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PFE » Topics » Financial Condition, Liquidity and Capital Resources

This excerpt taken from the PFE 10-K filed Feb 26, 2010.

Financial Condition, Liquidity and Capital Resources

Net Financial Assets/(Liabilities) as shown below:

 

      AS OF DECEMBER 31,    
(MILLIONS OF DOLLARS)    2009      2008     

Financial assets:

        

Cash and cash equivalents

    $ 1,978       $ 2,122  

Short-term investments

      23,991         21,609  

Short-term loans

      1,195         824  

Long-term investments and loans

      13,122         11,478    

Total financial assets

    $ 40,286       $ 36,033    

Debt:

        

Short-term borrowings, including current portion of long-term debt

    $ 5,469       $ 9,320  

Long-term debt

      43,193         7,963    

Total debt

    $ 48,662       $ 17,283    

Net financial assets/(liabilities)

    $ (8,376 )     $ 18,750  
 

We rely largely on operating cash flow, short-term investments, short-term commercial paper borrowings and long-term debt to provide for the working capital needs of our operations, including our R&D activities. We believe that we have the ability to obtain both short-term and long-term debt to meet our financing needs for the foreseeable future. The overall decrease in Net financial assets/(liabilities) in 2009, as shown above, reflects cash flows from operating activities, which were more than offset by the issuance of senior unsecured notes of which virtually all of the proceeds were used to partially finance the Wyeth acquisition. We believe we have the flexibility to allocate our significant operating cash flows with a continued focus on seeking to provide the highest return for our shareholders, such as potential dividend increases, share repurchases, investments in our business, or by paying down outstanding debt. The significant changes in the components of Net financial assets/(liabilities), as shown above, are as follows:

 

•  

We issued $13.5 billion of senior unsecured notes on March 24, 2009 and approximately $10.5 billion of senior unsecured notes on June 3, 2009, of which virtually all of the proceeds were used to partially finance our acquisition of Wyeth on October 15, 2009. Our long-term debt increased in 2009, primarily as a result of the issuances of these senior unsecured notes and the addition of an aggregate principle amount of $10.3 billion of legacy Wyeth debt.

 

•  

Our short-term and long-term investments increased primarily due to the investment of cash generated from operations and consist primarily of high-quality, investment grade available-for-sale debt securities. Wherever possible, cash management is centralized and intercompany financing is used to provide working capital to our operations. Where local restrictions prevent intercompany financing, working capital needs are met through operating cash flows and/or external borrowings.

"Financial Condition, Liquidity and Capital Resources" elsewhere:

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