-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, LwKutbKUjXvn+rL/8AqWWOxiMfx5BFZ3f5YXFqUeK3PuAp6adFC069alOrqreWuJ 9rlCqTL0LZdJRnnzyDtiMw== 0000891554-94-000029.txt : 19940328 0000891554-94-000029.hdr.sgml : 19940328 ACCESSION NUMBER: 0000891554-94-000029 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PFIZER INC CENTRAL INDEX KEY: 0000078003 STANDARD INDUSTRIAL CLASSIFICATION: 2834 IRS NUMBER: 135315170 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-03619 FILM NUMBER: 94517844 BUSINESS ADDRESS: STREET 1: 235 E 42ND ST CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2125732323 FORMER COMPANY: FORMER CONFORMED NAME: PFIZER CHARLES & CO INC DATE OF NAME CHANGE: 19710908 10-K 1 FORM 10-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM 10-K -------------- (Mark One) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1993 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ............ to .............. Commission file number 1-3619 PFIZER INC. (Exact name of registrant as specified in its charter) Delaware 13-5315170 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 235 East 42nd Street New York, New York 10017 (Address of principal executive offices) (Zip Code) (212) 573-2323 (Registrant's telephone number including area code) -------------- Securities registered pursuant to Section 12(b) of the Act: ================================================================================ Title of each class Name of each exchange on which registered - -------------------------------------------------------------------------------- Common Stock, $.10 par value New York Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange 4% Convertible Subordinated Debentures Due 1997 New York Stock Exchange - -------------------------------------------------------------------------------- Securities registered pursuant to Section 12(g) of the Act: None -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No ____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in the definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /_/ The aggregate market value of the voting stock held by non-affiliates of the registrant computed by reference to the closing price at which the stock was sold as of February 28, 1994 was approximately $18.5 billion. The number of shares outstanding of each of the registrant's classes of common stock as of February 28, 1994 was: 319,964,571 shares of common stock, all of one class. DOCUMENTS INCORPORATED BY REFERENCE Report to Shareholders for the fiscal year ended December 31, 1993 Parts I, II and IV Proxy Statement dated March 18, 1994 Part III ================================================================================ TABLE OF CONTENTS PART I Item Page - ---- ---- 1. Business.................................................. 2 General................................................. 2 Comparative Segment and Geographic Data...................................... 2 Health Care............................................. 2 Consumer Health Care.................................... 4 Animal Health........................................... 4 Food Science............................................ 5 Financial Subsidiaries.................................. 5 International Operations................................ 5 Tax Matters............................................. 5 Patents and Research.................................... 6 Employees............................................... 6 Regulation.............................................. 6 Raw Materials and Energy................................ 7 Environment............................................. 8 2. Properties................................................ 8 3. Legal Proceedings......................................... 9 4. Submission of Matters to a Vote of Security Holders............................. 12 PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters.................................... 12 6. Selected Financial Data................................... 13 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................. 13 8. Financial Statements and Supplementary Data..................................... 13 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................................... 14 PART III 10. Directors and Executive Officers of the Registrant...................................... 14 11. Executive Compensation.................................... 19 12. Security Ownership of Certain Beneficial Owners and Management....................... 19 13. Certain Relationships and Related Transactions................................... 19 PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................................ 19 Signatures..................................................... 21 Financial Statement Schedules.................................. 23 Exhibit 11 Exhibit 12 Exhibit 23 1 PART I Item 1. Business General Pfizer Inc. (the "Company") is a diversified, research-based health care company with global operations. The Company discovers, develops, manufactures and sells technology-intensive products in four business segments: Health Care, which includes a broad range of prescription pharmaceuticals, orthopedic implants, medical devices and surgical equipment; Consumer Health Care, which includes a variety of nonprescription drugs and personal care products; Animal Health, which includes animal health products and feed supplements; and Food Science, which includes ingredients for the food and beverage industries. Additionally, the Company's Financial Subsidiaries include a banking operation in Europe and a small captive insurance operation. Comparative Segment and Geographic Data Comparative segment and geographic data for the three years ended December 31, 1993 are set forth on pages 35 and 36, and in the Note "Financial Subsidiaries" on pages 41 and 42, of the Company's Annual Report to Shareholders for the fiscal year ended December 31, 1993 and are incorporated herein by reference. Health Care The Company's Health Care business is comprised of pharmaceuticals and hospital products. The Company competes with numerous other health care companies in the discovery and development of new, technologically advanced pharmaceutical and hospital products; in seeking use of its products by the medical profession; and in the sale of its product lines to wholesale and retail outlets, public and private hospitals, managed care organizations, government and the medical profession. Methods of competition in health care vary with the product category. There are a significant number of innovative companies in the field. A critical factor in most markets in which the Company competes is the ability to offer technological advances over competitive products. The productivity of scientific discovery and clinical development efforts is central to long-term operational success since there are many companies that specialize in marketing products that no longer have patent or regulatory protection. Other important factors in these markets include the ability to transfer knowledge of technological advances to the medical community, product quality, prompt delivery and price. The United States pharmaceutical marketplace has in recent years experienced intensified price competition, brought about by a range of market forces, including: increased generic competition, growth of managed care organizations, and legislation requiring pharmaceutical companies to provide rebates and discounts to government purchasers. Similar competitive forces, in varying degrees, have also been present in various other countries in which the Company operates. Prescription pharmaceutical and hospital products, both in the United States and abroad, are promoted directly to the medical profession. Pharmaceutical products are distributed in large part to wholesale and retail outlets, hospitals, clinics, and managed care organizations. Hospital products are generally sold directly to medical institutions and, in some cases, through distributors and surgical supply dealers. Pharmaceuticals The Company's worldwide pharmaceutical products are comprised primarily of drugs which fall into the following major therapeutic classes: cardiovascular agents, anti-infectives, anti-inflammatories, central nervous system agents and anti-diabetes agents. In 1993, pharmaceuticals made up 69% of the Company's consolidated net sales, an increase from 63% in 1992 and 54% in 1991. Increases in both United States and international pharmaceutical revenues in 1993 were principally the result of strong sales of recently introduced products, including Procardia XL (nifedipine GITS), Norvasc (amlodipine besylate), Cardura (doxazosin), Diflucan (fluconazole), Zithromax (azithromycin), and Zoloft (sertraline). 2 Cardiovascular products are the Company's largest therapeutic product line accounting for 27% of the Company's consolidated 1993 net sales, an increase from 23% in 1992 and 18% in 1991. These products realized sales growth of 22% in 1993, including an 11% increase in sales of Procardia XL, a once-a-day calcium channel blocker for hypertension and angina, as well as the continuing rollout of Norvasc, an intrinsically once-a-day calcium channel blocker for hypertension and angina and Cardura, an alpha blocker for hypertension. U.S. cardiovascular sales grew 18% in 1993 and international sales of cardiovascular agents rose 34%. Diflucan, an antifungal agent indicated for use in a variety of fungal infections including certain types which afflict AIDS and immunosuppressed cancer patients, and Zithromax, an oral antibiotic, were the largest products in the anti-infective class in terms of 1993 growth in net sales. Total anti-infective sales accounted for 22% of the Company's consolidated 1993 net sales, an increase from 20% and 18% in 1992 and 1991, respectively. Worldwide sales of anti-inflammatories decreased to 5% of the Company's consolidated 1993 net sales. This compares to 9% in 1992 and 10% in 1991. This decline resulted primarily from the availability of generic versions of Feldene (piroxicam) in the United States since August 1992 and new competitive brand name products. The Company's central nervous system agents include Zoloft, an anti-depressant introduced in the U.S. in 1992. Central nervous system agents accounted for less than 10% of the Company's consolidated 1993 net sales. The Company's anti-diabetes agents, including Glucotrol (glipizide), accounted for less than 10% of the Company's consolidated 1993 net sales. The Company's new product portfolio continues to undergo review by various regulatory agencies. The Company's products listed below are undergoing regulatory review by the United States Food and Drug Administration ("FDA") for the indications listed. Product Indication(s) ------- ------------- Cardura Benign prostatic hyperplasia Cetirizine (launched in Canada in 1991 under the name Reactine) Low-sedating antihistamine; Pediatric Diflucan Vaginal candidiasis; Pediatric Enable (tenidap) (known as Enablex outside the United States) Osteo- and rheumatoid arthritis Glucotrol XL (glipizide GITS) Sustained-release antidiabetic Unasyn Injectable antibiotic-pediatric Zithromax Oral antibiotic-pediatric Zoloft Obsessive-compulsive disorder In addition, the Company has marketing rights in the United States and Japan to XOMA Corporation, Inc.'s E5, a monoclonal antibody for the treatment of gram negative sepsis, which is undergoing FDA regulatory review. To date, Diflucan has been launched in 60 countries and regulatory approvals have been obtained in 18 additional countries. Norvasc has been launched in 55 countries and approvals have been obtained in 25 additional countries. Cardura has been launched in 21 countries and approvals have been obtained in 35 additional countries. Zithromax has been launched in 19 countries and approvals have been obtained in 17 additional countries. Zoloft has been launched in 14 countries and approvals have been obtained in 9 additional countries. Hospital Products Hospital Products Group consists of two divisions - Howmedica and Medical Devices. Howmedica manufactures and markets orthopedic implants. Medical Devices consists of three core businesses - Valleylab, Schneider, and American Medical Systems, and two smaller businesses - Infusaid/Strato and Biomedical Sensors. Howmedica's reconstructive hip, knee and bone cement products are used to replace joints which have deteriorated as a result of disease or injury. Major product lines are P.C.A. Hips, ABG Hips, Duracon Knee, and Simplex Bone Cement. Howmedica's trauma products are used by orthopedic surgeons to aid in trauma surgery and in setting fractures, and include the Gamma Nail, Luhr System and Alta System. Schneider, an international leader in angioplasty catheters, also markets a peripheral stent product line. Schneider, which is active in the United States and Europe, acquired a distribution company in Japan with 1993 being the first full year of Schneider's direct operation in that country. Valleylab is a worldwide leader in electrosurgical devices. 3 Valleylab's continued investment in product lines for minimally invasive surgery represents a significant opportunity for future growth. American Medical Systems is a leader in impotence and incontinence devices. Its major product development activities in 1993 were focused on trends towards minimally invasive surgery. Plans are being implemented to take advantage of manufacturing, marketing and distribution synergies between Strato Medical Corporation, a supplier of implantable vascular access ports, and Infusaid, an innovator in implantable infusion pumps. The combined operation will focus on advanced drug delivery systems. In 1993, Biomedical Sensors launched the Paratrend 7 intravascular continuous blood gas monitoring system, incorporating both electrochemical and fiber-optic technology. The continuous monitoring offered by the Paratrend 7 reduces the time to receive vital information, allowing pro-active diagnosis and therapy. Consumer Health Care The Company's Consumer Health Care products include proprietary health items, baby care products and toiletries, Plax pre-brushing dental rinse, and a number of products sold only in selected international markets, including Vanart hair care products in Mexico and the TCP line of antiseptic and germicidal products marketed primarily in the United Kingdom. Among the better-known brands manufactured and marketed by Consumer Health Care are Visine (tetrahydrozoline HCl) eyedrops, Ben-Gay analgesic creams, Desitin diaper rash ointments, Unisom (doxylamine succinate) sleep aids, Plax pre-brushing dental rinse, Rid anti-lice products and Barbasol shave creams and gels. In 1993, Consumer Health Care introduced Unisom Sleep Gels, soft liquid-filled gels with a maximum-strength sleep aid formula, Daily Care Desitin for the prevention of diaper rash, and a new formulation of Rid. Advanced Formula Plax was introduced in early 1994. Many other companies, large and small, manufacture and sell one or more similar consumer products. The Company is a significant competitor in this extensive market, and its principal methods of competition include product innovation and quality, customer satisfaction, broad distribution capabilities, advertising and promotion, and price. In general, the winning and retention of consumer acceptance of the Company's consumer products involve heavy expenditure for advertising, promotion, and marketing. Animal Health The Company's Animal Health operations include the discovery, development, manufacture and sale of animal health products and feed supplements. Major products include: veterinary products such as Terramycin LA-200 (oxytetracycline) (marketed as TM/LA outside of North America), a broad-spectrum injectable antibiotic; the Banminth (pyrantel tartrate), Nemex (pyrantel pamoate) and Paratect (morantel tartrate) anthelmintics; Mecadox (carbadox), an antibacterial for pigs; and Terramycin (oxytetracycline), a broad-spectrum antibiotic used for a variety of animal diseases. The Company's animal health business functions on a worldwide basis giving the segment a global approach to marketing and enabling it to effectively coordinate the launches of three animal health products: Advocin (danofloxacin), Dectomax (doramectin), and Aviax (semduramicin). Advocin, a broad-spectrum, third generation quinolone antibacterial used to control respiratory and other diseases in cattle, swine, and poultry has been launched in many Latin American, Asian, and African countries. Dectomax, a novel, second-generation avermectin with broad-spectrum activity against internal and external parasites in a number of animal species has been launched in Brazil, Argentina, and South Africa. Aviax, a potent, broad-spectrum ionophore anticoccidial, used to prevent coccidiosis in poultry is under regulatory review in many countries, with approvals already received in a number of markets. Animal health and nutrition products are sold through drug wholesalers, distributors, retail outlets and directly to users, including feed manufacturers, animal producers and veterinarians. A substantial number of other companies manufacture and sell one or more similar products for animal health use. There are hundreds of producers of animal health products throughout the world. The Company is a significant manufacturer of some of the products, such as injectable antibiotics, anthelmintics and anticoccidial products for the food animal market segments. With respect to the smaller pet segment, and other products for the food animal segments, the Company has a less significant market position. Methods of competition with respect to animal health and feed supplement products vary somewhat but include product innovation, service, price, quality and effective transfer of technological advances to the market through advertising and promotion. 4 Food Science The Food Science Group serves the global food processing industry with innovative food ingredients. Food Science continues to develop a strategic position of global leadership within the food ingredients business through the discovery and introduction of innovative food ingredients, linked with the added features of service and know-how for growth into value-added food ingredients systems. This strategic focus seeks to enable Food Science customers to provide an appealing array of healthy and tasteful foods, and, where possible, to provide a linkage to the Company's healthcare business. The specialty ingredients growth has been led by lite ingredients, including Litesse (polydextrose); dairy ingredients, featuring Chy-Max (chymosin); brewery ingredients; and food protectants. Appeal, taste, freshness and nutritional balance are quality parameters served by Food Science's ingredients and technology. Internal research and development remain key strengths and differentiate Food Science from many of its competitors. Products currently under development include fat extenders, intense sweeteners, flavors, food protectants and high temperature fat substitutes. The Food Science business competes with other organizations for sales of most of their ingredients as well as substitute products. Some of these organizations produce and sell products that are either identical to, or serve the same function as, ingredients marketed by Food Science. The number of competitors varies with each particular ingredient. Methods of competition vary by ingredient but include innovation and quality, prompt delivery, ability to meet exacting specifications, technical service and cost. Financial Subsidiaries In 1992, the Company completed the transfer of its international banking operations from Puerto Rico to the Republic of Ireland. This subsidiary, Pfizer International Bank Europe (PIBE), operates under a full banking license from the Central Bank of Ireland. This reorganization and transfer was made in anticipation of the integration and unification of the European Union's financial markets. PIBE makes loans and accepts deposits in U.S. dollars in international markets and is an active Euromarket lender with a portfolio of loans, floating rate notes and Euronotes of high quality corporates and sovereigns. Loans are made primarily on a short-and medium-term basis, with floating interest rates. The Company's insurance operation, The Kodiak Company Limited, reinsures certain assets, inland transport and marine cargo of Pfizer subsidiaries. International Operations The Company has significant operations outside the United States that, in general, parallel its United States businesses either through direct operations or through distributors. The Company's international businesses are subject, in varying degrees, to a number of risks inherent in carrying on business in certain countries outside the United States, including possible nationalization, expropriation and other restrictive government actions such as capital regulations. In addition, changes in the values of currencies take place from time to time and can be either favorable or unfavorable to the net income and net assets of subsidiaries operating outside the United States. It is impossible to predict future changes in foreign exchange values or the effect they will have on the Company. The Company actively engages in hedging its current transactional exposures against the impact of unfavorable foreign exchange rate movements. These hedging programs are routinely implemented by the Company's foreign operating units. In addition, from time to time, hedging programs designed to protect selected balance sheet positions and future cash flow exposures are conducted, generally by the Company's headquarters personnel. Tax Matters For tax years beginning after December 31, 1993, the Omnibus Budget Reconciliation Act of 1993 reduced by 40% the benefits accruing to the Company under Section 936 of the Internal Revenue Code (the "Puerto Rico tax credit"). Such tax benefits will decline an additional 5% per year through 1998. For tax years beginning after December 31, 1997, the Puerto Rico tax credit benefit will be fixed at 40% of the current level. In 1989, the Internal Revenue Service issued Notice 89-21 which deals, in part, with the tax accounting treatment of lump sum payments and assignments with respect to certain financial transactions which are similar to transactions entered into by the Company, and reported for tax purposes prior to the date of the Notice. If the Internal Revenue Service were to be successful in applying the Notice to these prior Company transactions, certain amounts which the Company believes are taxable only when and if repatriated to the United States would be required to be included in U.S. taxable income for the years 1988 through 1992. At this time, the Company continues to believe that its tax accounting treatment for the transactions in question was proper. 5 The Company has satisfactorily resolved all issues with the Internal Revenue Service for the years through 1986. The years 1987 through 1989 are currently under audit by the Internal Revenue Service. The Company believes that its accrued tax liabilities are adequate to cover its U.S. and foreign tax contingencies for all open years. Patents and Research The Company owns or is licensed under a number of patents relating to its products and manufacturing processes which, in the aggregate, are believed to be of material importance in its business. Based on current product sales, and in view of the vigorous competition with products sold by others, the Company does not consider any single patent or related group of patents to be significant in relation to the enterprise as a whole, except for the Procardia XL, Diflucan, Zoloft and Norvasc patents. Procardia XL is a once-a-day formulation of the Company's calcium channel blocker, Procardia (nifedipine), which is administered for the treatment of angina and hypertension. Procardia XL employs a novel drug delivery system developed and patented by Alza Corporation. The Company holds an exclusive license to use this delivery system with nifedipine until 2003. The Company holds patents relating to Diflucan, Zoloft, and Norvasc. The Company spent approximately $974 million in 1993, $863 million in 1992, and $757 million in 1991 on Company-sponsored research and development throughout the world. In 1994, the Company plans to spend in excess of $1.1 billion on research and development. In 1992, the Company also established Pfizer Research and Development Company (PRDCO) in Ireland with an initial capitalization of approximately $1 billion to engage in research and development through a cost-sharing arrangement with Pfizer Ltd. (a Pfizer U.K. subsidiary) in exchange for a portion of property rights relating to the development of specific products. Competition in research, involving the development of new products and processes and the improvement of existing products and processes, is particularly significant and results from time to time in product and process obsolescence. The development of new and improved products is important to the Company's success in all areas of its business. Employees Approximately 40,500 persons are employed by the Company throughout the world as follows: United States, 15,600; Europe, 10,800; Asia, 7,800; Canada/Latin America, 4,300; and Africa/Middle East, 2,000. The Company has a good relationship with its employees. Regulation Most of the Company's businesses are subject to varying degrees of governmental regulation in the countries in which operations are conducted. Such regulation in the United States involves a more complex approval process than in many other countries and therefore, often results in later marketing clearances and a corresponding increase in the expense of introducing new products in the United States. In many international markets, prices of pharmaceuticals are controlled by the government. In 1990, Congress passed the Safe Medical Devices Act. The law contains numerous provisions obligating medical device firms to submit additional information to the U.S. FDA and increased the FDA's powers to investigate and sanction companies for violative practices. To date, the impact of this legislation has been manifested most visibly in delays in processing marketing licenses known as 510 (k) premarket notifications and product marketing applications ("PMAs") and in utilization of the new civil monetary penalties provision. The Company's Hospital Products Group is actively implementing strategies to maintain compliance with the requirements and the burdens that arise due to these provisions. The 1990 Omnibus Budget Reconciliation Act requires pharmaceutical companies to extend rebates to state Medicaid agencies based on each state's reimbursement of pharmaceutical products under the Medicaid program. The Veterans Health Care Act, passed in 1992, requires manufacturers to provide discounts on purchases of pharmaceutical products by the Department of Veterans Affairs (DVA) and by certain entities funded by the Public Health Service. The Company's net sales in 1993 were reduced by Medicaid rebates and rebates under related state programs which amounted to $70 million. In addition, in 1993, Pfizer provided $51 million in discounts to the federal government, primarily to the DVA and the Department of Defense, for drugs purchased in accordance with the Veterans Health Care Act. 6 In 1990, the FDA announced a call for data for ingredients contained in products bearing anti-plaque and related claims. The call for data is part of the FDA's ongoing review, begun in 1972, of over-the-counter drug products. The FDA is taking this administrative approach to evaluate the safety and efficacy of anti-plaque products and has not proceeded further with regard to 1989 regulatory letters it issued to the Company and several other manufacturers of products bearing anti-plaque claims. The Company submitted its response to the call for data relating to Plax, its pre-brushing dental rinse, on June 17, 1991. This filing, as well as filings of other manufacturers, is still under review, and is currently being considered by an FDA Advisory Panel. In June 1992, the Generic Drug Enforcement Act was passed into law. The legislation provides for mandatory and permissive debarment of companies convicted of crimes related to abbreviated new drug applications and of individuals convicted of crimes related to development or approval of any drug product. Debarment is a prohibition against the company or individual from submitting, assisting in the submission or providing services for someone who has an approved or pending drug application. The law is reflective of a continuing trend in Congress to enhance FDA's enforcement powers over the entire regulated industry and stiffen penalties for violations of the Food, Drug and Cosmetic Act. To date, the FDA has utilized the provision to debar more than a dozen individuals. In 1992, the Prescription Drug User Fee Act was also signed into law. It imposes fees for: a) certain human drug and biologic product applications, b) certain products listed under provisions of the Food, Drug and Cosmetic Act, and c) establishments in which prescription drugs in final dosage form are manufactured. The fees, which will increase over a five year period and additionally are subject to inflation adjustments, are intended to be dedicated to the review process for human drug applications. The legislative goals, expressed in companion correspondence, are to reduce the backlog of original and supplemental product applications and expedite the review of new applications. User fees were collected on specified applications filed after September 1, 1992. The financial impact of these fees on the Company was not material in 1993, while the Company expects to benefit from expedited review of its applications. In Western Europe, the 12 countries currently comprising the European Union (formerly known as the European Community), are continuing the process of implementing directives, standards and regulatory control mechanisms designed to further harmonize requirements for the Union-wide approval and marketing of drugs and medical devices. These changes, which are not expected to be in full operation before the mid-1990s, are likely to have positive effects upon the Company's businesses. However, until the common requirements are implemented and the Company has some experience with them in practice, it will be impossible to determine the net impact on the Company. Also, by that time, the scope of these measures may have extended to other European countries whose applications to join the European Union are currently pending. During 1993, Congress began debate on reform of the U.S. health care system. Numerous health care reform bills have been introduced, including the Administration's "Health Security Act". The Health Security Act includes provisions that would form an Advisory Council on Breakthrough Drugs, require rebates on pharmaceuticals reimbursed under the Medicare program, and authorize the Secretary of Health and Human Services to exclude from coverage under Medicare, or require prior authorization for, drugs the Secretary considers to be excessively priced. While these provisions could have an adverse impact on the Company's pharmaceutical business in the United States, other bills that have been introduced do not contain such provisions. It is uncertain whether legislation will be enacted in 1994 or, if legislation is enacted, whether it will have a significant adverse effect on the Company. Raw Materials and Energy Raw materials essential to the business of the Company and its subsidiaries are generally obtainable from multiple sources. The Company did not experience any significant restrictions on availability of raw materials or supplies during the last year, and none is expected in 1994. Energy was available to the Company in sufficient quantities to meet Company requirements and this condition is expected to continue in 1994. 7 Environment Certain of the Company's operations are affected by Federal, State and local laws and regulations relating to environmental quality. The Company has made and intends to continue to make the necessary expenditures for environmental protection. Compliance with such laws and regulations is not expected to have a material adverse effect on the financial position, earnings or competitive position of the Company and its subsidiaries. United States All Other Total ------------- --------- ----- (Millions of dollars) Environment-related capital expenditures: 1993 Actual ................... $13.2 $17.8 $31.0 1994 Estimated ................ 76.1 16.2 92.3 1995 Estimated ................ 45.6 16.4 62.0 Other environmental-related expenses: 1993 Actual ................... 26.5 10.3 36.8 1994 Estimated ................ 30.4 12.1 42.5 Item 2. Properties Following is a summary description of the Company's principal plants and properties: Groton Plant and Research Laboratories -- These facilities are located in Groton, Connecticut, and surrounding towns, on approximately 649 acres, and include a number of buildings of one to eight stories, containing approximately 3,250,000 square feet of floor space either existing or under construction. Principal products produced at Groton are bulk pharmaceuticals, specialty chemicals and food ingredients. Since acquiring the plant in 1946, the Company has made major improvements, including construction of production facilities, a powerhouse and generating equipment, and a large research complex adjacent to the plant. In 1992, major improvements to plant facilities were initiated, including a process effluent and waste water treatment facility, and a major pharmaceutical capacity replacement project. Both projects are expected to be completed by 1996. Construction was completed in 1993 on several research expansions including a 156,000 square foot drug safety building addition, a 30,000 square foot central utilities building, and a 442,000 square foot parking facility. In 1993, enlargement of the pharmaceutical research and development facilities was initiated. Brooklyn Plant -- The Company's site in Brooklyn, New York, is on approximately 17 acres, including a number of buildings containing approximately 1,172,000 square feet of floor space. The primary operations, pharmaceutical dosage form manufacturing and packaging, are housed in an eight story production facility containing 545,000 square feet. Vigo Plant and Research Facility -- These facilities, located in Vigo County near Terre Haute, Indiana, are on a site of approximately 2,100 acres owned in fee and consist of a number of buildings of one to five stories containing approximately 706,000 square feet of floor space. Principal products produced at this plant are pharmaceutical products, bulk antibiotics, polydextrose and chymosin. Animal health research is also performed on this site. Barceloneta Plant -- Pfizer Pharmaceuticals Inc. is located on an 89-acre property owned by the Company at Barceloneta, Puerto Rico. An additional 151 acres of land adjacent to this property were purchased in 1991 for future utilization. The facilities contain four major manufacturing buildings (of two to four floors) and twelve support buildings with a total approximate area of 397,600 square feet of floor space; and ten additional facilities (tank farms, electrical substations, cooling towers, incinerator, etc.) with an approximate area of 70,400 square feet, for a total plant facilities area of approximately 468,000 square feet. It houses organic synthesis manufacturing, pharmaceutical dosage form manufacturing and packaging facilities, and the required service areas, such as bulk and drum liquid storage, laboratories, utilities, engineering shops, employee services and administration. Other U.S. Locations -- The Company also operates 12 other production facilities in the United States and has five regional sales and distribution centers in various parts of the country which are owned in fee. The Company's world headquarters is located at 235 East 42nd Street, New York, NY. The Company owns this 33-story office building which contains approximately 650,000 square feet. The building stands on slightly less than one acre of land which is leased under an agreement expiring in 2057. In 1983, the Company purchased a ten- 8 story office building located at 219 East 42nd Street, containing approximately 263,400 square feet which is immediately adjacent to the Company's headquarters. The Company also leases additional office space in New York City consisting of approximately 155,550 square feet. Outside the United States -- The Company's major manufacturing facilities outside the United States are located in Australia, Brazil, France, Germany, Great Britain, India, Ireland, Italy, Japan, Mexico and Spain. The plants in these eleven countries have an aggregate of over two million square feet of floor space. Additional plants are located in over 20 additional countries located in various parts of the world. A large medicinal and animal health research unit is located in Sandwich, England where an 82,000 square foot clinical sciences building became operational in 1993 and a 99,000 square foot animal sciences building became operational in early 1994. Construction is in progress on a 97,000 square foot pharmaceutical sciences building due for occupancy in 1996 and also on a 120,000 square foot administration and services building which is scheduled for completion in 1994. Additional research laboratories exist in France, Japan and Germany. The Company's major manufacturing facilities in the U.S. and the other locations referred to above manufacture various products for all of the Company's businesses. These properties are maintained in good operating condition and the manufacturing facilities have capacities considered adequate to meet the Company's needs. Item 3. Legal Proceedings The Company is involved in a number of claims and litigations, including product liability claims and litigations considered normal in the nature of its businesses. These include suits involving various pharmaceutical and hospital products that allege either reaction to or injury from use of the product. As previously disclosed, numerous claims have been brought against the Company and Shiley Incorporated, a wholly owned subsidiary, alleging either personal injury from fracture of 60(degree) or 70(degree) Shiley Convexo-Concave (C/C) heart valves, or anxiety that properly functioning implanted valves might fracture in the future, or, in a few cases, personal injury from a prophylactic replacement of a functioning valve. The Company believes that claims based on properly functioning implanted valves seeking recovery for alleged anxiety that the valves might fracture in the future do not state a cause of action and, accordingly, the Company has vigorously defended these cases. As of January 21, 1994, 59 cases have either been dismissed on motions to dismiss or for summary judgment, or have been voluntarily withdrawn by the plaintiffs. In the case of Kahn v. Shiley Incorporated and Pfizer Inc., however, the California Court of Appeal in 1990 held invalid all of the plaintiff's product liability claims relating to concerns with respect to plaintiff's properly functioning C/C heart valve, but permitted plaintiff to pursue claims based on deceit, which the trial court has held includes negligent and fraudulent misrepresentations. Cases involving approximately 200 implantees (and spouses of some of them) were consolidated for certain pretrial purposes under the caption of the Kahn case pending in the Superior Court, Orange County, California. More than 100 of these were settled in early 1993. Trial of the first of the remaining cases, of six selected for trial, began July 29, 1993. After trial, but before verdict, most of the remaining cases as well as several unfiled claims, involving approximately 250 implantees, were settled. In an attempt to resolve all claims alleging anxiety that properly functioning valves might fracture in the future, the Company entered into a settlement agreement in January 1992 in Bowling v. Shiley et al., a case brought in the United States District Court for the Southern District of Ohio that establishes a worldwide settlement class of people with C/C heart valves and their spouses, except those who elect to exclude themselves. The settlement provides for a Consultation Fund of $90 to $140 million (depending on the number of claims filed) from which valve recipients who make claims will receive payments that are intended to cover their cost of consultation with cardiologists or other health care providers with respect to their valves. The settlement agreement establishes a second fund of at least $75 million to support C/C valve-related research, including the development of techniques to identify valve recipients who may have significant risk of fracture, and to cover the unreimbursed medical expenses that valve recipients may incur for certain procedures related to the valves. The Company's obligation as to coverage of these unreimbursed medical expenses is not subject to any dollar limitation. Following a hearing on the fairness of the settlement, it was approved by the court on August 19, 1992. An appeal of the court's approval of the settlement was dismissed on December 20, 1993 by the United States Court of Appeals for the Sixth Circuit. A motion for rehearing en banc was denied on March 8, 1994. It is expected that most of the costs arising from the Bowling class 9 settlement will be covered by insurance and the proceeds of the sale of certain product lines of the Shiley businesses in 1992. Of approximately 900 implantees (and spouses of some of them) who opted out of the Bowling settlement class, 12 currently have cases or claims pending in the Kahn consolidation in California; 4 have cases or claims pending outside of California; approximately 675 whose claims were included in the Kahn consolidation have been settled; approximately 100 have never filed a case or claim; and approximately 10 have working valve cases pending. Several claims relating to elective reoperations of valve recipients are currently pending. Some of these claims relate to elective reoperations covered by the Bowling class settlement described above, and, therefore, the claimants are entitled to certain benefits in accordance with the settlement. Such claimants, if they irrevocably waive all of the benefits of the settlement, may pursue separate litigation to recover damages in spite of the class settlement. The Company is defending these claims. Generally, the plaintiffs in all of the pending heart valve litigations discussed above seek money damages. Based on the experience of the Company in defending these claims to date, including available insurance and reserves, the Company is of the opinion that these actions should not have a material adverse effect on the financial position or the results of operations of the Company. On September 30, 1993, Dairyland Insurance Co., a carrier providing excess liability coverage ("excess carrier") in the