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Financial Instruments (Tables)

9 Months Ended

Sep. 29, 2019

Schedule of Financial Assets and Liabilities Measured At Fair Value On a Recurring Basis



The following table presents the financial assets and liabilities measured at fair value using a market approach on a recurring basis by balance sheet categories and fair value hierarchy level as defined in Notes to Consolidated Financial Statements––Note 1E. Basis of Presentation and Significant Accounting Policies: Fair Value in Pfizer’s 2018 Financial Report:
	September 29, 2019						December 31, 2018
(MILLIONS OF DOLLARS)	Total		Level 1		Level 2		Total		Level 1		Level 2
Financial assets measured at fair value on a recurring basis:
Short-term investments
Classified as equity securities with readily determinable fair values:
Money market funds	$	1,035	$	—	$	1,035	$	1,571	$	—	$	1,571
Equity^(a)	19		7		12		29		17		11
	1,054		7		1,047		1,600		17		1,583
Classified as available-for-sale debt securities:
Government and agency—non-U.S.	2,498		—		2,498		9,609		—		9,609
Corporate and other	1,772		—		1,772		5,482		—		5,482
	4,270		—		4,270		15,091		—		15,091
Total short-term investments	5,324		7		5,317		16,691		17		16,674
Other current assets
Derivative assets:
Interest rate contracts	59		—		59		97		—		97
Foreign exchange contracts	559		—		559		477		—		477
Total other current assets	618		—		618		574		—		574
Long-term investments
Equity securities with readily determinable fair values^(a)	1,530		1,506		24		1,273		1,243		30

Classified as available-for-sale debt securities:
Government and agency—non-U.S.	45		—		45		94		—		94
Corporate and other	363		—		363		397		—		397
	408		—		408		491		—		491
Total long-term investments	1,937		1,506		432		1,764		1,243		521
Other noncurrent assets
Derivative assets:
Interest rate contracts	557		—		557		335		—		335
Foreign exchange contracts	367		—		367		232		—		232
Total other noncurrent assets	924		—		924		566		—		566
Total assets	$	8,803	$	1,513	$	7,290	$	19,595	$	1,260	$	18,335

Financial liabilities measured at fair value on a recurring basis:
Other current liabilities
Derivative liabilities:
Interest rate contracts	$	—	$	—	$	—	$	5	$	—	$	5
Foreign exchange contracts	133		—		133		78		—		78
Total other current liabilities	133		—		133		82		—		82
Other noncurrent liabilities
Derivative liabilities:
Interest rate contracts	—		—		—		378		—		378
Foreign exchange contracts	600		—		600		564		—		564
Total other noncurrent liabilities	600		—		600		942		—		942
Total liabilities	$	733	$	—	$	733	$	1,024	$	—	$	1,024

^(a)

As of September 29, 2019, short-term equity securities of $12 million and long-term equity securities of $23 million are held in trust for benefits attributable to the former Pharmacia Savings Plus Plan. As of December 31, 2018, short-term equity securities of $11 million and long-term equity securities of $29 million are held in trust for benefits attributable to the former Pharmacia Savings Plus Plan.

Schedule of Financial Liabilities Not Measured At Fair Value On a Recurring Basis



The following table presents the financial liabilities not measured at fair value on a recurring basis, including the carrying values and estimated fair values using a market approach:
	September 29, 2019						December 31, 2018
	Carrying Value		Estimated Fair Value				Carrying Value		Estimated Fair Value
(MILLIONS OF DOLLARS)			Total		Level 2				Total		Level 2
Financial Liabilities
Long-term debt, excluding the current portion	$	36,044	$	40,873	$	40,873	$	32,909	$	35,260	$	35,260

Investments by Classification Type



The following table represents our investments by classification type:
(MILLIONS OF DOLLARS)	September 29, 2019		December 31, 2018
Short-term investments
Equity securities with readily determinable fair values^(a)	$	1,054	$	1,600
Available-for-sale debt securities	4,270		15,091
Held-to-maturity debt securities	978		1,003
Total Short-term investments	$	6,302	$	17,694

Long-term investments
Equity securities with readily determinable fair values	$	1,530	$	1,273
Available-for-sale debt securities	408		491
Held-to-maturity debt securities	43		59
Private equity investments at cost	742		763
Total Long-term investments	$	2,723	$	2,586

Equity-method investments	15,999		181
Total long-term investments and equity-method investments	$	18,721	$	2,767
Held-to-maturity cash equivalents	$	217	$	199

^(a)

As of September 29, 2019 and December 31, 2018, equity securities with readily determinable fair values included money market funds primarily invested in U.S. Treasury and government debt.

