Attached files
file | filename |
---|---|
8-K - PFIZER INC | v183292_8k.htm |
EXHIBIT 99
PFIZER
REPORTS FIRST-QUARTER 2010 RESULTS;
REAFFIRMS
2010 FINANCIAL GUIDANCE
§
|
First-Quarter
2010 Revenues of $16.8 Billion
|
§
|
First-Quarter
2010 Reported Diluted EPS(1)
of $0.25, Adjusted Diluted EPS(2)
of $0.60
|
§
|
Reaffirms
2010 Financial Guidance and 2012 Diluted EPS Target
Ranges
|
§
|
Continues
to Make Solid Progress on the Wyeth
Integration
|
($
in millions, except per share amounts)
|
|||||||||||
First-Quarter
|
|||||||||||
2010
|
2009
|
Change
|
|||||||||
Reported
Revenues
|
$ | 16,750 | $ | 10,867 |
54%
|
||||||
Reported
Net Income(1)
|
2,026 | 2,729 |
(26)%
|
||||||||
Reported
Diluted EPS(1)
|
0.25 | 0.40 |
(38)%
|
||||||||
Adjusted
Income(2)
|
4,882 | 3,667 |
33%
|
||||||||
Adjusted
Diluted EPS(2)
|
0.60 | 0.54 |
11%
|
||||||||
See end
of text prior to tables for notes.
NEW YORK,
N.Y., Tuesday, May 4, 2010 – Pfizer Inc. (NYSE: PFE) today reported financial
results for first-quarter 2010. Since the acquisition of Wyeth was
completed on October 15, 2009, legacy Wyeth operations are reflected in
first-quarter 2010 results, but not in first-quarter 2009
results. First-quarter 2010 revenues were $16.8 billion, an increase
of 54% compared with $10.9 billion in the year-ago quarter. Revenues
for first-quarter 2010 compared with the year-ago quarter were favorably
impacted by $5.3 billion, or 48%, due to the addition of the legacy Wyeth
products, and $733 million, or 7%, due to foreign exchange. Revenues
were unfavorably impacted by $137 million, or 1%, due to legacy Pfizer
products. Revenues for first-quarter 2010 reflect a reduction of $56
million due to the recently enacted U.S. healthcare
legislation. For first-quarter 2010, U.S. revenues were $7.3
billion, an increase of 47% compared with the year-ago
quarter. International revenues were $9.4 billion, an increase of 60%
compared with the prior-year quarter, which reflected 48% operational growth and
a 12% favorable impact of foreign exchange. U.S. revenues represented
44% of total revenues in first-quarter 2010 compared with 46% in the year-ago
quarter, while international revenues represented 56% of total revenues in
first-quarter 2010 compared with 54% in the year-ago quarter.
- 1
-
Business
Revenues
Pfizer
operates two distinct commercial organizations: Biopharmaceutical and
Diversified. Biopharmaceutical includes the Primary Care, Specialty
Care, Established Products, Emerging Markets and Oncology customer-focused
units, while Diversified includes Animal Health, Consumer Healthcare, Nutrition
and Capsugel.
First-Quarter
|
||||||||||||||||||||
Operational
|
||||||||||||||||||||
($
in millions)
|
2010
|
2009
|
Change
|
Foreign
Exchange
|
Total
|
Legacy
Pfizer
|
||||||||||||||
Primary Care(3)
|
$ | 5,866 | $ | 5,322 |
10%
|
4%
|
6%
|
(1)%
|
||||||||||||
Specialty Care(4)
|
3,521 | 1,463 |
141%
|
10%
|
131%
|
(2)%
|
||||||||||||||
Established
Products(5)
|
2,786 | 1,615 |
73%
|
6%
|
67%
|
(9)%
|
||||||||||||||
Emerging
Markets(6)
|
1,972 | 1,352 |
46%
|
9%
|
37%
|
1%
|
||||||||||||||
Oncology(7)
|
361 | 350 |
3%
|
5%
|
(2)%
|
(13)%
|
||||||||||||||
Biopharmaceutical
|
14,506 | 10,102 |
44%
|
6%
|
38%
|
(3)%
|
|
|||||||||||||
Animal Health(8)
|
846 | 537 |
58%
|
10%
|
48%
|
17%
|
||||||||||||||
Consumer
Healthcare(9)
|
663 | — |
N/A
|
N/A
|
N/A
|
N/A
|
||||||||||||||
Nutrition(10)
|
458 | — |
N/A
|
N/A
|
N/A
|
N/A
|
||||||||||||||
Capsugel(11)
|
174 | 154 |
13%
|
5%
|
8%
|
8%
|
||||||||||||||
Diversified
|
2,141 | 691 |
210%
|
|
16%
|
194%
|
15%
|
|||||||||||||
Other(12)
|
103 | 74 |
39%
|
3%
|
36%
|
36%
|
||||||||||||||
Total
|
$ | 16,750 | $ | 10,867 |
54%
|
7%
|
47%
|
(1)%
|
||||||||||||
See end
of text prior to tables for notes.
N/A – Not
applicable
For
first-quarter 2010, revenues from Biopharmaceutical were $14.5 billion, an
increase of 44% compared with $10.1 billion in the year-ago
quarter. Operationally, revenues increased $3.8 billion, or 38%,
which included $4.1 billion, or 41% attributable to legacy Wyeth products,
primarily Premarin in the Primary Care unit, Enbrel and the Prevnar/Prevenar
franchise in the Specialty Care unit, Effexor and Zosyn/Tazocin in the
Established Products unit as well as Enbrel and Prevenar in the Emerging Markets
unit. In addition, foreign exchange favorably impacted
Biopharmaceutical revenues by 6% or $617 million.
- 2
-
Within
the Biopharmaceutical units, legacy Pfizer operational performance was impacted
in first-quarter 2010 compared to the year-ago quarter both by the loss of
exclusivity of certain products and by the reclassification of certain revenues
among the various units. Legacy Pfizer Oncology unit revenues in
first-quarter 2010 no longer include Camptosar’s European revenues due to its
loss of exclusivity in July 2009. Camptosar’s European revenues are
included in the Established Products unit beginning in first-quarter 2010. This
reclassification of revenues negatively impacted the Oncology unit’s performance
by 24% in first-quarter 2010 compared with the prior-year
quarter. Additionally, revenues from South Korea were included
in the Emerging Markets unit in 2009, but are included in the developed markets
units, as appropriate, beginning in first-quarter 2010, which negatively
impacted the legacy Pfizer Emerging Markets unit’s revenues by
5%. Further, legacy Pfizer Established Products unit revenues in
first-quarter 2010 were adversely impacted by 5% due to the loss of exclusivity
for Norvasc in Canada in July 2009, offset by the favorable impact due to
the addition of Camptosar’s European revenues as well as the reclassification of
revenues from South Korea.
For
first-quarter 2010, revenues from Diversified were $2.1 billion, an increase of
210% compared with $691 million in the year-ago
quarter. Operationally, revenues increased $1.3 billion, or 194%,
which was primarily attributable to legacy Wyeth products, principally Centrum,
Advil and Caltrate in Consumer Healthcare and certain Nutrition
products. Additionally, foreign exchange favorably impacted
Diversified revenues by 16% or $111 million.
Reported
Net Income(1) and
Reported Diluted EPS(1)
For
first-quarter 2010, Pfizer posted reported net income(1) of
$2.0 billion, a decrease of 26% compared with $2.7 billion in the prior-year
quarter, and reported diluted EPS(1) of
$0.25, a decrease of 38% compared with $0.40 in the prior-year quarter.
