Pfizer 2007 Annual Report Download - page 79

from pending government investigations, including but not
limited to those discussed below.
The Department of Justice continues to actively investigate the
marketing and safety of our COX-2 medicines, particularly Bextra.
The investigation has included requests for information and
documents. We also have received requests for information and
documents in connection with threatened claims concerning the
marketing and safety of Bextra and Celebrex from a group of state
attorneys general. We have been considering various ways to
resolve these matters.
Separately, the Department of Justice continues to actively
investigate certain physician payments budgeted to our
prescription pharmaceutical products. The investigation has
included requests for information and documents.
The Company has voluntarily provided the Department of Justice
and the Securities and Exchange Commission with information
concerning potentially improper payments made in connection
with certain sales activities outside the U.S. Certain potentially
improper payments and other matters are the subject of
investigations by government authorities in certain foreign countries,
including the following: A wholly owned subsidiary of Pfizer is
under criminal investigation by various government authorities in
Italy with respect to gifts and payments allegedly provided to
certain doctors operating within Italy’s national healthcare system.
In Germany, a wholly owned subsidiary of Pfizer is the subject of a
civil and criminal investigation with respect to certain tax matters.
The Pfizer subsidiaries are fully cooperating in these investigations.
E. Guarantees and Indemnifications
In the ordinary course of business and in connection with the sale
of assets and businesses, we often indemnify our counterparties
against certain liabilities that may arise in connection with the
transaction or related to activities prior to the transaction. These
indemnifications typically pertain to environmental, tax, employee
and/or product-related matters and patent infringement claims.
If the indemnified party were to make a successful claim pursuant
to the terms of the indemnification, we would be required to
reimburse the loss. These indemnifications are generally subject
to threshold amounts, specified claim periods and other
restrictions and limitations. Historically, we have not paid
significant amounts under these provisions and, as of December
31, 2007, recorded amounts for the estimated fair value of these
indemnifications were not significant.
21. Segment, Geographic and Revenue
Information
Business Segments
We operate in the following business segments:
•Pharmaceutical
– The Pharmaceutical segment includes products that prevent
and treat cardiovascular and metabolic diseases, central
nervous system disorders, arthritis and pain, infectious and
respiratory diseases, urogenital conditions, cancer, eye
disease, endocrine disorders and allergies.
•Animal Health
– The Animal Health segment includes products that prevent
and treat diseases in livestock and companion animals.
For our reportable operating segments (i.e., Pharmaceutical and
Animal Health), segment profit/(loss) is measured based on income
from continuing operations before provision for taxes on income,
minority interests and the cumulative effect of a change in
accounting principles. Certain costs, such as significant impacts of
purchase accounting for acquisitions, acquisition-related costs
and costs related to our cost-reduction initiatives and transition
activity associated with our former Consumer Healthcare business,
are included in Corporate/Other only. This methodology is utilized
by management to evaluate our businesses.
Certain income/(expense) items that are excluded from the
operating segments’ profit/(loss) are considered corporate items
and are included in Corporate/Other. These items include interest
income/(expense), corporate expenses (e.g., corporate
administration costs), other income/(expense) (e.g., realized gains
and losses attributable to our investments in debt and equity
securities), certain performance-based and all share-based
compensation expenses not allocated to the business segments,
significant impacts of purchase accounting for acquisitions, certain
milestone payments, acquisition-related costs, intangible asset
impairments and costs related to our cost-reduction initiatives.
Each segment is managed separately and offers different products
requiring different marketing and distribution strategies.
We sell our products primarily to customers in the wholesale
sector. In 2007, sales to our three largest U.S. wholesaler customers
represented approximately 18%, 12% and 10% of total revenues
and, collectively, represented approximately 20% of accounts
receivable as of December 31, 2007. In 2006, sales to our three
largest U.S. wholesaler customers represented approximately
20%, 13% and 11% of total revenues and, collectively, represented
approximately 26% of accounts receivable as of December 31,
2006. These sales and related accounts receivable were
concentrated in the Pharmaceutical segment.
Revenues exceeded $500 million in each of 12 countries outside
the U.S. in 2007 and in each of 10 countries outside the U.S. in
2006. The U.S. was the only country to contribute more than
10% of total revenues in each year.
2007 Financial Report 77
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies