Pfizer Reports Fourth-Quarter and Full-Year 2007 Results and 2008 Financial Guidance

  • Fourth-Quarter 2007 Revenues of $13.1 Billion Increased from $12.6 Billion in the Year-Ago Quarter
  • Fourth-Quarter 2007 Reported Diluted EPS of $0.42 Compared with $1.32 in the Year-Ago Quarter, which Included the $1.08 EPS Gain on the Sale of the Consumer Healthcare Business
  • Fourth-Quarter 2007 Adjusted Diluted EPS(1) of $0.52 Increased from $0.43 in the Year-Ago Quarter
  • Full-Year 2007 Revenues of $48.6 Billion Increased from $48.4 Billion in 2006

NEW YORK--(BUSINESS WIRE)--Pfizer Inc (NYSE: PFE):

($ in millions, except per share amounts)
Fourth Quarter   Full Year
2007   2006   Change 2007   2006   Change
Reported Revenues $ 13,065 $ 12,603 4% $ 48,613 $ 48,371 1%
Reported Net Income 2,878 9,449 (70%) 8,298 19,337 (57%)
Reported Diluted EPS 0.42 1.32 (68%) 1.20 2.66 (55%)
Adjusted Income(1) 3,556 3,047 17% 15,267 14,982 2%
Adjusted Diluted EPS(1) 0.52 0.43 21% 2.20 2.06 7%

Pfizer Inc (NYSE: PFE) today reported results for the fourth-quarter and full-year 2007. For the fourth-quarter 2007, Pfizer recorded revenues of $13.1 billion, an increase of 4% compared with $12.6 billion in the year-ago quarter, despite the March 2007 loss of U.S. exclusivity of Norvasc, which contributed to a decrease in Norvasc revenues of $667 million. Fourth-quarter 2007 revenues were positively impacted by foreign exchange, which increased revenues by approximately $610 million or 5%, and the strong performance of many new and in-line products.

For the fourth-quarter 2007, the Company posted reported net income of $2.9 billion, a decrease of 70% compared with $9.4 billion in the prior-year quarter, and reported diluted EPS of $0.42, a decrease of 68% compared with $1.32 in the prior-year quarter. The decline was primarily attributable to the one-time after-tax gain of $7.9 billion ($1.08 in reported diluted EPS) in the fourth-quarter 2006 related to the sale of the Consumer Healthcare business.

Pfizer recorded full-year 2007 revenues of $48.6 billion, an increase of 1% compared with $48.4 billion in 2006, notwithstanding the loss of U.S. exclusivity of Norvasc and Zoloft, which contributed to a decrease in Norvasc and Zoloft revenues of $3.4 billion. The 1% increase reflects the favorable impact of foreign exchange, which increased revenues by approximately $1.5 billion or 3%, in addition to the strong performance of many new and in-line products.

For the full-year 2007, the Company posted reported net income of $8.3 billion, a decrease of 57% compared with $19.3 billion in 2006, and reported diluted EPS of $1.20, a decrease of 55% compared with $2.66 in 2006. The decline was primarily attributable to the one-time after-tax gain of $7.9 billion ($1.08 in reported diluted EPS) in 2006 related to the sale of the Consumer Healthcare business as well as after-tax charges of $2.1 billion in the third-quarter 2007 related to the write-off of assets and other costs associated with Pfizer’s decision to exit Exubera.

For the fourth-quarter 2007, Pfizer posted adjusted income(1) of $3.6 billion, an increase of 17% compared with $3.0 billion in the year-ago quarter, and adjusted diluted EPS(1) of $0.52, an increase of 21% compared with $0.43 in the year-ago quarter. For the full-year 2007, the Company posted adjusted income(1) of $15.3 billion, an increase of 2% compared with $15.0 billion in 2006, and adjusted diluted EPS(1) of $2.20, an increase of 7% compared with $2.06 in 2006. Fourth-quarter and full-year 2007 adjusted income(1) and adjusted diluted EPS(1) were favorably impacted by foreign exchange and the Company’s cost-reduction initiatives, and were also impacted by revenues as discussed above. Adjusted diluted EPS(1) was also positively impacted by Pfizer’s purchase of $10.0 billion of the Company’s stock in 2007, approximately $2.5 billion of which was purchased in the fourth quarter.