Results for first-quarter 2010 reflect the first full quarter of the
legacy Wyeth products and operations. In comparison with the same
period in 2009, first-quarter 2010 was favorably impacted by revenues from
legacy Wyeth products, which was more than offset by the expenses associated
with the legacy Wyeth operations as well as purchase accounting adjustments
associated with the acquisition, higher net interest expense primarily due to
the borrowings used to partially fund the acquisition of Wyeth and an increase
in the effective tax rate.
- 3
-
Additionally,
reported diluted EPS(1) in
first-quarter 2010 was impacted by the increased number of shares outstanding in
comparison with the corresponding period in 2009 resulting from shares issued to
partially fund the Wyeth acquisition.
The
effective tax rate on reported results increased to approximately 36% in
first-quarter 2010 from approximately 28% in first-quarter 2009. This
increase primarily is the result of two factors: first, higher amortization
charges, primarily related to intangible assets, incurred as a result of the
acquisition of Wyeth and the mix of jurisdictions in which those charges were
incurred; and second, the write-off of the deferred tax asset of approximately
$270 million related to the Medicare Part D subsidy for retiree prescription
drug coverage resulting from changes in the recently enacted U.S. healthcare
legislation. These factors were partially offset by the favorable
impact of the resolution of certain tax positions pertaining to prior years with
various foreign tax authorities.
Adjusted
Income(2) and
Adjusted Diluted EPS(2)
First-quarter
2010 adjusted income(2) was
$4.9 billion, an increase of 33% compared with $3.7 billion in the year-ago
quarter, and adjusted diluted EPS(2) was
$0.60, an increase of 11% compared with $0.54 in the year-ago
quarter. In comparison with the same period in 2009, first-quarter
2010 was favorably impacted by revenues from legacy Wyeth products, which was
partially offset by the expenses associated with the legacy Wyeth operations as
well as higher net interest expense primarily due to the borrowings used to
partially fund the acquisition of Wyeth. The effective tax rate on
adjusted income(2) for
both first-quarter 2010 and first-quarter 2009 was approximately
30%.
Additionally,
adjusted diluted EPS(2) in
first-quarter 2010 was impacted by the increased number of shares outstanding in
comparison with the corresponding period in 2009 resulting from shares issued to
partially fund the Wyeth acquisition.
In
first-quarter 2010, adjusted cost of sales(2) as a
percentage of revenues was 17.5% compared with 12.1% in first-quarter
2009. This increase primarily reflects the change in the mix of
products and businesses as a result of the Wyeth
acquisition. Excluding the impact of foreign exchange, adjusted cost
of sales(2) as a
percentage of revenues was 16.7% in first-quarter 2010.
- 4
-
Adjusted
SI&A expenses(2) were
$4.4 billion in first-quarter 2010, an increase of 54% compared with $2.8
billion in the prior-year quarter. This increase was attributable to
the addition of the legacy Wyeth operations. Foreign exchange
increased first-quarter 2010 adjusted SI&A expenses(2) by
$156 million compared with the year-ago quarter.
Adjusted
R&D expenses(2) were
$2.2 billion in first-quarter 2010, an increase of 32% compared with $1.7
billion in the prior-year period. This increase was attributable to the
addition of the legacy Wyeth operations and continued investment in the
late-stage development portfolio. Foreign exchange increased
first-quarter 2010 adjusted R&D expenses(2) by $28
million compared with the year-ago quarter.
Overall,
foreign exchange increased adjusted total costs(13) by
$450 million, or 8%, in first-quarter 2010 compared with the prior-year
period.
The
Company remains on-track to achieve the cost-reduction target of approximately
$4 to $5 billion, by the end of 2012, at 2008 average foreign exchange rates, in
comparison with the 2008 pro-forma adjusted total costs(13) of
Pfizer and the legacy Wyeth operations. This quarter, operational
cost improvements were driven partially by a reduction in
workforce. At the end of first-quarter 2010, the workforce totaled
approximately 113,800, a decrease of 2,700 from year-end 2009. Since
the closing of the Wyeth acquisition on October 15, 2009, the workforce has
declined by 6,900, primarily in the U.S. Primary Care field force, manufacturing
and research and development operations.
Executive
Commentary
“Our
results this quarter demonstrate the ability of our colleagues to deliver solid
operational performance in a challenging environment as well as to extract value
for shareholders from the acquisition of Wyeth. During the quarter,
many of our in-line products performed well, including key legacy Wyeth assets
such as Enbrel, Effexor, the Prevnar/Prevenar franchise, and the Consumer
Healthcare and Nutrition businesses,” stated Jeff Kindler, Chairman and Chief
Executive Officer. “We are excited about our more diverse in-line product
portfolio, including Prevnar/Prevenar 13 for infants and toddlers, which has
been approved in more than 40 markets, and our expanded pipeline. We
expect to receive phase three clinical results for numerous compounds in our
pipeline during the remainder of 2010.”
- 5
-
Frank
D’Amelio, Chief Financial Officer, stated, “After considering the performance of
first-quarter 2010, the anticipated financial impact of the recently enacted
U.S. healthcare legislation of approximately $300 million on revenues in 2010 as
well as the strengthening of the U.S. dollar, we are reaffirming our previous
2010 financial guidance. We are reducing our 2012 target revenue
range by $800 million due to the anticipated impact of that
legislation. However, we expect to offset the impact on earnings from
the anticipated decline in revenue through spending reductions and other means,
as necessary, and are reaffirming our 2012 reported(1) and
adjusted(2)
diluted EPS target ranges.”
2010
Financial Guidance
For
full-year 2010, Pfizer’s financial guidance, at current exchange rates(14), is
summarized below.
2010 Guidance(15)
|
|
Reported
Revenues
|
$67.0
to $69.0 billion
|
Adjusted
Cost of Sales(2)
as a Percentage of Revenues
|
19.0%
to 20.0%
|
Adjusted
SI&A Expenses(2)
|
$19.0
to $20.0 billion
|
Adjusted
R&D Expenses(2)
|
$9.1
to $9.6 billion
|
Adjusted
Other (Income)/Deductions(2)
|
$1.2
to $1.4 billion
|
Effective
Tax Rate on Adjusted Income(2)
|
Approximately
30%
|
Reported
Diluted EPS(1)
|
$0.95
to $1.10
|
Adjusted
Diluted EPS(2)
|
$2.10
to
$2.20
|
2012
Financial Targets
Pfizer is
updating its target revenue range for 2012 to reflect the anticipated financial
impact of the recently enacted U.S. healthcare legislation. In comparison
to the range provided on February 3, 2010, the updated target revenue range has
been reduced by $800 million. The Company is reaffirming all other
elements of its 2012 financial targets, including the 2012 reported(1) and
adjusted(2)
diluted EPS target ranges. Given the longer-term nature of these targets,
they are subject to greater variability and less certainty as a result of
potential material impacts related to foreign exchange fluctuations,
macroeconomic activity including inflation, and industry-specific challenges
including changes to government healthcare policy, among
others.
- 6
-
For 2012,
at current exchange rates(14),
Pfizer is targeting reported revenue between $65.2 and $67.7 billion, reported
diluted EPS(1)
between $1.58 and $1.73, adjusted diluted EPS(2) between
$2.25 and $2.35, adjusted R&D expenses(2)
between $8.0 and $8.5 billion, adjusted operating margin(2) in a
range of the high 30%s to low 40%s and adjusted other (income)/deductions(2) between
$1.0 and $1.2 billion in deductions. The effective tax rate on
adjusted income(2) is
targeted at approximately 30%, while operating cash flow is expected to be at
least $19.0 billion.
