Pfizer 2007 Annual Report Download - page 74

72 2007 Financial Report
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
Asbestos
•Quigley
Quigley Company, Inc. (Quigley), a wholly owned subsidiary, was
acquired by Pfizer in 1968 and sold small amounts of products
containing asbestos until the early 1970s. In September 2004,
Pfizer and Quigley took steps that were intended to resolve all
pending and future claims against Pfizer and Quigley in which the
claimants allege personal injury from exposure to Quigley products
containing asbestos, silica or mixed dust. We took a charge of $369
million before-tax ($229 million after-tax) to third quarter 2004
earnings in connection with these matters.
In September 2004, Quigley filed a petition in the U.S. Bankruptcy
Court for the Southern District of New York seeking reorganization
under Chapter 11 of the U.S. Bankruptcy Code. In March 2005,
Quigley filed a reorganization plan in the Bankruptcy Court that
needed the approval of both the Bankruptcy Court and the U.S.
District Court for the Southern District of New York after receipt
of the vote of 75% of the claimants. In connection with that filing,
Pfizer entered into settlement agreements with lawyers
representing more than 80% of the individuals with claims related
to Quigley products against Quigley and Pfizer. The agreements
provide for a total of $430 million in payments, of which $215
million became due in December 2005 and is being paid to
claimants upon receipt by the Company of certain required
documentation from each of the claimants. The reorganization
plan provided for the establishment of a Trust (the Trust) for the
payment of all remaining pending claims as well as any future
claims alleging injury from exposure to Quigley products.
As certified by the balloting agent in May 2006, more than 75%
of Quigley’s claimants holding claims that represented more than
two-thirds in value of claims against Quigley voted to accept
Quigley’s plan of reorganization. In August 2006, in reviewing the
voting tabulation methodology, the Bankruptcy Court ruled that
certain votes that accepted the plan were not predicated upon
the actual value of the claim. As a result, the reorganization plan
was not accepted.
In June 2007, Quigley filed an amended plan of reorganization
to address the Bankruptcy Court’s concerns regarding the voting
tabulation methodology. In July 2007, the Bankruptcy Court held
a hearing to consider the adequacy of Quigley’s disclosure
statement. In October 2007, the Bankruptcy Court granted
Quigley’s application to approve its disclosure statement. On
February 26, 2008, the Bankruptcy Court authorized Quigley to
solicit its amended reorganization plan for acceptance by
claimants. If approved by the claimants and the courts, the
amended reorganization plan will result in a permanent injunction
directing all pending and future claims alleging personal injury
from exposure to Quigley products to the Trust.
Under the amended reorganization plan (as under the original
reorganization plan), Pfizer will contribute $405 million to the
Trust through a note, which has a present value of $172 million,
as well as approximately $100 million in insurance, and will
forgive a $30 million secured loan to Quigley. In addition, Pfizer
entered into an agreement with the representative of future
claimants that provides for the contribution to the Trust of an
additional amount with a present value of $88.4 million.
In December 2007, the Bankruptcy Court modified its 2004
preliminary injunction order as it relates to Pfizer. As a result,
while asbestos claims against Pfizer that are based on alleged
exposure to a Quigley product remain stayed, asbestos claims that
are not based on alleged exposure to a Quigley product are no
longer stayed.
In a separately negotiated transaction with an insurance company
in August 2004, we agreed to a settlement related to certain
insurance coverage which provides for payments to us over a ten-
year period of amounts totaling $405 million.
•Other Matters
Between 1967 and 1982, Warner-Lambert owned American
Optical Corporation, which manufactured and sold respiratory
protective devices and asbestos safety clothing. In connection
with the sale of American Optical in 1982, Warner-Lambert agreed
to indemnify the purchaser for certain liabilities, including certain
asbestos-related and other claims. As of December 31, 2007,
approximately 106,000 claims naming American Optical and
numerous other defendants were pending in various federal and
state courts seeking damages for alleged personal injury from
exposure to asbestos and other allegedly hazardous materials. We
are actively engaged in the defense of, and will continue to
explore various means to resolve, these claims. Several of the
insurance carriers that provided coverage for the American Optical
asbestos and other allegedly hazardous materials claims have
denied coverage. We believe that these carriers’ position is
without merit and are pursuing legal proceedings against such
carriers. Separately, there is a small number of lawsuits pending
against Pfizer in various federal and state courts seeking damages
for alleged personal injury from exposure to products containing
asbestos and other allegedly hazardous materials sold by
Gibsonburg Lime Products Company, which was acquired by
Pfizer in the 1960s and which sold small amounts of products
containing asbestos until the early 1970s. There also is a small
number of lawsuits pending in various federal and state courts
seeking damages for alleged exposure to asbestos in facilities
owned or formerly owned by Pfizer or its subsidiaries.
Celebrex and Bextra
In 2003, several purported class action complaints were filed in the
U.S. District Court for the District of New Jersey against Pharmacia,
Pfizer and certain former officers of Pharmacia. The complaints
allege that the defendants violated federal securities laws by
misrepresenting the data from a study concerning the
gastrointestinal effects of Celebrex. These cases were consolidated
for pre-trial proceedings in the District of New Jersey (Alaska
Electrical Pension Fund et al. v. Pharmacia Corporation et al.). In
January 2007, the court certified a class consisting of all persons
who purchased Pharmacia securities from April 17, 2000 through
February 6, 2001 and were damaged as a result of the decline in
the price of Pharmacia’s securities allegedly attributable to the
misrepresentations. Plaintiffs seek damages in an unspecified
amount. In October 2007, the court granted defendants’ motion
for summary judgment and dismissed the plaintiffs’ claims in