Pfizer 2006 Annual Report Download - page 33

In June 2005, we announced a $5 billion share-purchase program,
which is being funded by operating cash flows. In June 2006, the
Board of Directors increased our share-purchase authorization
from $5 billion to $18 billion. In total, under the June 2005
program, we purchased approximately 288 million shares for
approximately $7.5 billion.
In October 2004, we announced a $5 billion share-purchase
program, which we completed in the second quarter of 2005
and was funded from operating cash flows. In total, under the
October 2004 program, we purchased approximately 185 million
shares.
A summary of common stock purchases follows:
SHARES OF TOTAL COST OF
COMMON AVERAGE COMMON
(MILLIONS OF SHARES AND DOLLARS,
STOCK PER-SHARE STOCK
EXCEPT PER-SHARE DATA) PURCHASED PRICE PAID PURCHASED
2006:
June 2005 program 266 $26.19 $6,979
Total 266 $6,979
2005:
June 2005 program 22 $22.38 $ 493
October 2004 program 122 27.20 3,304
Total 144 $3,797
Contractual Obligations
Payments due under contractual obligations as of December 31,
2006, mature as follows:
YEARS
___________________________________________________________
OVER 1 OVER 3
(MILLIONS OF DOLLARS) TOTAL WITHIN 1 TO 3 TO 5 AFTER 5
Long-term
debt
(a)
$5,546 $ — $1,990 $514 $3,042
Other long-term
liabilities
reflected on
our balance
sheet under
GAAP
(b)
3,440 321 623 640 1,856
Lease
commitments
(c)
1,322 230 376 185 531
Purchase
obligations
(d)
912 629 186 91 6
(a)
Long-term debt consists of senior unsecured notes, floating-rate
unsecured notes, foreign currency denominated notes, and other
borrowings and mortgages.
(b)
Includes expected payments relating to our unfunded U.S.
supplemental (non-qualified) pension plans, postretirement plans
and deferred compensation plans.
(c)
Includes operating and capital lease obligations.
(d)
Purchase obligations represent agreements to purchase goods and
services that are enforceable and legally binding and include
amounts relating to advertising, information technology services
and employee benefit administration services.
In 2007, we expect to spend approximately $2.0 billion on
property, plant and equipment.
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
are generally 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, 2006, recorded amounts for the estimated fair
value of these indemnifications are not material.
Certain of our co-promotion or license agreements give our
licensors or partners the right 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.
Dividends on Common Stock
We declared dividends of $7.3 billion in 2006 and $6.0 billion in
2005 on our common stock. In 2006, we increased our annual
dividend to $0.96 per share from $0.76 per share in 2005. In
December 2006, our Board of Directors declared a first-quarter
2007 dividend of $0.29 per share. The 2007 cash dividend marks
the 40th consecutive year of dividend increases.
Our current dividend provides a return to shareholders while
maintaining sufficient capital to invest in growing our businesses.
Our dividends are funded from operating cash flows, our financial
asset portfolio and short-term commercial paper borrowings and
are not restricted by debt covenants. To the extent we have
additional capital in excess of investment opportunities, we
typically offer a return to our shareholders through a stock
repurchase program. We believe that our profitability and access
to financial markets provide sufficient capability for us to pay
current and future dividends.
New Accounting Standards
Recently Adopted Accounting Standards
On December 31, 2006, we adopted the provisions of Statement
of Financial Accounting Standards (SFAS) No. 158, Employers’
Accounting for Defined Benefit Pension and Other Postretirement
Plans (an amendment of Financial Accounting Standards Board
(FASB) Statements No. 87, 88, 106 and 132R). (See Notes to
Consolidated Financial Statements—Note 1D. Significant
Accounting Policies: New Accounting Standards, and Note 13.
Pension and Postretirement Benefit Plans and Defined
Contribution Plans.)
On January 1, 2006, we adopted the provisions of SFAS No. 123R,
Share-Based Payment, as supplemented by the guidance provided
by Staff Accounting Bulletin (SAB) 107, issued in March 2005.
(SFAS 123R replaced SFAS 123, Stock-Based Compensation, issued
in 1995. See Notes to Consolidated Financial Statements—Note
1D. Significant Accounting Policies: New Accounting Standards,
and Note 15. Share-Based Payments.)
Recently Issued Accounting Standards, Not Adopted as
of December 31, 2006
In June 2006, the FASB issued Interpretation No. 48 (FIN 48),
Accounting for Uncertainty in Income Taxes, an interpretation of
2006 Financial Report 31
Financial Review
Pfizer Inc and Subsidiary Companies