|
Financial Instruments (Tables)
|
12 Months Ended |
|
Dec. 31, 2011
|
| Information about Certain Financial Assets and Liabilities |
Information about certain of our financial assets and
liabilities follows:
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
AS OF DECEMBER 31,
|
|
| (MILLIONS OF DOLLARS) |
|
2011 |
|
|
2010 |
|
|
|
|
|
Selected financial assets measured at
fair value on a recurring basis(a):
|
|
|
|
|
|
|
|
|
|
Trading securities(b)
|
|
|
$ 154 |
|
|
|
$ 173 |
|
|
Available-for-sale debt
securities(c)
|
|
|
29,179 |
|
|
|
32,699 |
|
|
Available-for-sale money market
funds(d)
|
|
|
1,370 |
|
|
|
1,217 |
|
|
Available-for-sale equity securities,
excluding money market funds(c)
|
|
|
317 |
|
|
|
230 |
|
|
Derivative financial instruments in
receivable positions(e):
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
1,033 |
|
|
|
603 |
|
|
Foreign currency forward-exchange
contracts
|
|
|
349 |
|
|
|
494 |
|
|
Foreign currency swaps
|
|
|
17 |
|
|
|
128 |
|
|
|
|
|
Total
|
|
|
32,419 |
|
|
|
35,544 |
|
|
|
|
|
Other selected financial
assets(f):
|
|
|
|
|
|
|
|
|
|
Held-to-maturity debt securities,
carried at amortized cost(c)
|
|
|
1,155 |
|
|
|
1,178 |
|
|
Private equity securities, carried as
equity method or at cost(g)
|
|
|
1,020 |
|
|
|
1,134 |
|
|
Short-term loans, carried at
cost(h)
|
|
|
51 |
|
|
|
467 |
|
|
Long-term loans, carried at
cost(h)
|
|
|
381 |
|
|
|
299 |
|
|
|
|
|
Total
|
|
|
2,607 |
|
|
|
3,078 |
|
|
|
|
|
Total selected financial
assets
|
|
|
$35,026 |
|
|
|
$38,622 |
|
|
|
|
|
Financial liabilities measured at
fair value on a recurring basis(a):
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments in a
liability position(i):
|
|
|
|
|
|
|
|
|
|
Foreign currency swaps
|
|
|
$ 1,396 |
|
|
|
$ 623 |
|
|
Foreign currency forward-exchange
contracts
|
|
|
355 |
|
|
|
257 |
|
|
Interest rate swaps
|
|
|
14 |
|
|
|
4 |
|
|
|
|
|
Total
|
|
|
1,765 |
|
|
|
884 |
|
|
|
|
|
Other financial
liabilities(j):
|
|
|
|
|
|
|
|
|
|
Short-term borrowings, carried at
historical proceeds, as adjusted(f),
(k)
|
|
|
4,018 |
|
|
|
5,603 |
|
|
Long-term debt, carried at historical
proceeds, as adjusted(l),
(m)
|
|
|
34,931 |
|
|
|
38,410 |
|
|
|
|
|
Total
|
|
|
38,949 |
|
|
|
44,013 |
|
|
|
|
|
Total selected financial
liabilities
|
|
|
$40,714 |
|
|
|
$44,897 |
|
|
|
|
| (a) |
Fair
values are determined based on valuation inputs categorized as
Level 1, 2 or 3 (see Note 1E. Significant Accounting Policies:
Fair Value). All of our financial assets and liabilities
measured at fair value on a recurring basis use Level 2 inputs in
the calculation of fair value, except that included in
available-for-sale equity securities, excluding money market funds,
are $85 million as of December 31, 2011 and $105 million as of
December 31, 2010 of investments that use Level 1 inputs in
the calculation of fair value, and $25 million as of
December 31, 2011 that use Level 3 inputs.
|
| (b) |
Trading
securities are held in trust for legacy business acquisition
severance benefits.
|
| (c) |
Gross
unrealized gains and losses are not significant.
|
| (d) |
Includes
approximately $625 million as of December 31, 2011 and
December 31, 2010 of money market funds held in escrow to
secure certain of Wyeth’s payment obligations under its 1999
Nationwide Class Action Settlement Agreement, which relates to
litigation against Wyeth concerning its former weight-loss
products, Redux and Pondimin.
|
| (e) |
Designated as hedging instruments, except for certain foreign
currency contracts used as offsets; namely, foreign currency
forward-exchange contracts with fair values of $169 million and
interest rate swaps with fair values of $8 million at
December 31, 2011; and foreign currency forward-exchange
contracts with fair values of $326 million and foreign currency
swaps with fair values of $17 million at December 31,
2010.
