Pfizer 2010 Annual Report Download - page 3

Financial Review
Pfizer Inc. and Subsidiary Companies
Introduction
Our Financial Review is provided to assist readers in understanding the results of operations, financial condition and cash flows of
Pfizer Inc. (the Company). It should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated
Financial Statements. The discussion in this Financial Review contains forward-looking statements that involve substantial risks and
uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of
various factors such as those discussed in Part 1, Item 1A, “Risk Factors” of our 2010 Annual Report on Form 10-K and in the
“Forward-Looking Information and Factors That May Affect Future Results”, “Our Operating Environment” and “Our Strategy”
sections of this Financial Review.
In accordance with Pfizer’s international year-end, the financial information included in our consolidated financial statements for our
subsidiaries operating outside the United States (U.S.) is as of and for the year ended November 30 for each year presented. On
October 15, 2009, we completed our acquisition of Wyeth in a cash-and-stock transaction valued on that date at approximately $68
billion. Commencing from the acquisition date, our financial statements reflect the assets, liabilities, operating results and cash flows
of Wyeth. As a result, legacy Wyeth operations are reflected in our results of operations for the year ended December 31, 2010. In
accordance with our domestic and international fiscal year-ends, our consolidated financial statements for the year ended
December 31, 2009 reflect approximately two-and-a-half months of the fourth calendar quarter of 2009 in the case of Wyeth’s U.S.
operations and approximately one-and-a-half months of the fourth calendar quarter of 2009 in the case of Wyeth’s international
operations.
The Financial Review is organized as follows:
•Overview of Our Performance, Operating Environment, Strategy and Outlook. This section, beginning on page 2, provides information
about the following: our business; our 2010 performance; our operating environment, including the impacts and anticipated impacts of
the U.S. healthcare legislation enacted in March 2010; our strategy, including our recently announced initiative to improve the
innovation and overall productivity of our research and development operation; our business development initiatives, such as
acquisitions, dispositions, licensing and collaborations; our financial guidance for 2011; and our financial targets for 2012.
•Accounting Policies. This section, beginning on page 10, discusses those accounting policies that we consider important in
understanding Pfizer’s consolidated financial statements. For additional discussion of our accounting policies, see Notes to
Consolidated Financial Statements—Note 1. Significant Accounting Policies.
•Acquisition of Wyeth. This section, beginning on page 15, discusses our acquisition of Wyeth, the use of fair value and the recognition
of assets acquired and liabilities assumed in connection with our acquisition of Wyeth. For additional details related to the acquisition of
Wyeth, see Notes to Consolidated Financial Statements—Note 2. Acquisition of Wyeth.
•Analysis of the Consolidated Statements of Income. This section begins on page 20, and consists of the following sections:
ORevenues. This section, beginning on page 20, provides an analysis of our revenues and products for the three years ended
December 31, 2010, including an overview of important product developments.
OCosts and Expenses. This section, beginning on page 32, provides a discussion about our costs and expenses.
OProvision for Taxes on Income. This section, beginning on page 36, provides a discussion of items impacting our tax provision for the
periods presented and of two items that will impact our results beginning in 2011.
OAdjusted Income. This section, beginning on page 37, provides a discussion of an alternative view of performance used by
management.
•Financial Condition, Liquidity and Capital Resources. This section, beginning on page 41, provides an analysis of our consolidated
balance sheets as of December 31, 2010 and 2009, and consolidated cash flows for each of the three years ended December 31,
2010, 2009 and 2008, as well as a discussion of our outstanding debt and other commitments that existed as of December 31, 2010.
Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to help fund Pfizer’s future
activities.
•New Accounting Standards. This section, on page 45, discusses accounting standards that we recently have adopted, as well as those
that recently have been issued but not yet adopted by us.
•Forward-Looking Information and Factors That May Affect Future Results. This section, beginning on page 45, provides a description of
the risks and uncertainties that could cause actual results to differ materially from those discussed in forward-looking statements
presented in this Financial Review relating to our financial and operating performance, business plans and prospects, in-line products
and product candidates, and share-repurchase and dividend-rate plans. Such forward-looking statements are based on management’s
current expectations about future events, which are inherently susceptible to uncertainty and changes in circumstances. Also included
in this section are discussions of Financial Risk Management and Legal Proceedings and Contingencies.
2010 Financial Report 1