Pfizer 2006 Annual Report Download - page 34

32 2006 Financial Report
Financial Review
Pfizer Inc and Subsidiary Companies
SFAS 109, Accounting for Income Taxes. FIN 48 provides guidance
relative to the recognition, derecognition and measurement of
tax positions for financial statement purposes. Historically, our
policy has been to account for uncertainty in income taxes based
on whether we determined that our tax position is “probable”
under current tax law of being sustained, as well as an analysis
of potential outcomes under a given set of facts and circumstances.
FIN 48 requires that tax positions be sustainable based on a
“more likely than not” standard under current tax law benefit
recognition, and adjusted to reflect the largest amount of benefit
that is greater than 50% likely of being realized upon ultimate
settlement. While FIN 48 applies a lower level of certainty for tax
positions evaluated under tax law, as compared to our current
policy, we do not expect the adoption of FIN 48 to have a material
impact on our consolidated financial statements. We will adopt
the new standard as of January 1, 2007.
In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements. SFAS 157 provides guidance for, among other
things, the definition of fair value and the methods used to
measure fair value. The provisions of SFAS 157 are effective for
fiscal years beginning after November 15, 2007. We are currently
in the process of evaluating the impact of the adoption of SFAS
157 on our financial statements.
Forward-Looking Information and Factors
That May Affect Future Results
The Securities and Exchange Commission encourages companies
to disclose forward-looking information so that investors can
better understand a company’s future prospects and make
informed investment decisions. This report and other written or
oral statements that we make from time to time contain such
forward-looking statements that set forth anticipated results
based on management’s plans and assumptions. Such forward-
looking statements involve substantial risks and uncertainties. We
have tried, wherever possible, to identify such statements by
using words such as “will,” “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “believe,” “target,” “forecast” and
other words and terms of similar meaning in connection with any
discussion of future operating or financial performance or business
plans and prospects. In particular, these include statements relating
to future actions, business plans and prospects, prospective
products or product approvals, future performance or results of
current and anticipated products, sales efforts, expenses, interest
rates, foreign exchange rates, the outcome of contingencies,
such as legal proceedings, and financial results. Among the factors
that could cause actual results to differ materially are the
following:
•
the success of research and development activities;
•
decisions by regulatory authorities regarding whether and
when to approve our drug applications as well as their decisions
regarding labeling and other matters that could affect the
availability or commercial potential of our products;
•
the speed with which regulatory authorizations, pricing
approvals, and product launches may be achieved;
•
the success of external business development activities;
•
competitive developments, including with respect to competitor
drugs and drug candidates that treat diseases and conditions
similar to those treated by our in-line drugs and drug
candidates;
•
the ability to successfully market both new and existing products
domestically and internationally;
•
difficulties or delays in manufacturing;
•
trade buying patterns;
•
the ability to meet generic and branded competition after the
loss of patent protection for our products or for competitor
products;
•
the impact of existing and future regulatory provisions on
product exclusivity;
•
trends toward managed care and healthcare cost containment;
•
U.S. legislation or regulatory action affecting, among other
things, pharmaceutical product pricing, reimbursement or
access, including under Medicaid and Medicare, the importation
of prescription drugs that are marketed from outside the U.S.
at prices that are regulated by governments of various foreign
countries, and the involuntary approval of prescription
medicines for over-the-counter use;
•
the impact of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003;
•
legislation or regulatory action in markets outside the U.S.
affecting pharmaceutical product pricing, reimbursement or
access;
•
contingencies related to actual or alleged environmental
contamination;
•
claims and concerns that may arise regarding the safety or
efficacy of in-line products and product candidates;
•
legal defense costs, insurance expenses, settlement costs and
the risk of an adverse decision or settlement related to product
liability, patent protection, governmental investigations,
ongoing efforts to explore various means for resolving asbestos
litigation and other legal proceedings;
•
the Company’s ability to protect its patents and other
intellectual property both domestically and internationally;
•
interest rate and foreign currency exchange rate fluctuations;
•
governmental laws and regulations affecting domestic and
foreign operations, including tax obligations;
•
changes in U.S. generally accepted accounting principles;
•
any changes in business, political and economic conditions due
to the threat of terrorist activity in the U.S. and other parts of
the world, and related U.S. military action overseas;
•
growth in costs and expenses;
•
changes in our product, segment and geographic mix; and
•
the impact of acquisitions, divestitures, restructurings, product
withdrawals and other unusual items, including our ability to