Executive Commentary

“In 2007, we delivered solid performance, and made structural and operational changes to enhance the future performance of our company,” said Chairman and Chief Executive Officer Jeff Kindler. “With strong product performance, cost reductions, improved productivity and the benefits of foreign exchange, we achieved both revenue and adjusted diluted EPS(1) growth despite losing U.S. market exclusivity for Norvasc and Zoloft. This performance highlights not only Pfizer’s operating and financial strength, but also our determination to meet our objectives in a challenging marketplace.”

“We are executing against a broad plan to position Pfizer to deliver long-term value. Our new products -- Lyrica, Chantix, and Sutent -- are performing well. We are continuing to strengthen our senior leadership team and enhance accountability. We are shifting investments into high-priority therapeutic areas, revamping our R&D operations and acquiring new compounds and technologies that we believe are especially promising. These actions taken together have made Pfizer a stronger company than it was a year ago, and we look forward to continued progress in 2008,” added Kindler.

“Our results reflect our solid financial performance this quarter and year,” said Chief Financial Officer, Frank D’Amelio. “We continue to focus on building value by achieving our financial goals, maintaining spending discipline, prudently allocating our capital, and improving our cost structure. With respect to our cost structure, we continue to execute on our plans to reduce expenses and improve productivity. In 2007, among other activities, we reduced headcount by more than 11,000; exited six manufacturing sites and two R&D sites; continued to streamline our organization; and we remain on track to achieve in 2008 an absolute reduction of adjusted total costs(8) of at least $1.5 to $2.0 billion on a constant currency basis(9) as compared to 2006.”

“We are increasing our full-year 2008 revenue guidance to a range of $47.0 to $49.0 billion and providing additional full-year details,” continued D’Amelio. “As always, quarterly results may vary depending upon the seasonality of revenues and spending, as well as the timing of the loss of U.S. exclusivity and patent expirations of certain products, among other things. First-quarter 2008 revenues may not be comparable to the first-quarter 2007 revenues as a result of the loss of U.S. exclusivity of Norvasc, Camptosar (February 2008) and Zyrtec (January 2008), which we will cease selling this month following the anticipated launch of over-the-counter Zyrtec. Collectively, these products contributed U.S. revenues of about $1.1 billion in the first-quarter 2007 and $2.7 billion in the full-year 2007. We have considered these factors in our full-year 2008 guidance.”

“In 2007, we purchased $10.0 billion of Pfizer common stock. As part of our continuing effort to deliver strong total shareholder return, the Board of Directors authorized a new program to purchase up to $5.0 billion of the company’s common stock over time. In addition, we announced in December a 10% increase in our first-quarter 2008 dividend to $0.32 a share, marking our 41st consecutive year of annual dividend increases for Pfizer shareholders.”

Product Performance

($ in millions, except percentages)

 
Fourth Quarter Full Year
2007   2006   Change 2007   2006   Change
In-Line Products(2) $ 10,010 $ 9,614 4% $ 37,528 $ 36,504 3%
New Products(3) 1,103 569 94% 3,559 1,603 122%
 
Total In-Line and New Products(4) 11,113 10,183 9% 41,087 38,107 8%
 
Loss of Exclusivity Products(5)

784

1,483

3,532

6,976

(49%)

(47%)
 
Total Pharmaceutical 11,897 11,666 2% 44,619 45,083 (1%)
 
Animal Health 785 655 20% 2,639 2,311 14%
Other(6) 383 282 36% 1,355 977 39%
 
Total Revenues $ 13,065 $12,603 4% $48,613 $48,371 1%

(2) (3) (4) (5) (6) See end of text prior to tables for notes.

Pharmaceuticals

Pharmaceutical revenues for the fourth-quarter 2007 were $11.9 billion, an increase of 2% compared with the prior-year quarter, including the favorable impact of foreign exchange, which increased revenues by approximately $550 million or 5%. Fourth-quarter 2007 revenues from in-line and new products(4) increased 9% compared with the year-ago quarter. Revenues for Zoloft and Norvasc, which lost U.S. marketing exclusivity in 2006 and 2007, respectively, declined 47% compared with the year-ago quarter.

Full-year 2007 pharmaceutical revenues were $44.6 billion, a decrease of 1% compared with 2006, despite the positive impact of foreign exchange, which increased revenues by approximately $1.3 billion or 3%. Full-year 2007 revenues from in-line and new products(4) grew 8% compared with 2006. Revenues for Zoloft and Norvasc declined 49% in 2007 compared with 2006.

