Pfizer 2011 Annual Report Download - page 96

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
14. Earnings per Common Share Attributable to Common Shareholders
Basic and diluted EPS were computed using the following common share data:
YEAR ENDED DECEMBER 31,
(IN MILLIONS) 2011 2010 2009
EPS Numerator—Basic:
Income from continuing operations $ 8,739 $8,211 $8,529
Less: Net income attributable to noncontrolling interests 42 31 8
Income from continuing operations attributable to Pfizer Inc. 8,697 8,180 8,521
Less: Preferred stock dividends—net of tax 222
Income from continuing operations attributable to Pfizer Inc. common shareholders 8,695 8,178 8,519
Discontinued operations—net of tax 1,312 77 114
Net income attributable to Pfizer Inc. common shareholders $10,007 $8,255 $8,633
EPS Numerator—Diluted:
Income from continuing operations attributable to Pfizer Inc. common shareholders and
assumed conversions $ 8,697 $8,180 $8,521
Discontinued operations—net of tax 1,312 77 114
Net income attributable to Pfizer Inc. common shareholders and assumed conversions $10,009 $8,257 $8,635
EPS Denominator:
Weighted-average number of common shares outstanding—Basic 7,817 8,036 7,007
Common-share equivalents: stock options, stock issuable under employee
compensation plans and convertible preferred stock 53 38 38
Weighted-average number of common shares outstanding—Diluted 7,870 8,074 7,045
Stock options that had exercise prices greater than the average market price of our
common stock issuable under employee compensation plans(a) 272 413 400
(a) These common stock equivalents were outstanding during 2011, 2010 and 2009 but were not included in the computation of diluted EPS for those
years because their inclusion would have had an anti-dilutive effect.
15. Lease Commitments
We lease properties and equipment for use in our operations. In addition to rent, the leases may require us to pay directly for taxes,
insurance, maintenance and other operating expenses or to pay higher rent when operating expenses increase. Rental expense, net
of sublease income, was $382 million in 2011, $387 million in 2010 and $356 million in 2009.
The future minimum rental commitments under non-cancelable operating leases follow:
(MILLIONS OF DOLLARS) 2012 2013 2014 2015 2016
AFTER
2016
Lease commitments $187 $166 $144 $105 $83 $723
16. Insurance
Our insurance coverage reflects market conditions (including cost and availability) existing at the time it is written, and our decision
to obtain insurance coverage or to self-insure varies accordingly. Depending upon the cost and availability of insurance and the
nature of the risk involved, the amount of self-insurance may be significant. The cost and availability of coverage have resulted in
self-insuring certain exposures, including product liability. If we incur substantial liabilities that are not covered by insurance or
substantially exceed insurance coverage and that are in excess of existing accruals, there could be a material adverse effect on our
results of operations or cash flows in the period in which the amounts are paid and/or accrued (see Note 17. Commitments and
Contingencies).
17. Commitments and Contingencies
We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business. For a
discussion of our tax contingencies, see Note 5D. Taxes on Income: Tax Contingencies.
LEGAL PROCEEDINGS
Our non-tax contingencies include, among others, the following:
•Patent litigation, which typically involves challenges to the coverage and/or validity of our patents on various products or processes. We
are the plaintiff in the vast majority of these actions. An adverse outcome in actions in which we are the plaintiff could result in a loss of
patent protection for the drug at issue, a significant loss of revenues from that drug and impairments of any associated assets.
2011 Financial Report 95