For additional details,
please see the attached financial schedules, product revenue tables,
supplemental information and disclosure notice.
(1)
|
“Reported
Net Income” is defined as net income attributable to Pfizer Inc. in
accordance with U.S. generally accepted accounting
principles. “Reported Diluted EPS” is defined as reported
diluted EPS attributable to Pfizer Inc. common shareholders in accordance
with U.S. generally accepted accounting
principles.
|
(2)
|
"Adjusted
Income" and its components and "Adjusted Diluted Earnings Per Share (EPS)"
are defined as reported net income(1)
and its components and reported diluted EPS(1)
excluding purchase accounting adjustments, acquisition-related costs,
discontinued operations and certain significant items. Adjusted
Cost of Sales, Adjusted SI&A expenses, Adjusted R&D expenses and
Adjusted Other (Income)/Deductions are income statement line items
prepared on the same basis, and therefore, components of the overall
adjusted income measure. As described under Adjusted Income in the
Management’s Discussion and Analysis of Financial Condition and Results of
Operations section of Pfizer's Form 10-K for the year ended December 31,
2009, management uses adjusted income, among other factors, to set
performance goals and to measure the performance of the overall
company. We believe that investors' understanding of our
performance is enhanced by disclosing this measure. Reconciliations of
first-quarter 2010 and 2009 adjusted income and its components and
adjusted diluted EPS to reported net income(1)
and its components and reported diluted EPS(1),
as well as reconciliations of full-year 2010 guidance and 2012 targets for
adjusted income and adjusted diluted EPS to full-year 2010 guidance and
2012 targets for reported net income(1)
and reported diluted EPS(1),
are provided in the materials accompanying this report. The adjusted
income and its components and adjusted diluted EPS measures are not, and
should not be viewed as, substitutes for U.S. GAAP net income and its
components and diluted EPS.
|
(3)
|
The
Primary Care unit includes revenues from human pharmaceutical products
primarily prescribed by primary-care physicians, and may include, but are
not limited to, products in the following therapeutic and disease areas:
Alzheimer’s disease, anxiety, cardiovascular (excluding pulmonary arterial
hypertension), diabetes, pain, genitourinary, obesity, osteoporosis and
respiratory. Examples of products in this unit include, but are
not limited to, Celebrex, Lipitor, Lyrica, Premarin,
Pristiq and Viagra. All revenues for such products are
allocated to the Primary Care unit, except those generated in emerging
markets(6)
and those that are managed by the Established Products(5)
unit.
|
- 7
-
(4)
|
The
Specialty Care unit includes revenues from human pharmaceutical products
primarily prescribed by physicians who are specialists, and may include,
but are not limited to, products in the following therapeutic and disease
areas: antibacterials, antifungals, antivirals, bone, inflammation,
gastrointestinal, growth hormones, multiple sclerosis, ophthalmology,
pulmonary arterial hypertension and psychosis. Examples of
products in this unit include, but are not limited to, Enbrel, Genotropin,
Geodon, the Prevnar/Prevenar franchise, Xalatan and Zyvox. All
revenues for such products are allocated to the Specialty Care unit,
except those generated in emerging markets(6)
and those that are managed by the Established Products(5)
unit.
|
(5)
|
The
Established Products unit generally includes revenues from human
prescription pharmaceutical products that have lost patent protection or
marketing exclusivity in certain countries and/or regions. In certain
situations, products may be transferred to this unit before losing patent
protection or marketing exclusivity in order to maximize their
value. This unit also excludes revenues generated in emerging
markets(6). Examples
of products in this unit include, but are not limited to, Arthrotec,
Effexor, Medrol, Norvasc and
Relpax.
|
(6)
|
The
Emerging Markets unit includes revenues from all human prescription
pharmaceutical products sold in emerging markets, including, but not
limited to, Asia (excluding Japan), Latin America, Middle East, Africa,
Central and Eastern Europe, Russia and Turkey. Additionally,
revenues from South Korea were included in the Emerging Markets unit in
2009, but are included in the developed market units (Primary Care(3),
Specialty Care(4),
Established Products(5)
and Oncology(7)
units), as appropriate, beginning in first-quarter
2010.
|
(7)
|
The
Oncology unit includes revenues from human oncology and oncology-related
products. Examples of products in this unit include, but are
not limited to, Aromasin, Sutent and Torisel. All revenues for
such products are allocated to the Oncology unit, except those generated
in emerging markets(6)
and those that are managed by the Established Products(5)
unit.
|
(8)
|
Animal
Health includes worldwide revenues from products to prevent and treat
disease in livestock and companion animals, including vaccines,
paraciticides and
anti-infectives.
|
(9)
|
Consumer
Healthcare generally includes worldwide revenues from non-prescription
medicines and vitamins and may include, but are not limited to, products
in the following therapeutic categories: pain management, nutritionals,
respiratory and GI-topicals. Examples of products in Consumer
Healthcare include, but are not limited to, Advil, Centrum, Caltrate,
ChapStick and Robitussin.
|
(10)
|
Nutrition
generally includes revenues from a full line of infant and toddler
nutritional products sold outside of North America. Examples of
products in Nutrition include, but are not limited to, the S-26 and SMA
product lines as well as formula for infants with special nutritional
needs.
|
(11)
|
Capsugel
generally includes worldwide revenues from capsule products and services
for the pharmaceutical and associated healthcare
industries.
|
- 8
-
(12)
|
Includes
revenues generated from business-transition activity in connection with
the sale of Pfizer’s former Consumer Healthcare business in December 2006,
as well as from Pfizer
Centersource.
|
(13)
|
Represents
the total of Adjusted Cost of Sales(2),
Adjusted SI&A expenses(2)
and Adjusted R&D expenses(2).
|
(14)
|
Current
exchange rates approximate rates in effect at about the time of the
first-quarter 2010 earnings press release (average April 2010 exchange
rates).
|
(15)
|
This
guidance does not assume the completion of any business-development
transactions not completed as of April 4, 2010. This
guidance also excludes the potential effects of the resolution of
litigation-related matters not substantially resolved as of April 4,
2010.
|
Contacts:
|
|||||
Media
|
Investors
|
||||
Joan Campion
|
212.733.2798
|
Suzanne Harnett
|
212.733.8009
|
- 9
-
CONSOLIDATED
STATEMENTS OF INCOME
(UNAUDITED)
(millions,
except per common share data)
First Quarter
|
% Incr. /
|
|||||||||||
2010
|
2009
|
(Decr.)
|
||||||||||
Revenues
|
$ | 16,750 | $ | 10,867 | 54 | |||||||
Costs
and expenses:
|
||||||||||||
Cost
of sales (a)
|
4,306 | 1,408 | 206 | |||||||||
Selling,
informational and administrative expenses (a)
|
4,436 | 2,876 | 54 | |||||||||
Research
and development expenses (a)
|
2,226 | 1,705 | 31 | |||||||||
Amortization
of intangible assets
|
1,409 | 578 | 144 | |||||||||
Acquisition-related
in-process research and development charges
|
74 | - | * | |||||||||
Restructuring
charges and certain acquisition-related costs
|
706 | 554 | 27 | |||||||||
Other
(income)/deductions—net
|
414 | (57 | ) | * | ||||||||
Income
from continuing operations before provision for taxes on
income
|
3,179 | 3,803 | (16 | ) | ||||||||
Provision
for taxes on income
|
1,146 | 1,074 | 7 | |||||||||
Income
from continuing operations
|
2,033 | 2,729 | (26 | ) | ||||||||
Discontinued
operations—net of tax
|
2 | 1 | 35 | |||||||||
Net
income before allocation to noncontrolling interests
|
2,035 | 2,730 | (26 | ) | ||||||||
Less: Net
income attributable to noncontrolling interests
|
9 | 1 | * | |||||||||
Net
income attributable to Pfizer Inc.
|
$ | 2,026 | $ | 2,729 | (26 | ) | ||||||
Earnings
per share - basic:
|
||||||||||||
Income
from continuing operations attributable to Pfizer Inc. common
shareholders
|
$ | 0.25 | $ | 0.41 | (39 | ) | ||||||
Discontinued
operations—net of tax
|
- | - | — | |||||||||
Net
income attributable to Pfizer Inc. common shareholders
|
$ | 0.25 | $ | 0.41 | (39 | ) | ||||||
Earnings
per share - diluted:
|
||||||||||||
Income
from continuing operations attributable to Pfizer Inc. common
shareholders
|
$ | 0.25 | $ | 0.40 | (38 | ) | ||||||
Discontinued
operations—net of tax
|
- | - | — | |||||||||
Net
income attributable to Pfizer Inc. common shareholders
|
$ | 0.25 | $ | 0.40 | (38 | ) | ||||||
Weighted-average
shares used to calculate earnings per common share:
|
||||||||||||
Basic
|
8,061 | 6,723 | ||||||||||
Diluted
|
8,101 | 6,753 |
(a)
|
Exclusive
of amortization of intangible assets, except as discussed in footnote 5
below.
|
*
|
Calculation
not meaningful.
|
Certain
amounts and percentages may reflect rounding adjustments.
1.
|
The
above financial statements present the three-month periods ended April 4,
2010 and March 29, 2009. Subsidiaries operating outside the United States
are included for the three-month periods ended February 28, 2010 and
February 22, 2009. Wyeth's
results are included in our consolidated financial statements commencing
from the acquisition date of October 15, 2009, in accordance with Pfizer's
domestic and international year-ends. Therefore, our first-quarter 2009
results of operations do not include Wyeth's results of
operations. Cost
of sales for 2010 includes the significant impacts of purchase
accounting adjustments associated with inventory acquired from Wyeth that
was sold in 2010. Amortization
of intangible assets for 2010 includes the amortization
of intangible assets acquired from
Wyeth.
|
2.
|
The
financial results for the three-month period ended April 4, 2010, are not
necessarily indicative of the results which could ultimately be achieved
for the current year.
|
3.
|
Included
in Restructuring
charges and certain acquisition-related costs for first-quarter
2009 are $369 million of transaction costs, such as banking, legal,
accounting and other similar costs, directly related to our acquisition of
Wyeth.
|
4.
|
In
the first quarter of 2010, we recorded $74 million of Acquisition-related
in-process research and development charges due to the resolution
of contingencies associated with our 2008 acquisition of
CovX.
|
5.
|
Amortization
expense related to acquired intangible assets that contribute to our
ability to sell, manufacture, research, market and distribute our products
is included in Amortization
of intangible assets as these intangible assets benefit multiple
business functions. Amortization
expense related to acquired intangible assets that are associated with a
single function is included in Cost
of sales, Selling,
informational and administrative expenses or Research
and development expenses, as
appropriate.
|
PFIZER
INC. AND SUBSIDIARY COMPANIES
RECONCILIATION
OF REPORTED NET INCOME ATTRIBUTABLE TO PFIZER INC. AND ITS
COMPONENTS
AND
REPORTED DILUTED EPS ATTRIBUTABLE TO PFIZER INC. COMMON
SHAREHOLDERS
TO
ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS (a)
(UNAUDITED)
(millions
of dollars, except per common share data)
Three Months Ended April 4, 2010
|
||||||||||||||||||||||||
Purchase
|
Acquisition-
|
Certain
|
||||||||||||||||||||||
Accounting
|
Related
|
Discontinued
|
Significant
|
|||||||||||||||||||||
Reported
|
Adjustments
|
Costs(2)
|
Operations
|
Items(3)
|
Adjusted
|
|||||||||||||||||||
Revenues
|
$ | 16,750 | $ | - | $ | - | $ | - | $ | (7 | ) | $ | 16,743 | |||||||||||
Costs
and expenses:
|
||||||||||||||||||||||||
Cost of sales (b)
|
4,306 | (1,350 | ) | (13 | ) | - | (8 | ) | 2,935 | |||||||||||||||
Selling,
informational and administrative expenses (b)
|
4,436 | (1 | ) | (60 | ) | - | - | 4,375 | ||||||||||||||||
Research and
development expenses (b)
|
2,226 | (10 | ) | (20 | ) | - | - | 2,196 | ||||||||||||||||
Amortization
of intangible assets
|
1,409 | (1,383 | ) | - | - | - | 26 | |||||||||||||||||
Acquisition-related
in-process research and development charges
|
74 | (74 | ) | - | - | - | - | |||||||||||||||||
Restructuring
charges and certain acquisition-related costs
|
706 | - | (706 | ) | - | - | - | |||||||||||||||||
Other
(income)/deductions—net
|
414 | (23 | ) | - | - | (181 | ) | 210 | ||||||||||||||||
Income
from continuing operations before provision for taxes on
income
|
3,179 | 2,841 | 799 | - | 182 | 7,001 | ||||||||||||||||||
Provision
for taxes on income
|
1,146 | 712 | 226 | - | 26 | 2,110 | ||||||||||||||||||
Income
from continuing operations
|
2,033 | 2,129 | 573 | - | 156 | 4,891 | ||||||||||||||||||
Discontinued
operations—net of tax
|
2 | - | - | (2 | ) | - | - | |||||||||||||||||
Net
income before allocation to noncontrolling interests
|
2,035 | 2,129 | 573 | (2 | ) | 156 | 4,891 | |||||||||||||||||
Less: Net
income attributable to noncontrolling interests
|
9 | - | - | - | - | 9 | ||||||||||||||||||
Net
income attributable to Pfizer Inc.
|
$ | 2,026 | $ | 2,129 | $ | 573 | $ | (2 | ) | $ | 156 | $ | 4,882 | |||||||||||
Earnings
per common share - diluted:
|
||||||||||||||||||||||||
Income
from continuing operations attributable to Pfizer Inc. common
shareholders
|
$ | 0.25 | $ | 0.26 | $ | 0.07 | $ | - | $ | 0.02 | $ | 0.60 | ||||||||||||
Discontinued
operations—net of tax
|
- | - | - | - | - | - | ||||||||||||||||||
Net
income attributable to Pfizer Inc. common shareholders
|
$ | 0.25 | $ | 0.26 | $ | 0.07 | $ | - | $ | 0.02 | $ | 0.60 |
(a)
|
Adjusted
income and its components and adjusted diluted EPS are not, and should not
be viewed as, substitutes for U.S. GAAP net income and its components and
diluted EPS.
|
(b)
|
Exclusive
of amortization of intangible assets, except as discussed in note
1.
|
See end
of tables for notes.
Certain
amounts may reflect rounding adjustments.
