utilizing the most recent 10k for pfizer corporation (fiscal year ended december 31,2019)
calculate the percent-depreciated ratio as of december 31,2018 and december 31,2019. discuss what this tells you about pfizers long-term operating assets.
Consolidated Statements of Income WALIOS PESCA Revers C Co Sama semana Amortation Reg C Ore nungs Pro Opt Hom Dacabo Net come beka Lele Eames O that come afat) nings to Mome D Net Tasker | Regangage Mon M g cantong operators abo ne s Set Can Problem set #3 Financial Report AR to Po 10. in fe had a HR E MOK 9210 NEW www. ww * 14 www NET PAN HEE 16.30 . TAM 29 M6221 241 S 130 ARE ARE LIM APPS of the www. THEY www 3.14 LONE 700 HAN 4 HOL W SEM TM 330 ANTE KAPE MOCH WEN I MY 2015 F THE IM SIDE CIN 41 FLAM asi DIE AMD KOMA 13 Consolidated Balance Sheets day Sury Burger O Asset T Longin fr py and menta tag Good Houd Shots) Die Accued compend Over Lantes te wes Peop M Other n desp worked on w WHEN AL Lingo put takme 2016-12- Com Pref 29-03209-0 Com1001200201-4320-43 Anal pa 2015-2806 2014- They ha Ratan ang Auders Ploor 1 Ety bea Sed semes Softs, which appet Camas pagas UNI LUOR ASI 8.234 1.200 3340 20 25 10000 41300 12,000 144 11 NEW HIT 4 www. MIX 4X LAD 1:134 NFF DIE 12 *** STA Sara ALVIN (TAN WARE 37 1300 TLAKE P 1,000 11,304 31 36,95 30.900 6272 1.30 3706 14737 1.000 A 63.143 303 63,447 1670 PRE AUT TO NEE VW IRL NET HELL Hw www Y TRAZE NOT SHEL 20 467. MUSI 2) www NUZSA 65.407 166 43758 100 " pada Can or umptmor yf Corn, Tak CON po dated Statements of Cash Flows and Compa d AME Smar O pred --- Borabon of pro edge Hy F tepa P A esaten Prank P P I - Onge Taay a mis partial la vending MAKFUM 100 44 10 HERE pun 18.30 40 TIN www SUN www AME AND THE ra tara BE HOTTE DELEN - GMB A BL AME DHE www. www 41) 34 (())) 525 1138 1130 Ban COM) 8341 de hath (M ------ Bre == 0400 SELME 200 CA 108 www ar P PWY line Lap MIN Gary word | ) HE PLZN AT Notes to Consolidated Financial Statements my Cena Note 3 Property, Plant and Equipment MENG OF LAND Swing Met me Lee Acu Note 10. Identifiable intangible Assets and Good Ablege LLANY un badk Ling gree De CUR REL www.w Sty nga 201 MTH 100 An BLADE La 5.3 tats ||! MEINE (195) And unive A in They 553033 A DO LAN 76.347. 8700 URE 120 101 AM AMD www LINE HUM AME D NO 15,391 201 ww Han ww LOBET. 212 HOME www PHOTO NOW 62 2019 Financial Report Consolidated Statements of Income Pfizer Inc. and Subsidiary Companies (MILLIONS, EXCEPT PER COMMON SHARE DATA) Revenues Costs and expenses Cost of sales Selling, informational and administrative expenses Research and development expenses Amortization of intangible assets Restructuring charges and certain acquisition-related costs (Gain) on completion of Consumer Healthcare JV transaction Other (income) deductions-net Income from continuing operations before provision/(benefit) for taxes on income Provision (benefit for taxes on income Income from continuing operations Discontinued operations Income from discontinued operations net of tax Gain on disposal of discontinued operations-net of tax Discontinued operations-net of tax Net income before allocation to noncontrolling interests Less: Net income attributable to noncontrolling interests Net income attributable to Plzer Inc. Earnings per common share-basic Income from continuing operations attributable to Pfizer Inc. common shareholders Discontinued operations-net of tax Net income attributable to Pfizer Inc. common shareholders Earnings per common share de Income from continuing operations attributable to Pfizer Inc. common shareholders Discontinued operations-net of tax Net income attributable to Pfizer Inc. common shareholders Weighted average shares-basic Weighted average shares-diluted Exclusive of amortization of intangible assets, except as disclosed in Note L Amounts may not add due to rounding $ $ $ $ $ Year Ended December 31, 2019 2018 $1,750 S 53,647 S 10,219 11,248 14,350 14,455 8,650 8,006 4,610 4,893 747 1,044 (8,086) 3,578 2,116 17,682 11,885 1,384 706 16,298 11,179 10 10 11,188 36 11,153 $ 1.90 $ 1.90 1.80 $ 1.87 $ 4 16,302 29 16,273 5 2.92 S 2.32 5 2.07 S 2.37 5 5,569 5,872 5,675 5,977 See Notes to Consolidated Financial Statements, which are an integral part of these statements. 2017 52,546 11,228 14,804 7,683 4,758 351 1,416 12,305 (9,049) 21,353 (1) 3 2 21,355 21,308 3.57 3.57 3.52 5,970 6,058 2019 Financial Report See Notes to Consolidated Financial Statements, which are an integral part of these statements 64 2019 Financial Report Consolidated Balance Sheets Pfer Inc. and Subsidiary Companies (MILLIONS EXCEPT PREFERRED STOCK ISSUED AND PER COMMON SHARE DATA) Asseb Cash and cash equivalents Short-term investments Trade accounts receivable, less allowance for doubtful accounts: 2019-$527, 2018-$541 Inventories Current tax assets Other current assets Assets held for sale Total current assets Equity-method investments Long-term investments Property, plant and equipment, less accumulated depreciation Identifiable intangible assets, less accumulated amortization Goodwill Noncurrent deferred tax assets and other noncurrent taxat Other nonument assets Total assets Land Equity Short-term borrowings, including cument portion of long-term debt: 2018-$1,482 2018-$4.776 S Trade accounts payable Dividends payable Income taxes payable Accrued compensation and related items Other current labes Liebe held for sale Total current bes Long-term debt Pension benefit obligations, net Postretirement benefit obligations, net Noncurent deferred tax labe Other taxes payable Other nonument tab Totallabies Commitments and Contingencies Preferred stock, no par value, at stated value: 27 shares authorized issued 2019 431;2018-478 Common stock, $0.05 par value: 12.000 shares authorized; issued: 2019-9,369 2018-9.332 Additional paid-in capital Treasury stock, shares at cost 2019-3.835 2018-3.615 Retained eamings Accumulated other comprehensive loss Total Pfizer Inc. shareholders equity Equity attributable to noncontrolling interests Total equity Total abilities and equity Amounts may not add due to rounding As of December 31 2019 1,305 8,525 8,724 8,283 