Pfizer 2008 Annual Report Download - page 40

Financial Review
Pfizer Inc and Subsidiary Companies
A summary of common stock purchases follows:
(MILLIONS OF SHARES AND DOLLARS, EXCEPT PER-SHARE DATA)
SHARES OF
COMMON
STOCK
PURCHASED
AVERAGE
PER-SHARE
PRICE PAID
TOTAL COST OF
COMMON
STOCK
PURCHASED
2008:
June 2005 program 26 $18.96 $ 500
Total 26 $ 500
2007:
June 2005 program 395 $25.27 $9,994
Total 395 $9,994
Contractual Obligations
Payments due under contractual obligations as of December 31, 2008, mature as follows:
YEARS
(MILLIONS OF DOLLARS) TOTAL WITHIN 1
OVER 1
TO 3
OVER 3
TO 5 AFTER 5
Long-term debt(a) $10,357 $1,126 $1,739 $373 $7,119
Other long-term liabilities reflected on our consolidated balance sheet
under U.S. GAAP(b) 3,355 352 633 649 1,721
Lease commitments(c) 1,547 207 298 182 860
Purchase obligations and other(d) 2,692 699 798 913 282
Uncertain tax positions(e) 129 129 — — —
(a) Our long-term debt obligations include both our expected principal and interest obligations. Our calculations of expected interest payments
incorporates only current period assumptions for interest rates, foreign currency translation rates and hedging strategies. (See Notes to
Consolidated Financial Statements—Note 9. Financial Instruments.) Long-term debt consists of senior, unsecured notes, floating rate, unsecured
notes, foreign currency denominated notes, and other borrowings and mortgages.
(b) Includes expected payments relating to our unfunded U.S. supplemental (non-qualified) pension plans, postretirement plans and deferred
compensation plans.
(c) Includes operating and capital lease obligations.
(d) Includes agreements to purchase goods and services that are enforceable and legally binding and include amounts relating to advertising,
information technology services, employee benefit administration services, and potential milestone payments deemed reasonably likely to occur.
(e) Except for amounts reflected in Income taxes payable, we are unable to predict the timing of tax settlements, as tax audits can involve complex
issues and the resolution of those issues may span multiple years, particularly if subject to negotiation or litigation.
The above table excludes amounts for potential milestone payments under collaboration, licensing or other arrangements, unless
the payments are deemed reasonably likely to occur. Payments under these agreements generally become due and payable only
upon the achievement of certain development, regulatory and/or commercialization milestones, which may span several years, and
which may never occur.
In 2009, we expect to spend approximately $1.6 billion on property, plant and equipment. The downward trend in capital
expenditures in recent years reflects in part the rationalization of our plant network and other site closures, and Information
Technology infrastructure and application rationalization and standardization. Planned capital spending mostly represents
investment to maintain existing facilities and capacity. We rely largely on operating cash flow to fund our capital investment needs.
Due to our significant operating cash flow, we believe we have the ability to meet our capital investment needs and foresee no
delays to planned capital expenditures.
Off-Balance Sheet Arrangements
In the ordinary course of business and in connection with the sale of assets and businesses, we often indemnify our counterparties
against certain liabilities that may arise in connection with a transaction or that are related to activities prior to a transaction. These
indemnifications typically pertain to environmental, tax, employee and/or product-related matters, and patent infringement claims. If
the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to
reimburse the loss. These indemnifications are generally subject to threshold amounts, specified claim periods and other restrictions
and limitations. Historically, we have not paid significant amounts under these provisions and, as of December 31, 2008, recorded
amounts for the estimated fair value of these indemnifications are not significant.
Certain of our co-promotion or license agreements give our licensors or partners the rights to negotiate for, or in some cases to
obtain, under certain financial conditions, co-promotion or other rights in specified countries with respect to certain of our products.
Dividends on Common Stock
We declared dividends of $8.6 billion in 2008 and $8.2 billion in 2007 on our common stock. In December 2008, our Board of
Directors declared a first-quarter 2009 dividend of $0.32 per share. The first-quarter 2009 cash dividend will be our 281st
consecutive quarterly dividend. In January 2009, in connection with the proposed merger between Pfizer and Wyeth, the Board of
Directors determined that, effective with the dividend to be paid in the second quarter of 2009, it will reduce our quarterly dividend
per share to $0.16. The merger agreement prohibits us from declaring a quarterly dividend on our common stock in excess of $0.16
per share without Wyeth’s consent prior to the completion of the transaction.
38 2008 Financial Report