Lipitor revenues in the fourth-quarter 2007 were $3.4 billion, an increase of 3% compared with the prior-year quarter; this includes the favorable impact of foreign exchange, which increased revenues by approximately $150 million or 4%. In the U.S., Lipitor revenues declined 4% during the quarter, while revenues from international markets rose 13%. Full-year 2007 Lipitor revenues were $12.7 billion, a decrease of 2% compared with 2006; this includes the favorable impact of foreign exchange, which increased revenues by approximately $360 million or 3%. In the U.S., Lipitor revenues declined 8% during 2007, while revenues from international markets increased 9%. The U.S. statin market in particular continues to be highly competitive, with both branded and generic competition in an increasingly cost-sensitive environment. Pfizer continues to respond to this competition with an integrated, multi-channel effort emphasizing Lipitor’s strong clinical profile.

Celebrex revenues in the fourth-quarter 2007 were $637 million, an increase of 18% compared with the year-ago quarter. Full-year 2007 Celebrex revenues were $2.3 billion, an increase of 12% compared with 2006. In the U.S., Pfizer’s focus continues to include a direct-to-consumer advertising campaign aimed at further generating patient interest and initiating a valuable dialogue between patients and physicians about Celebrex.

Revenues from new products, including Chantix (known as Champix outside the U.S.), Sutent and Lyrica, grew significantly in both the fourth-quarter and full-year 2007 compared with the corresponding periods in 2006. In the fourth-quarter 2007, Chantix continued its strong performance with revenues of $280 million compared with $68 million in the fourth-quarter 2006. For the full-year 2007, Chantix revenues were $883 million compared with $101 million in 2006, the year it was launched. Chantix, the first non-nicotine prescription treatment for smoking cessation in almost a decade, has already been used by more than five million patients globally since its launch.

In the fourth-quarter 2007, revenues from Sutent, an important medicine for the treatment of advanced kidney cancer and gastrointestinal stromal tumors, were $182 million, an increase of 75% compared with the year-ago quarter. Sutent revenues for the full-year 2007 were $581 million, an increase of 166% compared with 2006.

In the fourth-quarter 2007, Lyrica revenues were $564 million, an increase of 60% compared with the prior-year quarter. Lyrica revenues for the full-year 2007 were $1.8 billion, an increase of 58% compared with 2006. Fourth-quarter and full-year 2007 revenue growth was driven by strong efficacy and high patient and physician satisfaction in the marketplace, as well as Lyrica’s recent FDA approval for the management of fibromyalgia. Lyrica is the only medicine indicated for this chronic, widespread pain condition. In addition, a branded direct-to-consumer campaign was initiated in the U.S. in late November 2007.

Animal Health

Animal Health revenues for the fourth-quarter 2007 were $785 million, an increase of 20% compared with $655 million in the year-ago quarter. For the full-year 2007, Animal Health revenues were $2.6 billion, an increase of 14% compared with $2.3 billion in 2006. Fourth-quarter and full-year 2007 revenue growth is attributable to strong product performance, as well as the favorable impact of foreign exchange which increased revenues by 7% for the fourth quarter and 5% for the full year.

Expenses

In the fourth-quarter 2007, adjusted cost of sales(1) as a percentage of revenues was 17.4% compared with 16.6% in the fourth-quarter 2006. For the full-year 2007, adjusted cost of sales(1) as a percentage of revenues was 15.9% compared with 14.9% in 2006, above previous guidance of about 15.5%. The favorable impact of our ongoing cost-reduction efforts in both the fourth-quarter and full-year 2007 was more than offset by the unfavorable impact of geographic and business mix as well as unfavorable foreign exchange on expenses compared with the respective year-ago periods.

Adjusted selling, informational and administrative (SI&A) expenses(1) were $4.5 billion in the fourth-quarter 2007, an increase of 1% compared with the prior-year quarter. For the full-year 2007, adjusted SI&A expenses(1) were $15.2 billion, a decrease of 1% compared with 2006. The favorable impact of our ongoing cost-reduction efforts in both the fourth-quarter and full-year 2007 was largely offset by the unfavorable impact of foreign exchange on expenses compared with the respective year-ago periods. Excluding the unfavorable impact of foreign exchange on expenses, adjusted SI&A expenses(1) in the full-year 2007 decreased by $560 million compared to 2006, somewhat less than previous guidance.

Adjusted research and development (R&D) expenses(1) were $2.2 billion in the fourth-quarter 2007, a decrease of 9% compared with the year-ago quarter, due primarily to the realization of savings associated with our cost-reduction initiatives partially offset by the unfavorable impact of foreign exchange on expenses. Full-year 2007 adjusted R&D expenses(1) were $7.5 billion, comparable to 2006 and in-line with previous guidance.