Schedule of Held-to-maturity Securities



At September 29, 2019, the investment securities portfolio consisted of debt securities that were virtually all investment-grade. Information on investments in debt and equity securities at September 29, 2019 and December 31, 2018 is as follows, including, as of September 29, 2019, the contractual maturities, or as necessary, the estimated maturities, of the available-for-sale and held-to-maturity debt securities:
	September 29, 2019																	December 31, 2018
			Gross Unrealized							Maturities (in Years)										Gross Unrealized
(MILLIONS OF DOLLARS)	Amortized Cost		Gains		Losses			Fair Value		Within 1		Over 1 to 5		Over 5		Total		Amortized Cost		Gains		Losses			Fair Value
Available-for-sale debt securities
Government and agency––non-U.S.	$	2,538	$	11	$	(6	)	$	2,543	$	2,498	$	45	$	—	$	2,543	$	9,754	$	7	$	(58	)	$	9,703
Corporate and other^(a)	2,140		1		(6		)	2,135		1,772		360		2		2,135		5,905		—		(27		)	5,878
Held-to-maturity debt securities
Time deposits and other	636		—		—			636		593		8		35		636		668		—		—			668
Government and agency––non-U.S.	601		—		—			601		601		—		—		601		592		—		—			592
Total debt securities	$	5,916	$	11	$	(12	)	$	5,915	$	5,464	$	413	$	38	$	5,915	$	16,920	$	8	$	(85	)	$	16,842

^(a)

Primarily issued by a diverse group of corporations.

Schedule of Available-for-sale Securities



At September 29, 2019, the investment securities portfolio consisted of debt securities that were virtually all investment-grade. Information on investments in debt and equity securities at September 29, 2019 and December 31, 2018 is as follows, including, as of September 29, 2019, the contractual maturities, or as necessary, the estimated maturities, of the available-for-sale and held-to-maturity debt securities:
	September 29, 2019																	December 31, 2018
			Gross Unrealized							Maturities (in Years)										Gross Unrealized
(MILLIONS OF DOLLARS)	Amortized Cost		Gains		Losses			Fair Value		Within 1		Over 1 to 5		Over 5		Total		Amortized Cost		Gains		Losses			Fair Value
Available-for-sale debt securities
Government and agency––non-U.S.	$	2,538	$	11	$	(6	)	$	2,543	$	2,498	$	45	$	—	$	2,543	$	9,754	$	7	$	(58	)	$	9,703
Corporate and other^(a)	2,140		1		(6		)	2,135		1,772		360		2		2,135		5,905		—		(27		)	5,878
Held-to-maturity debt securities
Time deposits and other	636		—		—			636		593		8		35		636		668		—		—			668
Government and agency––non-U.S.	601		—		—			601		601		—		—		601		592		—		—			592
Total debt securities	$	5,916	$	11	$	(12	)	$	5,915	$	5,464	$	413	$	38	$	5,915	$	16,920	$	8	$	(85	)	$	16,842

^(a)

Primarily issued by a diverse group of corporations.