3,344 2,600 21 32,803 17,133 3,014 13.967 35,370 58,653 2,099 4,450 167.499 16,195 $ 4,220 2,104 950 2,720 11,093 37,304 35,955 5,638 1,124 5,578 12,126 6,317 104,042 17 468 87,428 (110,801) 97,670 (11,640) 63,143 303 63,447 167.439 S See Notes to Consolidated Financial Statements, which are an integral part of these statements 2018 1,139 17,694 8,025 7,508 3,374 2,461 9.725 49.906 181 2,586 13,385 35,211 53.411 1,904 2.799 159.422 8,831 4,674 2,047 1.265 2,397 10,753 1,890 31,858 32.909 5,272 1,338 3,700 14,737 5.850 95.664 19 467 86.253 (101010) 89.554 (11,275) 63,407 351 63.758 159422 2019 Financial Report 65 66 2019 Financial Report Consolidated Statements of Cash Flows Pfizer Inc. and Subsidiary Companies (MILLIONS) Operating Activities Net income before allocation to noncontrolling interest Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities Depreciation and amortization Asset write-offs and impaiments TCJA impact Gain on completion of Consumer Healthcare JV transaction net of cash conveyed Deferred taxes from continuing operations Share-based compensation expense Benefit plan contributions in excess of expenselncome Other adjustments, net Other changes in assets and abilities, net of acquisitions and divestures Trade accounts receivable Inventones Other assets Trade accounts payable Other be Other tax accounts, et Net cash provided by operating activities Investing Actres Purchases of property, plant and equipment Purchases of short-term investments Proceeds from redemptions/sales of short-term investments Net (purchases of proceeds from redemptionssales of short-term investments with original maturities of three months or less Purchases of long-term investments Proceeds from redemptions/sales of long-term investments Acquisitions of businesses, net of cash acquired Acquisitions of intangible assets Other investing activities Net cash provided by used in investing activites Financing Activities Proceeds from short-term bowing Principal payments on short-term bomowings Net (payments on/proceeds from short-term bomowings with original maturities of three months or less Proceeds from issuance of long-term debt Principal payments on long-term debt Purchases of common stock Cash dividends paid Proceeds from exercise of stock options Other financing activities, net Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents Net increase(decrease) in cash and cash equivalents and restricted cash and cash equivalents Cash and cash equivalents and restricted cash and cash equivalents, at beginning of period Cash and cash equivalents and restricted cash and cash equivalents, at end of period .Continued. Year Ended December 31, 2019 2018 2017 $16.302 S 11,188 $ 21,355 6,010 6,384 6.269 2.953 3.398 634 (323) (596) (10,660) (8.233) 614 (2.205) (2410) 718 949 540 (336) (1,095) (961) (1,006) (1,209) 399 (742) (644) 259 (1.050) (717) (357) 795 (16) (564) 431 46 267 98 (87) (2,737) (78) 12.500 15.827 (2,176) (2,042) (6,835) (11,677) 9,183 17,581 6.925 (3.917) (1.797) 6.244 1.446 16.802 (1994) (1459) 10.302 2.068 (537) 3.579 (1,000) (154) (261) 288 671 4.525 (4,740) 3,711 8,464 (4437) (1947) (1,617) 1,422 4.974 5,274 (3,566) (6,154) (5.000) (7.659) 882 (611) (13.350) 53 (1235) 2.666 1,431 (201) 232 (10,001) (418) 205 (2945) (8.378) 2,551 4,942 (6.806) (8.865) (12.198) (8.043) (7.978) 394 1,250 (736) (588) (8,485) (20,441) (12) (116) 125 (205) 1,225 1.431 $ 1,350 $ 1.225 S 2019 Financial Report 4 Notes to Consolidated Financial Statements Plzer Inc. and Subsidiary Companies Note 1. Basis of Presentation and Significant Accounting Policies A. Basis of Presentation See the Glossary of Defined Terms at the beginning of this 2019 Financial Report for terms used throughout the consolidated financial statements and related notes in this 2019 Financial Report The consolidated financial statements include our parent company and all subsidiaries, and are prepared in accordance with accounting principles generally accepted in the United States of America (US. GAAP) The decision of whether or not to consolidate an entity requires consideration of majority voting interests, as well as effective economic or other control over the entity Typically, we do not seek control by means other than voting interests. For subsidiaries operating outside the US, the financial information is included as of and for the year ended November 30 for each year presented. Pfizer's fiscal year-end for US subsidianes is as of and for the year ended December 31 for each year presented Substantially all unmitted eamings of international subsidiaries are tree of legal and contractual restrictions All significant transactions among our businesses have been eliminated Beginning on January 1, 2018, only taxes paid on intercompany inventory sales transactions are defamed until recognized upon the sale of the inventory to a third party efecting the adoption of a new accounting standard in the first quarter of 2018. Prior to the adoption of this new accounting standard in the first quarter of 2018 taxes paid on intercompany sales transactions were defened until recognized upon sale of the asset to a third party From the second quarter of our 2016 fiscal year until the end of 2018, we managed our commercial operations through two distinct business segments Per innovative Health (H) and Per Essential Health (D) At the beginning of our 2019 fiscal year we began to manage our commercial operations through a new global structure consisting of three business segments-Plzer Biopharmaceuticals Group (Dachama Upjohn and through July 31, 2018 Consumer Healthcare Biopharma and Upjohn are the only reportable segments. We have revised prior period segment information to reflect the reorganization. For additional information, see Note 17. In addition, certain amounts within Long-term investments in the December 31, 2018 consolidated balance sheet have been reclassified to quity-method investments to conform to the current presentation. For additional information, seeNote 20 Certain amounts in the consolidated financial statements and associated notes may not add due