Pfizer 2009 Annual Report Download - page 69

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
Income taxes are not provided for foreign currency translation relating to permanent investments in international subsidiaries.
As of December 31, 2009, we estimate that we will reclassify into 2010 income the following pre-tax amounts currently held in
Accumulated other comprehensive income/(expense): virtually none of the unrealized holding gains on derivative financial
instruments; $253 million of actuarial losses related to benefit plan obligations and plan assets and other benefit plan items; and
$(22) million of prior service credits related primarily to benefit plan amendments.
9. Financial Instruments
A. Selected Financial Assets and Liabilities
Information about certain of our financial assets and liabilities follows:
AS OF DECEMBER 31,
(MILLIONS OF DOLLARS) 2009 2008
Selected financial assets measured at fair value on a recurring basis(a):
Trading securities(b) $ 184 $ 190
Available-for-sale debt securities(c) 32,338 30,061
Available-for-sale money market funds(d) 2,569 398
Available-for-sale equity securities, excluding money market funds(c) 281 319
Derivative financial instruments in receivable positions(e):
Foreign currency swaps 798 128
Foreign currency forward-exchange contracts 502 399
Interest rate swaps 276 732
Total 36,948 32,227
Other selected financial assets(f):
Short-term loans, carried at cost 1,195 824
Held-to-maturity debt securities, carried at amortized cost(c) 812 2,349
Private equity securities, carried at cost 811 182
Long-term loans, carried at cost 784 1,568
Total 3,602 4,923
Total selected financial assets 40,550 37,150
Financial liabilities measured at fair value on a recurring basis(a):
Derivative financial instruments in a liability position(g):
Foreign currency swaps 528 153
Foreign currency forward-exchange contracts 237 1,083
Interest rate swaps 25 7
Total 790 1,243
Other financial liabilities(f), (h):
Short-term borrowings, carried at historical proceeds, as adjusted(i) 5,469 9,320
Long-term debt, carried at historical proceeds, as adjusted(j), (k) 43,193 7,963
Total 48,662 17,283
Total selected financial liabilities $49,452 $18,526
(a) Fair values are determined based on valuation techniques categorized as follows: Level 1 means the use of quoted prices for identical instruments
in active markets; Level 2 means the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar
instruments in markets that are not active or are directly or indirectly observable; Level 3 means the use of unobservable inputs. Virtually all of our
financial assets and liabilities measured at fair value on a recurring basis use Level 2 inputs in the calculation of fair value, except that included in
available-for-sale equity securities, excluding money market funds, are $77 million as of December 31, 2009 and $87 million as of December 31,
2008 of investments that use Level 1 inputs in the calculation of fair value. None of our financial assets and liabilities measured at fair value on a
recurring basis is valued using Level 3 inputs at December 31, 2009 or 2008.
(b) Trading securities are held in trust for legacy Pharmacia severance benefits.
(c) Gross unrealized gains and losses are not significant.
(d) Includes approximately $1.2 billion of money market funds held in escrow to secure certain of Wyeth’s payment obligations under its 1999
Nationwide Class Action Settlement Agreement, which relates to litigation alleging that Wyeth’s former weight-loss products, Redux and Pondimin,
caused valvular heart disease and other conditions.
(e) Designated as hedging instruments, except for certain foreign currency contracts used as offsets; namely, foreign currency swaps with fair values of
$106 million and foreign currency forward-exchange contracts with fair values of $100 million at December 31, 2009; and foreign currency swaps
with fair values of $32 million and foreign currency forward-exchange contracts with fair values of $175 million at December 31, 2008.
(f) The differences between the estimated fair values and carrying values of our financial assets and liabilities not measured at fair value on a recurring
basis were not significant as of December 31, 2009 or December 31, 2008.
(g) Designated as hedging instruments, except for certain foreign currency contracts used as offsets, namely, foreign currency forward-exchange
contracts with fair values of $122 million and foreign currency swaps with fair values of $3 million at December 31, 2009; and foreign currency
forward-exchange contracts with fair values of $836 million and foreign currency swaps with fair values of $76 million at December 31, 2008.
(h) The carrying amounts may include adjustments for discount or premium amortization or for the effect of interest rate swaps designated as hedges.
(i) Includes foreign currency borrowings with fair values of $1.1 billion at December 31, 2009 and $1.6 billion at December 31, 2008, which are used as
hedging instruments.
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