Contractual Maturities of Available-for-sale and Held-to-maturity Debt Securities



At September 29, 2019, the investment securities portfolio consisted of debt securities that were virtually all investment-grade. Information on investments in debt and equity securities at September 29, 2019 and December 31, 2018 is as follows, including, as of September 29, 2019, the contractual maturities, or as necessary, the estimated maturities, of the available-for-sale and held-to-maturity debt securities:
	September 29, 2019																	December 31, 2018
			Gross Unrealized							Maturities (in Years)										Gross Unrealized
(MILLIONS OF DOLLARS)	Amortized Cost		Gains		Losses			Fair Value		Within 1		Over 1 to 5		Over 5		Total		Amortized Cost		Gains		Losses			Fair Value
Available-for-sale debt securities
Government and agency––non-U.S.	$	2,538	$	11	$	(6	)	$	2,543	$	2,498	$	45	$	—	$	2,543	$	9,754	$	7	$	(58	)	$	9,703
Corporate and other^(a)	2,140		1		(6		)	2,135		1,772		360		2		2,135		5,905		—		(27		)	5,878
Held-to-maturity debt securities
Time deposits and other	636		—		—			636		593		8		35		636		668		—		—			668
Government and agency––non-U.S.	601		—		—			601		601		—		—		601		592		—		—			592
Total debt securities	$	5,916	$	11	$	(12	)	$	5,915	$	5,464	$	413	$	38	$	5,915	$	16,920	$	8	$	(85	)	$	16,842

^(a)

Primarily issued by a diverse group of corporations.

Schedule of Gains and Losses on Investment Securities



The following table presents the net unrealized (gains) and losses for the period that relate to equity securities still held at the reporting date, calculated as follows:
	Three Months Ended						Nine Months Ended
(MILLIONS OF DOLLARS)	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018
Net gains recognized during the period on investments in equity securities^(a⁾	$	(6	)	$	(85	)	$	(153	)	$	(460	)
Less: Net gains recognized during the period on equity securities sold during the period	(3		)	(58		)	(13		)	(105		)
Net unrealized gains during the reporting period on equity securities still held at the reporting date	$	(3	)	$	(27	)	$	(140	)	$	(355	)

^(a)

The net gains on investments in equity securities are reported in Other (income)/deductions––net. For additional information, see Note 4.

Schedule of Short-term Borrowings



Short-term borrowings include:
(MILLIONS OF DOLLARS)	September 29, 2019			December 31, 2018
Commercial paper	$	12,914		$	3,100
Current portion of long-term debt, principal amount	2,423			4,781
Other short-term borrowings, principal amount^(a)	1,334			966
Total short-term borrowings, principal amount	16,671			8,847
Net fair value adjustments related to hedging and purchase accounting	7			(5		)
Net unamortized discounts, premiums and debt issuance costs	(61		)	(11		)
Total Short-term borrowings, including current portion of long-term debt, carried at historical proceeds, as adjusted	$	16,617		$	8,831

^(a)

Other short-term borrowings primarily include cash collateral. For additional information, see Note 7E.

Schedule of Principal Amounts of Senior Unsecured Long-Term Debt and Adjustments



The following table provides the aggregate principal amount of our senior unsecured long-term debt, and adjustments to report our aggregate long-term debt:
(MILLIONS OF DOLLARS)	September 29, 2019			December 31, 2018
Total long-term debt, principal amount	$	34,602		$	32,558
Net fair value adjustments related to hedging and purchase accounting	1,614			479
Net unamortized discounts, premiums and debt issuance costs	(179		)	(136		)
Other long-term debt	7			7
Total long-term debt, carried at historical proceeds, as adjusted	$	36,044		$	32,909
Current portion of long-term debt, carried at historical proceeds, as adjusted	$	2,431		$	4,776



In the first quarter of 2019, we issued the following senior unsecured notes:
		Principal
(MILLIONS OF DOLLARS)	Maturity Date	As of September 29, 2019
2.800% notes^(a)	March 11, 2022	$	500
2.950% notes^(a)	March 15, 2024	750
3.450% notes^(a)	March 15, 2029	1,750
3.900% notes^(a)	March 15, 2039	750
4.000% notes^(a)	March 15, 2049	1,250
Total long-term debt issued in the first quarter of 2019^(b)		$	5,000


^(a)	Fixed rate notes may be redeemed by us at any time, in whole, or in part, at varying redemption prices plus accrued and unpaid interest.

^(b)

The weighted-average effective interest rate for the notes at issuance was 3.57%.