to rounding. All percentages have been calculated using unrounded amounts in the first quarter of 2019, as of January 1, 2018, we adopted four new accounting standards. See Note 18 for father information Our recent significant business development activities include License Agreement with Akces Therapeutics, Inc-in October 2018, we entered into a worldwide exclusive licensing agreement for AKCEA-ANGPTL3-LR an investigational antisense therapy being developed to treat patients with o th certain cardiovascular and metabolic diseases, with Akces, a majority-owned affiate of lonis. The transaction closed in November 2019 and we made an upfront payment of 1250 mtion to Akce and tons, which was recorded in Research and development expenses in our fiscal fourth quarter of 2019 Formation of a New Consumer Healthcare Joint Venture-On July 31, 2019, we completed the transaction in which we and GSK combined our respective consumer healthcare businesses into a new consumer healthcare joint venture that operates globally under the GSK Consumer Healthcare name in accordance with our domestic and international reporting penods, our financial results, and our Consumer Healthcare segment's operating results for 2019 refect seven months of Consumer Healthcare segment domestic operations and eight months of Consumer Healthcare segment international operations Assets and liabiles associated with our Consumer Healthcare business were reclassified as held for sale in the consolidated balance sheet as of December 31, 2018 Acquisition of Amey Pharma Inc-On July 20, 2010, we acquired Array for $488 per share in cash. The total fair value of the consideration transferred for Amay was approximately $11.2 billion ($10.9 bilion, net of cash acquired). Our financial statements for 2015 reflect the assets, labies, operating results and cash flows of Array, commencing from the acquisition date Agreement to Combine Upjohn with Mylan NV-On July 29, 2019, we announced that we entered into a definitive agreement to combine Upjohn with Mylan, creating a new global pharmaceutical company, Vietris Under the terms of the agreement, which is structured as an a stock, Reverse Moms Trat transaction. Upjohn is expected to be spun off or split off to Pfizer's shareholders and immediately thereater combined with Mylan Pfizer shareholders would own 57% of the combined new company and former Mylan shareholders would own 43% Closing of the transaction is subject to Mylan shareholder approval and satisfaction of other customary closing conditions, including receipt of regulatory approv poten commercialization of the lead asset. The total fair value of the consideration transferred for Therachon was approximately $322 million. Our financial statements for 2019 reflect the assets, labies, operating results and cash flows of Therachon, commencing from the acquisition date and in accordance with our international reporting penod, refect five months of Therachon operations and cash flows Sale of Hospira Infusion Systems Net Assets to ICU Medical, Inc-On February 3, 2017, we completed the sale of our global infusion systems net assets, HS, to ICU Medical for up to approximately $900 million, composed of cash and contingent cash consideration, ICU Medical common stock (all of which we sold during 2018) and seller financing HS includes IV pumps solutions and devices. The operating in our income through 2, 2017 and our 2017 reflect one month of HS domestic operations and two months of HIG international operations. Our financial results for 2019 and 2018 de not reflect any contribution from HS global operations 2019 Financial Report Notes to Consolidated Financial Statements Per Inc and Subsidiary Companies Acquisition of AstraZeneca's Small Molecule Art-Infectives Business-On December 22, 2016, which fell in the first fiscal quarter of 2017 for our international operations, we acquired the development and commercialization rights to AstraZeneca's small molecule anti-infectives business primarily outside the U.S. for approximately $10 billion, composed of cash and contingent consideration. Our financial statements reflect the assets, labies, operating results and cash flows of this business, commencing from the acquisition date and in accordance with our international reporting period for 2017 reflect approximately 11 months of the small molecule anti-infectives business operations and cash flows acquired from AstraZeneca $ Notes to Consolidated Financial Statements Pfizer Inc. and Subsidiary Companies Note 9. Property, Plant and Equipment The following table provides the components of Property, plant and equipment Useful Lives MILLIONS OF DOLLARS (Years) Land Buildings 33-50 8-30 Machinery and equipment Furniture, fixtures and other 3-12 1/2 4,930 4,603 Construction in progress 2,960 2.902 30,756 29.977 Less: Accumulated depreciation 16,789 16.591 Property, plant and equipment 13,967 13.385 The increase in total property plant and equipment is mainly due to capital additions, partially ofhet by depreciation, reductions due to asset impairments largely associated with cost reduction inatives not associated with acquisitions (see Note 3), and the impact of foreign exchange Note 10. Identifiable Intangible Assets and Goodwill A. Identifiable intangible Assets Balance Sheet Information The following table provides the components of Identifiable intangible assets December 31, 2019 December 31, 2018 identifiable Identifiable Intangible Intangible Gross Assets less Gross Accumulated Carrying Amount Assets, less Accumulated Accumulated Carrying Accumulated MILLIONS OF DOLLARS Amortization Amortization Amount Amortization Amortization Finite-lived intangible assets Developed technology rights Brands 88,730 S (63,106) 25,625 $ 89,430 S (58,896) 30,535 922 (741) 181 923 (708) 215 Licensing agreements and other 1,772 (1.191) 582 1,436 (1.140) 290 91,425 (65.037) 26,347 91.788 (60,743) 31.045 Indefinite-lived intangible assets Brands 1,901 1,991 1.991 1,991 IPRAD 5,919 5,919 2.171 2.171 Licensing agreements and other 1,073 1,073 8,983 8,983 4,165 4,165 $100,408 $ (65.037) 35,370 S 96.964 $ (60,743) S 35.211 The increase in the gross carrying amount of deate nange assets mainly reflects the impact of the acquisition of Amay including the action of $1.5 bition of Developed technology nights, $340 million of intered Licensing agreements 34.0 billion of R&D and $1.1 billion of indeteved Licensing agreement (Note 24), partially offset by intangible asset impairment charges, primarily for Eucrisa in Developed technology rights o additional information on intangible asset impaments Refects acquired licensing agreements for technology in development The increase in table intangible assets, less accumulated amortization is mostly due to the additions noted in (a) above, paralyofhet by amortization and intangible asset impainment charges, primarily for Eucrisa in Deveped technology rights. See Note 4 for additional information on intangible impament Our identifiable intangible assets are associated with the following, as a percentage of total identifiable intangible assets, less accumulated amortization: December 31, 2019 Upjohn Biopharma WROM Developed technology rights Brands, finite-lived Brands, indefinite-lived IPRED Licensing agreements and other, finite-ved Licensing agreements and other indefinite-lived 104 2019 Financial Report 99% 100% 42% 95% 90% 2019 Financial Report 3 S As of December 31, 2019 516 S 103 10,068 12,201 2016 500 9,920 11.871 Notes to Consolidated Financial Statements Plzer and Bury Companies Developed Technology Rights property t Developed technology nights represent the amortized cont associated with developed technology, which has been acquired on the pas and which can include the right to develop use, market sell andior offer for sale the product, compounds and have acquired with respect to products, compounds and processes that have been co e possess a well-d hundreds of developed technology rights across therapeutic categories, representing the com ed products includin biopharmaceutical businesses. The more significant components of developed technology rights are the tr Xtand, Prear 13/Prevenar 13 Infant Brafovi Mektov Eugsa Prema, Preva 13 Pe Zavice, Prat Refacto AF and Doe Also included in this categor agreements for certain biopharmaceutical products Brands Brands represent the amortized or unamored cost associated patent protection. The more significant components e Depo-Medrol Ther brands a cant components of inte-ved brands are the follow PRAD R&D assets that have not yet received regulatory approval in at December 31, 2019 include IPRAD assets acquired in connection with the Amay acqu PR&O The significant components of PR the treatment of patients with germline BRCA-mutited advanced breast cancer acquired as part of the Mediation acquation PREO are required to be classified as indefinile lived assets und the successful completion or the abandonment of the acted R&D Accordingly during the development period after the date of acquation t as will out be aorted un major market typically ether the US or the EU, or in a series of other courtes subject to certain specified condone and ma judgment. At that time, we will determine the useful fe of the set edessly the asset out of PRO and begin amortization th RAD effort is abandoned the related IPRAD assets wil kely be written-off, and we will record an impaman charge For IPR&O the risk of falure is significant and there can be no certainty that the sately will y su products. The ure of the boarmaceutical w off at time in the Me Licensing Agreements Licensing agreements for developed technology and licensing agreements for technology in developme amangements acquired from third parties, including the Amay acquisition. These intangitle asets represent the atto associated with the sense, where Plzer has acquired the right to future reyes andior milestones upon depen by the licensing partner. A significant component of the licensing arrangements at December 31, 2019 a forg a number of partners for oncology technology in varying stages of development that have not yet ved regulatory app market Accordingly, during the development period after the date of acquation, each of these assets is classified as in assets and will not be amorted on approval is obtained in a major market At that time we will deleme the u reclassify the respective licensing arrangement asset to finite-lived intan ordan pa Amortization The weighted average life for each of our total finde-lived intangible assets and the largest component, developed technology righ approximately 9 years Total amortization expense for finite-ved intangible as was $4.7 billion in 2018 550 bon in 2018 and 34.8 ben in 2017. The following table provides the annual amortization expense expected for the year 2000 though 2004 MILLIONS OF DOLLAR 2000 2002 Amortation expe 8. Goodwill Prior to 2010, we managed our commercial operations through two disond business segments Per innovando Exson Heah (H) At the beginning of our 2019 fecal year we reorganined our com managed through three oferent operating segment Bophana, Upin and through July 31, 2018, P (se Note 17 for further information Our Consumer Healthcare business was classified as held for sale as 20 for furton Adotionally upon closing of the transaction during the third quarter of 2018 we decorateur Consu Healthcare business and desecognized Consumer Healthcare good As of the organization of our commercial operations, our remaining goodell was re Biopharma and Upohn operating segments by determining the fair value of each porting un and the portions being transferred Vie completed this re-allocation based on relative tar value in the second quarter of 201 ed to be relocated among the roid and new manag Notes to Consolidated Financial Statements Pern and Subsidy Companies The following table provides the components of and changes in the carrying amount of Good ALLIONS OF DOLLARS Biopharma Upjo Balance January 1, 2018 Other (432) (118) 10.484 Balance December 31, 2018 Additions Other (3) Balance December 31, 2018 Ply reflects the recavacation of our memar Mathcare bu Bhadon Plys T of foreign