early 1980s, commenced an action in the California Superior Court in Orange County, seeking a declaratory judgment that it was not obligated to provide insurance coverage for Shiley heart valve liability claims. On October 8, 1993, Pfizer filed cross-complaints against Dairyland and filed third-party complaints against 73 other excess carriers who sold excess liability policies covering periods from 1978 to 1985, seeking damages and declaratory judgments that they are obligated to pay for defense and indemnity to the extent not paid by other carriers. The Company's operations are subject to federal, state, and local environmental laws and regulations. Under the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended ("CERCLA" or Superfund"), the Company has been designated as a potentially responsible party by the United States Environmental Protection Agency with respect to certain waste sites with which the Company may have had direct or indirect involvement. Similar designations have been made by some state environmental agencies under applicable state superfund laws. Such designations are made regardless of the extent of the Company's involvement. There are also claims that the Company is a potentially responsible party or participant with respect to several waste sites in Canada. Such claims have been made by the filing of a complaint, the issuance of an administrative directive or order, or the issuance of a notice or demand letter. These claims are in various stages of administrative or judicial proceedings. They include demands for recovery of past governmental costs and for future investigative or remedial actions. In many cases, the dollar amount of the claim is not specified. In most cases, claims have been asserted against a number of other entities for the same recovery or other relief as was asserted against the Company. The Company is currently participating in remedial action at a number of sites under federal, state and local laws. To the extent possible with the limited amount of information available at this time, the Company has evaluated its responsibility for costs and related liability with respect to the above sites and is of the opinion that the Company's liability with respect to these sites should not have a material adverse effect on the financial position or the results of operations of the Company. In arriving at this conclusion, the Company has considered, among other things, the payments that have been made with respect to the sites in the past; the factors, such as volume and relative toxicity, ordinarily applied to allocate defense and remedial costs at such sites; the probable costs to be paid by the other potentially responsible parties; total projected remedial costs for a site, if known; existing technology; and the currently enacted laws and regulations. The Company anticipates that a portion of these costs and related liability will be covered by available insurance. The Company agreed to a consent order issued by the State of Connecticut's Department of Environmental Protection on January 28, 1994 in connection with the Company's operation of its pharmaceutical research and production facilities in Groton, Connecticut. The consent order, pursuant to which the Company agreed to pay a civil penalty of $150,000, resolves all matters raised in an administrative action brought by the agency against the Company. The action had alleged certain violations of state environmental regulations which incorporate provisions of the federal Resource Conservation and Recovery Act. Through the early 1970s, Pfizer (Minerals Division) and Quigley Company, Inc., a wholly owned subsidiary, sold a minimal amount of one construction product and several refractory products containing some asbestos. These 10 sales were discontinued thereafter. Although these sales represented a minor market share, the Company has been named as one of a number of defendants in numerous lawsuits. These actions, and actions related to the Company's sale of talc products in the past, claim personal injury resulting from exposure to asbestos-containing products, and nearly all seek general and punitive damages. In these actions, the Company or Quigley is typically one of a number of defendants, and both are members of the Center for Claims Resolution (the "CCR"), a joint defense organization that is defending these claims. The Company and Quigley are responsible for varying percentages of defense and liability payments for all members of the CCR. Prior to September 1990, the cases involving talc products were defended by the CCR, but the Company is now overseeing its own defense of these actions. A number of cases alleging property damage from asbestos-containing products installed in buildings have also been brought against Pfizer. On January 15, 1993, a class action complaint and settlement agreement were filed in the United States District Court for the Eastern District of Pennsylvania involving all personal injury claims by persons who have been exposed to asbestos-containing products but who have not yet filed a personal injury action against the twenty members of the CCR. The settlement agreement establishes a claims-processing mechanism that will provide historic settlement values upon proof of impaired medical condition as well as claims-processing rates over ten years. In addition, the shares allocated to the CCR members eliminate joint and several liability. The settlement is subject to the court's determination that the settlement is fair and reasonable. Concurrently with the filing of the future claims class action, the CCR settled approximately 16,360 personal injury cases on behalf of Pfizer and Quigley, leaving approximately 22,900 cases pending (15,400 against Quigley and 7,500 against Pfizer). It is the CCR's intention to settle remaining and opt-out cases and claims on a similar basis to past settlements. Costs incurred by the Company in defending the asbestos personal injury claims and the property damage claims, as well as settlements and damage awards in connection therewith, are largely insured against under policies issued by several primary insurance carriers and a number of excess carriers. The Company believes that its costs incurred in defending and ultimately disposing of the asbestos personal injury claims, as well as the property damage claims, will be largely covered by insurance policies issued by carriers that have agreed to provide coverage, subject to deductibles, exclusions, retentions and policy limits. In connection with the future claims settlement, the defendants have commenced a third-party action against their respective excess insurance carriers that have not agreed to provide coverage seeking a declaratory judgment that (a) the future claims settlement is fair and reasonable as to the carriers; (b) the carriers had adequate notice of the future claims class settlement; and (c) the carriers are obligated to provide coverage for asbestos personal injury claims. Based on the Company's experience in defending the claims to date and the amount of insurance coverage available, the Company is of the opinion that these actions should not ultimately have a material adverse effect on the financial position or the results of operations of the Company. In connection with the divestiture of Minerals Technologies Inc. (MTI), to which the net assets of the Pfizer Minerals and the Quigley businesses were transferred, Pfizer and Quigley agreed to indemnify MTI against any liability with respect to products manufactured and sold prior to October 30, 1992, as well as against liability for certain environmental matters. The Company has been named, together with numerous other manufacturers of prescription drugs and certain companies which distribute prescription pharmaceuticals, in at least fifty-one lawsuits (the majority of which are purported to be class actions) in the United States District Courts in Illinois, Pennsylvania, California, Texas, Minnesota and New York, as well as six lawsuits in California state courts, all brought by certain retail pharmacy companies. These cases allege, in essence, that the defendant drug manufacturers have violated the Sherman Act in that they have unlawfully agreed with each other (and, as alleged in some cases, with wholesalers) not to extend to retail pharmacy companies the same discounts which they allege were extended to managed care companies, mail order pharmacies and other institutional purchasers. Certain of the cases also allege violations of the Robinson-Patman Act in that the manufacturers allegedly have unlawfully discriminated against retail pharmacy companies by not extending to them such discounts. It is anticipated that additional cases may be filed. On February 4, 1994, 46 federal suits were transferred to the United States District Court for the Northern District of Illinois for coordinated pretrial preceedings. The remaining federal suits are expected to be transferred there as well. The Company believes these cases are without merit and will vigorously defend them. 11 FDA administrative proceedings relating to Plax are pending, principally an industry-wide call for data on all anti-plaque products by the FDA. The call for data notice specified that products that have been marketed for a material time and to a material extent may remain on the market pending FDA review of the data, provided the manufacturer has a good faith belief that the product is generally recognized as safe and effective and is not misbranded. The Company believes that Plax satisfied these requirements and prepared a response to the FDA's request, which was filed on June 17, 1991. This filing, as well as the filings of other manufacturers, is still under review and is currently being considered by an FDA Advisory Committee. A consolidated class action on behalf of persons who allegedly purchased Pfizer common stock during the March 24, 1989 through February 26, 1990 period is pending in the United States District Court for the Southern District of New York. This lawsuit, which commenced on July 13, 1990, alleges that the Company and certain officers and former directors and officers violated federal securities law by failing to disclose potential liability arising out of personal injury suits involving Shiley heart valves and seeks damages in an unspecified amount. The defendants in this action believe that the suit is without merit and are vigorously defending it. A derivative action commenced on April 2, 1990 against certain directors and officers and former directors and officers alleging breaches of fiduciary duty and other common law violations in connection with the manufacture and distribution of Shiley heart valves is pending in the Superior Court, Orange County, California. The complaint seeks, among other forms of relief, damages in an unspecified amount. The defendants in the action believe that the suit is without merit and are vigorously defending it. On January 28, 1993, a purported class action entitled Kearse v. Pfizer Inc. and Howmedica Inc. was commenced in the United States District Court for the Northern District of Ohio. Howmedica Inc. ("Howmedica") is a wholly owned subsidiary of the Company. The action sought monetary and injunctive relief, including medical monitoring, on behalf of patients implanted with the Howmedica P.C.A. one-piece acetabular hip component, which was manufactured by Howmedica from 1983 to 1990. The complaint alleged that the prostheses were defectively designed and manufactured and posed undisclosed risks to implantees. On August 3, 1993, a virtually identical purported class action, Bradshaw/Davids v. Pfizer Inc. and Howmedica Inc., was brought and the Kearse case was subsequently voluntarily dismissed. The Company believes that the suit is without merit and is vigorously defending it. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters Information required by this item is incorporated by reference to the notes entitled, "Long-Term Debt", "Earnings per Common Share", "Common Stock", "Preferred Stock Purchase Rights", "Employee Benefit Trust", "Cash Dividends", "Stock Option Plan" and "Quarterly Data (unaudited)" found on pages 43, 46, 47, 50 and 51 of the Annual Report to Shareholders for the fiscal year ended December 31, 1993. 12 Item 6. Selected Financial Data Selected Consolidated Statement of Income Data
Year Ended December 31, ---------------------------------------------------------------- 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- (Millions of dollars, except per share data) Net sales ............................. $7,477.7 $7,230.2 $6,950.0 $6,406.0 $5,671.5 ======== ======== ======== ======== ======== Income before cumulative effect of accounting changes ............... $ 657.5(a) $1,093.5(b) $ 722.1(d) $ 801.2 $ 681.1(e) Cumulative effect of accounting changes -- (282.6)(c) -- -- -- -------- -------- -------- -------- -------- Net income ............................ $ 657.5(a) $ 810.9(b) $ 722.1(d) $ 801.2 $ 681.1(e) ======== ======== ======== ======== ======== Earnings per common share (f): Income before cumulative effect of accounting changes ............. $ 2.05 $ 3.25 $ 2.13 $ 2.38 $ 2.02 Cumulative effect of accounting changes ........................... -- (.84)(c) -- -- -- -------- -------- -------- -------- -------- Net income .......................... $ 2.05 $ 2.41 $ 2.13 $ 2.38 $ 2.02 ======== ======== ======== ======== ======== Cash dividends paid per common share (f) ........................... $ 1.68 $ 1.48 $ 1.32 $ 1.20 $ 1.10 ======== ======== ======== ======== ======== December 31, ---------------------------------------------------------------- 1993 1992 1991 1990 1989 -------- -------- -------- -------- -------- (Millions of dollars) Total assets .......................... $9,330.9 $9,590.1 $9,634.6 $9,052.0 $8,324.8 ======== ======== ======== ======== ======== Long-term debt ........................ $ 570.5 $ 571.3 $ 396.6 $ 193.3 $ 190.6 ======== ======== ======== ======== ======== - -------------- (a) Includes a pre-tax charge of $750.0 million ($525.0 million after-tax) for restructuring and unusual items and a pre-tax gain of $60.0 million on the sale of a business offset by restructuring charges of $62.0 million. (b) Includes a pre-tax credit of $54.0 million representing the gain on the sale of certain businesses offset by charges for restructuring, consolidating and streamlining. In addition, it includes pre-tax curtailment gains of $56.5 million associated with postretirement benefits of divested operations. (c) Represents a pre-tax charge of $520.5 million ($312.6 million after-tax or $.93 per share) for the cumulative effect of adopting Statement of Financial Accounting Standards ("SFAS") No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions and a credit of $30.0 million ($.09 per share) for the cumulative effect of adopting SFAS No. 109, Accounting for Income Taxes. (d) Includes an after-tax special charge of $195.0 million for potential future Shiley C/C heart valve fracture claims. (e) Includes an after-tax provision of approximately $46.0 million for the loss on the sale of the Pigments business. (f) In 1991, the Company effected a two-for-one stock split of its common stock. Prior years have been restated to reflect this stock split.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Information required by this item is incorporated by reference to the "Financial Review" on pages 26 through 33 of the Annual Report to Shareholders for the fiscal year ended December 31, 1993. Item 8. Financial Statements and Supplementary Data Information required by this item is incorporated by reference to the "Independent Auditors' Report" found on page 34 and to pages 35 through 51 of the Annual Report to Shareholders for the fiscal year ended December 31, 1993. 13 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. PART III Item 10. Directors and Executive Officers of the Registrant Information with regard to the Directors of the Company, including those of the following Executive Officers who are Directors, is incorporated by reference to pages 3 through 7 of the Company's Proxy Statement dated March 18, 1994. The Board of Directors elects officers at its first meeting after each annual meeting of shareholders. The Board may also elect officers from time to time throughout the year. Elected officers of the Company hold office until their successors are chosen or until their earlier death, resignation or removal.
Age as of the date of the Company's Annual Meeting Positions and Offices With Name April 28, 1994 Company Presently Held ----- ------------ ----------------------- Brian W. Barrett............................... 54 Vice President; President, Northern Asia, Australasia and Canada--International Pharmaceuticals Group Edward C. Bessey............................... 59 Vice Chairman; President--U.S. Pharmaceuticals Group; Director; Member of the Corporate Management Committee M. Kenneth Bowler.............................. 51 Vice President--Federal Government Relations C. L. Clemente................................. 56 Senior Vice President--Corporate Affairs; Secretary and Corporate Counsel; Member of the Corporate Management Committee Bruce R. Ellig................................. 57 Vice President--Personnel Donald F. Farley .............................. 51 Vice President; President--Food Science Group David Fitzgerald............................... 60 Vice President; Executive Vice President--Hospital Products Group, and President, Howmedica Division George A. Forcier ............................. 55 Vice President--Quality Control William E. Harvey.............................. 63 Vice President; Treasurer Gary N. Jortner................................ 48 Vice President; Group Vice President, Disease Management--U.S. Pharmaceuticals Group Karen L. Katen................................. 45 Vice President; Executive Vice President--U.S. Pharmaceuticals Group Henry A. McKinnell............................. 51 Executive Vice President and Chief Financial Officer; President--Hospital Products Group; Member of the Corporate Management Committee Brower A. Merriam.............................. 59 Vice President; President--Animal Health Group John C. Mesloh................................. 59 Vice President--Corporate Purchasing Victor P. Micati............................... 54 Vice President; President, Europe--International Pharmaceuticals Group Paul S. Miller................................. 55 Senior Vice President; General Counsel; Member of the Corporate Management Committee George M. Milne, Jr. .......................... 50 Vice President; President--Central Research Robert Neimeth................................. 58 Executive Vice President; President--International Pharmaceuticals Group; Member of the Corporate Management Committee John F. Niblack................................ 55 Executive Vice President--Research and Development; Member of the Corporate Management Committee 14 Age as of the date of the Company's Annual Meeting Positions and Offices With Name April 28, 1994 Company Presently Held ----- ------------ ----------------------- William J. Robison............................. 58 Vice President; President--Consumer Health Care Group Herbert V. Ryan................................ 57 Controller Craig Saxton .................................. 51 Vice President; Executive Vice President--Central Research Gerald H. Schulze.............................. 46 Vice President--Corporate Strategic Planning Robert L. Shafer............................... 61 Vice President--Public Affairs David L. Shedlarz.............................. 46 Vice President--Finance William C. Steere, Jr.......................... 57 Chairman of the Board and Chief Executive Officer; Director; Member of the Corporate Management Committee Peter G. Tombros............................... 51 Vice President--Investor Relations