Schedule of Derivative Instruments



The following table provides the fair value of the derivative financial instruments and the related notional amounts presented between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments:
(MILLIONS OF DOLLARS)	September 29, 2019						December 31, 2018
			Fair Value						Fair Value
	Notional		Asset		Liability		Notional		Asset		Liability
Derivatives designated as hedging instruments:
Foreign exchange contracts^(a)	$	22,807	$	810	$	621	$	22,984	$	654	$	586
Interest rate contracts	6,645		616		—		11,145		432		383
			1,425		621				1,085		968

Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	18,112	116		112		$	15,154	55		55

Total			$	1,542	$	733			$	1,140	$	1,024

^(a)

The notional amount of outstanding foreign currency forward-exchange contracts hedging our intercompany forecasted inventory sales was $6.6 billion as of September 29, 2019 and $5.8 billion as of December 31, 2018.

Schedule of Derivative Assets



The following table provides the fair value of the derivative financial instruments and the related notional amounts presented between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments:
(MILLIONS OF DOLLARS)	September 29, 2019						December 31, 2018
			Fair Value						Fair Value
	Notional		Asset		Liability		Notional		Asset		Liability
Derivatives designated as hedging instruments:
Foreign exchange contracts^(a)	$	22,807	$	810	$	621	$	22,984	$	654	$	586
Interest rate contracts	6,645		616		—		11,145		432		383
			1,425		621				1,085		968

Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	18,112	116		112		$	15,154	55		55

Total			$	1,542	$	733			$	1,140	$	1,024

^(a)

Schedule of Derivative Liabilities



The following table provides the fair value of the derivative financial instruments and the related notional amounts presented between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments:
(MILLIONS OF DOLLARS)	September 29, 2019						December 31, 2018
			Fair Value						Fair Value
	Notional		Asset		Liability		Notional		Asset		Liability
Derivatives designated as hedging instruments:
Foreign exchange contracts^(a)	$	22,807	$	810	$	621	$	22,984	$	654	$	586
Interest rate contracts	6,645		616		—		11,145		432		383
			1,425		621				1,085		968

Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	18,112	116		112		$	15,154	55		55

Total			$	1,542	$	733			$	1,140	$	1,024

^(a)

Information about Gains/(Losses) Incurred to Hedge or Offset Operational Foreign Exchange or Interest Rate Risk



The following tables provide information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk:
	Amount of Gains/(Losses) Recognized in OID^(a)						Amount of Gains/(Losses) Recognized in OCI^{(a), (b)}					Amount of Gains/(Losses) Reclassified from OCI into OID and COS^{(a), (b)}
(MILLIONS OF DOLLARS)	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018		September 29, 2019		September 30, 2018
Three Months Ended
Derivative Financial Instruments in Cash Flow Hedge Relationships:
Foreign exchange contracts^(c)	$	—		$	—		$	131		$	183	$	7	$	198
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach	—			—			21			39		22		36
Derivative Financial Instruments in Fair Value Hedge Relationships:
Interest rate contracts	378			(195		)	—			—		—		—
Hedged item	(378		)	195			—			—		—		—
Foreign exchange contracts	—			1			—			—		—		—
Hedged item	—			(1		)	—			—		—		—
Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign exchange contracts	—			—			112			43		—		—
The portion on foreign exchange contracts excluded from the assessment of hedge effectiveness	—			—			43			14		45		21
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign currency short-term borrowings^(d)	—			—			45			8		—		—
Foreign currency long-term debt^(d)	—			—			79			17		—		—
Derivative Financial Instruments Not Designated as Hedges:
Foreign exchange contracts	(77		)	150			—			—		—		—
All other net	—			—			(1		)	—		—		—
	$	(77	)	$	150		$	429		$	304	$	74	$	256