exchange 42,927 5,411 (134) 4.200 2 10.451 111 hange an Too 35352 (254) 53.411 LAT (6) BAS Consolidated Statements of Income WALIOS PESCA Revers C Co Sama semana Amortation Reg C Ore nungs Pro Opt Hom Dacabo Net come beka Lele Eames O that come afat) nings to Mome D Net Tasker | Regangage Mon M g cantong operators abo ne s Set Can Problem set #3 Financial Report AR to Po 10. in fe had a HR E MOK 9210 NEW www. ww * 14 www NET PAN HEE 16.30 . TAM 29 M6221 241 S 130 ARE ARE LIM APPS of the www. THEY www 3.14 LONE 700 HAN 4 HOL W SEM TM 330 ANTE KAPE MOCH WEN I MY 2015 F THE IM SIDE CIN 41 FLAM asi DIE AMD KOMA 13 Consolidated Balance Sheets day Sury Burger O Asset T Longin fr py and menta tag Good Houd Shots) Die Accued compend Over Lantes te wes Peop M Other n desp worked on w WHEN AL Lingo put takme 2016-12- Com Pref 29-03209-0 Com1001200201-4320-43 Anal pa 2015-2806 2014- They ha Ratan ang Auders Ploor 1 Ety bea Sed semes Softs, which appet Camas pagas UNI LUOR ASI 8.234 1.200 3340 20 25 10000 41300 12,000 144 11 NEW HIT 4 www. MIX 4X LAD 1:134 NFF DIE 12 *** STA Sara ALVIN (TAN WARE 37 1300 TLAKE P 1,000 11,304 31 36,95 30.900 6272 1.30 3706 14737 1.000 A 63.143 303 63,447 1670 PRE AUT TO NEE VW IRL NET HELL Hw www Y TRAZE NOT SHEL 20 467. MUSI 2) www NUZSA 65.407 166 43758 100 " pada Can or umptmor yf Corn, Tak CON po dated Statements of Cash Flows and Compa d AME Smar O pred --- Borabon of pro edge Hy F tepa P A esaten Prank P P I - Onge Taay a mis partial la vending MAKFUM 100 44 10 HERE pun 18.30 40 TIN www SUN www AME AND THE ra tara BE HOTTE DELEN - GMB A BL AME DHE www. www 41) 34 (())) 525 1138 1130 Ban COM) 8341 de hath (M ------ Bre == 0400 SELME 200 CA 108 www ar P PWY line Lap MIN Gary word | ) HE PLZN AT Notes to Consolidated Financial Statements my Cena Note 3 Property, Plant and Equipment MENG OF LAND Swing Met me Lee Acu Note 10. Identifiable intangible Assets and Good Ablege LLANY un badk Ling gree De CUR REL www.w Sty nga 201 MTH 100 An BLADE La 5.3 tats ||! MEINE (195) And unive A in They 553033 A DO LAN 76.347. 8700 URE 120 101 AM AMD www LINE HUM AME D NO 15,391 201 ww Han ww LOBET. 212 HOME www PHOTO NOW 62 2019 Financial Report Consolidated Statements of Income Pfizer Inc. and Subsidiary Companies (MILLIONS, EXCEPT PER COMMON SHARE DATA) Revenues Costs and expenses Cost of sales Selling, informational and administrative expenses Research and development expenses Amortization of intangible assets Restructuring charges and certain acquisition-related costs (Gain) on completion of Consumer Healthcare JV transaction Other (income) deductions-net Income from continuing operations before provision/(benefit) for taxes on income Provision (benefit for taxes on income Income from continuing operations Discontinued operations Income from discontinued operations net of tax Gain on disposal of discontinued operations-net of tax Discontinued operations-net of tax Net income before allocation to noncontrolling interests Less: Net income attributable to noncontrolling interests Net income attributable to Plzer Inc. Earnings per common share-basic Income from continuing operations attributable to Pfizer Inc. common shareholders Discontinued operations-net of tax Net income attributable to Pfizer Inc. common shareholders Earnings per common share de Income from continuing operations attributable to Pfizer Inc. common shareholders Discontinued operations-net of tax Net income attributable to Pfizer Inc. common shareholders Weighted average shares-basic Weighted average shares-diluted Exclusive of amortization of intangible assets, except as disclosed in Note L Amounts may not add due to rounding $ $ $ $ $ Year Ended December 31, 2019 2018 $1,750 S 53,647 S 10,219 11,248 14,350 14,455 8,650 8,006 4,610 4,893 747 1,044 (8,086) 3,578 2,116 17,682 11,885 1,384 706 16,298 11,179 10 10 11,188 36 11,153 $ 1.90 $ 1.90 1.80 $ 1.87 $ 4 16,302 29 16,273 5 2.92 S 2.32 5 2.07 S 2.37 5 5,569 5,872 5,675 5,977 See Notes to Consolidated Financial Statements, which are an integral part of these statements. 2017 52,546 11,228 14,804 7,683 4,758 351 1,416 12,305 (9,049) 21,353 (1) 3 2 21,355 21,308 3.57 3.57 3.52 5,970 6,058 2019 Financial Report See Notes to Consolidated Financial Statements, which are an integral part of these statements 64 2019 Financial Report Consolidated Balance Sheets Pfer Inc. and Subsidiary Companies (MILLIONS EXCEPT PREFERRED STOCK ISSUED AND PER COMMON SHARE DATA) Asseb Cash and cash equivalents Short-term investments Trade accounts receivable, less allowance for doubtful accounts: 2019-$527, 2018-$541 Inventories Current tax assets Other current assets Assets held for sale Total current assets Equity-method investments Long-term investments Property, plant and equipment, less accumulated depreciation Identifiable intangible assets, less accumulated amortization Goodwill Noncurrent deferred tax assets and other noncurrent taxat Other nonument assets Total assets Land Equity Short-term borrowings, including cument portion of long-term debt: 2018-$1,482 2018-$4.776 S Trade accounts payable Dividends payable Income taxes payable Accrued compensation and related items Other current labes Liebe held for sale Total current bes Long-term debt Pension benefit obligations, net Postretirement benefit obligations, net Noncurent deferred tax labe Other taxes payable Other nonument tab Totallabies Commitments and Contingencies Preferred stock, no par value, at stated value: 27 shares authorized issued 2019 431;2018-478 Common stock, $0.05 par value: 12.000 shares authorized; issued: 2019-9,369 2018-9.332 Additional paid-in capital Treasury stock, shares at cost 2019-3.835 2018-3.615 Retained eamings Accumulated other comprehensive loss Total Pfizer Inc. shareholders equity Equity attributable to noncontrolling interests Total equity Total abilities and equity Amounts may not add due to rounding As of December 31 2019 1,305 8,525 8,724 8,283 3,344 2,600 21 32,803 17,133 3,014 13.967 35,370 58,653 2,099 4,450 167.499 16,195 $ 4,220 2,104 950 2,720 11,093 37,304 35,955 5,638 1,124 5,578 12,126 6,317 