Pfizer 2010 Annual Report Download - page 46

Financial Review
Pfizer Inc. and Subsidiary Companies
Financing Activities
2010 vs. 2009
Our net cash used in financing activities was $11.2 billion in 2010 compared to net cash provided by financing activities of $14.5
billion in 2009. The change in financing cash flows was primarily attributable to:
•net repayments of borrowings of $4.2 billion in 2010, compared to net proceeds from borrowings of $20.1 billion in 2009, primarily
reflecting the proceeds from our issuance of $13.5 billion of senior unsecured notes in the first quarter of 2009 and our issuance of
approximately $10.5 billion of senior unsecured notes in the second quarter of 2009;
•purchases of our common stock of $1.0 billion in 2010, compared to no purchases in 2009; and
•higher dividend payments in 2010, compared to 2009.
2009 vs. 2008
Our net cash provided by financing activities was $14.5 billion in 2009 compared to net cash used in financing activities of $6.6
billion in 2008. The change in cash activity for financing activities was primarily attributable to:
•net borrowings of $20.1 billion in 2009, primarily reflecting the proceeds from our issuance of $13.5 billion of senior unsecured notes in
the first quarter of 2009 and the proceeds from our issuance of approximately $10.5 billion of senior unsecured notes in the second
quarter of 2009 compared to net borrowings of $2.4 billion in 2008;
•lower dividend payments in 2009 compared to 2008; and
•no open market purchases of common stock in 2009 compared to $500 million of purchases in 2008.
On June 23, 2005, we announced that the Board of Directors authorized a $5 billion share-purchase plan (the “2005 Stock Purchase
Plan”). On June 26, 2006, we announced that the Board of Directors increased the authorized amount of shares to be purchased
under the 2005 Stock Purchase Plan from $5 billion to $18 billion. On January 23, 2008, we announced that the Board of Directors
authorized a new $5 billion share-purchase plan (the “2008 Stock Purchase Plan”), to be funded by operating cash flows that may
be utilized from time to time. In total under the 2005 and 2008 Stock Purchase Plans, through December 31, 2010, we have
purchased approximately 771 million shares for approximately $19.5 billion. We purchased approximately 61 million shares of our
common stock in 2010, and we did not purchase any shares of our common stock in 2009.
On February 1, 2011 we announced that the Board of Directors authorized a new $5 billion share-repurchase plan, which, together
with the balance remaining under the 2008 Stock Purchase Plan, increased our total current authorization to $9 billion. During 2011,
we anticipate repurchasing approximately $5 billion of our common stock, with the remaining authorized amount available in 2012
and beyond.
Contractual Obligations
Payments due under contractual obligations as of December 31, 2010, mature as follows:
YEARS
(MILLIONS OF DOLLARS) TOTAL WITHIN 1
OVER 1
TO 3
OVER 3
TO 5 AFTER 5
Long-term debt, including interest obligations(a) $64,600 $5,363 $10,933 $10,637 $37,667
Other long-term liabilities reflected on our consolidated balance sheet under
U.S. GAAP(b) 5,271 535 981 1,029 2,726
Lease commitments(c) 1,469 188 300 211 770
Purchase obligations and other(d) 3,560 1,569 996 780 215
Uncertain tax positions(e) 934 934 — — —
(a) Our long-term debt obligations include both our expected principal and interest obligations. Our calculations of expected interest payments
incorporate 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 including fixed and floating rate, foreign
currency denominated, and other notes.
(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 includes 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.
44 2010 Financial Report