (3) 1 2
Total $37 $32 $45 $27