BUSINESS EXPERIENCE OF NON-DIRECTOR OFFICERS Brian W. Barrett Mr. Barrett joined Pfizer Canada in 1966, where he served in various financial positions, including Chief Financial Officer of the Canadian subsidiary. In 1971, he was appointed Assistant Controller of Pfizer International in New York; in 1973, Director of International Planning and in 1976, Director of Planning. In 1980, Mr. Barrett was appointed Vice President -- Corporate Strategic Planning; in 1983, he became Vice President -- Finance for Pfizer International; in 1985, President -- Africa/Middle East and in 1991, President -- Asia/Canada. In 1992, Mr. Barrett was elected Vice President of the Company. He assumed the responsibilities of his present position, President, Northern Asia, Australasia and Canada -- International Pharmaceuticals Group, in 1993. M. Kenneth Bowler Mr. Bowler joined the Company in 1989, and has been Vice President -- Federal Government Relations since 1990. He formerly served as Staff Director for the House Ways and Means Committee. C. L. Clemente Mr. Clemente joined the Company in 1964 and has served as Vice President; General Counsel and Secretary, Pfizer International, Inc. He has also held the position of Vice President of Coty, formerly Pfizer's fragrance and cosmetic division. In 1983, he was named Associate General Counsel of Pfizer Inc. In 1986, he was elected Vice President; General Counsel and Secretary of the Company. He became a member of the Corporate Management Committee of the Company in 1991. In 1992, he was elected Senior Vice President --Corporate Affairs; Secretary and Corporate Counsel. Bruce R. Ellig Mr. Ellig joined the Company in 1960. He progressed through a number of positions of increasing responsibility in the Corporate Personnel Division including Vice President -- Compensation and Benefits in 1978 and Vice President-Employee Relations in 1983. In 1985, he was elected Vice President -- Personnel of the Company. Donald F. Farley Mr. Farley joined the Company in 1965 as Production Engineer for the Chemical Division. After serving in a number of positions of increasing responsibility within the Chemical Division, he was named its Vice President, Operations in 1982. In 1986 he became Senior Vice President of the Division, and in 1988, Executive Vice President - Specialty Chemicals. In 1992, Mr. Farley was named President of the Food Science Group, and in February 1993 was elected a Vice President of the Company. 15 David Fitzgerald Mr. Fitzgerald joined the Company's Howmedica division in 1970 as Controller. In 1974, he was promoted to Corporate Controller of Howmedica. He served as Assistant General Manager and Vice President -- General Manager, and in 1980 he assumed responsibility for Howmedica's worldwide orthopedics operations. In 1982, he was appointed Senior Vice President of Howmedica. In 1984, he became President of Howmedica and Senior Vice President of Hospital Products. In 1988, he became Executive Vice President of the Hospital Products Group. In 1992, Mr. Fitzgerald was elected Vice President of the Company. George A. Forcier Dr. Forcier joined the Company in 1966 as Analytical Research Chemist for the Company's Medical Research Laboratories. In 1970, he was named Project Leader, in 1979 Manager, and in 1981, Assistant Director, of the Analytical Research Department. In 1986, he was named Director of the Analytical Research and Development Department and in 1991, he became Group Director. Dr. Forcier was elected Vice President -- Quality Control of the Company, effective January 1, 1994. William E. Harvey Mr. Harvey joined the Company in 1966 as Assistant to the Treasurer of Pfizer International. In 1969, he was appointed Assistant Treasurer, International, and in 1981, he became Assistant Treasurer of the Company. In 1990, Mr. Harvey was elected Vice President; Treasurer of the Company. Gary N. Jortner Mr. Jortner joined the Company in 1973 as a Systems Analyst for Pfizer Pharmaceuticals. In 1974, he transferred to product management and progressed through a series of promotions that resulted in his being named Group Product Manager for Pfizer Labs in 1978. In 1981, he became Vice President of Marketing for Pfizer Labs. In 1986, he was promoted to Vice President of Operations for Labs. In 1991, he was named Vice President and General Manager, Pfizer Labs Division. In 1992, Mr. Jortner was elected Vice President of the Company. In 1993, he was named Vice President; Group Vice President, Disease Management -- U.S. Pharmaceuticals Group. Karen L. Katen Ms. Katen joined the Company in 1974 as a Marketing Associate for Pfizer Pharmaceuticals. Beginning in 1975, she progressed through a number of positions of increasing responsibility in the Roerig product management group which resulted in her being named Group Product Manager in 1978. In 1980, she transferred to Pfizer Labs as a Group Product Manager and later became Director, Product Management. In 1983, she returned to Roerig as Vice President - -Marketing. In 1986, she was named Vice President and General Manager --Roerig Division. In 1992, she was elected Vice President of the Company. In May 1993, Ms. Katen became Executive Vice President of the U.S. Pharmaceuticals Group, in addition to remaining General Manager of the Company's Roerig Division. Henry A. McKinnell Dr. McKinnell joined the Company in 1971. In 1977, he became Vice President - --Area Manager for Pfizer Asia. In 1979, he became Executive Vice President and in 1981, President of Pfizer Asia. In 1984, Dr. McKinnell was named Vice President -- Corporate Strategic Planning, and in 1986, he was elected a Vice President of the Company. In 1990, Dr. McKinnell became the Company's Chief Financial Officer and was named Vice President -- Finance of the Company. In 1992, he became a member of the Corporate Management Committee of the Company. In that same year, he became Executive Vice President of the Company, and President of the Company's Hospital Products Group, in addition to remaining the Company's Chief Financial Officer. Brower A. Merriam Mr. Merriam joined the Company in 1969 as Country Manager for Peru, and in 1971, he was appointed Country Manager for Argentina. In 1973, he was appointed President of Pfizer Latin America. He was appointed Director of Pfizer International in 1984, and in 1988 assumed the position of President for Latin America, Southeast Asia, Indo-Pacific and Canada. In 1990, he was appointed Executive Vice President of Pfizer International. In 1991, he 16 became Executive Vice President of the Animal Health Group and in 1992 was appointed its President. Mr. Merriam was elected a Vice President of the Company in 1992. John C. Mesloh Mr. Mesloh joined Howmedica, Inc. as Controller in 1973. In 1974, he was appointed Vice President -- Finance and Treasurer of Howmedica, and in 1980 he was elected Corporate Controller of the Company. In 1989, Mr. Mesloh was elected Vice President of the Company. Mr. Mesloh was elected Vice President, Corporate Purchasing, effective January 1993. Victor P. Micati Mr. Micati joined the Company in 1965 as a Management Candidate for Pfizer Labs. Beginning in 1966, he progressed through a number of positions of increasing responsibility in the Pfizer Labs division, which resulted in his being named Vice President --Marketing in 1971. In 1972 he became Vice President of Pharmaceutical Development for International Pharmaceuticals. In 1980, he was named Executive Vice President of the European Management Center. He returned to the International Pharmaceutical Division in 1984 as Senior Vice President, and in 1990 was named President, Europe. In 1992, Mr. Micati was elected Vice President of the Company. Paul S. Miller Mr. Miller joined the Company in 1971 and was appointed an Assistant Secretary and Assistant General Counsel in 1975. In 1983, he was named Associate General Counsel. In 1986, he became Secretary of the Corporate Management Committee and in that same year he was elected Vice President; General Counsel of the Company. He became a member of the Corporate Management Committee of the Company in 1991. In 1992, Mr. Miller was elected Senior Vice President -- General Counsel of the Company. George M. Milne Dr. Milne joined the Company in 1970 as a Research Scientist. In 1973, he was named Senior Research Scientist and progressed through a number of positions of increasing responsibility which resulted in his being named Vice President, Research and Development Operations in 1985. In 1988, Dr. Milne became Senior Vice President, Research and Development, and in September 1993, he was elected Vice President of the Company and President, Central Research. Robert Neimeth Mr. Neimeth joined the Company in 1962 as a management trainee, subsequently serving as Country Manager, Nigeria, as Vice President, Pharmaceutical Development in Asia, and then as President of Pfizer Asia from 1972 to 1977. He then served as Vice President and Director of Operations for Pfizer Labs. In 1980 he became President Pfizer Europe and, in 1983, Mr. Neimeth became Vice President of the Company. In 1984, he was also elected Executive Vice President of Pfizer International Subsidiaries. In 1990, he was named Vice President; President, Pfizer International Subsidiaries. In 1991, he became Chairman, President and Chief Executive Officer of Pfizer International. He also became a member of the Corporate Management Committee of the Company in 1991. In 1992, he was elected Executive Vice President of the Company, and President, International Pharmaceuticals Group. In this capacity, Mr. Neimeth supervises the Company's International Pharmaceutical and worldwide Animal Health operations. John F. Niblack Dr. Niblack joined the Company in 1967 and held various management positions in new drug discovery operations before being appointed in 1984 as Vice President, Medicinal Products Research and in 1986 as Executive Vice President, Central Research. In 1990, Dr. Niblack was named President-Central Research and elected a Vice President of the Company. In September 1993, Dr. Niblack was elected Executive Vice President - Research and Development, and became a member of the Corporate Management Committee of the Company. 17 William J. Robison Mr. Robison joined the Company in 1961 as a Sales Representative for Pfizer Labs. After serving in a number of positions of increasing responsibility in the Labs division, he was appointed Vice President of Sales in 1980, and Senior Vice President Pfizer Labs in 1986. In 1990 he was appointed Vice President and General Manager of Pratt Pharmaceuticals, and in 1992 assumed his present position as President of the Consumer Health Care Group. In 1992, Mr. Robison was also elected Vice President of the Company. Herbert V. Ryan Mr. Ryan joined the Company in 1962 as Supervisor, Capital Assets. In 1964 he was named Supervisor, Corporate Ledger, and in 1966 became Director, Corporate Accounting. In 1981 he was appointed Assistant Controller, Corporate Accounting. Effective January 1993, Mr. Ryan was elected Corporate Controller. Craig Saxton Dr. Saxton joined the Company in 1976 as Clinical Projects Director for the Central Research Division of Pfizer Limited in Sandwich, England. In 1981, he was named Senior Associate Medical Director for the International Division of Pfizer Inc., and in 1982 became the Division's Vice President, Medical Director. Dr. Saxton became Senior Vice President, Clinical Research and Development for the Central Research Division in 1988. In September 1993, he was named Executive Vice President - Central Research and was elected a Vice President of the Company. Gerald H. Schulze Mr. Schulze joined the Company in 1971 as a Medical Service Representative for Roerig. He served in a number of positions of increasing responsibility in the Pharmaceuticals and International divisions before being named Vice President -- Business Development for the Consumer Products division in 1985. In 1987, he was named Vice President -- Business Development for Hospital Products, and in 1988, became that division's Senior Vice President. In 1992, he was elected a Vice President of the Company and was named Executive Vice President for the Hospital Products Group and President of the Medical Devices Division. In November 1993, Mr. Schulze was elected Vice President, Corporate Strategic Planning of the Company. Robert L. Shafer Mr. Shafer joined the Company in 1966 as Assistant to the Director of Government Relations. In 1967, he became Associate Director of Government Relations and in 1968, Director of Government Relations. In 1973, Mr. Shafer was elected a Vice President of the Company. In 1982, he was elected Vice President-Public Affairs. David L. Shedlarz Mr. Shedlarz joined the Company in 1976 as Senior Financial Analyst for the Pharmaceuticals Division. After serving in a number of positions of increasing responsibility, he was named Production Controller in 1979 and Assistant Group Controller in 1981. In 1984, he became Group Controller and in 1989 was named Vice President of Finance for the Pharmaceuticals Group. In 1992, Mr. Shedlarz was elected Vice President -- Finance of the Company. Peter G. Tombros Mr. Tombros joined the Company as a Marketing Assistant with Pfizer Laboratories in 1968. After serving in a number of different marketing and sales positions, he was appointed to the position of Vice President, Marketing in 1975. In 1980, he was appointed Vice President, Pfizer Pharmaceuticals and General Manager for the Roerig Division. In 1984 he became Senior Vice President of Pfizer Pharmaceuticals and General Manager for the Roerig Division. In 1986, Mr. Tombros was elected Vice President of Pfizer Inc. and Executive Vice President of Pfizer Pharmaceuticals. In 1990 he was named Vice President -- Corporate Strategic Planning of the Company. In December 1993, Mr. Tombros was elected Vice President -- Investor Relations. In 1994, Mr. Tombros announced that he would be leaving the Company on March 22, 1994. 18 Item 11. Executive Compensation Information with regard to executive compensation is incorporated by reference to pages 9 through 17 of the Company's Proxy Statement dated March 18, 1994. Item 12. Security Ownership of Certain Beneficial Owners and Management Information with regard to security ownership of certain beneficial owners and management is incorporated by reference to pages 2 through 7 of the Company's Proxy Statement dated March 18, 1994. Item 13. Certain Relationships and Related Transactions Information with regard to certain relationships and related transactions is incorporated by reference to page 19 of the Company's Proxy Statement dated March 18, 1994. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K The following is a list of all Financial Statement Schedules and Exhibits filed as a part of this Annual Report. (a)(1) Financial Statements See Part II (a)(2) Financial Statement Schedules Page ---- Schedule V -- Property, Plant and Equipment 23 Schedule VI -- Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment 24 Schedule VIII -- Valuation and Qualifying Accounts 25 Schedule IX -- Short-Term Borrowings 26 Schedule X -- Supplementary Income Statement Information 27 Schedules not listed above have been omitted for the reason that they are inapplicable or not required or the information is given elsewhere in the financial statements. The financial statements of unconsolidated subsidiaries are omitted on the basis that these subsidiaries, considered in the aggregate, would not constitute a significant subsidiary. (a)(3) Exhibits 3(a) --Restated Certificate of Incorporation of the Company, as of April 1991 (incorporated by reference to Exhibit 4(a) of Form S-8, Registration No. 33-44053). 3(b) --By-laws of the Company, as amended January 1992 (incorporated by reference to Exhibit 3 of the Company's Form 8-K Current Report dated January 24, 1992). 10 --Executive Compensation Plans and Arrangements: 10.1 --Form of Severance Agreement for Certain Executive Officers of the Company (incorporated by reference to Exhibit 10.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1992). 10.2 --Pfizer Inc. Performance-Contingent Share Award Program (incorporated by reference to Exhibit A of the Company's Proxy Statement dated March 18, 1994). 11 --Computation of Earnings Per Common Share and Fully Diluted Earnings Per Common Share. 12 --Computation of Ratio of Earnings to Fixed Charges. 13(a)--Portions of the Annual Report of the Company for the fiscal year ended December 31, 1993 which are expressly incorporated by reference herein. 13(b)--Copy of the Annual Report of the Pfizer Savings and Investment Plan on Form 11-K for the fiscal year ended December 31, 1993. 13(c)--Copy of the Annual Report of the Pfizer Savings and Investment Plan for Employees Resident in Puerto Rico on Form 11-K for the fiscal year ended December 31, 1993. 19 21 --Subsidiaries of the Registrant. 23 --Report and consent of KPMG Peat Marwick, independent certified public accountants. (b) The Company filed a report on Form 8-K dated October 20, 1993. Exhibits to the Form 10-K are available upon request at the charges set out below. Requests should be directed to C. L. Clemente, Secretary, Pfizer Inc, 235 East 42nd Street, New York, N.Y. 10017. Exhibit 13(b) ... $1.20 Exhibit 13(c) ... 1.10 Exhibit 21 ...... .50 20 The following trademarks, found in this report, are among those used by Pfizer Inc. Cardura (doxazosin) Advocin (danofloxacin) Diflucan (fluconazole) Aviax (semduramicin) Enable (tenidap) Banminth (pyrantel tartrate) Enablex (tenidap) Dectomax (doramectin) E5 (anti-endotoxin antibody) Mecadox (carbadox) Feldene (piroxicam) Nemex (pyrantel pamoate) Glucotrol (glipizide) Terramycin LA-200 (oxytetracycline) Glucotrol XL (glipizide GITS) TM/LA (oxytetracycline) Norvasc (amlodipine besylate) Paratect (morantel tartrate) Procardia (nifedipine) Procardia XL (nifedipine GITS) Reactine (cetirizine) Unasyn IM/IV (sulbactam/ampicillin) Unasyn Oral (sultamicillin) Zithromax (azithromycin) Zoloft (sertraline) Barbasol ABG Ben-Gay Alta Daily Care Desitin Duracon Desitin Gamma Plax Luhr Rid Paratrend Unisom (doxylamine succinate) P.C.A. Unisom Sleep Gels Simplex Visine (tetrahydrozoline HC1) Chy-Max (chymosin) Litesse (polydextrose) SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Pfizer Inc. (Registrant) By /s/ C. L. Clemente --------------------- C. L. Clemente (Secretary) Dated: March 24, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
Signature Title Date --------- ----- ---- /s/ William C. Steere, Jr. Chairman of the Board, March 24, 1994 ---------------------------------------------- Director (Principal (William C. Steere, Jr.) Executive Officer) /s/ Henry A. McKinnell Executive Vice President March 24, 1994 ---------------------------------------------- (Principal Financial Officer) (Henry A. McKinnell) /s/ Herbert V. Ryan Controller March 25, 1994 ---------------------------------------------- (Principal Accounting Officer) (Herbert V. Ryan) /s/ Edward C. Bessey Director March 24, 1994 ---------------------------------------------- (Edward C. Bessey) /s/ M. Anthony Burns Director March 24, 1994 ---------------------------------------------- (M. Anthony Burns) /s/ William J. Crowe, Jr. Director March 24, 1994 ---------------------------------------------- (William J. Crowe, Jr.) /s/ Grace J. Fippinger Director March 24, 1994 ---------------------------------------------- (Grace J. Fippinger) /s/ Constance J. Horner Director March 24, 1994 ---------------------------------------------- (Constance J. Horner) Director March , 1994 ---------------------------------------------- (Stanley O. Ikenberry) /s/ Thomas G. Labrecque Director March 24, 1994 ---------------------------------------------- (Thomas G. Labrecque) 21 Signature Title Date --------- ----- ---- /s/ James T. Lynn Director March 24, 1994 ---------------------------------------------- (James T. Lynn) /s/ Paul A. Marks Director March 24, 1994 ---------------------------------------------- (Paul A. Marks) /s/ John R. Opel Director March 24, 1994 ---------------------------------------------- (John R. Opel) /s/ Edmund T. Pratt, Jr. Director March 24, 1994 ---------------------------------------------- (Edmund T. Pratt, Jr.) /s/ Franklin D. Raines Director March 24, 1994 ---------------------------------------------- (Franklin D. Raines) /s/ Felix G. Rohatyn Director March 24, 1994 ---------------------------------------------- (Felix G. Rohatyn) /s/ Jean-Paul Valles Director March 24, 1994 ---------------------------------------------- (Jean-Paul Valles)
22 PFIZER INC. AND SUBSIDIARY COMPANIES SCHEDULE V-PROPERTY, PLANT AND EQUIPMENT (a)
Balance at Other Balance at Beginning Additions Translation Changes Add End of Classification of Period at Cost Retirements Adjustments (Deduct)(c) Period -------------- ---------- --------- ----------- ----------- ----------- ---------- (Millions of Dollars) Year ended December 31, 1993 Land ........................ $ 71.7 $ 10.4 $ .7 $ .4 $ -- $ 81.8 Buildings ................... 953.9 158.0 4.1 (14.0) -- 1,093.8 Machinery and equipment ..... 1,706.9 248.5 37.5 (20.1) -- 1,897.8 Furniture, fixtures and other 698.3 175.6 50.3 (10.8) -- 812.8 Construction in progress .... 385.6 41.7(b) 5.4 (7.4) -- 414.5 -------- ------ ----- ------ -------- -------- $3,816.4 $634.2 $98.0 $(51.9) $ -- $4,300.7 ======== ====== ===== ====== ======== ======== Year ended December 31, 1992 Land, including quarries and mining properties ......... $ 85.3 $ 15.4 $ .7 $ 1.4 $ (29.7) $ 71.7 Buildings ................... 959.7 118.9 3.2 (10.2) (111.3) 953.9 Machinery and equipment ..... 1,876.4 339.5 43.4 (25.3) (440.3) 1,706.9 Furniture, fixtures and other 663.5 180.7 50.5 (13.6) (81.8) 698.3 Construction in progress .... 422.6 19.7(b) 1.0 (19.9) (35.8) 385.6 -------- ------ ----- ------ -------- -------- $4,007.5 $674.2 $98.8 $(67.6) $ (698.9) $3,816.4 ======== ====== ===== ====== ======== ======== Year ended December 31, 1991 Land, including quarries and mining properties ......... $ 83.3 $ 4.7 $ .4 $ (1.0) $ (1.3) $ 85.3 Buildings ................... 863.5 137.0 3.6 (23.3) (13.9) 959.7 Machinery and equipment ..... 1,670.6 288.6 27.4 (38.0) (17.4) 1,876.4 Furniture, fixtures and other 599.9 126.0 39.7 (16.2) (6.5) 663.5 Construction in progress .... 399.0 37.5(b) 2.2 (11.7) -- 422.6 -------- ------ ----- ------ -------- -------- $3,616.3 $593.8 $73.3 $(90.2) $ (39.1) $4,007.5 ======== ====== ===== ====== ======== ======== - ------------ (a) Generally, the straight line method of depreciation is used for financial reporting purposes. The rates used in computing the annual amounts of financial depreciation are, in general, as follows: Buildings ................ 3-4% Machinery and equipment... 5-20% Other .................... 3-25% (b) Includes reclassification of Construction in progress to appropriate classifications. (c) Adjustments arising from businesses divested and primarily attributable to the sale of the Company's Coty line of fragrances and cosmetics, a majority interest in the common stock of MTI and certain product lines of Shiley Incorporated in 1992 and the Plax international pre-brushing dental rinse business, Deknatel and Pfizer Laser Systems in 1991.
23 PFIZER INC. AND SUBSIDIARY COMPANIES SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Additions Balance at Charged to Other Balance at Beginning Costs and Translation Changes Add End of Description of Period Expenses Retirements Adjustments (Deduct)(a) Period ----------- ----------- --------- ----------- ----------- ----------- --------- (Millions of Dollars) Year ended December 31, 1993 Buildings ...................... $ 334.0 $ 31.1 $ 4.7 $ (1.5) $ -- $ 358.9 Machinery and equipment ........ 883.1 126.4 29.5 (8.1) -- 971.9 Furniture, fixtures and other .. 294.2 83.6 34.5 (5.9) -- 337.4 -------- ------ ----- ------ -------- -------- $1,511.3 $241.1 $68.7 $(15.5) $ -- $1,668.2 ======== ====== ===== ====== ======== ======== Year ended December 31, 1992 Quarries and mining properties ................... $ 2.9 $ .2 $ -- $ .1 $ (3.2) $ -- Buildings ...................... 327.1 37.4 2.6 (.4) (27.5) 334.0 Machinery and equipment ........ 1,001.7 126.7 45.9 (8.3) (191.1) 883.1 Furniture, fixtures and other .. 294.8 78.3 35.4 (6.4) (37.1) 294.2 -------- ------ ----- ------ -------- -------- $1,626.5 $242.6 $83.9 $(15.0) $ (258.9) $1,511.3 ======== ====== ===== ====== ======== ======== Year ended December 31, 1991 Quarries and mining properties ................... $ 2.9 $ -- $ -- $ -- $ -- $ 2.9 Buildings ...................... 304.6 34.2 1.7 (7.2) (2.8) 327.1 Machinery and equipment ........ 932.6 115.7 20.1 (19.0) (7.5) 1,001.7 Furniture, fixtures and other .. 266.4 67.8 29.4 (7.3) (2.7) 294.8 -------- ------ ----- ------ -------- -------- $1,506.5 $217.7 $51.2 $(33.5) $ (13.0) $1,626.5 ======== ====== ===== ====== ======== ======== - ------------ (a) Adjustments arising from businesses divested and primarily attributable to the sale of the Company's Coty line of fragrances and cosmetics, a majority interest in the common stock of MTI and certain product lines of Shiley Incorporated in 1992 and the Plax international pre-brushing dental rinse business, Deknatel and Pfizer Laser Systems in 1991.
24 PFIZER INC. AND SUBSIDIARY COMPANIES SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
Additions ------------------------- Balance at Charged to Charged to Beginning Costs and Other Deductions Balance at Description of Period Expenses Accounts (b) (a) (c) End of Period ----------- ---------- ---------- ------------ ---------- ------------- (Millions of Dollars) Year ended December 31, 1993 Valuation and qualifying accounts deducted from assets to which they apply Allowance for doubtful accounts .... $36.2 $12.1 $ .4 $ 8.1 $40.6 ===== ===== ===== ===== ===== Allowance for credit losses ........ $14.5 $ -- $-- $ 1.0(d) $13.5 ===== ===== ===== ===== ===== Year ended December 31, 1992 Valuation and qualifying accounts deducted from assets to which they apply Allowance for doubtful accounts .... $38.8 $11.5 $ .5 $14.6(e) $36.2 ===== ===== ===== ===== ===== Allowances for credit losses ....... $11.5 $ 3.0 $-- $-- $14.5 ===== ===== ===== ===== ===== Year ended December 31, 1991 Valuation and qualifying accounts deducted from assets to which they apply Allowance for doubtful accounts .... $42.5 $ 3.1 $-- $ 6.8 $38.8 ===== ===== ===== ===== ===== Allowance for credit losses ........ $11.5 $ -- $-- $-- $11.5 ===== ===== ===== ===== ===== - ------------ (a) Includes impact of translation of foreign currencies. (b) Recoveries of accounts previously written off. (c) Uncollectible accounts charged against allowance accounts. (d) Decrease in allowance arising from lower loan loss exposure. (e) Includes $6.4 million of adjustments arising from businesses divested.
25 PFIZER INC. AND SUBSIDIARY COMPANIES SCHEDULE IX -- SHORT-TERM BORROWINGS
Average Maximum Amount Weighted Weighted Amount Outstanding Average Balance at Average Outstanding During Interest Rate End of Interest During the the During the Category of Aggregate Short-term Borrowings Period Rate Period Period(a) Period(b) - ------------------------------------------- ------- ------ -------- -------- ------------- (Millions of Dollars) Year ended December 31, 1993 Bank Borrowings .................... $ 186.2 9.2% $ 219.5 $ 186.7 11.0% Certificates of deposit ............ 160.8 3.2% 161.9 127.2 3.6% Commercial paper ................... 814.5 3.2% 1,850.2 1,390.9 3.2% Other .............................. 13.7 7.7% 17.8 15.2 10.0% Current portion long-term debt ..... 3.6 -------- $1,178.8 ======== Year ended December 31, 1992 Bank Borrowings .................... $ 158.8 13.4% $ 235.6 $ 191.6 12.9% Certificates of deposit ............ 164.1 3.4% 308.5 148.8 3.7% Commercial paper ................... 905.1 3.7% 982.6 833.7 4.0% Other .............................. 19.7 13.8% 22.2 13.4 12.8% Current portion long-term debt ..... 4.6 -------- $1,252.3 ======== Year ended December 31, 1991 Bank Borrowings .................... $ 159.1 15.7% $ 412.0 $ 253.9 13.2% Certificates of deposit ............ 234.4 5.2% 234.4 80.3 6.7% Commercial paper ................... 1,280.0 4.7% 1,366.0 1,059.8 5.8% Other .............................. 3.8 18.9% 45.9 23.8 13.1% Current portion long-term debt ..... 13.8 -------- $1,691.1 ======== - -------------- (a) Represents the arithmetic mean of the end of the month balances by category for the previous twelve months. (b) Actual interest expense by category over the average amount outstanding during the period.
26 PFIZER INC. AND SUBSIDIARY COMPANIES SCHEDULE X-SUPPLEMENTARY INCOME STATEMENT INFORMATION Charged to Costs and Expenses -------------------------------- Year Ended December 31, -------------------------------- Item 1993 1992 1991 ---- ------ ------ ------ (Millions of Dollars) Maintenance and repairs .............. $ 98.0(a) $121.4 $122.3 Media advertising costs .............. 254.9 243.2 279.9 Royalties ............................ 225.9 205.0 243.7 - ------------ Taxes, other than payroll and income taxes and amortization of intangible assets, are omitted as each item does not exceed 1% of Net sales as reported in the Consolidated Statement of Income. (a) Decrease due to divsetiture of MTI in 1992. 27 EXHIBIT INDEX 3(a) --Restated Certificate of Incorporation of the Company, as of April 1991 (incorporated by reference to Exhibit 4(a) of Form S-8, Registration No. 33-44053). 3(b) --By-laws of the Company, as amended January 1992 (incorporated by reference to Exhibit 3 of the Company's Form 8-K Current Report dated January 24, 1992). 10 --Executive Compensation Plans and Arrangements: 10.1 --Form of Severance Agreement for Certain Executive Officers of the Company (incorporated by reference to Exhibit 10.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1992). 10.2 --Pfizer Inc. Performance-Contingent Share Award Program (incorporated by reference to Exhibit A of the Company's Proxy Statement dated March 18, 1994). 11 --Computation of Earnings Per Common Share and Fully Diluted Earnings Per Common Share. 12 --Computation of Ratio of Earnings to Fixed Charges. 13(a)--Portions of the Annual Report of the Company for the fiscal year ended December 31, 1993 which are expressly incorporated by reference herein. 13(b)--Copy of the Annual Report of the Pfizer Savings and Investment Plan on Form 11-K for the fiscal year ended December 31, 1993. 13(c)--Copy of the Annual Report of the Pfizer Savings and Investment Plan for Employees Resident in Puerto Rico on Form 11-K for the fiscal year ended December 31, 1993. 21 --Subsidiaries of the Registrant. 23 --Report and consent of KPMG Peat Marwick, independent certified public accountants. EX-11 2 EXHIBIT 11 Exhibit 11 PFIZER INC. AND SUBSIDIARY COMPANIES COMPUTATION OF EARNINGS PER COMMON SHARE AND FULLY DILUTED EARNINGS PER COMMON SHARE (In Millions Except Per Share Data)
Year Ended December 31, --------------------------------- 1993 1992 1991 ------ ------ ------- Net income ........................................................... $657.5 $810.9 $722.1 Add: Interest on 8 3/4% Convertible Subordinated Debentures Due 2006 and amortization of expenses incurred in connection with the issuance of the 8 3/4% Convertible Subordinated Debentures, net of applicable income tax effect (a) ........ -- .2 1.3 ------ ------ ------ Adjusted net income for earnings per common share computation ........ $657.5 $811.1 $723.4 ====== ====== ====== Weighted average number of common shares outstanding ................. 315.5 329.0 330.2 Common share equivalents applicable to stock option plans ............ 4.9 7.5 7.6 Common share equivalents applicable to 8 3/4% Convertible Subordinated Debentures Due 2006 (a)............................... -- -- 1.5 ------ ------ ------ Weighted average number of common shares and common share equivalents used to compute earnings per common share .............. 320.4 336.5 339.3 ====== ====== ====== Earnings per common share ............................................ $ 2.05 $ 2.41 $ 2.13 ====== ====== ====== Adjusted net income for earnings per common share computation.......... $657.5 $811.1 $723.4 Add: Interest on 4% Convertible Subordinated Debentures Due 1997 and amortization of expenses incurred in connection with the issuance of the 4% Convertible Subordinated Debentures, net of applicable income tax effect ............ -- -- -- ------ ------ ------ Adjusted net income for fully diluted earnings per common share computation.................................................... $657.5 $811.1 $723.4 ====== ====== ====== Weighted average number of common shares outstanding ................. 315.5 329.0 330.2 Common share equivalents applicable to 8 3/4% Convertible Subordinated Debentures Due 2006 (a) ............................... -- -- 1.5 Common share equivalents applicable to stock option plans ............ 5.1 7.5 8.4 Common share equivalents applicable to 4% Convertible Subordinated Debentures Due 1997 (b) . .............................. -- .1 .1 ------ ------ ------ Weighted average number of common shares and common share equivalents used to compute fully diluted earnings per common share ................................................... 320.6 336.6 340.2 ====== ====== ====== Fully diluted earnings per common share (c) .......................... $ 2.05 $ 2.41 $ 2.13 ====== ====== ====== - ------------ (a) The 8 3/4% Convertible Subordinated Debentures Due 2006 are considered to be common share equivalents since the interest rate on the debentures was less than two-thirds of the prime interest rate at the time of issuance. These debentures were redeemed on April 15, 1992. (b) The 4% Convertible Subordinated Debentures Due 1997 are not considered to be common share equivalents since the interest rate on the debentures was not less than two-thirds of the prime interest rate at the time of issuance. (c) This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
EX-12 3 EXHIBIT 12 Exhibit 12 PFIZER INC. AND SUBSIDIARY COMPANIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Millions of Dollars, Except Ratios)
Year Ending December 31, ---------------------------------------------- 1993 1992 1991 1990 1989 ------- ------- ------- ------- ------- Earnings Income before provision for taxes on income, minority interests and cumulative effect of accounting changes ................................... $ 851.4 $1,534.8 $ 943.7 $1,103.3 $ 916.5 Less: Minority interests ........................... 2.6 2.7 3.2 4.2 4.1 Undistributed earnings (losses) of unconsolidated subsidiaries.................. .7 8.5 0.8 (0.3) 6.9 ------- -------- -------- -------- -------- Adjusted income.......................................... 848.1 1,523.6 939.7 1,099.4 905.5 Fixed charges, excluding capitalized interest............................................... 135.6 130.1 155.2 153.8 144.2 ------- -------- -------- -------- -------- Total earnings..................................... $ 983.7 $1,653.7 $1,094.9 $1,253.2 $1,049.7 ======= ======== ======== ======== ======== Fixed Charges Interest expense (including amortization of debt discount and expenses and capitalized interest)................................ $ 120.5 $ 115.6 $ 138.1 $ 142.4 $ 131.2 One-third of rental expense.............................. 29.1 26.7 25.1 21.3 18.2 ------- -------- -------- -------- -------- Total fixed charges................................ $ 149.6 $ 142.3 $ 163.2 $ 163.7 $ 149.4 ======= ======== ======== ======== ======== Ratio of earnings to fixed charges (a)..................... 6.6 11.6 6.7 7.7 7.0 ======= ======== ======== ======== ======== - ------------ (a) "Earnings" consist of income before provision for taxes on income, minority interests and cumulative effect of accounting changes less minority interests and less undistributed earnings (losses) of unconsolidated subsidiaries adjusted for fixed charges, excluding capitalized interest. "Fixed charges" consist of interest expense, amortization of debt discount and expenses, capitalized interest and one-third of rental expense, which the Company believes to be a conservative estimate of an interest factor in its leases. It is not practicable to calculate the interest factor in a material portion of the Company's leases.
EX-13.(A) 4 EXHIBIT 13(A) EXHIBIT 13(a) FINANCIAL REVIEW Pfizer Inc and Subsidiary Companies Significant Events Affecting Comparability The comparability of income statement data has been affected by the following significant items that occurred from 1991 through 1993: o In the third quarter of 1993, the Company recorded a $750 million pre-tax charge ($525 million after-tax) for certain restructuring and unusual items. This charge covers restructuring costs, including personnel reductions and the writedown of certain tangible assets as well as intangible assets whose carrying value will not be recovered through future cash flows. The restructuring charge provides for a wide range of targeted restructuring initiatives including the consolidation of manufacturing, distribution and administrative infrastructures. Certain of the projects will begin immediately, while others will be completed in the next several years. The restructuring is projected to lower annual operating costs by at least $130 million when the full benefit of the efficiencies is realized and to lead to a worldwide workforce reduction of approximately 3,000 employees. o In October 1992, the Company sold approximately 60% of its interest in Minerals Technologies Inc. (MTI), a wholly owned company comprised of the Company's specialty minerals businesses, which was formerly part of the food science segment. The proceeds of $226.6 million, net of associated expenses, approximated the net book value of the interest sold. In April 1993, the Company sold its remaining interest. This last transaction resulted in a pre-tax gain of approximately $60 million and was offset by a $62 million charge for restructuring, consolidation and streamlining of certain of the Company's businesses. o The Company adopted new accounting rules for postretirement health care and life insurance benefits and for income taxes in the fourth quarter of 1992, effective January 1, 1992. These rules resulted in a one-time net after-tax charge of $282.6 million. These changes had no effect on cash flows. o In June 1992, the Company sold its Coty business, resulting in a pre-tax gain of $258.6 million which was substantially offset by charges associated with restructuring, consolidation and streamlining of certain of the Company's businesses. o In March 1992, the Company sold certain product lines and other assets of Shiley Incorporated to Sorin Biomedica S.p.A. The purchase price was approximately $230 million in cash. The transaction resulted in a gain which was used to offset costs associated with the Bowling Settlement Agreement. See the footnote "Litigation" beginning on page 47 for a further discussion of these matters. o Postretirement benefit curtailment gains of $56.5 million related to divestitures made during 1992 were included in divestitures, restructuring and unusual items--net in 1992. o Net income in 1991 was reduced by a $300 million pre-tax charge ($195 million after-tax) for potential future Shiley Convexo/Concave (C/C) heart valve fracture claims. o In 1991, the Company sold its Plax international pre-brushing dental rinse business for $105 million in cash. There was no gain or loss on this transaction. Overview of Consolidated Operating Results Net income in 1993 was $657.5 million, or $2.05 per share, compared with net income of $810.9 million, or $2.41 per share, in 1992. Excluding the effects of divestitures, restructuring and unusual items--net in 1993 and 1992 and the adoption of two new accounting standards in 1992, net income and earnings per share would have been $1,183.9 million, or $3.70 per share, in 1993 and $1,028.4 million, or $3.06 per share, in 1992, an increase of 15% and 21%, respectively. Operating results, excluding the items noted above, are referred to in this report as results of ongoing operations. Reported 1993 net sales of $7.5 billion increased by 3% compared with 1992. Excluding the sales of divested businesses from both 1993 and 1992, net sales increased by 9% in 1993. These results continue to reflect the Company's successful research and development (R&D) efforts. The Company's R&D program has produced a broad pipeline of innovative new prescription drugs. In 1993, R&D expenditures were $974.4 million, representing 13% of reported net sales, an increase of 13% over 1992. The Company's divestments and restructurings were designed to strengthen the Company's core businesses, improve long-term profitability and strengthen its competitive position in the pharmaceutical industry. The Company is now positioned to focus on its strengths of discovering, developing and marketing innovative new health care products on a worldwide basis. Growth: Reported Basis (The table below was represented by a graph in the printed Annual Report.) 1992 vs. 1991 1993 vs. 1992 - ----------------------------------------------------------------------------- Net Sales 4% 3% - ----------------------------------------------------------------------------- Production Margin 10% 10% - ----------------------------------------------------------------------------- Selling, Informational and Administrative 6% 6% - ----------------------------------------------------------------------------- Research and Development 14% 13% - ----------------------------------------------------------------------------- Operating Income 63% (41)% - ----------------------------------------------------------------------------- Income Before Cumulative Effect of Accounting Changes 51% (40)% - ----------------------------------------------------------------------------- Net Income 12% (19)% - ----------------------------------------------------------------------------- 26 Net Sales Consolidated net sales in 1993 increased by $248 million, or 3% over 1992. Net sales in 1992 increased by $280 million, or 4%, over 1991. Net sales from ongoing operations increased by 9% and 16% for the years 1993 and 1992, respectively. Increases in each year were reported in both the U.S. and international markets. In 1993, the Company registered net sales of more than $10 million in each of 42 countries outside of the U.S., with no single country other than the U.S. and Japan contributing more than 10% to reported consolidated net sales. The following tables detail sales by segment on a reported and ongoing basis for 1993 and 1992: 1993 Net Sales As % % (millions of dollars) Reported Change Ongoing Change - -------------------------------------------------------------- Health Care $6,210.3 11 $6,210.3 11 Consumer Health Care 373.5 (8) 373.5 -- Food Science* 315.9 (51) 303.8 (8) Animal Health 578.0 3 578.0 3 - -------------------------------------------------------------- Total $7,477.7 3 $7,465.6 9 - -------------------------------------------------------------- 1992 Net Sales As % % (millions of dollars) Reported Change Ongoing Change - -------------------------------------------------------------- Health Care $5,613.9 12 $5,612.4 19 Consumer Health Care 404.6 (42) 372.2 1 Food Science* 650.9 (11) 330.5 5 Animal Health 560.8 7 560.8 7 - -------------------------------------------------------------- Total $7,230.2 4 $6,875.9 16 - -------------------------------------------------------------- Percentage Change in Net Sales--As Reported Analysis of Change Total % ------------------------- Change Price Volume Currency - -------------------------------------------------------------- Health Care 1993 vs. 1992 11 2 11 (2) 1992 vs. 1991 12 3 8 1 Consumer Health Care 1993 vs. 1992 (8) 2 (9) (1) 1992 vs. 1991 (42) 2 (44) -- Food Science* 1993 vs. 1992 (51) 1 (52) -- 1992 vs. 1991 (11) -- (12) 1 Animal Health 1993 vs. 1992 3 6 -- (3) 1992 vs. 1991 7 7 -- -- Consolidated 1993 vs. 1992 3 2 3 (2) 1992 vs. 1991 4 3 -- 1 - -------------------------------------------------------------- *Reflects the sale of the Specialty Minerals business in 1992. The increase in 1993 consolidated net sales includes a 9% rise in unit volume from ongoing operations, offset by 6% applicable to net sales of divested businesses. The 4% increase in 1992 consolidated net sales includes a 10% rise in unit volume from ongoing operations, offset by 10% applicable to net sales of divested and closed businesses. Reported 1993 sales for the health care segment reflect a 13% increase in worldwide sales of pharmaceuticals, compared with a 21% increase in 1992. The following table shows the percentage change in net sales of the Company's major pharmaceuticals for the years ended December 31, 1993 and 1992, respectively: Percentage Change in Net Sales % Increase/(Decrease) - ----------------------------------------------------------------- 93/92 92/91 - ----------------------------------------------------------------- Cardura 40 90 Diflucan 19 36 Feldene (41) (11) Glucotrol 13 16 Norvasc 119 144 Procardia XL 11 35 Unasyn 7 14 Zithromax 82 * Zoloft 138 * - ----------------------------------------------------------------- *Growth more than 1000%. The decline in Feldene sales in 1993 and 1992 was attributable to a combination of new competitive brand-name products and generic competition. The 1990 Omnibus Budget Reconciliation Act included a provision requiring pharmaceutical companies to rebate to states a portion of revenues from pharmaceutical products dispensed to state Medicaid recipients. Medicaid rebates and related state programs reduced net sales by $70 million and $51 million in 1993 and 1992, respectively. In addition, the Company provided approximately $51 and $33 million in discounts to the federal government in 1993 and 1992, respectively, for purchases by the Department of Veterans Affairs and the Department of Defense. Growth: Ongoing Basis (The table below was represented by a graph in the printed Annual Report.) 1992 vs. 1991 1993 vs. 1992 - ----------------------------------------------------------------------------- Net Sales 16% 9% - ----------------------------------------------------------------------------- Production Margin 19% 12% - ----------------------------------------------------------------------------- Selling, Informational and Administrative 19% 8% - ----------------------------------------------------------------------------- Research and Development 18% 15% - ----------------------------------------------------------------------------- Operating Income 19% 18% - ----------------------------------------------------------------------------- Net Income 17% 15% - ----------------------------------------------------------------------------- Net sales of the Hospital Products Group increased by 2% in 1993, compared with a decrease of 14% in 1992. Excluding sales associated with divested businesses, net sales on an ongoing basis increased by 3% in 1993 and 27 FINANCIAL REVIEW (continued) Pfizer Inc and Subsidiary Companies 10% in 1992. The Hospital Products business was adversely impacted by events affecting the industry in general, principally the deferral of medical procedures and changes in purchasing practices--ranging from shifts to lower-cost products to reduced hospital inventories. Foreign exchange reduced growth from 6% to 2%. Sales in the consumer health care segment decreased by 8% in 1993 compared with a decrease of 42% in 1992. The sales decline for 1993 was primarily due to the sale of the Coty business in 1992, strong competition and a weak economy. The decline for 1992 reflects the impact of the sale of the Coty business and the 1991 sale of the Plax international business. Sales in the food science segment declined by 51% in 1993 and 11% in 1992. These declines were primarily attributable to the October 1992 divestment of MTI. The 1993 sales decline was also attributable to the Company's de-emphasis and phase-out of a number of commodity chemicals. Sales in the animal health segment increased by 3% in 1993 because of strong U.S. sales of Terramycin/ Liquamycin LA-200 and the international growth of Dectomax and Advocin. The 7% sales increase in 1992 was attributable to strong international growth. An analysis by segment of annual percentage changes in reported net sales in the U.S. and international markets and the percentage of consolidated net sales by business segment for the years ended December 31, 1993, 1992 and 1991 follows: United States Operations % Increase/(Decrease) in Net Sales - ------------------------------------------------------------- 1993 1992 1991 - ------------------------------------------------------------- Health Care 12 14 16 Consumer Health Care (13) (45) 6 Food Science* (56) (10) (16) Animal Health 7 -- 10 Total U.S. Operations 3 2 10 - ------------------------------------------------------------- International Operations % Increase/(Decrease) in Net Sales - ------------------------------------------------------------- 1993 1992 1991 - ------------------------------------------------------------- Health Care 9 10 14 Consumer Health Care 6 (30) (2) Food Science* (44) (11) (22) Animal Health 1 10 -- Total International Operations 4 6 7 - ------------------------------------------------------------- *Reflects the sale of the Specialty Minerals business in 1992. Diversification by Business % of Consolidated Net Sales - ------------------------------------------------------------- 1993 1992 1991 - ------------------------------------------------------------- Health Care 83 78 72 Consumer Health Care 5 5 10 Food Science* 4 9 10 Animal Health 8 8 8 - ------------------------------------------------------------- Consolidated 100 100 100 - ------------------------------------------------------------- *Reflects the sale of the Specialty Minerals business in 1992. Geographically, the Company's business is widespread, as shown in the following table: Diversification by Geographic Area % of Consolidated Net Sales - ------------------------------------------------------------- 1993 1992 1991 - ------------------------------------------------------------- U.S. 54 54 55 - ------------------------------------------------------------- Europe 22 24 23 Asia 15 14 14 Canada/Latin America 7 6 6 Africa/Middle East 2 2 2 - ------------------------------------------------------------- International 46 46 45 - ------------------------------------------------------------- Consolidated 100 100 100 - ------------------------------------------------------------- Product Developments The Company's successful research and development program continues to introduce innovative products, including new dosage forms and indications. The table below shows a listing of the Company's New Drug Applications (NDA) and the date the NDA was filed with the U.S. Food and Drug Administration (FDA): Product Indications Date Filed - ------------------------------------------------------------- Cardura Benign prostatic hyperplasia August 1993 Diflucan Vaginal candidiasis* (approvable August 1993) December 1992 Pediatric November 1993 Enable Osteo- and rheumatoid arthritis December 1993 Glucotrol XL Sustained-release antidiabetic* December 1992 Reactine Low-sedating antihistamine* June 1988 Pediatric January 1993 Unasyn Injectable antibiotic--pediatric November 1993 Zithromax Oral antibiotic--pediatric October 1993 Zoloft Obsessive-compulsive disorder May 1992 - ------------------------------------------------------------- *Expected to be introduced in the U.S. in 1994. Operating Costs and Expenses Operating costs and expenses, expressed as a percentage of net sales, for the years 1993, 1992 and 1991 are reflected in the following table: 28 % Increase/ (Decrease) - ----------------------------------------------------------------------- (millions of dollars) 1993 1992 1991 93/92 92/91 - ----------------------------------------------------------------------- Net sales $7,477.7 $7,230.2 $6,950.0 3 4 Cost of sales $1,772.0 $2,024.3 $2,200.6 (12) (8) % of net sales 23.7% 28.0% 31.7% - ----------------------------------------------------------------------- Production margin $5,705.7 $5,205.9 $4,749.4 10 10 % of net sales 76.3% 72.0% 68.3% Selling, informational and administra- tive expenses $3,066.0 $2,899.3 $2,739.1 6 6 % of net sales 41.0% 40.1% 39.4% Research and development expenses $ 974.4 $ 863.2 $ 756.8 13 14 % of net sales 13.0% 11.9% 10.9% Divestitures, restructuring and unusual items-- net $ 752.0 $ (110.5) $ 300.0 -- -- % of net sales 10.1% (1.5%) 4.3% - ----------------------------------------------------------------------- Income from operations $ 913.3 $1,553.9 $ 953.5 (41) 63 % of net sales 12.2% 21.5% 13.7% - ----------------------------------------------------------------------- Production margin as a percentage of net sales increased to 76.3% in 1993 from 72.0% in 1992. The improvement was essentially attributable to divestitures of low-margin businesses, cost reductions and favorable product mix resulting from growth in the pharmaceutical business. As a percentage of net sales, selling, informational and administrative expenses (SI&A) (including legal costs) increased in both 1993 and 1992. Selling expenses increased in 1993 reflecting costs associated with the launch of new products. The increase in 1992 reflects the worldwide sales force expansion and spending in support of new product introductions. This category includes expenses incurred in communicating scientific, medical and clinical information about the Company's various products to the medical community and others. Health care information is also communicated by means of Company sponsorship of medical symposia and conventions, as well as through distribution of informative literature concerning the Company's products. Also included in this category are advertising expenses associated with the production and purchase of print space in magazines/journals and media time on radio and television comprising approximately 8% of SI&A expenses. A significant portion of these expenditures are in support of the Company's consumer health care segment and are intended for the general public. The decrease in cost of sales as a percentage of net sales more than offset increases in SI&A expenses and in R&D expenses. As a result, operating margins (excluding divestitures, restructuring and unusual items--net) improved by $221.9 and $189.9 million in 1993 and 1992, respectively. The Company continues its commitment to developing innovative products and new indications for existing products, particularly in the health care segment. R&D expenses reflect a 15% compound growth rate over the period from 1991 through 1993. Health care R&D expenses, expressed as a percentage of health care net sales, were 14.3%, 13.6% and 13.2%, for 1993, 1992 and 1991, respectively. In 1994, the Company plans to spend in excess of $1.1 billion on R&D. Operating Profitability Operating profit on a reported basis decreased in 1993 and reflected a $750 million pre-tax charge to cover a worldwide restructuring program and unusual items, partially offset by improved production margins. In 1992, operating profit increased on a reported basis and was primarily attributable to the successful introduction of new products in the health care segment and improved production margins resulting from the divestment of lower-margin businesses. The following tables show operating profit/(loss) by business segment on a reported and ongoing basis for 1993 and 1992: 1993 Operating Profit/(Loss) As % % (millions of dollars) Reported Change Ongoing Change - ------------------------------------------------------------- Health Care $1,129.9 (9) $1,621.8 18 Consumer Health Care (102.3) * 31.3 (7) Food Science 16.1 (23) 27.6 14 Animal Health (5.8) * 37.5 (9) - ------------------------------------------------------------- Segment total $1,037.9 (36) $1,718.2 17 - ------------------------------------------------------------- *Calculation not meaningful. 1992 Operating Profit As % % (millions of dollars) Reported Change Ongoing Change - ------------------------------------------------------------- Health Care $1,241.8 53 $1,371.0 22 Consumer Health Care 329.7 289 33.6 (38) Food Science 21.0 (63) 24.3 (8) Animal Health 41.2 (3) 41.2 (3) - ------------------------------------------------------------- Segment total $1,633.7 64 $1,470.1 18 - ------------------------------------------------------------- Non-Operating Income/(Deductions) Non-operating income and deductions are summarized in the following table: (millions of dollars) 1993 1992 1991 - ---------------------------------------------------------------- Interest income $ 163.5 $ 184.6 $ 193.8 Interest expense (106.5) (103.4) (130.1) Other income 34.6 34.6 46.7 Other deductions (153.5) (134.9) (120.2) - ---------------------------------------------------------------- Non-operating income/ (deductions)--net $ (61.9) $ (19.1) $ (9.8) - ---------------------------------------------------------------- Interest income declined in 1993 and 1992 because of lower interest rates. The increase in interest expense in 1993 was primarily due to higher average borrowing levels, partially offset by lower interest rates. The decline in interest expense in 29 FINANCIAL REVIEW (continued) Pfizer Inc and Subsidiary Companies 1992 was mainly a result of lower interest rates, partially offset by higher average borrowing levels. Significant items included in other income were: o Settlement of a patent infringement case in 1993 amounting to approximately $16.2 million. o Income of approximately $8.5 million in 1992 applicable to equity investments. o Patent infringement settlements of $23.4 million and income from sales of small product lines of $4.3 million in 1991. Other deductions included net exchange losses of $40.0, $22.8 and $6.5 million in 1993, 1992 and 1991, respectively. In addition, amortization of intangibles was approximately $13.3, $16.9 and $19.8 million in 1993, 1992 and 1991, respectively. Income Before Taxes and Net Income The following table shows an analysis of income before taxes and net income: % Increase/ (Decrease) - ----------------------------------------------------------------- (millions of dollars) 1993 1992 1991 93/92 92/91 - ----------------------------------------------------------------- Net sales $7,477.7 $7,230.2 $6,950.0 3 4 - ----------------------------------------------------------------- Income before taxes $ 851.4 $1,534.8 $ 943.7 (45) 63 % of net sales 11.4% 21.2% 13.6% Taxes on income $ 191.3 $ 438.6 $ 218.4 (56) 101 Effective tax rate 22.5% 28.6% 23.1% Net income $ 657.5 $ 810.9 $ 722.1 (19) 12 % of net sales 8.8% 11.2% 10.4% - ----------------------------------------------------------------- Excluding items related to divestitures, restructuring and unusual items--net, the effective tax rate would have been 26% in both years. This includes benefits related to partially tax exempt operations in Puerto Rico of 10% and 9% in 1993 and 1992, respectively. Liquidity and Capital Resources The Company's financial condition remained strong at December 31, 1993. Cash, cash equivalents and short-term investments are its principal measure of liquidity. These items amounted to $1.2, $1.7 and $1.5 billion at December 31, 1993, 1992 and 1991, respectively. Cash and cash equivalents, short-term investments and the conversion of other working capital items to cash are expected to be adequate for the Company's cash requirements in the foreseeable future. 