Financial Guidance

For the full-year 2008, Pfizer’s financial guidance, at current exchange rates(7) except as otherwise noted, is summarized below.

Revenues   $47.0 to $49.0 billion
Adjusted Total Costs(8)   At least $1.5 to $2.0 billion lower than 2006 on a constant currency basis(9)
Adjusted Cost of Sales(1) as a Percentage of Revenues  

14.5% to 15.5%

Adjusted R&D Expenses(1)   $7.3 to $7.6 billion
Adjusted SI&A Expenses(1)   $14.4 to $14.9 billion
Effective Tax Rate on Adjusted Income(1)   22.0% to 22.5%
Reported Diluted EPS   $1.78 to $1.93
Adjusted Diluted EPS(1)   $2.35 to $2.45
Cash Flows from Operations   $17.0 to $18.0 billion

For additional details, please see the attached financial schedules, product revenue tables, supplemental financial information and Disclosure Notice.

(1) "Adjusted income" and its components and "adjusted diluted earnings per share (EPS)" are defined as reported net income and its components and reported diluted EPS excluding purchase-accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. Adjusted Cost of Sales, Adjusted SI&A expenses and Adjusted R&D expenses 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-Q for the quarterly period ended September 30, 2007, 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 fourth-quarter and full-year 2007 and 2006 adjusted income and its components and adjusted diluted EPS to reported net income and its components and reported diluted EPS, as well as reconciliations of full-year 2008 adjusted income and adjusted diluted EPS guidance to full-year 2008 reported net income and reported diluted EPS guidance, 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 diluted EPS.

(2) Represents worldwide revenues for all pharmaceutical products, excluding revenues included in notes (3) and (5).

(3) Represents worldwide revenues for pharmaceutical products launched in the U.S. since 2005: Chantix/Champix, Eraxis, Lyrica, Macugen, Revatio, Selzentry/Celsentri, Sutent and Zmax.

(4) Total worldwide pharmaceutical revenues excluding the revenues of major products that have lost exclusivity in the U.S. in 2006 and 2007 as described in note (5). See the table accompanying this report.

(5) Represents worldwide revenues for pharmaceutical products that lost exclusivity in the U.S. in 2006 and 2007: Zoloft and Norvasc.

(6) Includes Consumer Healthcare business transition activity, Capsugel and Pfizer Centersource.

(7) Current exchange rates approximate rates at the time of our fourth quarter earnings press release (January 2008).

(8) Represents primarily the total of Adjusted Cost of Sales(1), Adjusted SI&A expenses(1) and Adjusted R&D expenses(1).

(9) Constant currency basis means that the applicable projected financial measure is based upon the actual foreign exchange rates in effect during 2006.

PFIZER INC AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
                 
 
(millions of dollars, except per common share data)
 
Fourth Quarter

% Incr.

/

(Decr.)

Full-Year

% Incr.

/

(Decr.)

2007 2006 2007 2006  
Revenues $ 13,065 $ 12,603 4 $ 48,613 $ 48,371 1
Costs and expenses:
Cost of sales (a) 2,625 2,217 18 11,239 7,640 47
Selling, informational and administrative expenses (a) 4,653 4,562 2 15,626 15,589 -
Research and development expenses (a) 2,260 2,412 (6 ) 8,089 7,599 6
Amortization of intangible assets 756 815 (7 ) 3,128 3,261 (4 )
Acquisition-related in-process research and development charges - 322 * 283 835 (66 )
Restructuring charges and acquisition-related costs 216 507 (57 ) 2,534 1,323 92

Other (income)/ deductions--net

  (610 )   54 *   (1,759 )   (904 ) 95

Income from continuing operations before (benefit)/ provision

for taxes on income and minority interests 3,165 1,714 85 9,473 13,028 (27 )