PFIZER
INC. AND SUBSIDIARY COMPANIES
RECONCILIATION
OF REPORTED NET INCOME ATTRIBUTABLE TO PFIZER INC. AND ITS
COMPONENTS
AND
REPORTED DILUTED EPS ATTRIBUTABLE TO PFIZER INC. COMMON
SHAREHOLDERS
TO
ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS (a)
(UNAUDITED)
(millions
of dollars, except per common share data)
Three Months Ended March 29, 2009
|
||||||||||||||||||||||||
Purchase
|
Acquisition-
|
Certain
|
||||||||||||||||||||||
Accounting
|
Related
|
Discontinued
|
Significant
|
|||||||||||||||||||||
Reported
|
Adjustments
|
Costs(2)
|
Operations
|
Items(3)
|
Adjusted
|
|||||||||||||||||||
Revenues
|
$ | 10,867 | $ | - | $ | - | $ | - | $ | (22 | ) | $ | 10,845 | |||||||||||
Costs
and expenses:
|
||||||||||||||||||||||||
Cost of sales (b)
|
1,408 | - | - | - | (94 | ) | 1,314 | |||||||||||||||||
Selling,
informational and administrative expenses (b)
|
2,876 | 3 | - | - | (46 | ) | 2,833 | |||||||||||||||||
Research and
development expenses (b)
|
1,705 | (7 | ) | - | - | (33 | ) | 1,665 | ||||||||||||||||
Amortization
of intangible assets
|
578 | (540 | ) | - | - | - | 38 | |||||||||||||||||
Acquisition-related
in-process research and development charges
|
- | - | - | - | - | - | ||||||||||||||||||
Restructuring
charges and certain acquisition-related costs
|
554 | - | (397 | ) | - | (157 | ) | - | ||||||||||||||||
Other
(income)/deductions—net
|
(57 | ) | (2 | ) | - | - | (165 | ) | (224 | ) | ||||||||||||||
Income
from continuing operations before provision for taxes on
income
|
3,803 | 546 | 397 | - | 473 | 5,219 | ||||||||||||||||||
Provision
for taxes on income
|
1,074 | 192 | 145 | - | 140 | 1,551 | ||||||||||||||||||
Income
from continuing operations
|
2,729 | 354 | 252 | - | 333 | 3,668 | ||||||||||||||||||
Discontinued
operations—net of tax
|
1 | - | - | (1 | ) | - | - | |||||||||||||||||
Net
income before allocation to noncontrolling interests
|
2,730 | 354 | 252 | (1 | ) | 333 | 3,668 | |||||||||||||||||
Less: Net
income attributable to noncontrolling interests
|
1 | - | - | - | - | 1 | ||||||||||||||||||
Net
income attributable to Pfizer Inc.
|
$ | 2,729 | $ | 354 | $ | 252 | $ | (1 | ) | $ | 333 | $ | 3,667 | |||||||||||
Earnings
per common share - diluted:
|
||||||||||||||||||||||||
Income
from continuing operations attributable to Pfizer Inc.
common shareholders
|
$ | 0.40 | $ | 0.05 | $ | 0.04 | $ | - | $ | 0.05 | $ | 0.54 | ||||||||||||
Discontinued
operations—net of tax
|
- | - | - | - | - | - | ||||||||||||||||||
Net
income attributable to Pfizer Inc. common shareholders
|
$ | 0.40 | $ | 0.05 | $ | 0.04 | $ | - | $ | 0.05 | $ | 0.54 |
(a)
|
Adjusted
income and its components and adjusted diluted EPS are not, and should not
be viewed as, substitutes for U.S. GAAP net income and its components and
diluted EPS.
|
(b)
|
Exclusive
of amortization of intangible assets, except as discussed in note
1.
|
See end
of tables for notes.
Certain
amounts may reflect rounding adjustments.
PFIZER
INC. AND SUBSIDIARY COMPANIES
RECONCILIATION
OF REPORTED NET INCOME ATTRIBUTABLE TO PFIZER INC. AND ITS
COMPONENTS
AND
REPORTED DILUTED EPS ATTRIBUTABLE TO PFIZER INC. COMMON
SHAREHOLDERS
TO
ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS
(UNAUDITED)
1)
|
Amortization
expense related to acquired intangible assets that contribute to our
ability to sell, manufacture, research, market and distribute our products
is included in Amortization of intangible
assets as these intangible assets benefit multiple business
functions. Amortization expense related to acquired intangible assets that
are associated with a single function is included in Cost of sales,
Selling, informational and
administrative expenses or Research and development
expenses, as appropriate.
|
2)
|
Acquisition-related
costs includes the following:
|
First Quarter
|
||||||||
(millions of dollars)
|
2010
|
2009
|
||||||
Transaction
costs(a)
|
$ | 9 | $ | 369 | ||||
Integration
costs(a)
|
208 | 28 | ||||||
Restructuring
charges(a)
|
489 | - | ||||||
Additional
depreciation - asset restructuring(b)
|
93 | - | ||||||
Total
acquisition-related costs — pre-tax
|
799 | 397 | ||||||
Income
taxes(c)
|
(226 | ) | (145 | ) | ||||
Total
acquisition-related costs — net of tax
|
$ | 573 | $ | 252 |
(a)
|
Transaction
costs include costs directly related to our acquisition of Wyeth, such as
banking, legal, accounting and other similar costs. Integration
costs represent external, incremental costs directly related to
integrating Wyeth and primarily include expenditures for consulting and
systems integration. Restructuring charges relate to our acquisition of
Wyeth and include employee termination costs, asset impairments and exit
costs.
|
(b)
|
Represents
the impact of changes in the estimated useful lives of assets involved in
restructuring actions. Included in Cost of Sales ($13
million), Selling,
informational and administrative expenses ($60 million) and Research and development expenses
($20 million) for the three months ended April 4,
2010.
|
(c)
|
Included
in Provision for
taxes on income.
|
3) Certain
significant items includes the following:
First Quarter
|
||||||||
(millions of dollars)
|
2010
|
2009
|
||||||
Restructuring
charges - Cost-reduction initiatives(a)
|
$ | - | $ | 157 | ||||
Implementation
costs - Cost-reduction initiatives(b)
|
- | 174 | ||||||
Certain
legal matters(c)
|
142 | 132 | ||||||
Other
|
40 | 10 | ||||||
Total
certain significant items — pre-tax
|
182 | 473 | ||||||
Income
taxes(d)
|
(26 | ) | (140 | ) | ||||
Total
certain significant items — net of tax
|
$ | 156 | $ | 333 |
(a)
|
Restructuring
costs for 2009 are included in the Restructuring charges and
certain acquisition-related costs line item caption in
our consolidated statements of
income.
|
(b)
|
Included
in Cost of
sales ($76 million), Selling, informational and
administrative expenses ($46 million), Research and development
expenses ($41 million), and Other (income)/deductions -
net ($11 million) for the three months ended March 29,
2009.
|
(c)
|
Included
in Other
(income)/deductions - net.
|
(d)
|
Included
in Provision for
taxes on income.
|
PFIZER
INC.