104,042 17 468 87,428 (110,801) 97,670 (11,640) 63,143 303 63,447 167.439 S See Notes to Consolidated Financial Statements, which are an integral part of these statements 2018 1,139 17,694 8,025 7,508 3,374 2,461 9.725 49.906 181 2,586 13,385 35,211 53.411 1,904 2.799 159.422 8,831 4,674 2,047 1.265 2,397 10,753 1,890 31,858 32.909 5,272 1,338 3,700 14,737 5.850 95.664 19 467 86.253 (101010) 89.554 (11,275) 63,407 351 63.758 159422 2019 Financial Report 65 66 2019 Financial Report Consolidated Statements of Cash Flows Pfizer Inc. and Subsidiary Companies (MILLIONS) Operating Activities Net income before allocation to noncontrolling interest Adjustments to reconcile net income before allocation to noncontrolling interests to net cash provided by operating activities Depreciation and amortization Asset write-offs and impaiments TCJA impact Gain on completion of Consumer Healthcare JV transaction net of cash conveyed Deferred taxes from continuing operations Share-based compensation expense Benefit plan contributions in excess of expenselncome Other adjustments, net Other changes in assets and abilities, net of acquisitions and divestures Trade accounts receivable Inventones Other assets Trade accounts payable Other be Other tax accounts, et Net cash provided by operating activities Investing Actres Purchases of property, plant and equipment Purchases of short-term investments Proceeds from redemptions/sales of short-term investments Net (purchases of proceeds from redemptionssales of short-term investments with original maturities of three months or less Purchases of long-term investments Proceeds from redemptions/sales of long-term investments Acquisitions of businesses, net of cash acquired Acquisitions of intangible assets Other investing activities Net cash provided by used in investing activites Financing Activities Proceeds from short-term bowing Principal payments on short-term bomowings Net (payments on/proceeds from short-term bomowings with original maturities of three months or less Proceeds from issuance of long-term debt Principal payments on long-term debt Purchases of common stock Cash dividends paid Proceeds from exercise of stock options Other financing activities, net Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents Net increase(decrease) in cash and cash equivalents and restricted cash and cash equivalents Cash and cash equivalents and restricted cash and cash equivalents, at beginning of period Cash and cash equivalents and restricted cash and cash equivalents, at end of period .Continued. Year Ended December 31, 2019 2018 2017 $16.302 S 11,188 $ 21,355 6,010 6,384 6.269 2.953 3.398 634 (323) (596) (10,660) (8.233) 614 (2.205) (2410) 718 949 540 (336) (1,095) (961) (1,006) (1,209) 399 (742) (644) 259 (1.050) (717) (357) 795 (16) (564) 431 46 267 98 (87) (2,737) (78) 12.500 15.827 (2,176) (2,042) (6,835) (11,677) 9,183 17,581 6.925 (3.917) (1.797) 6.244 1.446 16.802 (1994) (1459) 10.302 2.068 (537) 3.579 (1,000) (154) (261) 288 671 4.525 (4,740) 3,711 8,464 (4437) (1947) (1,617) 1,422 4.974 5,274 (3,566) (6,154) (5.000) (7.659) 882 (611) (13.350) 53 (1235) 2.666 1,431 (201) 232 (10,001) (418) 205 (2945) (8.378) 2,551 4,942 (6.806) (8.865) (12.198) (8.043) (7.978) 394 1,250 (736) (588) (8,485) (20,441) (12) (116) 125 (205) 1,225 1.431 $ 1,350 $ 1.225 S 2019 Financial Report 4 Notes to Consolidated Financial Statements Plzer Inc. and Subsidiary Companies Note 1. Basis of Presentation and Significant Accounting Policies A. Basis of Presentation See the Glossary of Defined Terms at the beginning of this 2019 Financial Report for terms used throughout the consolidated financial statements and related notes in this 2019 Financial Report The consolidated financial statements include our parent company and all subsidiaries, and are prepared in accordance with accounting principles generally accepted in the United States of America (US. GAAP) The decision of whether or not to consolidate an entity requires consideration of majority voting interests, as well as effective economic or other control over the entity Typically, we do not seek control by means other than voting interests. For subsidiaries operating outside the US, the financial information is included as of and for the year ended November 30 for each year presented. Pfizer's fiscal year-end for US subsidianes is as of and for the year ended December 31 for each year presented Substantially all unmitted eamings of international subsidiaries are tree of legal and contractual restrictions All significant transactions among our businesses have been eliminated Beginning on January 1, 2018, only taxes paid on intercompany inventory sales transactions are defamed until recognized upon the sale of the inventory to a third party efecting the adoption of a new accounting standard in the first quarter of 2018. Prior to the adoption of this new accounting standard in the first quarter of 2018 taxes paid on intercompany sales transactions were defened until recognized upon sale of the asset to a third party From the second quarter of our 2016 fiscal year until the end of 2018, we managed our commercial operations through two distinct business segments Per innovative Health (H) and Per Essential Health (D) At the beginning of our 2019 fiscal year we began to manage our commercial operations through a new global structure consisting of three business segments-Plzer Biopharmaceuticals Group (Dachama Upjohn and through July 31, 2018 Consumer Healthcare Biopharma and Upjohn are the only reportable segments. We have revised prior period segment information to reflect the reorganization. For additional information, see Note 17. In addition, certain amounts within Long-term investments in the December 31, 2018 consolidated balance sheet have been reclassified to quity-method investments to conform to the current presentation. For additional information, seeNote 20 Certain amounts in the consolidated financial statements and associated notes may not add due to rounding. All percentages have been calculated using unrounded amounts in the first