|
| (f) |
The
differences between the estimated fair values and carrying values
of these financial assets and liabilities not measured at fair
value on a recurring basis were not significant as of
December 31, 2011 or December 31, 2010.
|
| (g) |
Our
private equity securities represent investments in the life
sciences sector.
|
| (h) |
Our
short-term and long-term loans are due from companies with highly
rated securities (Standard & Poor’s (S&P)
ratings that are virtually all AA or better).
|
| (i) |
Designated as hedging instruments, except for certain foreign
currency contracts used as offsets; namely, foreign currency
forward-exchange contracts with fair values of $141 million and
foreign currency swaps with fair values of $123 million at
December 31, 2011; and foreign currency forward-exchange
contracts with fair values of $186 million and foreign currency
swaps with fair values of $93 million at December 31,
2010.
|
| (j) |
Some
carrying amounts may include adjustments for discount or premium
amortization or for the effect of interest rate swaps designated as
hedges.
|
| (k) |
Includes
foreign currency borrowings with fair values of $2 billion at
December 31, 2010, which are used as hedging
instruments.
|
| (l) |
Includes
foreign currency debt with fair values of $919 million at
December 31, 2011 and $880 million at December 31, 2010,
which are used as hedging instruments.
|
| (m) |
The fair value of our long-term debt is $40.1
billion at December 31, 2011 and $42.3 billion at
December 31, 2010.
|
|
| Selected Financial Assets and Liabilities Presented in the Condensed Consolidated Balance Sheets |
The selected financial assets and liabilities are
presented in our consolidated balance sheets as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
AS OF DECEMBER 31,
|
|
| (MILLIONS OF DOLLARS) |
|
2011 |
|
|
2010 |
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$ 900 |
|
|
|
$ 906 |
|
|
Short-term investments
|
|
|
23,219 |
|
|
|
26,277 |
|
|
Short-term loans
|
|
|
51 |
|
|
|
467 |
|
|
Long-term investments and
loans
|
|
|
9,457 |
|
|
|
9,747 |
|
|
Taxes and other current
assets(a)
|
|
|
357 |
|
|
|
515 |
|
|
Taxes and other noncurrent
assets(b)
|
|
|
1,042 |
|
|
|
710 |
|
|
|
|
|
Total
|
|
|
$35,026 |
|
|
|
$38,622 |
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Short-term borrowings, including
current portion of long-term debt
|
|
|
$4,018 |
|
|
|
$ 5,603 |
|
|
Other current liabilities(c)
|
|
|
459 |
|
|
|
339 |
|
|
Long-term debt
|
|
|
34,931 |
|
|
|
38,410 |
|
|
Other noncurrent
liabilities(d)
|
|
|
1,306 |
|
|
|
545 |
|
|
|
|
|
Total
|
|
|
$40,714 |
|
|
|
$44,897 |
|
|
|
|
| (a) |
As of
December 31, 2011, derivative instruments at fair value
include foreign currency forward-exchange contracts ($349 million)
and interest rate swaps ($8 million) and, as of December 31,
2010, include foreign currency forward-exchange contracts ($494
million) and foreign currency swaps ($21 million).
|
| (b) |
As of
December 31, 2011, derivative instruments at fair value
include interest rate swaps ($1.0 billion) and foreign currency
swaps ($17 million) and, as of December 31, 2010, include
interest rate swaps ($603 million) and foreign currency swaps ($107
million).
|
| (c) |
At
December 31, 2011, derivative instruments at fair value
include foreign currency forward-exchange contracts ($355 million)
and foreign currency swaps ($104 million) and, at December 31,
2010, include foreign currency forward-exchange contracts ($257
million), foreign currency swaps ($79 million) and interest rate
swaps ($3 million).
|
| (d) |
At
December 31, 2011, derivative instruments at fair value
include foreign currency swaps ($1.3 billion) and interest rate
swaps ($14 million) and, at December 31, 2010, include foreign
currency swaps ($544 million) and interest rate swaps ($1
million).