(Benefit)/ provision for taxes on income

264 223 19 1,064 1,992 (47 )
Minority interests   36     2 M+   42     12   235
Income from continuing operations   2,865     1,489 92   8,367     11,024   (24 )
Discontinued operations:
Income/(loss) from discontinued operations--net of tax (3 ) 103 * (3 ) 433 *
Gains/(losses) on sales of discontinued operations--net of tax   16     7,857 (100 )   (66 )   7,880   *
Discontinued operations--net of tax   13     7,960 (100 )   (69 )   8,313   *
Net income $ 2,878   $ 9,449 (70 ) $ 8,298   $ 19,337   (57 )
Earnings per common share - basic:
Income from continuing operations $ 0.42 $ 0.21 100 $ 1.21 $ 1.52 (20 )
Discontinued operations--net of tax   -     1.11 *   (0.01 )   1.15   *
Net income $ 0.42   $ 1.32 (68 ) $ 1.20   $ 2.67   (55 )
Earnings per common share - diluted:
Income from continuing operations $ 0.42 $ 0.21 100 $ 1.21 $ 1.52 (20 )
Discontinued operations--net of tax   -     1.11 *   (0.01 )   1.14   *
Net income $ 0.42   $ 1.32 (68 ) $ 1.20   $ 2.66   (55 )
Weighted-average shares used to calculate earnings per common share:
Basic   6,774     7,144   6,917     7,242  
Diluted   6,792     7,171   6,939     7,274  
 
 

(a) Exclusive of amortization of intangible assets, except as discussed in footnote 4 below.

 

   *  Calculation not meaningful.

   M+ Change greater than one thousand percent.

   Certain amounts and percentages may reflect rounding adjustments.

1.   The above financial statements present the three-month and twelve-month periods ended December 31 of each year. Subsidiaries operating outside the United States are included for the three-month and twelve-month periods ended November 30 of each year.
2. The financial results for the full year ended December 31, 2007, include pre-tax charges of $2.8 billion, virtually all of which were recorded in the third quarter of 2007, associated with the impairment of Exubera assets and the decision to exit and stop additional investment in the product. These charges include approximately $1.1 billion of intangible asset impairments, $661 million of inventory write-offs, $454 million of fixed asset impairments, and $578 million of other exit costs. The charges are included in Cost of sales ($2.6 billion), Selling, informational and administrative expenses ($85 million), Research and development expense ($100 million), and Revenues ($10 million for an estimate of customer returns).
3. As required, the estimated value of Acquisition-related in-process research and development charges (IPR&D) is expensed at acquisition date. In 2007, we expensed $283 million of IPR&D, primarily related to our acquisitions of BioRexis Pharmaceutical Corp. and Embrex, Inc. in the first quarter. In 2006, we expensed $835 million of IPR&D, of which $322 million related to our acquisition of PowderMed Ltd. in the fourth quarter and $513 million primarily related to our acquisition of Rinat Neuroscience Corp. in the second quarter.
4. Amortization expense related to acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute our products are included in Amortization of intangible assets as they benefit multiple business functions. Amortization expense related to acquired intangible assets that are associated with a single function are included in Cost of sales, Selling, informational and administrative expenses or Research and development expenses, as appropriate.
5. Discontinued operations--net of tax is primarily related to our former Consumer Healthcare business, sold in December 2006 for approximately $16.6 billion.
6. (Benefit)/provision for taxes on income includes a tax benefit of $278 million in the fourth quarter 2007 and a benefit of $958 million for the full-year 2007 relating to charges associated with Exubera. (Benefit)/provision for taxes on income in the full year 2006 includes a downward revision ($124 million) of the estimated tax costs recorded in 2005 attributable to the repatriation of foreign earnings in accordance with the American Jobs Creation Act of 2004, $217 million of one-time tax benefits associated with favorable tax legislation and $441 million related to the resolution of certain tax positions. (Benefit)/provision for taxes on income for the fourth quarter and full year 2007 was also favorably impacted by the change in geographic mix of products sold in 2007.
PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME AND ITS COMPONENTS AND REPORTED DILUTED EPS
TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS
(UNAUDITED)
(millions of dollars, except per common share data)
         
 
Quarter Ended December 31, 2007

Reported

Purchase

Accounting

Adjust-
ments

Acqui-
sition-

Related

Costs

Discon-
tinued

Oper-
ations(2)

Certain

Signi-
ficant

Items(3)

Adjusted

Revenues $ 13,065 $ - $ - $ - $ (75 ) $ 12,990
Costs and expenses:
Cost of sales (a) 2,625 - - - (359 ) 2,266
Selling, informational and administrative expenses (a) 4,653 3 - - (124 ) 4,532
Research and development expenses (a) 2,260 (7 ) - - (93 ) 2,160
Amortization of intangible assets 756 (721 ) - - - 35
Acquisition-related in-process R&D charges - - - - - -
Restructuring charges and acquisition-related costs 216 - (3 ) - (213 ) -

Other (income)/ deductions--net

(610 ) (2 ) -   -   219   (393 )

 

Income from continuing operations before (benefit)/ provision for taxes on income and minority interests