REVENUES
FIRST
QUARTER 2010
(UNAUDITED)
(millions
of dollars)
WORLDWIDE
|
U.S.
|
INTERNATIONAL
|
||||||||||||||||||||||||||||||||||
%
|
%
|
%
|
||||||||||||||||||||||||||||||||||
2010
|
2009
|
Change
|
2010
|
2009
|
Change
|
2010
|
2009
|
Change
|
||||||||||||||||||||||||||||
TOTAL
REVENUES
|
$ | 16,750 | $ | 10,867 | 54 | $ | 7,314 | $ | 4,969 | 47 | $ | 9,436 | $ | 5,898 | 60 | |||||||||||||||||||||
TOTAL
BIOPHARMACEUTICAL:
|
14,506 | 10,102 | 44 | 6,607 | 4,709 | 40 | 7,899 | 5,393 | 46 | |||||||||||||||||||||||||||
LIPITOR
|
2,757 | 2,721 | 1 | 1,310 | 1,452 | (10 | ) | 1,447 | 1,269 | 14 | ||||||||||||||||||||||||||
ENBREL
(Outside the U.S. and Canada)***
|
802 | - | * | - | - | * | 802 | - | * | |||||||||||||||||||||||||||
LYRICA
|
723 | 684 | 6 | 352 | 418 | (16 | ) | 371 | 266 | 40 | ||||||||||||||||||||||||||
EFFEXOR***
|
716 | - | * | 592 | - | * | 124 | - | * | |||||||||||||||||||||||||||
CELEBREX
|
570 | 564 | 1 | 388 | 419 | (7 | ) | 182 | 145 | 24 | ||||||||||||||||||||||||||
PREVNAR/PREVENAR
- 7***
|
520 | - | * | 181 | - | * | 339 | - | * | |||||||||||||||||||||||||||
VIAGRA
|
479 | 454 | 5 | 253 | 258 | (2 | ) | 226 | 196 | 16 | ||||||||||||||||||||||||||
XALATAN
/ XALACOM
|
422 | 407 | 4 | 145 | 153 | (5 | ) | 277 | 254 | 9 | ||||||||||||||||||||||||||
NORVASC
|
368 | 481 | (23 | ) | 13 | 19 | (35 | ) | 355 | 462 | (23 | ) | ||||||||||||||||||||||||
ZYVOX
|
292 | 283 | 3 | 161 | 175 | (8 | ) | 131 | 108 | 21 | ||||||||||||||||||||||||||
PREVNAR/PREVENAR
- 13***
|
286 | - | * | 208 | - | * | 78 | - | * | |||||||||||||||||||||||||||
ZOSYN
/ TAZOCIN***
|
264 | - | * | 178 | - | * | 86 | - | * | |||||||||||||||||||||||||||
DETROL/DETROL
LA
|
261 | 289 | (10 | ) | 176 | 211 | (17 | ) | 85 | 78 | 9 | |||||||||||||||||||||||||
SUTENT
|
259 | 202 | 28 | 69 | 67 | 3 | 190 | 135 | 40 | |||||||||||||||||||||||||||
PREMARIN
FAMILY***
|
256 | - | * | 234 | - | * | 22 | - | * | |||||||||||||||||||||||||||
GEODON
/ ZELDOX
|
254 | 230 | 10 | 213 | 195 | 9 | 41 | 35 | 19 | |||||||||||||||||||||||||||
GENOTROPIN
|
206 | 197 | 4 | 45 | 54 | (17 | ) | 161 | 143 | 12 | ||||||||||||||||||||||||||
CHANTIX
/ CHAMPIX
|
189 | 177 | 7 | 106 | 112 | (5 | ) | 83 | 65 | 27 | ||||||||||||||||||||||||||
VFEND
|
188 | 179 | 5 | 60 | 62 | (3 | ) | 128 | 117 | 9 | ||||||||||||||||||||||||||
BENEFIX***
|
154 | - | * | 67 | - | * | 87 | - | * | |||||||||||||||||||||||||||
CADUET
|
135 | 134 | - | 86 | 104 | (17 | ) | 49 | 30 | 62 | ||||||||||||||||||||||||||
AROMASIN
|
128 | 110 | 16 | 42 | 42 | - | 86 | 68 | 26 | |||||||||||||||||||||||||||
ZOLOFT
|
120 | 115 | 5 | 17 | 21 | (19 | ) | 103 | 94 | 10 | ||||||||||||||||||||||||||
REVATIO
|
114 | 113 | - | 69 | 82 | (16 | ) | 45 | 31 | 43 | ||||||||||||||||||||||||||
MEDROL
|
109 | 118 | (8 | ) | 25 | 41 | (39 | ) | 84 | 77 | 8 | |||||||||||||||||||||||||
CARDURA
|
107 | 107 | - | 8 | 1 | * | 99 | 106 | (7 | ) | ||||||||||||||||||||||||||
ARICEPT**
|
107 | 95 | 12 | - | - | * | 107 | 95 | 12 | |||||||||||||||||||||||||||
ZITHROMAX
/ ZMAX
|
103 | 114 | (10 | ) | 4 | 4 | (17 | ) | 99 | 110 | (10 | ) | ||||||||||||||||||||||||
REFACTO/XYNTHA***
|
90 | - | * | 21 | - | * | 69 | - | * | |||||||||||||||||||||||||||
ALL
OTHER (legacy Pfizer and legacy Wyeth)
|
2,523 | 1,746 | 45 | 864 | 460 | 88 | 1,659 | 1,286 | 29 | |||||||||||||||||||||||||||
ALLIANCE
REVENUE (Enbrel (in the U.S. and Canada)***, Aricept, Spiriva, Rebif and
Exforge)
|
1,004 | 582 | 73 | 720 | 359 | 100 | 284 | 223 | 28 | |||||||||||||||||||||||||||
TOTAL
DIVERSIFIED:
|
2,141 | 691 | 210 | 663 | 238 | 179 | 1,478 | 453 | 227 | |||||||||||||||||||||||||||
ANIMAL
HEALTH***
|
846 | 537 | 58 | 299 | 194 | 54 | 547 | 343 | 59 | |||||||||||||||||||||||||||
CONSUMER
HEALTHCARE***
|
663 | - | * | 315 | - | * | 348 | - | * | |||||||||||||||||||||||||||
NUTRITION***
|
458 | - | * | - | - | * | 458 | - | * | |||||||||||||||||||||||||||
CAPSUGEL
|
174 | 154 | 13 | 49 | 44 | 10 | 125 | 110 | 14 | |||||||||||||||||||||||||||
OTHER
****
|
103 | 74 | 39 | 44 | 22 | 100 | 59 | 52 | 13 |
* -
|
Calculation
not meaningful.
|
**
-
|
Represents
direct sales under license agreement with Eisai Co.,
Ltd.
|
***
-
|
Legacy
Wyeth products and operations. First quarter 2010 Animal Health results
also reflect the addition of legacy Wyeth products. Wyeth's
results are included in our financial statements commencing from the
acquisition date of October 15, 2009, in accordance with Pfizer's
domestic and international year-ends. Therefore, our first
quarter 2009 results do not include Wyeth's results of
operations.
|
****
-
|
Includes
transition activity from Pfizer's former consumer healthcare business,
which was sold in 2006, and Pfizer
Centersource.
|
Certain
amounts and percentages may reflect rounding adjustments.
PFIZER
INC.