|
|
| Contractual Maturities of Available-for-sale and Held-to-maturity Debt Securities |
The contractual maturities of the available-for-sale and
held-to-maturity debt securities follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
YEARS |
|
| (MILLIONS OF DOLLARS) |
|
WITHIN 1 |
|
|
OVER 1
TO 5
|
|
|
OVER 5
TO 10
|
|
|
TOTAL AS OF
DECEMBER 31,
2011
|
|
|
|
|
|
Available-for-sale debt
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western European, Scandinavian and
other government debt
|
|
|
$ 9,895 |
|
|
|
$1,177 |
|
|
|
$ –– |
|
|
|
$11,072 |
|
|
Corporate debt(a)
|
|
|
3,921 |
|
|
|
2,321 |
|
|
|
284 |
|
|
|
6,526 |
|
|
U.S. Government debt
|
|
|
5,431 |
|
|
|
–– |
|
|
|
257 |
|
|
|
5,688 |
|
|
Supranational debt
|
|
|
1,872 |
|
|
|
433 |
|
|
|
–– |
|
|
|
2,305 |
|
|
Federal Home Loan Mortgage
Corporation and Federal National Mortgage Association asset-backed
securities
|
|
|
–– |
|
|
|
2,225 |
|
|
|
9 |
|
|
|
2,234 |
|
|
Western European and other government
agency debt
|
|
|
1,101 |
|
|
|
253 |
|
|
|
–– |
|
|
|
1,354 |
|
|
Held-to-maturity debt
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of deposit and
other
|
|
|
1,150 |
|
|
|
5 |
|
|
|
–– |
|
|
|
1,155 |
|
|
|
|
|
Total debt securities
|
|
|
$23,370 |
|
|
|
$6,414 |
|
|
|
$550 |
|
|
|
$30,334 |
|
|
|
|
| (a) |
Primarily
issued by above-investment-grade institutions in the financial
services sector.
|
|
| Schedule of Long Term Debt |
The components of our long-term debt
follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
AS OF DECEMBER 31, |
|
| (MILLIONS OF DOLLARS) |
|
MATURITY DATE |
|
2011 |
|
|
2010 |
|
|
|
|
|
Senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
|
|
6.20%(a)
|
|
March 2019 |
|
|
$ 3,248 |
|
|
|
$ 3,247 |
|
|
5.35%(a)
|
|
March
2015 |
|
|
3,069 |
|
|
|
3,000 |
|
|
7.20%(a)
|
|
March
2039 |
|
|
2,948 |
|
|
|
2,564 |
|
|
4.75% euro(b)
|
|
June
2016 |
|
|
2,583 |
|
|
|
2,665 |
|
|
5.75% euro(b)
|
|
June
2021 |
|
|
2,581 |
|
|
|
2,662 |
|
|
3.625% euro(b)
|
|
June
2013 |
|
|
2,392 |
|
|
|
2,466 |
|
|
6.50% U.K. pound(b)
|
|
June
2038 |
|
|
2,306 |
|
|
|
2,306 |
|
|
5.95%
|
|
April
2037 |
|
|
2,088 |
|
|
|
2,089 |
|
|
5.50%
|
|
February 2014 |
|
|
1,893 |
|
|
|
1,921 |
|
|
5.50%
|
|
March
2013 |
|
|
1,564 |
|
|
|
1,608 |
|
|
4.55% euro
|
|
May
2017 |
|
|
1,325 |
|
|
|
1,322 |
|
|
4.75% euro
|
|
December 2014 |
|
|
1,266 |
|
|
|
1,302 |
|
|
5.50%
|
|
February 2016 |
|
|
1,061 |
|
|
|
1,074 |
|
|
4.45%(c)
|
|
March
2012 |
|
|
–– |
|
|
|
3,543 |
|
|
Notes and other debt with a
weighted-average interest rate of 5.28%(d)
|
|
2012–2018 |
|
|
2,302 |
|
|
|
2,342 |
|
|
Notes and other debt with a
weighted-average interest rate of 6.51%(e)
|
|
2021–2036 |
|
|
3,440 |
|
|
|
3,464 |
|
|
Foreign currency notes and other
foreign currency debt with a weighted-
average interest rate of 2.48%(f)
|
|
2014-2016 |
|
|
865 |
|
|
|
835 |
|
|
|
|
|
Total long-term debt
|
|
|
|
|
$34,931 |
|
|
|
$38,410 |
|
|
|
|
|
Current portion not included
above
|
|
|
|
|
$6 |
|
|
|
$ 3,502 |
|
|
|
|
| (a) |
Instrument is callable by us at any time at the greater of 100%
of the principal amount or the sum of the present values of the
remaining scheduled payments of principal and interest discounted
at the U.S. Treasury rate plus 0.50% plus, in each case, accrued
and unpaid interest.