3,165 727 3 - 495 4,390

(Benefit)/ provision for taxes on income

264 219 (4 ) - 319 798
Minority interests 36   -   -   -   -   36  
Income from continuing operations 2,865   508   7   -   176   3,556  
Discontinued operations:
Income/(loss) from discontinued operations--net of tax (3 ) - - 3 - -
Gains/(losses) on sales of discontinued operations--net of tax 16   -   -   (16 ) -   -  
Discontinued operations--net of tax 13   -   -   (13 ) -   -  
Net income $ 2,878   $ 508   $ 7   $ (13 ) $ 176   $ 3,556  
Earnings per common share - diluted:
Income from continuing operations $ 0.42 $ 0.07 $ - $ - $ 0.03 $ 0.52
Discontinued operations--net of tax -   -   -   -   -   -  
Net income $ 0.42   $ 0.07   $ -   $ -   $ 0.03   $ 0.52  
 
 
 
Twelve Months Ended December 31, 2007

Reported

Purchase

Accounting

Adjust-
ments

Acqui-
sition-

Related

Costs

Discon-
tinued

Oper-
ations(2)

Certain

Signi-
ficant

Items(3)

Adjusted

Revenues $ 48,613 $ - $ - $ - $ (209 ) $ 48,404
Costs and expenses:
Cost of sales (a) 11,239 (49 ) - - (3,497 ) 7,693
Selling, informational and administrative expenses (a) 15,626 12 - - (418 ) 15,220
Research and development expenses (a) 8,089 (29 ) - - (516 ) 7,544
Amortization of intangible assets 3,128 (3,013 ) - - - 115
Acquisition-related in-process R&D charges 283 (283 ) - - - -
Restructuring charges and acquisition-related costs 2,534 - (11 ) - (2,523 ) -

Other (income)/ deductions--net

(1,759 ) (22 ) -   -   235   (1,546 )

Income from continuing operations before (benefit)/ provision for taxes on income and minority interests

9,473 3,384 11 - 6,510 19,378

(Benefit)/ provision for taxes on income

1,064 873 1 - 2,131 4,069
Minority interests 42   -   -   -   -   42  
Income from continuing operations 8,367   2,511   10   -   4,379   15,267  
Discontinued operations:
Income/(loss) from discontinued operations--net of tax (3 ) - - 3 - -
Gains/(losses) on sales of discontinued operations--net of tax (66 ) -   -   66   -   -  
Discontinued operations--net of tax (69 ) -   -   69   -   -  
Net income $ 8,298   $ 2,511   $ 10   $ 69   $ 4,379   $ 15,267  
Earnings per common share - diluted:
Income from continuing operations $ 1.21 $ 0.36 $ - $ - $ 0.63 $ 2.20
Discontinued operations--net of tax (0.01 ) -   -   0.01   -   -  
Net income $ 1.20   $ 0.36   $ -   $ 0.01   $ 0.63   $ 2.20  
 
 

(a) Exclusive of amortization of intangible assets, except as discussed in note 1.

See end of tables for notes.
Certain amounts may reflect rounding adjustments.
Certain prior period amounts were reclassified to conform to the current period presentation.
PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION OF REPORTED NET INCOME AND ITS COMPONENTS AND REPORTED DILUTED EPS
TO ADJUSTED INCOME AND ITS COMPONENTS AND ADJUSTED DILUTED EPS
(UNAUDITED)
(millions of dollars, except per common share data)
         
 
Quarter Ended December 31, 2006

Reported

Purchase

Accounting

Adjust-
ments

Acqui-
sition-

Related

Costs

Discon-
tinued

Oper-
ations(2)

Certain

Signi-
ficant

Items(3)

Adjusted

Revenues $ 12,603 $ - $ - $ - $ - $ 12,603
Costs and expenses:
Cost of sales (a) 2,217 (14 ) - - (113 ) 2,090
Selling, informational and administrative expenses (a) 4,562 3 - - (84 ) 4,481
Research and development expenses (a) 2,412 (7 ) - - (44 ) 2,361
Amortization of intangible assets 815 (786 ) - - (1 ) 28
Acquisition-related in-process R&D charges 322 (322 ) - - - -
Restructuring charges and acquisition-related costs 507 - (12 ) - (495 ) -

Other (income)/ deductions--net

54   (2 ) -   -   (306 ) (254 )

Income from continuing operations before (benefit)/ provision for taxes on income and minority interests