quarter of 2019, as of January 1, 2018, we adopted four new accounting standards. See Note 18 for father information Our recent significant business development activities include License Agreement with Akces Therapeutics, Inc-in October 2018, we entered into a worldwide exclusive licensing agreement for AKCEA-ANGPTL3-LR an investigational antisense therapy being developed to treat patients with o th certain cardiovascular and metabolic diseases, with Akces, a majority-owned affiate of lonis. The transaction closed in November 2019 and we made an upfront payment of 1250 mtion to Akce and tons, which was recorded in Research and development expenses in our fiscal fourth quarter of 2019 Formation of a New Consumer Healthcare Joint Venture-On July 31, 2019, we completed the transaction in which we and GSK combined our respective consumer healthcare businesses into a new consumer healthcare joint venture that operates globally under the GSK Consumer Healthcare name in accordance with our domestic and international reporting penods, our financial results, and our Consumer Healthcare segment's operating results for 2019 refect seven months of Consumer Healthcare segment domestic operations and eight months of Consumer Healthcare segment international operations Assets and liabiles associated with our Consumer Healthcare business were reclassified as held for sale in the consolidated balance sheet as of December 31, 2018 Acquisition of Amey Pharma Inc-On July 20, 2010, we acquired Array for $488 per share in cash. The total fair value of the consideration transferred for Amay was approximately $11.2 billion ($10.9 bilion, net of cash acquired). Our financial statements for 2015 reflect the assets, labies, operating results and cash flows of Array, commencing from the acquisition date Agreement to Combine Upjohn with Mylan NV-On July 29, 2019, we announced that we entered into a definitive agreement to combine Upjohn with Mylan, creating a new global pharmaceutical company, Vietris Under the terms of the agreement, which is structured as an a stock, Reverse Moms Trat transaction. Upjohn is expected to be spun off or split off to Pfizer's shareholders and immediately thereater combined with Mylan Pfizer shareholders would own 57% of the combined new company and former Mylan shareholders would own 43% Closing of the transaction is subject to Mylan shareholder approval and satisfaction of other customary closing conditions, including receipt of regulatory approv poten commercialization of the lead asset. The total fair value of the consideration transferred for Therachon was approximately $322 million. Our financial statements for 2019 reflect the assets, labies, operating results and cash flows of Therachon, commencing from the acquisition date and in accordance with our international reporting penod, refect five months of Therachon operations and cash flows Sale of Hospira Infusion Systems Net Assets to ICU Medical, Inc-On February 3, 2017, we completed the sale of our global infusion systems net assets, HS, to ICU Medical for up to approximately $900 million, composed of cash and contingent cash consideration, ICU Medical common stock (all of which we sold during 2018) and seller financing HS includes IV pumps solutions and devices. The operating in our income through 2, 2017 and our 2017 reflect one month of HS domestic operations and two months of HIG international operations. Our financial results for 2019 and 2018 de not reflect any contribution from HS global operations 2019 Financial Report Notes to Consolidated Financial Statements Per Inc and Subsidiary Companies Acquisition of AstraZeneca's Small Molecule Art-Infectives Business-On December 22, 2016, which fell in the first fiscal quarter of 2017 for our international operations, we acquired the development and commercialization rights to AstraZeneca's small molecule anti-infectives business primarily outside the U.S. for approximately $10 billion, composed of cash and contingent consideration. Our financial statements reflect the assets, labies, operating results and cash flows of this business, commencing from the acquisition date and in accordance with our international reporting period for 2017 reflect approximately 11 months of the small molecule anti-infectives business operations and cash flows acquired from AstraZeneca $ Notes to Consolidated Financial Statements Pfizer Inc. and Subsidiary Companies Note 9. Property, Plant and Equipment The following table provides the components of Property, plant and equipment Useful Lives MILLIONS OF DOLLARS (Years) Land Buildings 33-50 8-30 Machinery and equipment Furniture, fixtures and other 3-12 1/2 4,930 4,603 Construction in progress 2,960 2.902 30,756 29.977 Less: Accumulated depreciation 16,789 16.591 Property, plant and equipment 13,967 13.385 The increase in total property plant and equipment is mainly due to capital additions, partially ofhet by depreciation, reductions due to asset impairments largely associated with cost reduction inatives not associated with acquisitions (see Note 3), and the impact of foreign exchange Note 10. Identifiable Intangible Assets and Goodwill A. Identifiable intangible Assets Balance Sheet Information The following table provides the components of Identifiable intangible assets December 31, 2019 December 31, 2018 identifiable Identifiable Intangible Intangible Gross Assets less Gross Accumulated Carrying Amount Assets, less Accumulated Accumulated Carrying Accumulated MILLIONS OF DOLLARS Amortization Amortization Amount Amortization Amortization Finite-lived intangible assets Developed technology rights Brands 88,730 S (63,106) 25,625 $ 89,430 S (58,896) 30,535 922 (741) 181 923 (708) 215 Licensing agreements and other 1,772 (1.191) 582 1,436 (1.140) 290 91,425 (65.037) 26,347 91.788 (60,743) 31.045 Indefinite-lived intangible assets Brands 1,901 1,991 1.991 1,991 IPRAD 5,919 5,919 2.171 2.171 Licensing agreements and other 1,073 1,073 8,983 8,983 4,165 4,165 $100,408 $ (65.037) 35,370 S 96.964 $ (60,743) S 35.211 The increase in the gross carrying amount of