	Amount of Gains/(Losses) Recognized in OID^(a)						Amount of Gains/(Losses) Recognized in OCI^{(a), (b)}				Amount of Gains/(Losses) Reclassified from OCI into OID and COS^{(a), (b)}
(MILLIONS OF DOLLARS)	September 29, 2019			September 30, 2018			September 29, 2019		September 30, 2018		September 29, 2019		September 30, 2018
Nine Months Ended
Derivative Financial Instruments in Cash Flow Hedge Relationships:
Foreign exchange contracts^(c)	$	—		$	—		$	137	$	147	$	265	$	(204	)
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach	—			—			105		87		108		84
Derivative Financial Instruments in Fair Value Hedge Relationships:
Interest rate contracts	1,191			(715		)	—		—		—		—
Hedged item	(1,191		)	715			—		—		—		—
Foreign exchange contracts	—			5			—		—		—		—
Hedged item	—			(5		)	—		—		—		—
Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign exchange contracts	—			—			87		191		—		—
The portion of foreign exchange contracts excluded from the assessment of hedge effectiveness	—			—			136		41		99		47
Non-Derivative Financial Instruments in Net Investment Hedge Relationships:
Foreign currency short-term borrowings^(d)	—			—			65		50		—		—
Foreign currency long-term debt^(d)	—			—			89		111		—		—
Derivative Financial Instruments Not Designated as Hedges:
Foreign exchange contracts	(201		)	156			—		—		—		—
All other net	—			—			—		1		—		1
	$	(201	)	$	156		$	617	$	629	$	472	$	(72	)


^(a)	OID = Other (income)/deductions—net, included in Other (income)/deductions—net in the condensed consolidated statements of income. COS = Cost of Sales, included in Cost of sales in the condensed consolidated statements of income. OCI = Other comprehensive income/(loss), included in the condensed consolidated statements of comprehensive income.

^(b)

For derivative financial instruments in cash flow hedge relationships, the gains and losses are included in Other comprehensive income––Unrealized holding gains on derivative financial instruments, net. 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––Foreign currency translation adjustments, net.


^(c)	Based on quarter-end foreign exchange rates that are subject to change, we expect to reclassify a pre-tax gain of $252 million within the next 12 months into Cost of sales. The maximum length of time over which we are hedging future foreign exchange cash flow relates to our $1.8 billion U.K. pound debt maturing in 2043.

^(d)

Short-term borrowings include foreign currency short-term borrowings with carrying values of $1.1 billion as of September 29, 2019, which are used as hedging instruments in net investment hedges. Long-term debt includes foreign currency long-term borrowings with carrying values of $1.9 billion as of September 29, 2019, which are used as hedging instruments in net investment hedges.

Schedule of Total Amount of Each Income and Expense Line in which Results of Cash Flow Hedges are Recorded



The following table provides the total amount of each income and expense line in which the results of fair value or cash flow hedges are recorded:
	Three Months Ended					Nine Months Ended
(MILLIONS OF DOLLARS)	September 29, 2019		September 30, 2018			September 29 2019		September 30, 2018
Cost of sales	$	2,602	$	2,694		$	7,611	$	8,173
Other (income)/deductions—net	319		(414		)	537		(1,143		)

Schedule of Total Amount of Each Income and Expense Line in which Results of Fair Value Hedges are Recorded



The following table provides the amounts recorded in our condensed consolidated balance sheet related to cumulative basis adjustments for fair value hedges:
	September 29, 2019						December 31, 2018
			Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to Carrying Amount						Cumulative Amount of Fair Value Hedging Adjustment Increase/(Decrease) to Carrying Amount
(MILLIONS OF DOLLARS)	Carrying Amount of Actively Hedged Assets/Liabilities^(a)		Active Hedging Relationships		Discontinued Hedging Relationships		Carrying Amount of Actively Hedged Assets/Liabilities^(a)		Active Hedging Relationships			Discontinued Hedging Relationships
Long-term investments	$	45	$	—	$	—	$	45	$	(1	)	$	—
Short-term borrowings, including current portion of long-term debt	—		—		—		1,499		(5		)	—
Long-term debt	7,101		557		700		9,952		(45		)	129

^(a)

Carrying amounts exclude the cumulative amount of fair value hedging adjustments.



The following table provides the total amount of each income and expense line in which the results of fair value or cash flow hedges are recorded:
	Three Months Ended					Nine Months Ended
(MILLIONS OF DOLLARS)	September 29, 2019		September 30, 2018			September 29 2019		September 30, 2018
Cost of sales	$	2,602	$	2,694		$	7,611	$	8,173
Other (income)/deductions—net	319		(414		)	537		(1,143		)