1,714 1,128 12 - 1,043 3,897

(Benefit)/ provision for taxes on income

223 229 7 - 389 848
Minority interests 2   -   -   -   -   2  
Income from continuing operations 1,489   899   5   -   654   3,047  
Discontinued operations:
Income from discontinued operations--net of tax 103 - - (103 ) - -
Gains/(losses) on sales of discontinued operations--net of tax 7,857   -   -   (7,857 ) -   -  
Discontinued operations--net of tax 7,960   -   -   (7,960 ) -   -  
Net income $ 9,449   $ 899   $ 5   $ (7,960 ) $ 654   $ 3,047  
Earnings per common share - diluted:
Income from continuing operations $ 0.21 $ 0.13 $ - $ - $ 0.09 $ 0.43
Discontinued operations--net of tax 1.11   -   -   (1.11 ) -     -  
Net income $ 1.32   $ 0.13   $ -   $ (1.11 ) $ 0.09   $ 0.43  
 
 
 
Twelve Months Ended December 31, 2006

Reported

Purchase

Accounting

Adjust-
ments

Acqui-
sition-

Related

Costs

Discon-
tinued

Oper-
ations(2)

Certain

Signi-
ficant

Items(3)

Adjusted

Revenues $ 48,371 $ - $ - $ - $ - $ 48,371
Costs and expenses:
Cost of sales (a) 7,640 (40 ) - - (391 ) 7,209
Selling, informational and administrative expenses (a) 15,589 12 - - (244 ) 15,357
Research and development expenses (a) 7,599 (28 ) - - (58 ) 7,513
Amortization of intangible assets 3,261 (3,149 ) - - - 112
Acquisition-related in-process R&D charges 835 (835 ) - - - -
Restructuring charges and acquisition-related costs 1,323 - (27 ) - (1,296 ) -

Other (income)/ deductions--net

(904 ) (15 ) -   -   (124 ) (1,043 )

Income from continuing operations before (benefit)/ provision for taxes on income and minority interests

13,028 4,055 27 - 2,113 19,223

(Benefit)/ provision for taxes on income

1,992 924 13 - 1,300 4,229
Minority interests 12   -   -   -   -   12  
Income from continuing operations 11,024   3,131   14   -   813   14,982  
Discontinued operations:
Income from discontinued operations--net of tax 433 - - (433 ) - -
Gains/(losses) on sales of discontinued operations--net of tax 7,880   -   -   (7,880 ) -   -  
Discontinued operations--net of tax 8,313   -   -   (8,313 ) -   -  
Net income $ 19,337   $ 3,131   $ 14   $ (8,313 ) $ 813   $ 14,982  
Earnings per common share - diluted:
Income from continuing operations $ 1.52 $ 0.43 $ - $ - $ 0.11 $ 2.06
Discontinued operations--net of tax 1.14   -   -   (1.14 ) -   -  
Net income $ 2.66   $ 0.43   $ -   $ (1.14 ) $ 0.11   $ 2.06  
 
 

(a) 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
NOTES TO RECONCILIATION OF REPORTED NET INCOME AND ITS COMPONENTS AND
REPORTED DILUTED EPS 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 are included in Amortization of intangible assets as they benefit multiple business functions. Amortization expense related to acquired intangible assets that are associated with a single function are included in Cost of sales, Selling, informational and administrative expenses or Research and development expenses, as appropriate.
 
2) Discontinued Operations is primarily related to our former Consumer Healthcare business.
 
3) Certain significant items includes the following:
       
Fourth Quarter Full-Year
(millions of dollars) 2007 2006 2007 2006
 
Restructuring charges - Cost-reduction initiatives(a) $ 213 $ 495 $ 2,523 $ 1,296
Implementation costs - Cost-reduction initiatives(b) 525 241 1,389 788
Asset impairment charges and other associated costs (c) (6 ) 320 2,798 320
Consumer Healthcare business transition activity(d) (2 ) - (26 ) -
Sanofi-aventis research and development milestone(e) - - - (118 )
Other(f)   (235 )   (13 )   (174 )   (173 )
Total certain significant items, pre-tax 495 1,043 6,510 2,113
Income taxes(g) (319 ) (389 ) (2,131 ) (735 )
Resolution of certain tax positions(g) - - - (441 )
Tax impact of the repatriation of foreign earnings(g)   -     -     -     (124 )
Total certain significant items--net of tax $ 176   $ 654   $ 4,379   $ 813  
  (a)   Included in Restructuring charges and acquisition-related costs.
 
