Pfizer 2007 Annual Report Download - page 57

2007 Financial Report 55
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
C. Long-Term Debt
Information about our long-term debt as of December 31 follows:
(MILLIONS OF DOLLARS) MATURITY DATE 2007 2006
Senior unsecured notes:
4.75% euro December 2014 $1,296 $—
4.55% euro May 2017 1,291 —
6.60% December 2028 764 735
4.50% February 2014 753 720
5.63% April 2009 612 609
1.21% Japanese yen February 2011 530 504
6.50% December 2018 527 506
1.85% Japanese yen February 2016 484 461
4.65% March 2018 300 288
3.30% March 2009 297 290
0.80% Japanese yen March 2008 —506
6.00% January 2008 —252
Other:
Debentures, notes,
borrowings and mortgages 460 675
Total long-term debt $7,314 $5,546
Current portion not included above $1,024 $ 712
Long-term debt outstanding as of December 31, 2007, matures in
the following years:
AFTER
(MILLIONS OF DOLLARS) 2009 2010 2011 2012 2012
Maturities $945 $6 $536 $6 $5,821
In March 2007, we filed a securities registration statement with
the SEC. The registration statement was filed under the automatic
shelf registration process available to well-known seasoned issuers
and is effective for three years. We can issue securities of various
types under that registration statement at any time, subject to
approval by our Board of Directors in certain circumstances.
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.
We entered into financial instruments to hedge or offset by the
same currency an appropriate portion of the currency risk and the
timing of the hedged or offset item. As of December 31, 2007 and
2006, the more significant financial instruments employed to
manage foreign exchange risk follow:
PRIMARY NOTIONAL AMOUNT MATURITY
BALANCE SHEET HEDGE (MILLIONS OF DOLLARS) ________________________________ DATE
INSTRUMENT(a) CAPTION(b) TYPE(c) HEDGED OR OFFSET ITEM 2007 2006 07/06
Forwards OCL — Short-term foreign currency assets and liabilities(d) $10,672 $7,939 2008/2007
Swaps OCL NI Swedish krona net investments(e) 8,288 7,759 2008
Forwards OCL CF Euro available-for-sale investments 5,297 — 2008
Swaps Prepaid CF Swedish krona intercompany loan 5,156 4,759 2008
Forwards OCL CF Yen available-for-sale investments 2,666 — 2008
ST yen borrowings STB NI Yen net investments 1,679 1,598 2008/2007
Forwards OCL CF U.K. pound available-for-sale investments 1,419 — 2008
Swap Other assets — Euro fixed rate debt 1,321 — 2014
Swap Other assets — Euro fixed rate debt 1,321 — 2017
Swaps Prepaid NI Euro net investments 916 — 2008
Swaps OCL NI Euro net investments —1,369 2007
Swaps OCL NI Yen net investments 686 653 2008/2007
LT yen debt LTD NI Yen net investments 574 547 After 2012
ST yen debt STB NI Yen net investments 530 506 2008
LT yen debt LTD NI Yen net investments 530 504 2011
Forwards OCL — Short-term intercompany foreign currency loans(f) —3,484 2007
Forwards Prepaid CF Yen available-for-sale investments —1,135 2007
Swaps OCL CF U.K. pound intercompany loan —811 2007
Forwards OCL CF Euro intercompany loan —542 2007
Forwards OCL CF Euro available-for-sale investments —444 2007
(a) Forwards = Forward-exchange contracts; ST yen borrowings = Short-term yen borrowings; ST yen debt = Short-term yen debt; LT yen debt =
Long-term yen debt.
(b) The primary balance sheet caption indicates the financial statement classification of the amount associated with the financial instrument
used to hedge or offset foreign exchange risk. The abbreviations used are defined as follows: Prepaid = Prepaid expenses and taxes ;
Other assets = Other assets, deferred taxes and deferred charges ; STB = Short-term borrowings, including current portion of long-term debt ;
OCL = Other current liabilities ; and LTD = Long-term debt .
(c) CF = Cash flow hedge; NI = Net investment hedge.
(d) Forward-exchange contracts used to offset short-term foreign currency assets and liabilities were primarily for intercompany transactions in
euros, Japanese yen, Swedish krona, U.K. pounds and Canadian dollars for the year ended December 31, 2007, and euros, U.K. pounds,
Australian dollars, Canadian dollars, Japanese yen and Swedish krona for the year ended December 31, 2006.
(e) Reflects an increase in Swedish krona net investments in 2006 due to the receipt of proceeds related to the sale of our Consumer Healthcare
business in Sweden.
(f) Forward-exchange contracts used to offset foreign currency loans in 2006 for intercompany contracts arising from the sale of our Consumer
Healthcare business, primarily in Canadian dollars, U.K. pounds and euros.