Pfizer 2015 Annual Report Download - page 98

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
2015 Financial Report
97
The following table provides the components of our senior unsecured long-term debt:
As of December 31,
(MILLIONS OF DOLLARS) Maturity Date 2015 2014
6.20%(a) March 2019 $3,276 $3,264
7.20%(a) March 2039 2,856 2,902
4.75% euro(b) June 2016 —2,424
5.75% euro(b) June 2021 2,172 2,419
6.50% U.K. pound(b) June 2038 2,202 2,316
5.95%(c) April 2037 2,057 2,083
2.10%(c) May 2019 1,515 1,507
4.55% euro(d) May 2017 1,041 1,201
5.50%(b) February 2016 —1,018
Notes and other debt with a weighted-average interest rate of 2.83%(f) 2017–2020 6,152 5,161
Notes and other debt with a weighted-average interest rate of 5.18%(e) 2021–2044 7,547 6,698
Foreign currency notes and other foreign currency debt with a weighted-
average interest rate of 2.84%(g) 2016 —547
Long-term debt $ 28,818 $ 31,541
Current portion of long-term debt (not included above) $3,720 $3,011
(a) Instrument is redeemable by us at any time at the greater of 100% of the principal amount of the notes or the sum of the present values of the remaining
scheduled payments of principal and interest discounted at the U.S. Treasury rate plus 0.50%, plus, in each case, accrued and unpaid interest.
(b) Instrument is redeemable by us at any time at the greater of 100% of the principal amount of the notes or the sum of the present values of the remaining
scheduled payments of principal and interest discounted at a comparable government bond rate plus 0.20%. plus, in each case, accrued and unpaid interest.
(c) The instrument is redeemable by us at any time at the greater of 100% of the principal amount of the notes or the sum of the present values of the remaining
scheduled payments of principal and interest discounted at the U.S. Treasury rate plus 0.25% for the 5.95% notes and 0.07% for the 2.10% notes, plus, in each
case, accrued and unpaid interest.
(d) The instrument is redeemable by us at any time at the greater of 100% of the principal amount of the notes or the price at which the gross redemption yield on
the notes would be equal to the gross redemption yield of a comparable European government bond (selected at the discretion of the Trustee) on the basis of
the middle market price of such European government bond.
(e) Contains debt issuances with a weighted-average maturity of approximately 15 years, and the majority of which are redeemable by us at any time at the greater
of 100% of the principal amount of the notes or the sum of the present values of the remaining scheduled payments of principal and interest discounted at the
U.S. Treasury rate plus a weighted average of 0.20%, plus, in each case, accrued and unpaid interest.
(f) Contains debt issuances with a weighted-average maturity of approximately two years, and the majority of which are redeemable by us at any time at the
greater of 100% of the principal amount of the notes or the sum of the present values of the remaining scheduled payments of principal and interest discounted
at the U.S. Treasury rate plus a weighted average of 0.12%, plus, in each case, accrued and unpaid interest.
(g) At December 31, 2015, the debt issuances have been reclassified to Current portion of long-term debt.
In October 2015, Pfizer exchanged $1.7 billion debt of its recently acquired subsidiary Hospira for virtually the same amount of Pfizer Inc. debt
with the same interest rate and maturity terms as the Hospira debt, leaving a minor amount of outstanding debt in Hospira’s name. In
connection with the exchange offers, the indenture governing the Hospira notes and the Hospira notes were amended to, among other things,
eliminate substantially all of the restrictive covenants. The net income effect of this exchange was immaterial.
The following table provides the maturity schedule of our Long-term debt outstanding as of December 31, 2015:
(MILLIONS OF DOLLARS) 2017 2018 2019 2020 After 2020 Total
Maturities $4,412 $2,400 $4,807 $364 $16,835 $28,818
E. Derivative Financial Instruments and Hedging Activities
Foreign Exchange Risk
A significant portion of our revenues, earnings and net investments in foreign affiliates is exposed to changes in foreign exchange rates. We
seek to manage our foreign exchange risk, in part, through operational means, including managing same-currency revenues in relation to
same-currency costs and same-currency assets in relation to same-currency liabilities. Depending on market conditions, foreign exchange risk
also is managed through the use of derivative financial instruments and foreign currency debt. These financial instruments serve to protect net
income and net investments against the impact of the translation into U.S. dollars of certain foreign exchange-denominated transactions.
As of December 31, 2015, the aggregate notional amount of foreign exchange derivative financial instruments hedging or offsetting foreign
currency exposures was $35.7 billion. The derivative financial instruments primarily hedge or offset exposures in the euro, Japanese yen, and
U.K. pound. The maximum length of time over which we are hedging future foreign exchange cash flow relates to our $2.2 billion U.K. pound
debt maturing in 2038.