(b) Included in Cost of sales ($263 million), Selling, informational and administrative expenses ($136 million), and Research and development expenses ($124 million) and Other (income)/deductions - net ($2 million) for the fourth quarter of 2007. Included in Cost of sales ($700 million), Selling, informational and administrative expenses ($334 million), Research and development expenses ($416 million) and Other (income)/deductions - net ($61 million income) for the full year ended December 31, 2007. Included in Cost of sales ($114 million), Selling, informational and administrative expenses ($83 million), Research and development expenses ($44 million) and for the fourth quarter of 2006. Included in Cost of sales ($392 million), Selling, informational and administrative expenses ($243 million), Research and development expenses ($176 million) and Other (income)/deductions - net ($23 million income) for the full year ended December 31, 2006.
 
(c) The financial results for the full year ended December 31, 2007, include pre-tax charges of $2.8 billion, virtually all of which were recorded in the third quarter of 2007, associated with the impairment of Exubera assets and the decision to exit and stop additional investment in the product. These charges include approximately $1.1 billion of intangible asset impairments, $661 million of inventory write-offs, $454 million of fixed asset impairments, and $578 million of other exit costs. The charges are included in Cost of sales ($2.6 billion), Selling, informational and administrative expenses ($85 million), Research and development expense ($100 million), and Revenues ($10 million for an estimate of customer returns). For the fourth quarter and full year 2006, includes $320 million related to the impairment of the Depo-Provera intangible asset, which was included in Other (income)/deductions - net.
 
(d) Included in Revenues ($75 million), Cost of sales ($73 million), Selling, informational and administrative expenses ($3 million) and Other (income)/deductions - net ($3 million income) for the fourth quarter of 2007, and included in Revenues ($219 million), Cost of sales ($194 million), Selling, informational and administrative expenses ($15 million) and Other (income)/deductions - net ($16 million income) for the full year ended December 31, 2007.
 
(e) Included in Research and development expenses.
 

(f)

Other can include items such as (Gains)/losses on sale of investments, (Gains)/losses on disposal of assets and litigation-related matters.

 

(g)

Included in (Benefit)/provision for taxes on income.

 

 

PFIZER INC
SEGMENT/PRODUCT REVENUES
FOURTH QUARTER 2007
(UNAUDITED)
(millions of dollars)
               
 
QUARTER-TO-DATE
WORLDWIDE U.S. INTERNATIONAL
% % %
  2007   2006   Change   2007   2006   Change   2007   2006   Change

TOTAL

REVENUES

13,065   12,603   4     5,910   6,404     (8 )   7,155   6,199   15  
                                       

PHARMA-
CEUTICAL

11,897   11,666   2     5,456   6,055     (10 )   6,441   5,611   15  

- CARDIO-
 VASCULAR
 AND
 METABOLIC
 DISEASES

4,995 5,243 (5 ) 2,322 2,865 (19 ) 2,673 2,378 12
LIPITOR 3,428 3,335 3 1,864 1,945 (4 ) 1,564 1,390 13
NORVASC 650 1,317 (51 ) 26 686 (96 ) 624 631 (1 )

CHANTIX /
CHAMPIX

280 68 311 202 68 196 78 - *
CADUET 154 115 35 125 109 16 29 6 359
CARDURA 128 140 (7 ) 3 2 51 125 138 (8 )

- CENTRAL
 NERVOUS
 SYSTEM
 DISORDERS

1,436 1,251 15 660 597 10 776 654 19
LYRICA 564 353 60 320 214 49 244 139 76

GEODON /
ZELDOX

232 210 10 192 176 9 40 34 15
ZOLOFT 134 166 (20 ) 25 76 (68 ) 109 90 20
NEURONTIN 110 120 (8 ) 19 18 11 91 102 (11 )
ARICEPT** 116 98 18 - - (2 ) 116 98 18

XANAX /
XANAX XR

86 81 7 16 15 10 70 66 6
RELPAX 85 81 6 53 52 1 32 29 16

-ARTHRITIS
 AND PAIN

804 737 9 509 477 7 295 260 14
CELEBREX 637 540 18 469 412 14 168 128 30
- INFECTIOUS

 AND

 RESPIRATORY

 DISEASES

943 866 9 280 256 9 663 610 9
ZYVOX 252 223 13 155 144 7 97 79 24
VFEND 177 148 20 57 49 17 120 99 22

ZITHROMAX /
ZMAX

110 109 - - (3 ) * 110 112 (3 )
DIFLUCAN 104 109 (5 ) 4 (13 ) * 100 122 (18