1993 1992 1991 - ---------------------------------------------------------------------- Working capital (millions of dollars) $1,289.6 $2,167.4 $1,387.7 Current ratio 1.37:1 1.67:1 1.41:1 Debt to total capitalization 31% 28% 29% Shareholders' equity per common share* $ 12.43 $ 14.51 $ 15.25 Days of sales outstanding 63 57 65 Months of inventory on hand 8.5 8.1 7.1 - ---------------------------------------------------------------------- *Represents shareholders' equity divided by the actual number of common shares outstanding. Net cash provided from the Company's operating activities, as well as borrowings, provide the major sources of funds for working capital needs and additions to property, plant and equipment. The percentage of debt to total capitalization increased to 31% in 1993 from 28% in the preceding year. This increase was due to a decrease in shareholders' equity arising from the Company's program of purchasing its common stock. The decrease in shareholders' equity per common share to $12.43 from $14.51 in the preceding year was due to the Company's program of purchasing its common stock. The table below summarizes the Company's cash flows from operating, investing and financing activities: (millions of dollars) 1993 1992 1991 - ------------------------------------------------------------------ Cash provided by/(used in): Operating activities $1,263.0 $807.0 $847.6 Investing activities (196.9) 389.9 (125.2) Financing activities (1,567.0) (1,228.0) (262.6) Effect of exchange rate changes on cash and cash equivalents (26.8) (29.4) (12.5) - ------------------------------------------------------------------ Net (decrease)/increase in cash and cash equivalents $ (527.7) $(60.5) $447.3 - ------------------------------------------------------------------ Operating Activities The increase of $456.0 million in net cash generated by operating activities in 1993 was primarily attributable to higher income from operations before restructuring charges, partially offset by a higher deferred tax benefit. In 1992, cash generated by operating activities declined by $40.6 million. This was primarily attributable to the increase in deferred tax and pension assets and worldwide pharmaceutical accounts receivable levels related to the increased demand for new products. The $750 million and $62 million charges for restructuring and unusual items in 1993 included noncash items of $369.7 million consisting of writedowns of assets and certain charges related to the realignment of foreign operations. In addition, provisions for costs associated with the restructuring plan were $442.3 million. Cash outlays for 1993 related to the restructuring totaled $41.4 million. Expected cash outlays for the next three years are approximately $200, $100 and $100 million, respectively. These cash outlays are expected to be funded through operations. Once these actions have been completed, the Company expects to lower annual operating costs by at least $130 million. Investing Activities Cash used in investing activities was $196.9 million in 1993 compared with cash provided by investing activities of $389.9 million in 1992. This change was primarily attributable to lower proceeds from sales of businesses which amounted to $241.2, $896.6 and $195.1 million in 1993, 1992 and 1991, respectively. Capital expenditures are primarily funded through operating activities. The current research expansions 30 at Groton, Connecticut and Sandwich, England will be completed in 1996 at a total cost of approximately $500 million. Also, the Company is continuing a major pharmaceutical capacity replacement project at its Groton facility. This is expected to be completed in 1995 at a projected capital expenditure of approximately $190 million. In addition, the construction of a pharmaceutical plant in Dalian, China was completed in 1993, as part of a joint venture. Financing Activities Cash dividends paid to shareholders in 1993 were $536.1 million, compared with $486.5 million in 1992, resulting from a 14% increase in the annual dividend from $1.48 to $1.68 per common share. This increase was partially offset by the Company's repurchase of its common shares. In August 1993, the Company sold 10 million treasury shares to an Employee Benefit Trust (EBT). The EBT will be used primarily to fund future obligations for previously approved Company benefit plans over its 15-year term. In exchange for the shares, the Company received a promissory note valued at approximately $600 million at the date of sale. The EBT, which represents unearned employee benefits, has been recorded as a deduction from shareholders' equity and will be reduced as employee benefits are satisfied. The 10 million shares sold to the EBT consisted of 1993 treasury stock purchases. In February 1993, the Company announced a program to purchase up to 20 million shares of its common stock in the open market or in privately negotiated transactions. These shares will be available for use in the Company's employee benefit plans and for general corporate purposes. Under this stock repurchase program, 12.5 million shares were purchased in 1993 in the open market at a cost of approximately $804.0 million. In August 1992, the Company announced a program to purchase up to 10 million shares of its common stock in the open market. As of December 31, 1992, total purchases under this program amounted to 6.7 million shares at a cost of $506.0 million. At December 31, 1993, this repurchase program was completed with the purchase of the remaining 3.3 million shares at a cost of $215.6 million. These collective share repurchase programs were primarily funded from net cash generated by operating activities and the issuance of commercial paper. The Company expects that it will continue to incur short-term borrowings from time to time to finance its worldwide working capital needs. In June 1991, the Company filed a shelf registration with the U.S. Securities and Exchange Commission under which it could issue up to $750 million of debt securities. Under this registration, the Company issued $250 million of notes in 1991 and $250 million of notes in 1992. The funds from the sale of these securities were used for general corporate purposes, including a reduction of U.S. short-term borrowings. The Company maintains lines of credit and revolving-credit agreements with a select group of banks and other financial intermediaries. Its major unused lines of credit totaled approximately $1.2 billion at December 31, 1993. An indicator of the Company's financial strength is that its senior debt has been rated Aaa by Moody's Investors Services (Moody's) and AAA by Standard and Poor's (S&P)--their highest ratings--for the past eight years. Moody's and S&P are the major corporate rating organizations. Banking Operation The Company's international banking operation extends credit to financially strong borrowers. Loans are made primarily for the short and medium term, with floating interest rates. Generally, loans are made on an unsecured basis. When deemed appropriate, guarantees and certain covenants may be obtained as a condition to the extension of credit. To reduce credit risk, all borrowers must satisfy credit approval guidelines, which also establish borrowing limits and monitoring procedures. Credit risk is further reduced through an active policy of diversification with respect to borrower, industry and geographic location. Interest-rate risk is controlled through a comprehensive program of techniques, including an objective measurement system, establishment of various risk limits at appropriate control levels and the monitoring of interest-rate trends and responding thereto in accordance with established policies. During 1992, the Company completed the transfer of its international banking operations from Puerto Rico to the Republic of Ireland. In connection with this relocation, a new financial subsidiary incorporated in 1991 under the laws of the Republic of Ireland was established. This subsidiary, Pfizer International Bank Europe (PIBE), operates under a full banking license from the Central Bank of Ireland. This reorganization and transfer was made in response to the European Union's efforts towards integration of its financial markets. The following table summarizes the composition of the loan portfolios, the most significant of the interest-earning assets held by the international banking operation, at November 30, 1993, 1992 and 1991. Borrowers (millions of dollars) 1993 1992 1991 - ------------------------------------------------------- Commercial and industrial $569.1 $587.2 $ 705.0 Government 91.9 210.0 437.9 Financial institutions 146.6 177.7 50.0 - ------------------------------------------------------- Total $807.6 $974.9 $1,192.9 - ------------------------------------------------------- Maturities (millions of dollars) 1993 1992 1991 - ------------------------------------------------------- Within one year $456.9 $628.3 $ 372.6 One to five years 350.7 346.6 735.3 More than five years -- -- 85.0 - ------------------------------------------------------- Total $807.6 $974.9 $1,192.9 - ------------------------------------------------------- A portion of the loans at maturity have been replaced by other interest-bearing assets. 31 FINANCIAL REVIEW (continued) Pfizer Inc and Subsidiary Companies The table below shows the percentage of interest-earning assets of the international banking operation (including interest-bearing deposits, loans and Eurosecurities) by country of the borrower, depository, issuer or guarantor, where the total for such country is 3% or more of the total assets of the international banking operations: % of Banking Operations Total Assets - ------------------------------------------------------------- 1993 1992 1991 - ------------------------------------------------------------- U.K. 19 19 18 Canada 13 15 14 Denmark 12 9 4 France 12 8 9 Netherlands 9 6 6 U.S. 8 8 -- Switzerland 7 5 -- Italy 6 20 17 Germany 5 -- -- Spain 5 -- -- Sweden 4 7 4 Japan -- -- 18 Belgium -- -- 4 - ------------------------------------------------------------- Prospective Information Health Care Reform Proposal During 1993, Congress began debate on reform of the U.S. health care system. Numerous health care reform bills have been introduced, including the Administration's "Health Security Act." The Health Security Act includes provisions that would form an Advisory Council on Breakthrough Drugs, require rebates on pharmaceuticals reimbursed under the Medicare program and authorize the Secretary of Health and Human Services to exclude from coverage under Medicare, or require prior authorization for, drugs the Secretary considers to be excessively priced. While these provisions could have an adverse impact on the Company's pharmaceutical business in the U.S., other bills that have been introduced do not contain such provisions. It is uncertain whether legislation will be enacted in 1994 or, if legislation is enacted, whether it will have a significant adverse effect on the Company. In 1993, the Company's average pharmaceutical price increases in the United States were below the U.S. Consumer Price Index. In addition, the Company has announced that its weighted average U.S. pharmaceutical price increase will be less than 2.5% for 1994. Competition The Company's pharmaceutical business will face significant exposure from competitive brand names and generic competition during the next several years for its more mature products. Feldene is already subject to generic competition and Glucotrol is expected to be subject to similar competition in the U.S. market in 1994. The combined U.S. net sales of these products were $308, $473 and $521 million in 1993, 1992 and 1991, respectively. In mid-1993 the FDA approved an NDA for a competitor's sustained-release form of nifedipine for the treatment of hypertension. This product uses a delivery system different from the patented technology used in Procardia XL, the Company's product, which has a delivery system that is patent-protected until 2003. The new product does not have all of Procardia XL's FDA-approved indications for use. As with other calcium channel blockers or other cardiovascular drugs approved to treat any of Procardia XL's indications, it is not possible to predict the impact of competition on sales of Procardia XL. North American Free Trade Agreement (NAFTA) and General Agreement on Tariffs and Trade (GATT) NAFTA was signed into law in December 1993. This trade agreement provides greater protection for intellectual property and will help the Company protect its investment in innovative therapies. The GATT agreement strengthens progress in intellectual property protection, places strict limits on compulsory licensing of patented products and identifies the lack of patent protection as a serious worldwide trade problem. It provides for a 10-year transition period by major pharmaceutical patent-infringing countries such as Brazil, Turkey, Argentina and India, resulting in the continued discrimination against patents filed prior to the effective date of the agreement. New Tax Law The Omnibus Budget Reconciliation Act of 1993 (the Act) contains a number of provisions that affect the Company. Two significant provisions relate to the increase in the corporate tax rate from 34% to 35%, retroactive to January 1, 1993 and the imposition of a limitation on the tax credit allowed to the Company for U.S. tax on income earned in Puerto Rico, where the Company has a major manufacturing facility. The tax increase of 1% did not significantly affect the Company's operating results in 1993. It is expected that in 1994 the reduction in the U.S. tax benefit arising from operations in Puerto Rico will contribute to an increase in the Company's effective tax rate from 26% to 30%, based on the latest available information. As part of the Act, the research and development tax credit which expired on June 30, 1992 was extended retroactively from July 1, 1992 to June 30, 1995. Research and development tax credits for the 18 months ended December 31, 1993 reduced the Company's effective tax rate by 3.3% in 1993. Prospective Financial Standards In November 1992, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 112, Employers' Accounting for Postemployment Benefits, which establishes accounting standards for employers who provide benefits to former or inactive employees after termination but before retirement. The Company's current accounting practice is in compliance with the new standard. 32 In 1993, the FASB issued Statements No. 114, Accounting by Creditors for Impairment of a Loan, and No. 115, Accounting for Certain Investments in Debt and Equity Securities. SFAS No. 114, effective January 1, 1995, addresses how creditors should establish allowances for credit losses on individual loans determined to be impaired. SFAS No. 115, effective January 1, 1994, requires all companies to modify their present accounting for debt and marketable equity securities. Adoption of each of these Statements is not expected to have a material impact on the Company's operating results, nor will it affect the Company's cash flows. Litigation and Environmental Matters Claims have been brought against the Company and its subsidiaries for various legal matters. In addition, the Company's operations are subject to federal, state and local environmental laws and regulations. For further details, see the footnote "Litigation" beginning on page 47. Dividend Growth The following table presents cash dividends paid per common share and the dividend payout ratio (which is calculated by dividing cash dividends by earnings per share): % Increase/ (Decrease) - --------------------------------------------------------------- 1993 1992 1991 93/92 92/91 - --------------------------------------------------------------- Cash dividends paid per common share $1.68 $1.48 $1.32 14 12 Earnings per common share 2.05 2.41 2.13 (15) 13 Dividend payout ratio* 82.0% 61.4% 62.0% - --------------------------------------------------------------- *Excluding the effect of divestitures, restructuring and unusual items--net, the dividend payout ratio would have been 45.4%, 48.4% and 50.8% in 1993, 1992 and 1991, respectively. Inflation and Changing Prices Inflation, although moderate in many parts of the world during 1993, continues to affect worldwide economies. Inflation had no material impact on the Company's operations in 1993. Responsibility for Financial Statements and System of Internal Control Pfizer Inc and Subsidiary Companies The financial statements which appear on pages 35 through 51 were prepared by and are the responsibility of the Company's management. These financial statements are in conformity with generally accepted accounting principles and, therefore, include amounts based upon informed judgments and estimates. Management also accepts responsibility for the preparation of other financial information included in this document. The Company's management has designed a system of internal control to safeguard its assets, ensure that transactions are properly authorized and provide reasonable assurance, at reasonable cost, as to the integrity, objectivity and reliability of financial information. Even an effective internal control system, regardless of how well designed, has inherent limitations and, therefore, can provide only reasonable assurance with respect to financial statement preparation. The system is built on a business ethics policy which requires all employees to maintain the highest ethical standards in conducting Company affairs. The system of internal control includes careful selection, training and development of financial managers, an organizational structure that segregates responsibilities and a communications program which ensures that Company policies and procedures are well understood throughout the organization. The Company also has an extensive program of internal audits, with prompt follow-up, including reviews of separate Company operations and functions around the world. The Company's independent certified public accountants, KPMG Peat Marwick, have audited the annual financial statements in accordance with generally accepted auditing standards. The independent auditors' report expresses an informed judgment as to the fair presentation of the Company's reported operating results, financial position and cash flows. This judgment is based on the results of auditing procedures performed and such other tests that they deemed necessary, including consideration of the Company's internal control structure. Recommendations made by KPMG Peat Marwick and the Company's internal auditors are considered and appropriate action taken with respect to these recommendations. The Company believes that its system of internal control is effective and adequate to accomplish the objectives discussed above. /s/ W. C. Steere, Jr. W. C. Steere, Jr. Principal Executive Officer /s/ H. McKinnell /s/ H. V. Ryan H. McKinnell, Ph.D. H. V. Ryan Principal Financial Officer Principal Accounting Officer February 24, 1994 33 AUDIT COMMITTEE'S REPORT Pfizer Inc and Subsidiary Companies The Board of Directors reviews the audit function, internal controls and the financial statements largely through its Audit Committee, which consists solely of directors who are not Company employees. The Audit Committee meets at least quarterly with management, the independent auditors and internal auditors concerning their respective responsibilities. Among its various duties, the Audit Committee recommends the appointment of the Company's independent auditors. Both KPMG Peat Marwick and the internal auditors have full access to the Audit Committee and meet with it, without management present, to discuss the scope and results of their examinations including internal control, audit and financial reporting matters. /s/ S.O.Ikenberry S. O. Ikenberry, Ph.D. Chair, Audit Committee February 24, 1994 INDEPENDENT AUDITORS' REPORT KPMG Peat Marwick Certified Public Accountants To the Shareholders and Board of Directors of Pfizer Inc: We have audited the accompanying consolidated balance sheet of Pfizer Inc and subsidiary companies as of December 31, 1993, 1992 and 1991 and the related consolidated statements of income, shareholders' equity and cash flows for each of the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Pfizer Inc and subsidiary companies at December 31, 1993, 1992 and 1991, and the results of their operations and their cash flows for each of the years then ended, in conformity with generally accepted accounting principles. As discussed in the notes to the consolidated financial statements, the Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, and Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, in 1992. /s/ KPMG Peat Marwick 345 Park Avenue New York, New York 10154 February 24, 1994 34 SEGMENT INFORMATION Pfizer Inc and Subsidiary Companies
Consumer Corporate/ Health Health Food Animal Financial (millions of dollars) Care Care Science(a) Health Subsidiaries(e) Consolidated - ------------------------------------------------------------------------------------------------------------------------------- 1993 Net sales $6,210.3 $ 373.5 $315.9 $578.0 $ -- $7,477.7 - ------------------------------------------------------------------------------------------------------------------------------- Operating profit/(loss)--segment(b) $1,129.9 $(102.3) $ 16.1 $ (5.8) $ -- $1,037.9 - ------------------------------------------------------------------------------------------------------------------------------- Interest income 163.5 163.5 Interest expense (106.5) (106.5) Net corporate expenses (243.5) (243.5) - ------------------------------------------------------------------------------------------------------------------------------- Income before provision for taxes on income and minority interests $ 851.4 - ------------------------------------------------------------------------------------------------------------------------------- Identifiable assets $4,650.3 $ 152.4 $374.4 $444.6 $3,709.2 $9,330.9 - ------------------------------------------------------------------------------------------------------------------------------- Capital additions $ 480.9 $ 15.4 $ 62.9 $ 39.2 $ 35.8 $ 634.2 - ------------------------------------------------------------------------------------------------------------------------------- Depreciation $ 182.6 $6.5 $ 19.6 $ 17.0 $ 15.4 $ 241.1 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- 1992 Net sales $5,613.9 $ 404.6 $650.9 $560.8 $ -- $7,230.2 - ------------------------------------------------------------------------------------------------------------------------------- Operating profit--segment(c) $1,241.8 $ 329.7 $ 21.0 $ 41.2 $ -- $1,633.7 - ------------------------------------------------------------------------------------------------------------------------------- Interest income 184.6 184.6 Interest expense (103.4) (103.4) Net corporate expenses (180.1) (180.1) - ------------------------------------------------------------------------------------------------------------------------------- Income before provision for taxes on income, minority interests and cumulative effect of accounting changes $1,534.8 - ------------------------------------------------------------------------------------------------------------------------------- Identifiable assets $4,153.2 $285.9 $368.9 $478.6 $4,303.5 $9,590.1 - ------------------------------------------------------------------------------------------------------------------------------- Capital additions $ 436.4 $9.2 $126.3 $ 41.3 $ 61.0 $ 674.2 - ------------------------------------------------------------------------------------------------------------------------------- Depreciation $ 147.0 $6.9 $ 51.8 $ 13.7 $ 23.2 $ 242.6 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- 1991 Net sales $4,998.3 $695.7 $729.9 $526.1 $ -- $6,950.0 - ------------------------------------------------------------------------------------------------------------------------------- Operating profit--segment $ 813.5(d) $ 84.7 $ 56.9 $ 42.4 $ -- $ 997.5 - ------------------------------------------------------------------------------------------------------------------------------- Interest income 193.8 193.8 Interest expense (130.1) (130.1) Net corporate expenses (117.5) (117.5) - ------------------------------------------------------------------------------------------------------------------------------- Income before provision for taxes on income and minority interests $943.7 - ------------------------------------------------------------------------------------------------------------------------------- Identifiable assets $3,796.6 $461.9 $794.9 $452.0 $4,129.2 $9,634.6 - ------------------------------------------------------------------------------------------------------------------------------- Capital additions $ 364.5 $ 11.3 $134.1 $ 35.8 $48.1 $ 593.8 - ------------------------------------------------------------------------------------------------------------------------------- Depreciation $ 125.6 $ 7.3 $ 48.2 $ 15.3 $21.3 $ 217.7 - ------------------------------------------------------------------------------------------------------------------------------- (a) Includes the results of the divested minerals businesses through October 30, 1992. (b) Includes pre-tax charges of $750 million and $62 million to cover a worldwide restructuring program as well as unusual items. It also includes a gain of approximately $60 million realized on the sale of the Company's remaining interest in MTI. Amounts directly attributable to individual segments have been allocated to them. Amounts not directly traceable to individual segments are included in net corporate expenses. (c) Includes a $110.5 million net credit relating to the divestiture and restructuring of certain of the Company's businesses and curtailment gains associated with postretirement benefits other than pensions of divested operations. Amounts directly attributable to individual segments have been allocated to them. Amounts not directly traceable to individual segments are included in net corporate expenses. (d) Includes a $300 million special charge for potential future Shiley C/C heart valve fracture claims. (e) Segment information for the financial subsidiaries is presented in the footnote "Financial Subsidiaries" on page 41.
