Pfizer 2009 Annual Report Download - page 42

Financial Review
Pfizer Inc. and Subsidiary Companies
•Significant breakdown, infiltration or interruption of our information technology systems and infrastructure;
•Legal defense costs, insurance expenses, settlement costs and the risk of an adverse decision or settlement related to product liability,
patent protection, governmental investigations, ongoing efforts to explore various means for resolving asbestos litigation, and other
legal proceedings;
•Ability to protect our patents and other intellectual property both domestically and internationally;
•Interest rate and foreign currency exchange rate fluctuations;
•Governmental laws and regulations affecting domestic and foreign operations, including tax obligations and changes affecting the
taxation by the U.S. of income earned outside the U.S. that may result from pending and possible future proposals;
•Changes in U.S. generally accepted accounting principles;
•Uncertainties related to general economic, political, business, industry, regulatory and market conditions, including, without limitation,
uncertainties related to the impact on us, our lenders, our customers, our suppliers and counterparties to our foreign-exchange and
interest-rate agreements of weak global economic conditions and recent and possible future changes in global financial markets;
•Any changes in business, political and economic conditions due to actual or threatened terrorist activity in the U.S. and other parts of
the world and related U.S. military action overseas;
•Growth in costs and expenses;
•Changes in our product, segment and geographic mix; and
•Impact of acquisitions, divestitures, restructurings, product withdrawals and other unusual items, including our ability to realize the
projected benefits of our acquisition of Wyeth and of our cost-reduction initiatives.
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans
and assumptions. Achievement of anticipated results is subject to substantial risks, uncertainties and inaccurate assumptions.
Should known or unknown risks or uncertainties materialize or should underlying assumptions prove inaccurate, actual results could
vary materially from past results and those anticipated, estimated or projected. Investors should bear this in mind as they consider
forward-looking statements.
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or
otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8-K and
10-K reports and our other filings with the SEC.
Certain risks, uncertainties and assumptions are discussed here and under the heading entitled “Risk Factors” in Item 1A. of our
Annual Report on Form 10-K for the year ended December 31, 2009, which will be filed in February 2010. We note these factors for
investors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to
predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or
uncertainties.
This report includes discussion of certain clinical studies relating to various in-line products and/or product candidates. These
studies typically are part of a larger body of clinical data relating to such products or product candidates, and the discussion herein
should be considered in the context of the larger body of data. In addition, clinical trial data are subject to differing interpretations,
and, even when we view data as sufficient to support the safety and/or effectiveness of a product candidate or a new indication for
an in-line product, regulatory authorities may not share our views and may require additional data or may deny approval altogether.
Financial Risk Management
The overall objective of our financial risk management program is to seek to minimize the impact of foreign exchange rate
movements and interest rate movements on our earnings. We manage these financial exposures through operational means and by
using various financial instruments. These practices may change as economic conditions change.
Foreign Exchange Risk—A significant portion of our revenues and earnings is exposed to changes in foreign exchange rates. We
seek to manage our foreign exchange risk in part through operational means, including managing same currency revenues in
relation to same currency costs and same currency assets in relation to same currency liabilities.
Foreign exchange risk is also managed through the use of foreign currency forward-exchange contracts. These contracts are used
to offset the potential earnings effects from mostly intercompany short-term foreign currency assets and liabilities that arise from
operations. Foreign currency swaps are used to offset the potential earnings effects from foreign currency debt. We also use foreign
currency forward-exchange contracts and foreign currency swaps to hedge the potential earnings effects from short-term and long-
term foreign currency investments, third-party loans and intercompany loans.
In addition, under certain market conditions, we protect against possible declines in the reported net investments of our Japanese
yen and, prior to 2009, Swedish krona and certain euro functional-currency subsidiaries. In these cases, we use currency swaps or
foreign currency debt.
40 2009 Financial Report