BIOPHARMACEUTICAL
REVENUES
DEVELOPED
AND EMERGING MARKETS
(UNAUDITED)
(millions
of dollars)
FIRST QUARTER +
|
||||||||||||||||||||||||||||||||||||||||||||||||
TOTAL
|
DEVELOPED MARKETS++
|
EMERGING MARKETS+++
|
||||||||||||||||||||||||||||||||||||||||||||||
% Growth
|
% Growth
|
% Growth
|
||||||||||||||||||||||||||||||||||||||||||||||
|
2010
|
2009
|
Total
|
Operational
|
2010
|
2009
|
Total
|
Operational
|
2010
|
2009
|
Total
|
Operational
|
||||||||||||||||||||||||||||||||||||
TOTAL
BIOPHARMACEUTICAL
|
$ | 14,506 | $ | 10,102 | 44 | 38 | $ | 12,534 | $ | 8,750 | 43 | 38 | $ | 1,972 | $ | 1,352 | 46 | 37 | ||||||||||||||||||||||||||||||
LIPITOR
|
2,757 | 2,721 | 1 | (4 | ) | 2,542 | 2,526 | 1 | (5 | ) | 215 | 195 | 10 | 1 | ||||||||||||||||||||||||||||||||||
LYRICA
|
723 | 684 | 6 | 1 | 666 | 636 | 5 | - | 57 | 48 | 19 | 11 | ||||||||||||||||||||||||||||||||||||
CELEBREX
|
570 | 564 | 1 | (2 | ) | 510 | 504 | 1 | (1 | ) | 60 | 60 | 1 | (6 | ) | |||||||||||||||||||||||||||||||||
VIAGRA
|
479 | 454 | 5 | 1 | 408 | 382 | 7 | 3 | 71 | 72 | (1 | ) | (8 | ) | ||||||||||||||||||||||||||||||||||
NORVASC
|
368 | 481 | (23 | ) | (26 | ) | 258 | 365 | (29 | ) | (32 | ) | 110 | 116 | (6 | ) | (8 | ) | ||||||||||||||||||||||||||||||
ALL
OTHER
|
9,609 | 5,198 | 85 | 77 | 8,150 | 4,337 | 88 | 83 | 1,459 | 861 | 69 | 59 |
+ -
|
Revenues from South Korea are
included in the table under emerging markets in first-quarter 2009.
Commencing
in the first quarter of 2010, revenues from South Korea are included under
developed markets.
|
++ -
|
Includes
U.S. biopharmaceutical revenues, which represent 46% of total
first-quarter 2010 biopharmaceutical revenues and 47% of total
first-quarter 2009 biopharmaceutical revenues. First-quarter
2010 includes revenues from Wyeth's developed markets; however,
first-quarter 2009 does not include Wyeth's
revenues.
|
+++ -
|
Amounts
include all human prescription pharmaceutical products sold in emerging
markets, including, but not limited to, Asia (excluding Japan, and
excluding South Korea in 2010), Latin America, Middle East, Africa,
Central and Eastern Europe, Russia and Turkey. First-quarter 2010 includes
revenues from Wyeth's emerging markets; however, first-quarter 2009 does
not include Wyeth's revenues. If revenues from South Korea had not been
included in emerging markets in first-quarter 2009, operational growth in
emerging markets would be as follows: Total: 43%; Lipitor: 7%; Lyrica:
22%; Celebrex: 2%; Viagra: 0%; Norvasc: 1%; and all other:
63%.
|
Certain
amounts and percentages may reflect rounding adjustments.
PFIZER
INC.
SUPPLEMENTAL
INFORMATION
1. Change in Reported
Revenues
The
weakening of the U.S. dollar relative to other currencies, primarily the euro,
Australian dollar, Canadian dollar and Brazilian Real, favorably impacted our
revenues by $733 million, or 7%, in first-quarter 2010, compared to the same
period last year. Operationally, reported revenues increased 47% in
first-quarter 2010, compared to the same period in 2009, due to the favorable
impact of $5.3 billion, or 48%, due to the addition of legacy Wyeth products,
partially offset by a decline in revenues from legacy Pfizer products of $137
million, or 1%.
2. Change in Reported Cost
of Sales
Reported
cost of sales increased 206% in first-quarter 2010, compared to the same period
in 2009. The increase primarily reflects purchase accounting adjustments
associated with the Wyeth acquisition, the addition of Wyeth manufacturing
costs, as well as the change in the mix of products and businesses as a result
of the Wyeth acquisition. In addition, the impact of foreign exchange had an
unfavorable impact on reported cost of sales in the current
quarter.
Reported
cost of sales as a percentage of revenues increased 12.7 percentage points to
25.7% in first-quarter 2010, compared to the same period in 2009, reflecting the
aforementioned factors.
3. Change in Reported
Selling, Informational & Administrative (SI&A) Expenses and Reported
Research & Development (R&D) Expenses and Reported In-Process R&D
Charges (IPR&D)
Reported
SI&A expenses increased 54% in first-quarter 2010, compared to the same
period in 2009. The increase primarily reflects the addition of Wyeth operating
costs and the unfavorable impact of foreign exchange.
Reported
R&D expenses increased 31% in first-quarter 2010, compared to the same
period in 2009. The increase is primarily due to the addition of Wyeth operating
costs, continued investment in the late-stage development portfolio and the
unfavorable impact of foreign exchange.
Reported
IPR&D charges of $74 million in 2010 relate to the resolution of
contingencies associated with our 2008 acquisition of CovX.
4. Other (Income)/Deductions
- Net
($
in millions)
|
First-Quarter
|
|||||||
2010
|
2009
|
|||||||
Interest
income
|
$ | (112 | ) | $ | (245 | ) | ||
Interest
expense
|
522 | 129 | ||||||
Net
interest (income)/expense(a)
|
410 | (116 | ) | |||||
Royalty-related
income
|
(142 | ) | (57 | ) | ||||
Net
(gain)/loss on asset disposals
|
(45 | ) | (12 | ) | ||||
Legal
matters, net
|
137 | 95 | ||||||
Other,
net
|
54 | 33 | ||||||
Other
(income)/deductions-net
|
$ | 414 | $ | (57 | ) |
(a)
|
Net
interest expense was $410 million in first-quarter 2010 compared to net
interest income of $116 million in the same period in 2009. Interest
expense increased in 2010 due to our issuance of $13.5 billion of senior
unsecured notes on March 24, 2009 and $10.5 billion of senior unsecured
notes on June 3, 2009, primarily related to the acquisition of Wyeth.
Interest income decreased in 2010 due to lower interest rates coupled with
lower average cash balances.
|
1
5. Effective Tax
Rate
The
effective tax rate on reported Income from continuing operations
before provision for taxes on income for first-quarter 2010 was 36.0%
compared to 28.2% in first-quarter 2009. The increase in the effective tax rate
is the result of an increase in amortization charges, primarily related to
intangible assets, incurred as a result of our acquisition of Wyeth and the mix
of jurisdictions in which those charges were incurred. In addition, the increase
in the effective tax rate was impacted by the expiration of the U.S. research
tax credit, the increase in non-deductible IPR&D charges, as well as the
write-off of the deferred tax asset of approximately $270 million related the
Medicare Part D subsidy for retiree prescription drug coverage resulting from
changes in the recently enacted U.S. healthcare legislation concerning the tax
treatment of that subsidy effective for tax years beginning after December 31,
2012, partially offset by $410 million in tax benefits for the resolution of
certain tax positions pertaining to prior years with various foreign tax
authorities.
The
effective tax rate on adjusted income(1) was
30.1% in first-quarter 2010 and 29.7% in first-quarter 2009. The tax rate
on adjusted income(1) in
2010 takes into account the expiration of the U.S. research tax credit, the
write-off of the deferred tax asset of approximately $270 million related the
Medicare Part D subsidy for retiree prescription drug coverage resulting from
changes in the recently enacted U.S. healthcare legislation concerning the tax
treatment of that subsidy effective for tax years beginning after December 31,
2012, largely offset by $410 million in tax benefits for the resolution of
certain tax positions pertaining to prior years with various foreign tax
authorities.
6. Reconciliation of 2010
Adjusted Income(1) and Adjusted Diluted
EPS(1) Guidance to 2010 Reported
Net Income Attributable to Pfizer Inc. and Reported Diluted EPS Attributable to
Pfizer Inc. Common Shareholders Guidance (a)
Full-Year 2010 Guidance
|
||||||
($ billions, except per-share amounts)
|
Net Income(b)
|
Diluted EPS(b)
|
||||
Income/(Expense)
|
||||||
Adjusted
Income/Diluted EPS(1)
Guidance
|
~$
17.0 - $17.8
|
~$
2.10 - $2.20
|
||||
Purchase
Accounting Impacts of Transactions Completed as of 4/4/10
|
(6.4)
|
(0.79)
|
||||
|
||||||
Acquisition-Related
Costs
|
(2.5
– 2.9)
|
(0.31-0.36)
|
||||
Reported
Net Income Attributable to Pfizer Inc/Diluted EPS Guidance
|
~$
7.7
- $8.9
|
~$
0.95
- $1.10
|
||||
|
(a)
|
At
exchange rates in effect at about the time of the first-quarter 2010
earnings press release (average April 2010 exchange rates).
|
|
(b)
|
Does
not assume the completion of any business-development transactions not
completed as of April 4, 2010. Amounts exclude
the potential effects of the resolution of litigation-related matters not
substantially resolved as of April 4,
2010.
|
2
7. Reconciliation of 2012
Adjusted Income(1) and Adjusted Diluted
EPS(1) Targets to 2012 Reported
Net Income Attributable to Pfizer Inc. and Reported Diluted EPS Attributable to
Pfizer Inc. Common Shareholders Targets (a)
Full-Year 2012 Targets
|
||||||
($ billions, except per-share amounts)
|
Net Income(b)
|
Diluted EPS(b)
|
||||
Income/(Expense)
|
||||||
Adjusted
Income/Diluted EPS(1)
Targets
|
~$
18.3
- $19.1
|
~$
2.25
- $2.35
|
||||
Purchase
Accounting Impacts of Transactions Completed as of 4/4/10
|
(3.8)
|
(0.47)
|
|
|||
|
||||||
Acquisition-Related
Costs
|
(1.2
– 1.6)
|
(0.15
– 0.20)
|
||||
Reported
Net Income Attributable to Pfizer Inc/Diluted EPS Targets
|
~$
12.9
- $14.1
|
~$
1.58
- $1.73
|
||||
(a)
|
At
exchange rates in effect at about the time of the first-quarter 2010
earnings press release (average April 2010 exchange rates).
|
(b)
|
Amounts
exclude the potential effects of the resolution of litigation-related
matters. Given the longer-term nature of these targets,
they are subject to greater variability and less certainty as a result of
potential material impacts related to foreign exchange
fluctuations, macroeconomic activity including inflation, and
industry-specific challenges including changes to government
healthcare policy, among
others.
|
_______________
(1)
“Adjusted income” and “adjusted diluted earnings per share (EPS)” are defined as
reported net income attributable to Pfizer Inc. and reported diluted EPS
attributable to Pfizer Inc. common shareholders excluding purchase accounting
adjustments, acquisition-related costs, discontinued operations and certain
significant items. As described under Adjusted Income in the
Management’s Discussion and Analysis of Financial Condition and Results of
Operations section of Pfizer’s Form 10-K for the fiscal year ended December 31,
2009, management uses adjusted income, among other factors, to set performance
goals and to measure the performance of the overall company. We believe that
investors’ understanding of our performance is enhanced by disclosing this
measure. The adjusted income and adjusted diluted EPS measures are not, and
should not be viewed as, substitutes for U.S. GAAP net income and diluted
EPS.
3
DISCLOSURE
NOTICE: The information contained in this earnings release and the attachments
is as of May 4, 2010. The Company assumes no obligation to update
forward-looking statements contained in this earnings release or the attachments
as a result of new information or future events or developments.
This
webcast contains forward-looking information about the Company’s financial
results and estimates, business plans and prospects, in-line products and
product candidates that involves substantial risks and
uncertainties. You can identify these statements by the fact that
they use words such as “will,” “anticipate,” “estimate,” “expect,” “project,”
“intend,” “plan,” “believe,” “target,” “forecast” and other words and terms of
similar meaning in connection with any discussion of future operating or
financial performance or business plans and prospects. Among the
factors that could cause actual results to differ materially are the following:
the success of research and development activities; decisions by regulatory
authorities regarding whether and when to approve our drug applications as well
as their decisions regarding labeling, ingredients and other matters that could
affect the availability or commercial potential of our products; the speed with
which regulatory authorizations, pricing approvals and product launches may be
achieved; the success of external business-development activities; competitive
developments, including the impact on our competitive position of new product
entrants, in-line branded products, generic products, private label products and
product candidates that treat diseases and conditions similar to those treated
by our in-line drugs and drug candidates; the ability to meet generic
and branded competition after the loss of patent protection for our products or
competitor products; the ability to successfully market both new and existing
products domestically and internationally; difficulties or delays in
manufacturing; trade buying patterns; the impact of existing and future
legislation and regulatory provisions on product exclusivity; trends toward
managed care and healthcare cost containment; the impact of U.S. healthcare
legislation enacted in 2010 – the Patient Protection and Affordable Care Act and
the Health Care and Education Reconciliation Act; U.S. legislation or regulatory
action affecting, among other things, pharmaceutical product pricing,
reimbursement or access, including under Medicaid, Medicare and other publicly
funded or subsidized health programs, the importation of prescription drugs from
outside the U.S. at prices that are regulated by governments of various foreign
countries, direct-to-consumer advertising and interactions with healthcare
professionals, and the use of comparative effectiveness methodologies that could
be implemented in a manner that focuses primarily on the cost differences and
minimizes the therapeutic differences among pharmaceutical products and
restricts access to innovative medicines; legislation or regulatory action in
markets outside the U.S. affecting pharmaceutical product pricing, reimbursement
or access; contingencies related to actual or alleged environmental
contamination; claims and concerns that may arise regarding the safety or
efficacy of in-line products and product candidates; significant breakdown,
infiltration, or interruption of our information technology systems and
infrastructure; legal defense costs, insurance expenses, settlement costs and
the risk of an adverse decision or settlement related to product liability,
patent protection, governmental investigations, ongoing efforts to explore
various means for resolving asbestos litigation, and other legal proceedings;
the Company’s ability to protect its patents and other intellectual property
both domestically and internationally; interest rate and foreign currency
exchange rate fluctuations; governmental laws and regulations affecting domestic
and foreign operations, including tax obligations and changes affecting the
taxation by the U.S. of income earned outside of the U.S. that may result from
pending and possible future proposals; changes in U.S. generally accepted
accounting principles; uncertainties related to general economic, political,
business, industry, regulatory and market conditions including, without
limitation, uncertainties related to the impact on us, our lenders, our
customers, our suppliers and counterparties to our foreign-exchange and
interest-rate agreements of weak global economic conditions and recent and
possible future changes in global financial markets; any changes in business,
political and economic conditions due to actual or threatened terrorist activity
in the U.S. and other parts of the world, and related U.S. military action
overseas; growth in costs and expenses; changes in our product, segment and
geographic mix; and the impact of acquisitions, divestitures, restructurings,
product withdrawals and other unusual items, including our ability to realize
the projected benefits of our acquisition of Wyeth and of our cost-reduction
initiatives. A further list and description of risks, uncertainties and other
matters can be found in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2009 and in its reports on Forms 10-Q and
8-K.
This
earnings release may include discussion of certain clinical studies relating to
various in-line products and/or product candidates. These studies
typically are part of a larger body of clinical data relating to such products
or product candidates, and the discussion herein should be considered in the
context of the larger body of data.