Pfizer 2007 Annual Report Download - page 59

2007 Financial Report 57
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
The differences between the estimated fair values and carrying
values of our financial instruments were not significant as of
December 31, 2007 and 2006.
F. Credit Risk
On an ongoing basis, we review the creditworthiness of
counterparties to foreign exchange and interest rate agreements
and do not expect to incur a loss from failure of any counterparties
to perform under the agreements.
There are no significant concentrations of credit risk related to our
financial instruments with any individual counterparty. As of
December 31, 2007, we had $4.3 billion due from a broad group
of banks around the world.
In general, there is no requirement for collateral from customers.
However, derivative financial instruments are executed under
master netting agreements with financial institutions. These
agreements contain provisions that provide for the ability for
collateral payments, depending on levels of exposure, our credit
rating and the credit rating of the counterparty. As of December
31, 2007, we advanced cash collateral of $460 million and received
cash collateral of $364 million against various counterparties.
The collateral primarily supports the approximate fair value of our
Swedish krona swap contracts. The collateral advanced receivables
is reported in Prepaid expenses and taxes, and the collateral
received obligation is reported in Other current liabilities.
11. Inventories
The components of inventories as of December 31 follow:
(MILLIONS OF DOLLARS) 2007 2006
Finished goods $2,064 $1,651
Work-in-process 2,353 3,198
Raw materials and supplies 885 1,262
Total inventories(a) $5,302 $6,111
(a) Decrease was primarily due to write-off of inventories related to
Exubera (see Note 4. Asset Impairment Charges and Other Costs
Associated with Exiting Exubera ) and the impact of our inventory-
reduction initiatives.
12. Property, Plant and Equipment
The major categories of property, plant and equipment as of
December 31 follow:
USEFUL
LIVES
(MILLIONS OF DOLLARS) (YEARS) 2007 2006
Land — $ 718 $ 641
Buildings 331⁄3-50 10,319 9,947
Machinery and equipment 8-20 10,441 9,969
Furniture, fixtures and other 3-121⁄24,867 4,644
Construction in progress — 1,758 1,862
28,103 27,063
Less: accumulated depreciation 12,369 10,431
Total property, plant and equipment $15,734 $16,632
13. Goodwill and Other Intangible Assets
A. Goodwill
The changes in the carrying amount of goodwill by segment for
the years ended December 31, 2007 and 2006, follow:
ANIMAL
(MILLIONS OF DOLLARS) PHARMACEUTICAL HEALTH OTHER TOTAL
Balance, January 1, 2006 $20,919 $ 56 $10 $20,985
Additions(a) 166 — — 166
Other(b) (287) 5 7 (275)
Balance, December 31, 2006 20,798 61 17 20,876
Additions(a) —40— 40
Other(b) 458 7 1 466
Balance, December 31, 2007 $21,256 $108 $18 $21,382
(a) Primarily related to Embrex in 2007 and Exubera in 2006.
(b) In 2007, primarily relates to the impact of foreign exchange. In
2006, includes reductions to goodwill related to the resolution of
certain tax positions, adjustments for certain purchase accounting
liabilities and the impact of foreign exchange.
B. Other Intangible Assets
The components of identifiable intangible assets, primarily
included in our Pharmaceutical segment, as of December 31
follow:
2007 2006
GROSS GROSS
CARRYING ACCUMULATED CARRYING ACCUMULATED
(MILLIONS OF DOLLARS) AMOUNT AMORTIZATION AMOUNT AMORTIZATION
Finite-lived
intangible assets:
Developed
technology rights $32,433 $(15,830) $32,769 $(12,423)
Brands 1,017 (452) 888 (417)
License agreements 212 (59) 189 (41)
Trademarks 128 (82) 113 (73)
Other(a) 459 (264) 508 (266)
Total amortized
finite-lived
intangible assets 34,249 (16,687) 34,467 (13,220)
Indefinite-lived
intangible assets:
Brands 2,864 — 2,991 —
Trademarks 71 — 77 —
Other 1—35 —
Total indefinite-lived
intangible assets 2,936 — 3,103 —
Total identifiable
intangible assets $37,185 $(16,687) $37,570 $(13,220)
Total identifiable
intangible assets, less
accumulated
amortization(b) $ 20,498 $ 24,350
(a) Includes patents, non-compete agreements, customer contracts
and other intangible assets.
(b) Decrease primarily due to amortization, as well as the impairment
of intangible assets associated with Exubera (see
Note 4. Asset
Impairment Charges and Other Costs Associated with Exiting Exubera),
partially offset by the impact of foreign exchange.