Pfizer 2010 Annual Report Download - page 94

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
E. Cash Flows
It is our practice to fund amounts for our qualified pension plans that are at least sufficient to meet the minimum requirements set
forth in applicable employee benefit laws and local tax laws.
The following table presents expected future cash flow information as of December 31, 2010:
PENSION PLANS
(MILLIONS OF DOLLARS)
U.S.
QUALIFIED
U.S. SUPPLEMENTAL
(NON-QUALIFIED) INTERNATIONAL
POST
RETIREMENT
PLANS
Expected employer contributions:
2011 $ 407 $ 99 $ 443 $ 254
Expected benefit payments:
2011 $ 929 $155 $ 382 $ 293
2012 656 104 399 302
2013 695 103 406 310
2014 857 110 424 321
2015 770 116 448 328
2016–2020 4,653 702 2,509 1,742
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 the Employee Benefit Trust (see Note 14D. Equity: Employee Benefit Trust), as well as through open market purchases.
Employees are permitted to subsequently diversify all or any portion of their company matching 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
$259 million in 2010, $191 million in 2009 and $198 million in 2008.
14. Equity
A. Common Stock
During 2009, in connection with our acquisition of Wyeth on October 15, 2009 (see Note 2. Acquisition of Wyeth), 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. 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 plans, 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 and 2008 Stock Purchase Plans, through December 31, 2010, we purchased approximately 771 million shares
for approximately $19.0 billion. We purchased approximately 61 million shares of our common stock during 2010 at an average price
per share of $16.46. We did not purchase any shares of our common stock in 2009 and, during 2008 we purchased approximately
26 million shares of our common stock at an average price per share of $18.96.
On February 1, 2011, we announced that the Board of Directors authorized a new $5 billion share-repurchase plan, which, together
with the balance remaining under the 2008 Stock Purchase Plan, increased our total current authorization to $9 billion.
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.
92 2010 Financial Report