Pfizer 2008 Annual Report Download - page 71

Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
We regularly evaluate all of our financial assets for impairment. For investments in debt and equity securities, when a decline in fair
value, if any, is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is
established. For loans, an impairment charge is recorded if it is probable that we will not be able to collect all amounts due according
to the loan agreement. There were no significant impairments recognized in 2008, 2007 or 2006.
F. Credit Risk
We regularly review the creditworthiness of counterparties to foreign exchange and interest rate agreements and do not expect to
incur a significant 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, 2008, we had $3.8 billion due from a well-diversified, highly rated group (primarily Standard & Poor’s rating of AA or
better) of bank counterparties 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, 2008, we
advanced cash collateral of $497 million and received cash collateral of $510 million against various counterparties. The collateral
primarily supports the approximate fair value of our derivative contracts. The collateral advanced receivables are reported in Short-
term loans, and the collateral received obligations are reported in Short-term borrowings, including current portion of long-term debt.
10. Inventories
The components of inventories as of December 31 follow:
(MILLIONS OF DOLLARS) 2008 2007
Finished goods $2,024 $2,064
Work-in-process 1,527 2,353
Raw materials and supplies 830 885
Total inventories(a) $4,381 $5,302
(a) Certain amounts of inventories are in excess of one year’s supply. There are no recoverability issues associated with these quantities and the
amounts are not significant.
11. Property, Plant and Equipment
The major categories of property, plant and equipment as of December 31 follow:
(MILLIONS OF DOLLARS)
USEFUL LIVES
(YEARS) 2008 2007
Land — $ 616 $ 718
Buildings 33
1
⁄ 3 -50 8,775 10,319
Machinery and equipment 8-20 9,583 10,441
Furniture, fixtures and other 3-12
1
⁄ 2 4,350 4,867
Construction in progress — 1,804 1,758
25,128 28,103
Less: accumulated depreciation 11,841 12,369
Total property, plant and equipment $13,287 $15,734
12. Goodwill and Other Intangible Assets
A. Goodwill
The changes in the carrying amount of goodwill by segment for the years ended December 31, 2008 and 2007, follow:
(MILLIONS OF DOLLARS) PHARMACEUTICAL
ANIMAL
HEALTH OTHER TOTAL
Balance, January 1, 2007 $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
Additions(a) 21 36 — 57
Other(b) 40 (15) — 25
Balance, December 31, 2008 $21,317 $129 $18 $21,464
(a) In 2008, primarily related to our acquisitions of Coley and a number of animal health product lines from Schering-Plough, as well as two smaller
acquisitions also related to Animal Health. In 2007, primarily related to our acquisition of Embrex.
(b) In 2008, primarily relates to tax adjustments and the impact of foreign exchange. In 2007, primarily relates to the impact of foreign exchange.
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