Pfizer Reports Third-Quarter 2007 Results; Reconfirms 2007 and 2008 Revenue and Adjusted Diluted EPS(1) Guidance.* Third-Quarter 2007 Reported Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.11 Represents a Decline of 76% Compared to the Same Period Last Year and Includes Charges of $0.31 ($2.8 Billion Pre-Tax) Related to a Decision to Exit Exubera * Adjusted Diluted EPS((1)) of $0.58 for the Third-Quarter 2007 Represents an Increase of 7% Compared to the Same Period a Year Ago * New Products((3)) Posted Significant Growth in Revenues; Overall Third-Quarter 2007 Revenues were Adversely Impacted by Loss of U.S. Exclusivity for Norvasc Norvasc® Amlodepine besylate, see there and Zoloft Zo·loft A trademark for the serotonin-inhibiting antidepressant sertraline hydrochloride. sertraline hydrochloride Lustral (UK), Zoloft Pharmacologic class: * Worldwide Lipitor Lip·i·tor A trademark for the drug atorvastatin calcium. atorvastatin calcium Lipitor Pharmacologic class: HMG-CoA reductase inhibitor Therapeutic class: Revenues were $3.2 Billion in the Third Quarter of 2007 Compared to $3.3 Billion in the Third Quarter of 2006 NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Pfizer: [TABLE OMITTED] Pfizer Inc posted third-quarter 2007 revenues of $12.0 billion, a 2% decline from the same period last year. The Company's reported net income was $761 million in the third quarter of 2007, a decrease of 77% from the same period last year, primarily reflecting pre-tax charges of $2.8 billion related to the decision to exit Exubera, our inhaled in·hale v. in·haled, in·hal·ing, in·hales v.tr. 1. To draw (air or smoke, for example) into the lungs by breathing; inspire. 2. insulin insulin, hormone secreted by the β cells of the islets of Langerhans, specific groups of cells in the pancreas. Insufficiency of insulin in the body results in diabetes. Insulin was one of the first products to be manufactured using genetic engineering. product to treat diabetes. Adjusted income(1) for the third quarter of 2007 increased 1% to $4.0 billion compared to the third quarter of 2006. "We are encouraged by our operating results in the third quarter, and we remain on track to achieve our full-year 2007 revenues and adjusted diluted EPS(1) goals. Meanwhile, we made an important decision regarding Exubera, a product for which we initially had high expectations," said Jeff Kindler Jeffrey Kindler is the CEO of the Pfizer corporation. Background Jeffrey Kindler graduated summa cum laude from Tufts University in 1977 and then magna cum laude from Harvard Law School in 1980. He subsequently clerked for Supreme Court Justice William J. , Chairman and Chief Executive Officer. "Despite our best efforts, Exubera has failed to gain the acceptance of patients and physicians. We have therefore concluded that further investment in this product is unwarranted." "We will work with physicians to transition Exubera patients to other treatment options in the next three months. We remain committed to investing significant resources in the development of new and innovative medicines to manage diabetes, including monitoring inhalation inhalation /in·ha·la·tion/ (in?hah-la´shun) 1. the drawing of air or other substances into the lungs.inhala´tional 2. the drawing of an aerosolized drug into the lungs with the breath. 3. technologies and other innovative delivery systems for insulin and other medicines." Frank D'Amelio, Chief Financial Officer, added, "The Exubera pre-tax charges of $2.8 billion related primarily to the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of assets associated with this product, as well as the accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of other exit costs. More specifically, these charges are comprised of approximately $1.1 billion of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , $661 million of inventory, $454 million of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → and $584 million of other exit costs." Commenting on the financial performance in the just-ended quarter, Mr. Kindler kin·dle 1 v. kin·dled, kin·dling, kin·dles v.tr. 1. a. To build or fuel (a fire). b. To set fire to; ignite. 2. said, "We are achieving our operational goals in the face of major revenue losses due to patent expirations in the U.S. Most of our new products(3) along with the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of foreign exchange are contributing significantly toward offsetting these losses as evidenced by our year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. results." Mr. Kindler continued, "While optimizing revenues from our in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. products(2) and generating strong growth from our new products(3), we remain focused on driving a series of fundamental changes in the Company to improve our performance and achieve a lower, more flexible cost base. We are making substantial progress on these priorities. For example, our reduction in adjusted selling, informational and administrative expenses(1) this year is expected to exceed our previous forecast on a constant currency basis(8)." "However, we need to deliver better results, continue to make tough decisions about allocating our capital wisely, and bring more new products to the market as quickly as possible. Doing all of this will put Pfizer on the right course and build value for our shareholders." Financial Results In the third quarter of 2007, Pfizer posted revenues of $12.0 billion, a decline of 2% from $12.3 billion in the same period last year. This decline reflects the loss of U.S. exclusivity for Zoloft in June 2006 (with generic competition entering the market in August 2006) and for Norvasc in March 2007, six months earlier than expected. Both products were major contributors to revenue last year. Further, the decline in revenues was also the result of a one-time reversal of a sales deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. accrual recorded in the third quarter of 2006 related to a favorable development in a pricing dispute in the U.S. These adverse factors were substantially offset by revenues from new products(3) and the favorable impact of foreign exchange of approximately $300 million. Revenues in the first nine months of 2007 were $35.5 billion, a decline of 1% from $35.8 billion in the same period in the previous year, primarily a result of the loss of U.S. exclusivity for Zoloft and Norvasc, once again largely offset by the revenues from new products(3) and the favorable impact of foreign exchange of approximately $860 million. Reported net income in the third quarter of 2007 was $761 million compared with $3.4 billion in the third quarter of 2006, a decline of 77%. Reported diluted EPS of $0.11 in the third quarter of 2007 declined 76% from $0.46 in the prior year period. In addition to the $2.8 billion of pre-tax charges related to Exubera, loss of U.S. exclusivity for Zoloft and Norvasc, and the one-time reversal of a sales deduction accrual of about $170 million recorded in the third quarter of 2006, the decrease in both reported net income and reported diluted EPS reflects increased restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and implementation expenses associated with our cost-reduction initiatives, and the non-recurrence of prior year income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. as a result of the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of our former Consumer Healthcare business in December 2006. The impact of these factors was partially offset by the growth in revenues from new products(3), lower operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , increased interest income, and the favorable impact of foreign exchange. Reported diluted EPS was also favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by our share purchase program. Adjusted income(1) of $4.0 billion in the third quarter of 2007 increased 1% over the same period last year, while adjusted diluted EPS(1) of $0.58 increased 7% from $0.54 in 2006, primarily as a result of the revenue items previously discussed as well as lower operating expenses, increased interest income, and the favorable impact of foreign exchange. Adjusted diluted EPS(1) was also favorably impacted by our share purchase program. Through the first nine months of 2007, we purchased $7.5 billion of our stock as part of our previously announced plan to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to $10.0 billion of our stock in 2007. [TABLE OMITTED] (2) (3) (4) (5) (6) See end of text prior to tables for notes. Pharmaceuticals Worldwide pharmaceutical revenues for the third quarter of 2007 were down 4% from the same quarter a year ago. In-line and new products(4) revenues increased 5% in the third quarter of 2007 compared to the same period in 2006. Revenues for products that lost U.S. marketing exclusivity in 2006 and 2007, Zoloft and Norvasc, declined 54% in the third quarter of 2007 compared to last year. Lipitor revenues in the third quarter of 2007 were $3.2 billion, a 5% decline from the same period in 2006. In the U.S., Lipitor revenues declined 13%, while revenues in international markets rose 9%, due primarily to the favorable impact of foreign exchange and, to a lesser extent, operating growth. We estimate full-year 2007 worldwide Lipitor revenues to be 3% to 5% lower than 2006. The U.S. statin stat·in n. Any of a class of drugs that inhibit a key enzyme involved in the synthesis of cholesterol and promote receptor binding of LDL cholesterol, resulting in decreased levels of serum cholesterol. market in particular continues to be highly competitive, with both branded and generic competition in an increasingly cost-sensitive environment. We continue to respond to this competition with an integrated multi-channel effort. Celebrex Cel·e·brex A trademark for the drug celecoxib. celecoxib Celebrex Pharmacologic class: Nonsteroidal cyclooxygenase-2 (COX-2) inhibitor, nonsteroidal anti-inflammatory drug (NSAID) revenues rose 8% to $577 million in the third quarter of 2007 compared to the same period last year. In the U.S., we are continuing to focus on our direct-to-consumer advertising direct-to-consumer advertising Drug industry The use of mass media–eg, TV, magazines, newspapers, to publicly promote drugs, medical devices or other products which, by law, require a prescription, which targets consumers, with the intent of having a Pt campaign aimed at further stimulating patient interest and initiating a valuable dialogue between patients and physicians. Lyrica revenues grew 37% to $465 million in the third quarter of 2007 compared to the same period last year. Lyrica's growth continues to be fueled by strong efficacy as well as high patient and physician satisfaction in the marketplace. Lyrica was approved in the U.S. in June 2007 for the management of fibromyalgia fibromyalgia Chronic syndrome that is characterized by musculoskeletal pain, often at multiple sites. The cause is unknown. A significant number of persons with fibromyalgia also have mental disorders, especially depression. , one of the most common chronic, widespread pain conditions, and was launched for this indication in July 2007. Chantix Chantix (chan´tiks), n the brand name for the prescription drug verenicline, which is prescribed to aid in the cessation of smoking. , our treatment to aid smoking cessation smoking cessation Public health Temporary or permanent halting of habitual cigarette smoking; withdrawal therapies–eg, hypnosis, psychotherapy, group counseling, exposing smokers to Pts with terminal lung CA and nicotine chewing gum are often ineffective. , continued its strong performance with revenues of $241 million in the third quarter of 2007 compared to $33 million in the third quarter of 2006. Within the last month, we launched a direct-to-consumer campaign in the U.S. aimed at further increasing awareness of Chantix and how it can help smokers who want to quit. Animal Health Third-quarter 2007 revenues increased 13% to $636 million, compared to $562 million in the same period last year. For the first nine months of 2007, revenues increased 12% to $1.9 billion compared to $1.7 billion in the same period last year. The increase in both periods is largely attributed to strong product performance in the companion animal and international livestock livestock Farm animals, with the exception of poultry. In Western countries the category encompasses primarily cattle, sheep, pigs, goats, horses, donkeys, and mules; other animals (e.g., buffalo, oxen, or camels) may predominate in other areas. businesses; the acquisition of Embrex, a company with a unique vaccine vaccine Preparation containing either killed or weakened live microorganisms or their toxins, introduced by mouth, by injection, or by nasal spray to stimulate production of antibodies against an infectious agent. delivery system that vaccinates chicks while inside their eggs; and the favorable impact of foreign exchange. Expenses In the third quarter of 2007, adjusted cost of sales(1) as a percentage of revenues was 15.1%, compared to 15.4% in the third quarter of 2006 despite adverse geographic and product mix as compared to the same period a year ago. This reflects our ongoing cost-base reduction efforts. "Given ongoing pressures associated with geographic and product mix, we now forecast adjusted cost of sales(1) to be about 15.5% of revenues for the full-year of 2007 versus our previous estimate of 15.0%," said Mr. D'Amelio. Adjusted Selling, Informational and Administrative (SI&A) expenses(1) of $3.6 billion in the third quarter of 2007 decreased 1% compared to the third quarter of 2006, due primarily to savings from our cost-reduction initiatives, partially offset by the unfavorable impact of foreign exchange. We previously projected adjusted SI&A expenses(1) for the full-year 2007 to decrease by more than $500 million absent the impact of foreign exchange relative to the full-year 2006. We now project a year-over-year decrease in adjusted SI&A expenses(1) of about $600 million on a constant currency basis(8) as the benefits of our cost-reduction initiatives are materializing. Adjusted research and development (R&D) expenses(1) were $1.7 billion in the third quarter of 2007, a decrease of 5% compared to the third quarter of 2006, due primarily to the realization of savings associated with our cost-reduction initiatives and the non-recurrence of a licensing payment in the prior year partially offset by the unfavorable impact of foreign exchange. We continue to project the full-year 2007 adjusted R&D expenses(1) to be approximately $7.5 billion. Financial Guidance Our financial guidance for full-year 2007, at current exchange rates(7) except as otherwise noted, is summarized below and compared to prior communications. We have raised the lower end of the ranges for revenues and adjusted diluted EPS(1). In addition, as a result of progress in our cost-reduction initiatives, we now expect adjusted SI&A expenses(1) to decrease about $100 million more than our previous guidance. We have also changed our guidance on adjusted cost of sales(1)as a percent of revenues from 15.0% to 15.5%, largely due to geographic and product mix. Further, given the charges we recorded related to Exubera, we have decreased our guidance on reported diluted EPS. Guidance regarding adjusted R&D expenses(1), the effective tax rate on adjusted income(1), and cash flows from operations remains consistent with prior communications. [TABLE OMITTED] Our financial guidance for full-year 2008, at current exchange rates(7) except as otherwise noted, is summarized below. [TABLE OMITTED] 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 diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of (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 Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations section of Pfizer's Form 10-Q Form 10-Q See 10-Q. for the quarterly period ended July 1, 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 third-quarter and nine-month 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 2007 and 2008 adjusted income and adjusted diluted EPS guidance to full-year 2007 and 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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, Eraxis, Exubera, Lyrica, Macugen, Revatio, Selzentry, 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 have 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 third quarter earnings press release (October 2007). (8) Constant currency basis means that the applicable projected financial measure is based upon the actual foreign exchange rates in effect during 2006. (9) Represents primarily the total of Adjusted Cost of Sales(1), Adjusted SI&A expenses(1) and Adjusted R&D expenses(1).
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PFIZER INC
SUPPLEMENTAL INFORMATION
1) Impact of Foreign Exchange on Revenues The weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. of the U.S. dollar relative to other currencies,
primarily the euro and British pound, favorably impacted our revenues by
approximately $300 million, or 2.5%, in the third quarter of 2007,
compared to the same period in 2006, and approximately $860 million, or
2.4%, in the first nine months of 2007, compared to the same period in
2006.
2) Charges Related to Exubera After carefully assessing the financial performance of Exubera, an inhaled-insulin product, we decided to exit Exubera. Despite our best efforts, Exubera has failed to gain the acceptance of patients and physicians. In the third quarter of 2007, we recorded total pre-tax charges of $2.8 billion, which includes charges for asset impairments, exit and disposal costs. Our Exubera-related exit plans will include working with physicians over the next three months to transition patients to other treatment options, evaluating redeployment re·de·ploy tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. options for colleagues, working with our partners and vendors with respect to transition and exit activities and exploring asset disposal opportunities, among other activities. In the third quarter of 2007, we recorded the following charges related to our decision to exit Exubera: [TABLE OMITTED] These charges are included in Cost of sales ($2.6 billion), Selling, informational and administrative expenses ($83 million), Research and development expenses ($131 million) and Revenues ($10 million for an estimate of customer returns) in the third quarter of 2007. The asset write-offs (intangibles, inventory and fixed assets) represent non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. . The other exit costs, which includes contract termination Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). charges, among other things, will result in future cash expenditures. During the implementation of the exit strategy, certain additional cash costs will be incurred and reported in future periods, such as, maintenance-level operating costs operating costs npl → gastos mpl operacionales and demolition Demolition is the opposite of construction: the tearing-down of buildings and other structures. It contrasts with deconstruction, which is the taking down of a building while carefully preserving valuable elements for re-use. ; however, at this time, those future costs are not expected to be material. 3) Change in Cost of Sales Cost of sales increased 135% in the three months ended September 30, 2007, compared to the same period in 2006, and 59% in the nine months ended September 30, 2007, compared to the same period in 2006. These increases reflect charges of $2.6 billion associated with Exubera, unfavorable product mix, reflecting the loss of U.S. exclusivity on low manufacturing cost products, like Zoloft and Norvasc, the unfavorable impact of foreign exchange, as well as the impact of higher 2007 implementation costs associated with our cost-reduction initiatives, partially offset by the savings impact of our cost-base reduction efforts. Charges in cost of sales related to our cost-reduction initiatives were $173 million for the three months ended September 30, 2007, and $50 million for the three months ended October 1, 2006, and $437 million for the nine months ended September 30, 2007, and $278 million for the nine months ended October 1, 2006. Cost of sales also includes $41 million for the three months ended September 30, 2007, and $121 million for the nine months ended September 30, 2007, related to business transition activities associated with the sale of our Consumer Healthcare business, completed in December 2006. These expenses are transitional in nature and generally result from agreements that seek to facilitate the orderly orderly /or·der·ly/ (or´der-le) an attendant in a hospital who works under the direction of a nurse. or·der·ly n. An attendant in a hospital. transfer of operations of our former Consumer Healthcare business to the new owner. Cost of sales as a percentage of revenues increased 22.5 percentage points to 38.5% in the third quarter of 2007, reflecting charges of $2.6 billion associated with Exubera, unfavorable geographic and product mix in our portfolio, and the impact of higher 2007 implementation costs associated with our cost-reduction initiatives, compared to the same period in 2006, partially offset by the savings impact of our cost-base reduction efforts. 4) Change in Selling, Informational & Administrative (SI&A) Expenses and Research & Development (R&D) Expenses Reported SI&A expenses in the three months and nine months ended September 30, 2007 were comparable to the same periods in 2006, reflecting the savings impact of our cost-reduction initiatives, offset by charges of $83 million associated with Exubera and the unfavorable impact of foreign exchange on expenses. Reported SI&A expense includes charges of $70 million for the three months ended September 30, 2007 and $63 million for the three months ended October 1, 2006, related to our cost-reduction initiatives, and $198 million for the nine months ended September 30, 2007 and $160 million for the nine months ended October 1, 2006. Reported R&D expenses, excluding acquisition-related in-process research and development charges (IPR&D), increased 5% in the third quarter of 2007 compared to the same period in 2006, and increased 12% in the first nine months of 2007 compared to the same period in 2006. The third-quarter increase is primarily due to charges of $131 million associated with Exubera and higher costs associated with our cost-reduction initiatives, partially offset by lower milestone payments. The increase in the first nine-months is primarily due to collaboration payments made to Bristol-Myers-Squibb Company in the second quarter of 2007 for the development and commercialization of apixaban, as well as charges of $131 million associated with Exubera recorded in the third quarter of 2007. Reported R&D expenses includes charges of $130 million for the three months ended September 30, 2007, and $70 million for the three months ended October 1, 2006, related to our cost-reduction initiatives, and $292 million for the nine months ended September 30, 2007, and $132 million for the nine months ended October 1, 2006. IPR&D charges of $283 million, primarily related to the acquisitions of BioRexis Pharmaceutical Corp. and Embrex, Inc., were recorded in the first quarter of 2007 and $513 million, primarily related to the acquisition of Rinat Neuroscience neu·ro·sci·ence n. Any of the sciences, such as neuroanatomy and neurobiology, that deal with the nervous system. neuroscience the embryology, anatomy, physiology, biochemistry and pharmacology of the nervous system. Corp., was recorded in the second quarter of 2006. 5) Other Income and Other Deductions [TABLE OMITTED] *Certain 2006 amounts were reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the 2007 presentation. (a) Increases in net interest income in the third quarter and first nine months of 2007 compared to the same periods in 2006 were due primarily to higher interest rates and an increase in our net financial assets Financial assets Claims on real assets. , reflecting proceeds of $16.6 billion from the sale of our Consumer Healthcare business in late December 2006. 6) Effective Tax Rate The effective tax rates on reported Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before provision for taxes on income and minority interest for the third quarter of 2007 was a 25.4% benefit compared to an 18.1% cost in the third quarter of 2006, primarily reflecting the impact of charges associated with Exubera, among other factors. The effective tax rates on reported Income from continuing operations before provision for taxes on income and minority interest for the first nine months of 2007 was 12.7% compared to 15.6% in the first nine months of 2006, primarily reflecting the impact of charges associated with Exubera, the impact of a $283 million charge in the first nine months of 2007 compared to a $513 million charge for the same period in 2006 for acquired IPR&D, which is not deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). for tax purposes, as well as the volume and geographic mix of restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. in the first nine months of 2007 compared to the same period in 2006, partially offset by certain one-time tax benefits in 2006 associated with favorable tax legislation and the resolution of certain tax positions in the first quarter of 2006. The effective tax rates on adjusted income1 for the third quarter and first nine months of 2007 were 21.7% and 21.8% compared to 23.2% and 22.1% for the same periods in 2006. 7) Reconciliation of 2007 and 2008 Adjusted Income((1)) and Adjusted Diluted EPS((1)) Guidance to 2007 and 2008 Reported Net Income and Reported Diluted EPS Guidance [TABLE OMITTED] (a) Guidance in the table above exclude the effects of business-development transactions not completed as of September 30, 2007. (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 July 1, 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 third-quarter and nine-month 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 2007 and 2008 adjusted income and adjusted diluted EPS guidance to full-year 2007 and 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. DISCLOSURE NOTICE: The information contained in this earnings release and the attachments is as of October 18, 2007. The Company assumes no obligation to update any forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. contained in this earnings release or the attachments as a result of new information or future events or developments. This earnings release and the attachments contain forward-looking information about the Company's financial results and estimates, business plans and prospects, in-line products and product candidates that involve 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: * Success of research and development activities * Decisions by regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities regarding whether and when to approve our drug applications as well as their decisions regarding labeling and other matters that could affect the availability or commercial potential of our products * Speed with which regulatory authorizations, pricing approvals and product launches may be achieved * Success of external business development activities * Competitive developments, including with respect to competitor drugs and drug candidates that treat diseases and conditions similar to those treated by our in-line drugs and drug candidates * Ability to successfully market both new and existing products domestically and internationally * Difficulties or delays in manufacturing * Trade buying patterns * Ability to meet generic and branded competition after the loss of patent protection for our products and competitor products * Impact of existing and future regulatory provisions on product exclusivity * Trends toward managed care and healthcare cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. * U.S. legislation or regulatory action affecting, among other things, pharmaceutical product pricing, reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. or access, including under Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. and Medicare, the importation of prescription drugs prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, that are marketed from outside the U.S. at prices that are regulated by governments of various foreign countries, and the involuntary involuntary adj. or adv. without intent, will, or choice. Participation in a crime is involuntary if forced by immediate threat to life or health of oneself or one's loved ones, and will result in dismissal or acquittal. INVOLUNTARY. approval of prescription medicines for over-the-counter use * Impact of the Medicare Prescription Drug, Improvement and Modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, Act of 2003 * Legislation or regulatory action in markets outside the U.S. affecting pharmaceutical product pricing, reimbursement or access * Contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. 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 * 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 asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , and other legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. * 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 * Changes in generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting * Any changes in business, political and economic conditions due to the threat of 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 * Impact of acquisitions, divestitures, restructurings, product withdrawals and other unusual items, including our ability to realize the projected benefits of our cost-reduction initiatives. A further list and description of these risks, uncertainties, and other matters can be found in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2006, and in its reports on Forms 10-Q and 8-K. |
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