deate nange assets mainly reflects the impact of the acquisition of Amay including the action of $1.5 bition of Developed technology nights, $340 million of intered Licensing agreements 34.0 billion of R&D and $1.1 billion of indeteved Licensing agreement (Note 24), partially offset by intangible asset impairment charges, primarily for Eucrisa in Developed technology rights o additional information on intangible asset impaments Refects acquired licensing agreements for technology in development The increase in table intangible assets, less accumulated amortization is mostly due to the additions noted in (a) above, paralyofhet by amortization and intangible asset impainment charges, primarily for Eucrisa in Deveped technology rights. See Note 4 for additional information on intangible impament Our identifiable intangible assets are associated with the following, as a percentage of total identifiable intangible assets, less accumulated amortization: December 31, 2019 Upjohn Biopharma WROM Developed technology rights Brands, finite-lived Brands, indefinite-lived IPRED Licensing agreements and other, finite-ved Licensing agreements and other indefinite-lived 104 2019 Financial Report 99% 100% 42% 95% 90% 2019 Financial Report 3 S As of December 31, 2019 516 S 103 10,068 12,201 2016 500 9,920 11.871 Notes to Consolidated Financial Statements Plzer and Bury Companies Developed Technology Rights property t Developed technology nights represent the amortized cont associated with developed technology, which has been acquired on the pas and which can include the right to develop use, market sell andior offer for sale the product, compounds and have acquired with respect to products, compounds and processes that have been co e possess a well-d hundreds of developed technology rights across therapeutic categories, representing the com ed products includin biopharmaceutical businesses. The more significant components of developed technology rights are the tr Xtand, Prear 13/Prevenar 13 Infant Brafovi Mektov Eugsa Prema, Preva 13 Pe Zavice, Prat Refacto AF and Doe Also included in this categor agreements for certain biopharmaceutical products Brands Brands represent the amortized or unamored cost associated patent protection. The more significant components e Depo-Medrol Ther brands a cant components of inte-ved brands are the follow PRAD R&D assets that have not yet received regulatory approval in at December 31, 2019 include IPRAD assets acquired in connection with the Amay acqu PR&O The significant components of PR the treatment of patients with germline BRCA-mutited advanced breast cancer acquired as part of the Mediation acquation PREO are required to be classified as indefinile lived assets und the successful completion or the abandonment of the acted R&D Accordingly during the development period after the date of acquation t as will out be aorted un major market typically ether the US or the EU, or in a series of other courtes subject to certain specified condone and ma judgment. At that time, we will determine the useful fe of the set edessly the asset out of PRO and begin amortization th RAD effort is abandoned the related IPRAD assets wil kely be written-off, and we will record an impaman charge For IPR&O the risk of falure is significant and there can be no certainty that the sately will y su products. The ure of the boarmaceutical w off at time in the Me Licensing Agreements Licensing agreements for developed technology and licensing agreements for technology in developme amangements acquired from third parties, including the Amay acquisition. These intangitle asets represent the atto associated with the sense, where Plzer has acquired the right to future reyes andior milestones upon depen by the licensing partner. A significant component of the licensing arrangements at December 31, 2019 a forg a number of partners for oncology technology in varying stages of development that have not yet ved regulatory app market Accordingly, during the development period after the date of acquation, each of these assets is classified as in assets and will not be amorted on approval is obtained in a major market At that time we will deleme the u reclassify the respective licensing arrangement asset to finite-lived intan ordan pa Amortization The weighted average life for each of our total finde-lived intangible assets and the largest component, developed technology righ approximately 9 years Total amortization expense for finite-ved intangible as was $4.7 billion in 2018 550 bon in 2018 and 34.8 ben in 2017. The following table provides the annual amortization expense expected for the year 2000 though 2004 MILLIONS OF DOLLAR 2000 2002 Amortation expe 8. Goodwill Prior to 2010, we managed our commercial operations through two disond business segments Per innovando Exson Heah (H) At the beginning of our 2019 fecal year we reorganined our com managed through three oferent operating segment Bophana, Upin and through July 31, 2018, P (se Note 17 for further information Our Consumer Healthcare business was classified as held for sale as 20 for furton Adotionally upon closing of the transaction during the third quarter of 2018 we decorateur Consu Healthcare business and desecognized Consumer Healthcare good As of the organization of our commercial operations, our remaining goodell was re Biopharma and Upohn operating segments by determining the fair value of each porting un and the portions being transferred Vie completed this re-allocation based on relative tar value in the second quarter of 201 ed to be relocated among the roid and new manag Notes to Consolidated Financial Statements Pern and Subsidy Companies The following table provides the components of and changes in the carrying amount of Good ALLIONS OF DOLLARS Biopharma Upjo Balance January 1, 2018 Other (432) (118) 10.484 Balance December 31, 2018 Additions Other (3) Balance December 31, 2018 Ply reflects the recavacation of our memar Mathcare bu Bhadon Plys T of foreign exchange 42,927 5,411 (134) 4.200 2 10.451 111 hange an Too 35352 (254) 53.411 LAT (6) BAS
