Pfizer 2015 Annual Report Download - page 53

Financial Review
Pfizer Inc. and Subsidiary Companies
52
2015 Financial Report
• contributions to our pension and postretirement plans; and
• business-development activities.
For additional information about our share-purchase plans, see the “Share-Purchase Plans and Accelerated Share Repurchase Agreement”
section of this Financial Review.
Our long-term debt is rated high-quality by both Standard & Poor’s (S&P) and Moody’s Investors Service (Moody’s). See the “Credit Ratings”
section below. As market conditions change, we continue to monitor our liquidity position. We have taken and will continue to take a
conservative approach to our financial investments. Both short-term and long-term investments consist primarily of high-quality, highly liquid,
well-diversified and available-for-sale debt securities.
Selected Measures of Liquidity and Capital Resources
The following table provides certain relevant measures of our liquidity and capital resources:
As of December 31,
(MILLIONS OF DOLLARS, EXCEPT RATIOS AND PER COMMON SHARE DATA) 2015 2014
Selected financial assets:
Cash and cash equivalents(a) $3,641 $3,343
Short-term investments(a) 19,649 32,779
Long-term investments(a) 15,999 17,518
39,290 53,640
Debt:
Short-term borrowings, including current portion of long-term debt 10,160 5,141
Long-term debt 28,818 31,541
38,978 36,682
Selected net financial assets(b) $312 $16,958
Working capital(c) $14,405 $34,007
Ratio of current assets to current liabilities(c) 1.49:1 2.58:1
Total Pfizer Inc. shareholders’ equity per common share(d) $10.48 $11.33
(a) See Notes to Consolidated Financial Statements––Note 7. Financial Instruments for a description of certain assets held and for a description of credit risk related
to our financial instruments held.
(b) Selected net financial assets decreased during 2015 as net cash provided by operating activities decreased, and cash paid for the Hospira acquisition, dividend
payments and share purchases, among other things, more than offset the redemptions/sales, net of purchases, of investments and proceeds from the exercise of
stock options. For additional information, see the “Analysis of the Consolidated Statements of Cash Flows” section of this Financial Review.
(c) The presentation of all deferred taxes as noncurrent in accordance with a new accounting standard that we adopted at December 31, 2015 impacted working
capital and the ratio of current assets to current liabilities. Net current deferred tax assets of $2.1 billion at December 31, 2014 were reclassified to noncurrent
assets and noncurrent liabilities, as appropriate (see Notes to Consolidated Financial Statements––Note 1B. Adoption of New Accounting Standards). The
decrease in working capital is due to the acquisition of Hospira, as well as the timing of accruals, cash receipts and payments in the ordinary course of business.
For additional information on 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.
(d) Represents total Pfizer Inc. shareholders’ equity divided by the actual number of common shares outstanding (which excludes treasury stock).
For additional information about the sources and uses of our funds, see the “Analysis of the Consolidated Balance Sheets” and “Analysis of the
Consolidated Statements of Cash Flows” sections of this Financial Review.
On May 15, 2014, we completed a public offering of $4.5 billion aggregate principal amount of senior unsecured notes (see Notes to
Consolidated Financial Statements––Note 7D. Financial Instruments: Long-Term Debt).
On June 3, 2013, we completed a public offering of $4.0 billion aggregate principal amount of senior unsecured notes. In addition, we repaid at
maturity our 3.625% senior unsecured notes, which had a balance of $2.4 billion at December 31, 2012, and, in December 2013, we redeemed
the aggregate principal amount of $1.8 billion of our 5.50% senior unsecured notes that were due in February 2014.
Domestic and International Short-Term Funds
Many of our operations are conducted outside the U.S., and significant portions of our cash, cash equivalents and short-term investments are
held internationally. We generally hold up to $10 billion of our short-term funds in U.S. tax jurisdictions. The amount of funds held in U.S. tax
jurisdictions can fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as
business-development activities. As part of our ongoing liquidity assessments, we regularly monitor the mix of domestic and international cash
flows (both inflows and outflows). Repatriation of overseas funds can result in additional U.S. federal, state and local income tax payments. We
record U.S. deferred tax liabilities for certain unremitted earnings, but when amounts earned overseas are expected to be indefinitely reinvested
outside the U.S., no accrual for U.S. taxes is provided.