Pfizer 2006 Annual Report Download - page 56

54 2006 Financial Report
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
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held-to-maturity long-term investments and long-term debt—
we use valuation models that use observable market quotes.
The differences between the estimated fair values and carrying
values of our financial instruments were not significant as of
December 31, 2006 and 2005.
F. Credit Risk
On an ongoing basis, we review the creditworthiness of
counterparties to foreign exchange and interest rate agreements
and do not expect to incur a loss from failure of any counterparties
to perform under the agreements.
There are no significant concentrations of credit risk related to our
financial instruments with any individual counterparty, except for
investments in money market funds as noted in Note 9A.
Investments in Debt and Equity Securities. These mutual funds are
rated by two rating agencies, as follows: Aaa by Moody’s Investors
Services and AAAm by Standard & Poor’s. These investments
represent virtually all the proceeds from the sale of our Consumer
Healthcare business that closed on December 20, 2006. As of
December 31, 2006, we had $4.1 billion due from a broad group
of banks around the world.
In general, there is no requirement for collateral from customers.
However, derivative financial instruments are executed under
master netting agreements with financial institutions. These
agreements contain provisions that provide for the ability for
collateral payments, depending on levels of exposure, our credit
rating and the credit rating of the counterparty.
10. Inventories
The components of inventories as of December 31 follow:
(MILLIONS OF DOLLARS) 2006 2005
Finished goods $1,651 $1,756
Work-in-process 3,198 2,373
Raw materials and supplies 1,262 1,349
Total inventories
(a)
$6,111 $5,478
(a)
Increase is primarily due to the impact of foreign exchange, the
acquisition of sanofi-aventis’ Exubera inventory and the build-up
of inventory to support new product launches, partially offset by
the impact of our inventory reduction initiative.
11.
Property, Plant and Equipment
The major categories of property, plant and equipment as of
December 31 follow:
USEFUL
LIVES
(MILLIONS OF DOLLARS) (YEARS) 2006 2005
Land — $ 641 $ 635
Buildings 33
1
⁄3-50 9,877 9,244
Machinery and equipment 8-20 9,759 8,823
Furniture, fixtures and
other 3-12
1
⁄2 4,644 4,350
Construction in progress — 2,142 2,101
27,063 25,153
Less: accumulated depreciation 10,431 8,920
Total property, plant and equipment $16,632 $16,233
12.
Goodwill and Other Intangible Assets
A. Goodwill
The changes in the carrying amount of Goodwill by segment for
the years ended December 31, 2006 and 2005, follow:
ANIMAL
(MILLIONS OF DOLLARS)
PHARMACEUTICAL HEALTH OTHER TOTAL
Balance, January 1, 2005 $20,966 $ 79 $10 $21,055
Additions
(a)
243 — — 243
Other
(b)
(290) (23) — (313)
Balance, December 31, 2005 20,919 56 10 20,985
Additions
(a)
166 — — 166
Other
(b)
(287) 5 7 (275)
Balance, December 31, 2006 $20,798 $ 61 $17 $20,876
(a)
Primarily related to Exubera in 2006 and Vicuron in 2005.
(b)
Includes reductions to goodwill related to the resolution of
certain tax positions, adjustments for certain purchase accounting
liabilities and the impact of foreign exchange.