Pfizer 2015 Annual Report Download - page 51

Financial Review
Pfizer Inc. and Subsidiary Companies
50
2015 Financial Report
ANALYSIS OF THE CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, % Change
(MILLIONS OF DOLLARS) 2015 2014 2013 15/14 14/13
Cash provided by/(used in):
Operating activities $14,512 $16,883 $17,684 (14) (5)
Investing activities (2,980) (5,654) (10,544) (47) (46)
Financing activities (10,233) (9,986) (14,975) 2(33)
Effect of exchange-rate changes on cash and cash equivalents (1,000) (83)(63)*32
Net increase/(decrease) in Cash and cash equivalents $298 $1,160 $ (7,898) (74) *
* Calculation not meaningful.
In the Consolidated Statements of Cash Flows, the line item, Other changes in assets and liabilities, net of acquisitions and divestitures, is
presented excluding the effects of changes in foreign currency exchange rates, as these changes do not reflect actual cash inflows or
outflows, and excluding any other significant non-cash movements. Accordingly, the amounts shown will not necessarily agree with the
changes in the assets and liabilities that are presented in our consolidated balance sheets.
Operating Activities
2015 v. 2014
Our net cash provided by operating activities was $14.5 billion in 2015, compared to $16.9 billion in 2014. The decrease in net cash provided
by operating activities reflects the change in operating earnings as well as a $1.0 billion voluntary pension contribution in January 2015, and
the timing of other receipts and payments in the ordinary course of business, including higher payments related to certain liabilities associated
with legal matters, partially offset by the upfront cash payment of $850 million in 2014 in connection with our collaborative arrangement with
Merck KGaA.
In 2015, the change in the line item called Other adjustments, net, primarily reflects the non-cash changes in the equity losses related to the
Hisun and ViiV equity-method investments.
In 2015 and 2014, the line item Other changes in assets and liabilities, net of acquisitions and divestitures, primarily reflects changes, in the
normal course of business, in accounts receivable, inventories, other current assets, other noncurrent assets, accounts payable, accrued
compensation and other current and non-current liabilities. For 2015, this line item also includes the adjustments necessary to reflect the
payments of certain liabilities associated with legal matters accrued in prior periods, including Neurontin-related matters, partially offset by the
deferral of an upfront payment received as part of our tanezumab collaborative arrangement. For additional information about accounts
receivable, see also the “Selected Measures of Liquidity and Capital Resources: Accounts Receivable” section of this Financial Review. For
additional information about our legal accruals, see Notes to Consolidated Financial Statements—Note 4. Other (Income)/Deductions—Net.
2014 v. 2013
Our net cash provided by operating activities was $16.9 billion in 2014, compared to $17.7 billion in 2013. The decrease in net cash provided
by operating activities reflects operating earnings impacted by the timing of receipts and payments in the ordinary course of business, as well
as the upfront cash payment of $850 million in connection with our collaborative arrangement with Merck KGaA. For additional information,
see Notes to Consolidated Financial Statements—Note 2C. Acquisitions, Licensing Agreements, Collaborative Arrangements, Divestitures,
Equity-Method Investments and Cost-Method Investment: Collaborative Arrangements.
In 2014, the change in the line item called Other adjustments, net, primarily reflects the non-cash changes in the estimated loss on the Teuto
call/put option. For additional information, see Notes to Consolidated Financial Statements—Note 2E. Acquisitions, Licensing Agreements,
Collaborative Arrangements, Divestitures, Equity-Method Investments and Cost-Method Investment: Equity-Method Investments.
Investing Activities
2015 v. 2014
Our net cash used in investing activities was $3.0 billion in 2015, compared to $5.7 billion in 2014. The decrease in net cash used in investing
activities was primarily attributable to:
• net redemptions of investments of $14.6 billion in 2015, compared to net purchases of investments of $4.2 billion in 2014,
partially offset by:
• cash paid of $15.7 billion, net of cash acquired, in 2015 for the acquisition of Hospira (see Notes to Consolidated Financial Statements—
Note 2A. Acquisitions, Licensing Agreements, Collaborative Arrangements, Divestitures, Equity-Method Investments and Cost-Method
Investment: Acquisitions); and
• cash paid of $763 million, net of cash acquired, in 2015 primarily for the acquisition of Baxter’s portfolio of marketed vaccines (see Notes to
Consolidated Financial Statements—Note 2A. Acquisitions, Licensing Agreements, Collaborative Arrangements, Divestitures, Equity-
Method Investments and Cost-Method Investment: Acquisitions).