Pfizer 2005 Annual Report Download - page 52

2005 Financial Report 51
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
At December 31, 2005, we had access to $3.0 billion of lines of
credit, of which $1.1 billion expire within one year. Of these lines
of credit, $2.8 billion are unused, of which our lenders have
committed to loan us $1.7 billion at our request. $1.5 billion of
the unused lines of credit, which expire in 2010, may be used to
support our commercial paper borrowings.
C. Long-Term Debt
Information about our long-term debt as of December 31 follows:
(MILLIONS OF DOLLARS) MATURITY DATE 2005 2004
Senior unsecured notes:
LIBOR-based floating-rate January 2007 $1,000 $—
LIBOR-based floating-rate January 2006 —1,000
5.625%(a) February 2006 —771
6.6%(a) December 2028 763 749
4.5%(a) February 2014 728 742
2.5%(a) March 2007 682 686
5.625%(a) April 2009 618 644
6.5%(a) December 2018 522 528
0.80% Japanese yen March 2008 513 586
4.65%(a) March 2018 293 294
3.3%(a) March 2009 288 294
6.0%(a) January 2008 255 266
Other:
Debentures, notes,
borrowings and mortgages(a) 685 719
Total long-term debt $6,347 $7,279
Current portion not included above(a) $778 $907
(a) Includes unrealized gains and losses for debt with fair value
hedges in 2005 and/or 2004 (see Note 9D, Financial Instruments:
Derivative Financial Instruments and Hedging Activities).
In November 2005, Pfizer issued $1 billion of senior unsecured
floating-rate notes at LIBOR, less a nominal amount, with an
initial maturity of 13 months. The debt holders have the option
to extend the term of the notes by one month, each month,
during the five-year maximum term of the notes. In addition, the
adjustment to LIBOR increases each December by a nominal
amount. The notes are callable by us at par plus accrued interest
to date every six months, with a notice of not less than thirty days,
but not more than sixty days. The LIBOR-based floating-rate
notes bear an interest rate of 4.33% as of December 31, 2005. The
floating-rate notes were issued through an international
subsidiary. They are guaranteed as to principal and interest by
Pfizer Inc. though the maturity date of the notes. These notes were
issued to fund certain international subsidiaries’ intercompany
dividends paid in 2005 in connection with the Jobs Act.
In July 2005, we decided to exercise Pfizer’s option to call, at par-
value plus accrued interest, $1 billion of senior unsecured floating-
rate notes, which were included in Long-term debt at December
31, 2004. Notice to call was given to the Trustees and the notes
were redeemed in September 2005.
Long-term debt outstanding at December 31, 2005 matures in the
following years:
AFTER
(MILLIONS OF DOLLARS) 2007 2008 2009 2010 2010
Maturities $1,688 $979 $956 $2 $2,722
On February 22, 2006, we issued the following Japanese yen
fixed-rate bonds, which will be used for current general corporate
purposes:
•$508 million equivalent, senior unsecured notes, due February
2011, which pay interest semi-annually, beginning on August 22,
2006, at a rate of 1.2%; and
•$466 million equivalent, senior unsecured notes, due February
2016, which pay interest semi-annually, beginning on August 22,
2006, at a rate of 1.8%.
The notes were issued under a $5 billion debt shelf registration
filed with the SEC in November 2002. Such yen debt is designated
as a hedge of our yen net investments.
At February 24, 2006, we had the ability to borrow $1 billion by
issuing debt securities under our existing debt shelf registration
statement filed with the SEC in November 2002.
D. Derivative Financial Instruments and Hedging
Activities
Foreign Exchange Risk—A significant portion of 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 expected 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 is also 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.