|
| (b) |
Instrument is callable by us at any time at the greater of 100%
of the principal amount or the sum of the present values of the
remaining scheduled payments of principal and interest discounted
at a comparable government bond rate plus 0.20% plus, in each case,
accrued and unpaid interest.
|
| (c) |
At
December 31, 2011, the note was called.
|
| (d) |
Contains
debt issuances with a weighted-average maturity of approximately 5
years.
|
| (e) |
Contains
debt issuances with a weighted-average maturity of approximately 18
years.
|
| (f) |
Contains debt issuances with a weighted-average maturity
of approximately 4 years.
|
|
| Schedule of Debt Maturities |
| Long-t |
erm debt outstanding as of December 31, 2011 matures
in the following years: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (MILLIONS OF DOLLARS) |
|
2013 |
|
|
2014 |
|
|
2015 |
|
|
2016 |
|
|
AFTER 2016 |
|
|
TOTAL |
|
|
|
|
|
Maturities
|
|
$ |
3,964 |
|
|
$ |
3,987 |
|
|
$ |
3,074 |
|
|
$ |
4,500 |
|
|
|
$19,406 |
|
|
$ |
34,931 |
|
|
|
|
|
| Schedule of Gains/(Losses) Incurred to Hedge or Offset Operational Foreign Exchange or Interest Rate Risk |
Information about the gains/(losses) incurred to hedge or
offset operational foreign exchange or interest rate risk
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMOUNT OF
GAINS/(LOSSES)
RECOGNIZED IN OID(a), (b), (c) |
|
|
AMOUNT OF
GAINS/(LOSSES)
RECOGNIZED IN OCI
(EFFECTIVE PORTION)(a), (d) |
|
|
AMOUNT OF
GAINS/(LOSSES)
RECLASSIFIED FROM
OCI INTO OID
(EFFECTIVE PORTION)(a), (d) |
|
| (MILLIONS OF DOLLARS) |
|
Dec.
31,
2011
|
|
|
Dec.
31,
2010
|
|
|
Dec. 31,
2011
|
|
|
Dec. 31,
2010
|
|
|
Dec. 31,
2011
|
|
|
Dec. 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Financial
Instruments in Cash Flow
Hedge
Relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency swaps
|
|
|
$ –– |
|
|
|
$ –– |
|
|
|
$ (496) |
|
|
|
$(1,054) |
|
|
|
$(243) |
|
|
|
$(704) |
|
|
Derivative Financial
Instruments in Net Investment
Hedge
Relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency swaps
|
|
|
7 |
|
|
|
(1) |
|
|
|
(1,059) |
|
|
|
(97) |
|
|
|
–– |
|
|
|
–– |
|
|
Derivative Financial
Instruments Not Designated
as
Hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward-exchange
contracts
|
|
|
(260 |
) |
|
|
(454) |
|
|
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
Foreign currency swaps
|
|
|
106 |
|
|
|
20 |
|
|
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
|
–– |
|
|
Non-Derivative Financial
Instruments in Net
Investment
Hedge Relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency short-term
borrowings
|
|
|
–– |
|
|
|
–– |
|
|
|
940 |
|
|
|
(241) |
|
|
|
–– |
|
|
|
–– |
|
|
Foreign currency long-term
debt
|
|
|
–– |
|
|
|
–– |
|
|
|
(41) |
|
|
|
(91) |
|
|
|
–– |
|
|
|
–– |
|
|
All other, net
|
|
|
15 |
|
|
|
1 |
|
|
|
(4) |
|
|
|
(6) |
|
|
|
4 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$(132) |
|
|
|
$(434) |
|
|
|
$ (660) |
|
|
|
$(1,489) |
|
|
|
$(239) |
|
|
|
$(702) |
|
|
|
|
| (a) |
OID =
Other (income)/deductions––net, included in the income
statement account, Other deductions—net. OCI =
Other comprehensive income/(loss), included in the
balance sheet account Accumulated other comprehensive
loss.
|
| (b) |
Also
includes gains and losses attributable to the hedged risk in fair
value hedged relationships.
|
| (c) |
There was
no significant ineffectiveness for any of the periods
presented.
|
| (d) |
Amounts
presented represent the effective portion of the gain or loss. For
derivative financial instruments in cash flow hedge relationships,
the effective portion is included in Other comprehensive
income/(loss)–derivative financial instruments. For
derivative financial instruments in net investment hedge
relationships and for foreign currency debt designated as hedging
instruments, the effective portion is included in Other
comprehensive income/(loss)––currency translation
adjustment and other.
|
|