Pfizer 2009 Annual Report Download - page 85

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
The following table presents expected future cash flow information as of December 31, 2009:
(MILLIONS OF DOLLARS)
PENSION PLANS
POST
RETIREMENT
PLANS
U.S.
QUALIFIED
U.S.
SUPPLEMENTAL
(NON-QUALIFIED) INTERNATIONAL
Expected employer contributions:
2010 $ 7 $203 $ 445 $ 259
Expected benefit payments:
2010 $ 837 $203 $ 383 $ 291
2011 702 119 386 301
2012 737 126 407 308
2013 777 126 423 321
2014 816 134 441 334
2015–2019 4,818 754 2,527 1,775
The table reflects the total U.S. and international plan benefits projected to be paid from the plans or from our general assets under
the current actuarial assumptions used for the calculation of the benefit obligation and, therefore, actual benefit payments may differ
from projected benefit payments.
F. Defined Contribution Plans
We have savings and investment plans in several countries, including the U.S., Japan, Spain and the Netherlands. For the U.S.
plans, employees may contribute a portion of their salaries and bonuses to the plans, and we match, largely in company stock or
company stock units, a portion of the employee contributions. In the U.S., the matching contributions in company stock are sourced
from an internal stock trust as well as through open market purchases. Employees are permitted to subsequently diversify all or any
portion of their company match contribution. The contribution match for certain legacy Pfizer U.S. participants is held in an employee
stock ownership plan. We recorded charges related to our plans of $191 million in 2009, $198 million in 2008 and $203 million in
2007.
14. Equity
A. Common Stock
In connection with our acquisition of Wyeth on October 15, 2009, we issued approximately 1.3 billion shares of common stock,
which were previously held as Pfizer treasury stock, to former Wyeth shareholders to partially fund the acquisition (see Note 2.
Acquisition of Wyeth for additional details). The excess of the average cost of Pfizer treasury stock issued over the fair value of the
stock portion of the consideration transferred to acquire Wyeth was recorded as a reduction to Retained Earnings. We purchase our
common stock via privately negotiated transactions or in open market purchases as circumstances and prices warrant. Purchased
shares under each of the share-purchase programs, which are authorized by our Board of Directors, are available for general
corporate purposes.
On June 23, 2005, we announced that the Board of Directors authorized a $5 billion share-purchase plan (the 2005 Stock Purchase
Plan). On June 26, 2006, we announced that the Board of Directors increased the authorized amount of shares to be purchased
under the 2005 Stock Purchase Plan from $5 billion to $18 billion. On January 23, 2008, we announced that the Board of Directors
had authorized a new $5 billion share-purchase plan, to be funded by operating cash flows, that may be utilized from time to time. In
total, under the 2005 Stock Purchase Plan, through December 31, 2009, we purchased approximately 710 million shares for
approximately $18.0 billion. We did not purchase any shares of our common stock in 2009. During 2008, we purchased 26 million
shares of our common stock at an average price per share of $18.96, and during 2007, we purchased 395 million shares of our
common stock at an average price per share of $25.27.
B. Preferred Stock
The Series A convertible perpetual preferred stock is held by an Employee Stock Ownership Plan (Preferred ESOP) Trust and
provides dividends at the rate of 6.25%, which are accumulated and paid quarterly. The per share stated value is $40,300 and the
preferred stock ranks senior to our common stock as to dividends and liquidation rights. Each share is convertible, at the holder’s
option, into 2,574.87 shares of our common stock with equal voting rights. The conversion option is indexed to our common stock
and requires share settlement, and, therefore, is reported at the fair value at the date of issuance. We may redeem the preferred
stock at any time or upon termination of the Preferred ESOP, at our option, in cash, in shares of common stock or, a combination of
both at a price of $40,300 per share.
C. Employee Stock Ownership Plans
We have two employee stock ownership plans (collectively, the ESOPs), the Preferred ESOP and another that holds common stock
of the company (Common ESOP). As of January 1, 2008, the legacy Pharmacia U.S. savings plan was merged with the Pfizer
Savings Plan. Prior to the merger, a portion of the matching contributions for legacy Pharmacia U.S. savings plan participants was
funded through the ESOPs.
In January 2007, we paid the remaining balance of financing, which was outstanding prior to our acquisition of Pharmacia in 2003,
relating to the Preferred ESOP. Compensation expense related to the ESOPs totaled approximately $35 million in 2007.
Allocated shares held by the Common ESOP are considered outstanding for the earnings per share (EPS) calculations and the
eventual conversion of allocated preferred shares held by the Preferred ESOP is assumed in the diluted EPS calculation. As of
2009 Financial Report 83