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Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
84
2013 Financial Report
between the fair value of our long-term debt and the amount reported on the consolidated balance sheet is due to a decline in relative market interest rates
since the debt issuance.
A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely heavily on
estimates and assumptions. For a description of our general accounting policies associated with developing fair value estimates, see Note 1E.
Basis of Presentation and Significant Accounting Policies: Fair Value. For a description of the risks associated with estimates and
assumptions, see Note 1C. Basis of Presentation and Significant Accounting Policies: Estimates and Assumptions.
The following methods and assumptions were used to estimate the fair value of our financial assets and liabilities:
• Trading equity securities—quoted market prices.
• Trading debt securities—observable market interest rates.
• Available-for-sale debt securities—third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable
market data and credit-adjusted interest rate yield curves.
• Available-for-sale money market funds—observable Net Asset Value prices.
• Available-for-sale equity securities, excluding money market funds—third-party pricing services that principally use a composite of
observable prices.
• Derivative financial instruments (assets and liabilities)—third-party matrix-pricing model that uses significant inputs derived from or
corroborated by observable market data. Where applicable, these models discount future cash flow amounts using market-based
observable inputs, including interest rate yield curves, and forward and spot prices for currencies. The credit risk impact to our derivative
financial instruments was not significant.
• Held-to-maturity debt securities—third-party matrix-pricing model that uses significant inputs derived from or corroborated by observable
market data and credit-adjusted interest rate yield curves.
• Private equity securities, excluding equity-method investments—application of the implied volatility associated with an observable biotech
index to the carrying amount of our portfolio.
• Short-term borrowings and long-term debt—third-party matrix-pricing model that uses significant inputs derived from or corroborated by
observable market data and our own credit rating.
We periodically review the methodologies, inputs and outputs of third-party pricing services for reasonableness. Our procedures can include,
for example, referencing other third-party pricing models, monitoring key observable inputs (like LIBOR interest rates) and selectively
performing test-comparisons of values with actual sales of financial instruments.
The following table provides the classification of these selected financial assets and liabilities in our consolidated balance sheets:
As of December 31,
(MILLIONS OF DOLLARS) 2013 2012
Assets
Cash and cash equivalents $1,104 $947
Short-term investments 30,225 22,318
Long-term investments 16,406 14,149
Other current assets(a) 286 296
Other noncurrent assets(b) 1,225 1,086
$49,246 $38,796
Liabilities
Short-term borrowings, including current portion of long-term debt $6,027 $6,424
Other current liabilities(c) 303 330
Long-term debt 30,462 31,036
Other noncurrent liabilities(d) 327 374
$37,119 $38,164
(a) As of December 31, 2013, derivative instruments at fair value include interest rate swaps ($90 million), foreign currency swaps ($24 million) and foreign
currency forward-exchange contracts ($172 million) and, as of December 31, 2012, include foreign currency swaps ($144 million) and foreign currency forward-
exchange contracts ($152 million).
(b) As of December 31, 2013, derivative instruments at fair value include interest rate swaps ($378 million) and foreign currency swaps ($847 million) and, as of
December 31, 2012, include interest rate swaps ($1.0 billion) and foreign currency swaps ($50 million).
(c) At December 31, 2013, derivative instruments at fair value include foreign currency swaps ($84 million) and foreign currency forward-exchange contracts ($219
million) and, as of December 31, 2012, include foreign currency swaps ($87 million) and foreign currency forward-exchange contracts ($243 million).
(d) At December 31, 2013, derivative instruments at fair value include interest rate swaps ($301 million) and foreign currency swaps ($26 million) and, as of
December 31, 2012, include interest rate swaps ($33 million) and foreign currency swaps ($341 million).
In addition, as of December 31, 2012, we had long-term receivables where the determination of fair value employs discounted future cash
flows, using current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining