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Financial Review
Pfizer Inc. and Subsidiary Companies
46
2013 Financial Report
Contractual Obligations
Payments due under contractual obligations as of December 31, 2013, mature as follows:
Years
(MILLIONS OF DOLLARS) Total 2014 2015-2016 2017-2018 Thereafter
Long-term debt, including current portion(a) $32,522 $2,060 $7,452 $5,073 $17,937
Interest payments on long-term debt obligations(b) 17,320 1,368 2,492 2,119 11,341
Other long-term liabilities(c) 4,654 451 829 858 2,516
Lease commitments(d) 1,476 210 306 181 779
Purchase obligations and other(e) 3,376 1,265 1,417 641 53
Uncertain tax positions(f) 98 98 — — —
(a) Long-term debt consists of senior unsecured notes, including fixed and floating rate, foreign currency denominated, and other notes.
(b) Our calculations of expected interest payments incorporate only current period assumptions for interest rates, foreign currency translation rates and hedging
strategies (see Notes to Consolidated Financial Statements—Note 7. Financial Instruments), and assume that interest is accrued through the maturity date or
expiration of the related instrument.
(c) Includes expected payments relating to our unfunded U.S. supplemental (non-qualified) pension plans, postretirement plans and deferred compensation plans.
Excludes amounts relating to our U.S. qualified pension plans and international pension plans, all of which have a substantial amount of plan assets, because
the required funding obligations are not expected to be material and/or because such liabilities do not necessarily reflect future cash payments, as the impact of
changes in economic conditions on the fair value of the pension plan assets and/or liabilities can be significant; however, we currently anticipate contributing
approximately $311 million to these plans in 2014. Also excludes $3.7 billion of liabilities related to legal matters, employee terminations and the fair value of
derivative financial instruments and other, most of which do not represent contractual obligations. See also our liquidity discussion above in this "Analysis of
Financial Condition, Liquidity and Capital Resources" section, as well as the Notes to Consolidated Financial Statements—Note 3. Restructuring Charges and
Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives, Note 7A. Financial Instruments: Selected Financial Assets and Liabilities,
Note 11E. Pension and Postretirement Benefit Plans and Defined Contribution Plans: Cash Flows, and Note 17. Commitments and Contingencies.
(d) Includes operating and capital lease obligations.
(e) Includes agreements to purchase goods and services that are enforceable and legally binding and includes amounts relating to advertising, information
technology services, employee benefit administration services, and potential milestone payments deemed reasonably likely to occur.
(f) Includes amounts reflected in Income taxes payable only. We are unable to predict the timing of tax settlements related to our noncurrent obligations for
uncertain tax positions as tax audits can involve complex issues and the resolution of those issues may span multiple years, particularly if subject to negotiation
or litigation.
The above table includes amounts for potential milestone payments under collaboration, licensing or other arrangements, if the payments are
deemed reasonably likely to occur. Payments under these agreements generally become due and payable only upon the achievement of
certain development, regulatory and/or commercialization milestones, which may span several years and which may never occur.
In 2014, we expect to spend approximately $1.3 billion on property, plant and equipment. Planned capital spending mostly represents
investment to maintain existing facilities and capacity. We rely largely on operating cash flows to fund our capital investment needs. Due to our
significant operating cash flows, we believe we have the ability to meet our capital investment needs and anticipate no delays to planned
capital expenditures.
Off-Balance Sheet Arrangements
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 a transaction or that are related to activities prior to a 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
generally are 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, 2013, recorded amounts for the estimated fair value of these
indemnifications are not significant.
Certain of our co-promotion or license agreements give our licensors or partners the rights to negotiate for, or in some cases to obtain under
certain financial conditions, co-promotion or other rights in specified countries with respect to certain of our products.
Share-Purchase Plans
On December 12, 2011, we announced that the Board of Directors had authorized a $10 billion share-purchase plan (the December 2011
Stock Purchase Plan), which was exhausted in the first quarter of 2013. On November 1, 2012, we announced that the Board of Directors had
authorized an additional $10 billion share-purchase plan, which became effective on November 30, 2012 and was exhausted in October 2013.
On June 27, 2013, we announced that the Board of Directors had authorized an additional $10 billion share-purchase plan, and share
purchases commenced thereunder in October 2013.
In 2013, we purchased approximately 563 million shares of our common stock for approximately $16.3 billion under our publicly announced
share-purchase plans. In 2012, we purchased approximately 349 million shares of our common stock for approximately $8.2 billion under our
publicly announced share-purchase plans. In 2011, we purchased approximately 459 million shares of our common stock for approximately
$9.0 billion under our publicly announce share-purchase plans. After giving effect to share purchases through year-end 2013, our remaining
share-purchase authorization was approximately $5.5 billion at December 31, 2013.