See Notes to Consolidated Financial Statements which are an integral part of these statements. 35 GEOGRAPHIC DATA Pfizer Inc and Subsidiary Companies
Canada/ Africa/ Corporate/ United Latin Middle Financial Adjustments/ (millions of dollars) States(a) Europe Asia America East Subsidiaries Eliminations Consolidated - ----------------------------------------------------------------------------------------------------------------------------- 1993 Net sales $4,006.0 $1,632.0 $1,131.9 $528.3 $179.5 $ -- $ -- $7,477.7 Intercompany sales 134.5 489.6 23.1 20.4 3.8 -- (671.4) -- - ----------------------------------------------------------------------------------------------------------------------------- Total $4,140.5 $2,121.6 $1,155.0 $548.7 $183.3 $ -- $(671.4) $7,477.7 - ----------------------------------------------------------------------------------------------------------------------------- Operating profit/(loss)-- geographic(b) $ 698.5 $ 381.8 $ 75.2 $ (.4) $ (28.6) $ -- $ (88.6) $1,037.9 - ----------------------------------------------------------------------------------------------------------------------------- Interest income 163.5 163.5 Interest expense (106.5) (106.5) Net corporate expenses (243.5) (243.5) - ----------------------------------------------------------------------------------------------------------------------------- Income before provision for taxes on income and minority interests $ 851.4 - ----------------------------------------------------------------------------------------------------------------------------- Identifiable assets $2,598.2 $2,034.6 $1,198.2 $393.7 $128.9 $3,709.2 $(731.9) $9,330.9 - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- 1992 Net sales $3,888.2 $1,709.1 $1,012.7 $470.4 $149.8 $ -- $ -- $7,230.2 Intercompany sales 92.6 409.7 23.8 16.0 .7 -- (542.8) -- - ----------------------------------------------------------------------------------------------------------------------------- Total $3,980.8 $2,118.8 $1,036.5 $486.4 $150.5 $ -- $(542.8) $7,230.2 - ----------------------------------------------------------------------------------------------------------------------------- Operating profit-- geographic(c) $1,172.4 $ 404.8 $ 26.0 $ 54.2 $ 16.3 $ -- $ (40.0) $1,633.7 - ----------------------------------------------------------------------------------------------------------------------------- Interest income 184.6 184.6 Interest expense (103.4) (103.4) Net corporate expenses (180.1) (180.1) - ----------------------------------------------------------------------------------------------------------------------------- Income before provision for taxes on income, minority interests and cumulative effect of accounting changes $1,534.8 - ----------------------------------------------------------------------------------------------------------------------------- Identifiable assets $2,280.5 $2,018.6 $1,008.3 $325.0 $108.9 $4,303.5 $(454.7) $9,590.1 - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- 1991 Net sales $3,808.6 $1,613.4 $ 950.0 $431.8 $146.2 $ -- $ -- $6,950.0 Intercompany sales 171.8 354.2 17.5 14.2 .4 -- (558.1) -- - ----------------------------------------------------------------------------------------------------------------------------- Total $3,980.4 $1,967.6 $ 967.5 $446.0 $146.6 $ -- $(558.1) $6,950.0 - ----------------------------------------------------------------------------------------------------------------------------- Operating profit-- geographic $ 462.0(d) $ 437.7 $ 68.2 $ 33.3 $ 13.8 $ -- $ (17.5) $ 997.5 - ----------------------------------------------------------------------------------------------------------------------------- Interest income 193.8 193.8 Interest expense (130.1) (130.1) Net corporate expenses (117.5) (117.5) - ----------------------------------------------------------------------------------------------------------------------------- Income before provision for taxes on income and minority interests $ 943.7 - ----------------------------------------------------------------------------------------------------------------------------- Identifiable assets $2,524.6 $1,973.2 $ 898.2 $337.3 $ 94.4 $4,129.2 $(322.3) $9,634.6 - ----------------------------------------------------------------------------------------------------------------------------- (a) The Company's manufacturing operations in Puerto Rico are included in the United States for Geographic Data purposes. (b) Includes pre-tax charges of $750 million and $62 million to cover a worldwide restructuring program as well as unusual items. It also includes a gain of approximately $60 million realized on the sale of the Company's remaining interest in MTI. Amounts directly attributable to individual geographic areas have been allocated to them. Amounts not directly traceable to individual geographic areas are included in net corporate expenses. (c) Includes a $110.5 million net credit relating to the divestiture and restructuring of certain of the Company's businesses and curtailment gains associated with postretirement benefits other than pensions of divested operations. Amounts directly attributable to individual geographic areas have been allocated to them. Amounts not directly traceable to individual geographic areas are included in net corporate expenses. (d) Includes a $300 million special charge for potential future Shiley C/C heart valve fracture claims.
See Notes to Consolidated Financial Statements which are an integral part of these statements. 36 CONSOLIDATED STATEMENT OF INCOME Pfizer Inc and Subsidiary Companies
Year ended December 31 - --------------------------------------------------------------------------------------------------- (millions of dollars except per share data) 1993 1992 1991 - --------------------------------------------------------------------------------------------------- Net sales $7,477.7 $7,230.2 $6,950.0 Operating costs and expenses Cost of sales 1,772.0 2,024.3 2,200.6 Selling, informational and administrative expenses 3,066.0 2,899.3 2,739.1 Research and development expenses 974.4 863.2 756.8 Divestitures, restructuring and unusual items--net 752.0 (110.5) 300.0 - --------------------------------------------------------------------------------------------------- Income from operations 913.3 1,553.9 953.5 - --------------------------------------------------------------------------------------------------- Interest income 163.5 184.6 193.8 Interest expense (106.5) (103.4) (130.1) Other income 34.6 34.6 46.7 Other deductions (153.5) (134.9) (120.2) - --------------------------------------------------------------------------------------------------- Non-operating income/(deductions)--net (61.9) (19.1) (9.8) - --------------------------------------------------------------------------------------------------- Income before provision for taxes on income, minority interests and cumulative effect of accounting changes 851.4 1,534.8 943.7 Provision for taxes on income 191.3 438.6 218.4 Minority interests 2.6 2.7 3.2 - --------------------------------------------------------------------------------------------------- Income before cumulative effect of accounting changes 657.5 1,093.5 722.1 Cumulative effect of change in accounting for: Postretirement benefits, net of income taxes -- (312.6) -- Income taxes -- 30.0 -- - --------------------------------------------------------------------------------------------------- Net income $ 657.5 $ 810.9 $ 722.1 - --------------------------------------------------------------------------------------------------- Earnings per common share Income before cumulative effect of accounting changes $ 2.05 $ 3.25 $ 2.13 Cumulative effect of change in accounting for: Postretirement benefits, net of income taxes -- (.93) -- Income taxes -- .09 -- - --------------------------------------------------------------------------------------------------- Net income $ 2.05 $ 2.41 $ 2.13 - ---------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements which are an integral part of these statements. 37 Consolidated Statement of Shareholders' Equity Pfizer Inc and Subsidiary Companies
Common Stock Additional Currency Employee Treasury Stock ------------------ Paid-In Retained Translation Benefit ----------------- (millions) Shares Par Value Capital Earnings Adjustment Trust Shares Cost Total - ----------------------------------------------------------------------------------------------------------------------------------- Balance January 1, 1991 330.9 $ 33.1 $318.0 $4,509.9 $255.6 $ -- (.6) $ (24.6) $5,092.0 Net income 722.1 722.1 Cash dividends declared (437.1) (437.1) Debenture conversions .4 -- (64.3) 1.8 95.8 31.5 Currency translation adjustment (97.8) (97.8) Employee benefit transactions 1.1 .1 (43.7) 4.2 215.9 172.3 Purchase of common stock (7.9) (442.4) (442.4) Shares purchased from Retirement Annuity Plan (.3) (18.9) (18.9) Shares purchased from Savings and Investment Plan (.1) (2.6) (2.6) Dividend reinvestment plan 2.5 .1 4.7 7.2 - ----------------------------------------------------------------------------------------------------------------------------------- Balance December 31, 1991 332.4 33.2 212.5 4,794.9 157.8 -- (2.8) (172.1) 5,026.3 Net income 810.9 810.9 Cash dividends declared (486.5) (486.5) Debenture conversions .8 .1 10.9 11.0 Currency translation adjustment (112.5) (112.5) Employee benefit transactions 3.7 .4 142.1 (.1) (17.4) 125.1 Purchase of common stock (8.5) (632.2) (632.2) Shares purchased from Retirement Annuity Plan (.4) (30.0) (30.0) Shares purchased from Savings and Investment Plan -- (2.9) (2.9) Dividend reinvestment plan .1 -- 9.4 9.4 - ----------------------------------------------------------------------------------------------------------------------------------- Balance December 31, 1992 337.0 33.7 374.9 5,119.3 45.3 -- (11.8) (854.6) 4,718.6 Net income 657.5 657.5 Cash dividends declared (536.1) (536.1) Currency translation adjustment (13.6) (13.6) Employee benefit transactions 1.4 .2 41.9 -- .6 42.7 Purchase of common stock (15.8) (1,019.6) (1,019.6) Employee Benefit Trust transactions--net 63.2 (690.0) 10.0 631.1 4.3 Dividend reinvestment plan .2 -- 11.7 11.7 - ----------------------------------------------------------------------------------------------------------------------------------- Balance December 31, 1993 338.6 $ 33.9 $491.7 $5,240.7 $ 31.7 $(690.0) (17.6) $(1,242.5) $3,865.5 - -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements which are an integral part of these statements. 38 CONSOLIDATED BALANCE SHEET Pfizer Inc and Subsidiary Companies
December 31 - ----------------------------------------------------------------------------------------------------------------- (millions of dollars) 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------- Assets Current Assets Cash and cash equivalents $ 729.4 $1,257.1 $1,317.6 Short-term investments, at cost which approximates market value 447.1 446.6 230.5 Accounts receivable, less allowance for doubtful accounts: 1993-$40.6; 1992-$36.2; 1991-$38.8 1,468.7 1,400.3 1,403.9 Short-term loans 456.9 620.3 352.6 Inventories Finished goods 413.3 413.5 471.2 Work in process 502.1 465.8 461.5 Raw materials and supplies 178.1 188.5 238.8 - ----------------------------------------------------------------------------------------------------------------- Total inventories 1,093.5 1,067.8 1,171.5 - ----------------------------------------------------------------------------------------------------------------- Prepaid expenses, taxes and other current assets 537.6 592.7 332.1 - ----------------------------------------------------------------------------------------------------------------- Total current assets 4,733.2 5,384.8 4,808.2 Long-term loans and marketable securities, at cost 586.7 601.4 1,337.8 Property, plant and equipment, less accumulated depreciation 2,632.5 2,305.1 2,381.0 Goodwill, less accumulated amortization 231.1 368.2 383.6 Other assets, deferred taxes and deferred charges 1,147.4 930.6 724.0 - ----------------------------------------------------------------------------------------------------------------- Total assets $9,330.9 $9,590.1 $9,634.6 - ----------------------------------------------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current Liabilities Short-term borrowings, including current portion of long-term debt $1,178.8 $1,252.3 $1,691.1 Accounts payable 479.1 456.4 462.9 Income taxes payable 606.2 395.9 358.5 Accrued compensation and related items 408.6 332.9 287.6 Other current liabilities 770.9 779.9 620.4 - ----------------------------------------------------------------------------------------------------------------- Total current liabilities 3,443.6 3,217.4 3,420.5 Long-term debt 570.5 571.3 396.6 Postretirement benefit obligation other than pension plans 443.3 459.1 -- Deferred taxes on income 189.4 146.9 284.8 Other non-current liabilities 779.3 441.9 472.0 Minority interests 39.3 34.9 34.4 - ----------------------------------------------------------------------------------------------------------------- Total liabilities 5,465.4 4,871.5 4,608.3 - ----------------------------------------------------------------------------------------------------------------- Shareholders' Equity Preferred stock, without par value; 12,000,000 shares authorized, none issued -- -- -- Common stock, $.10 par value; 750,000,000 shares authorized; issued: 1993-338,564,752; 1992-336,972,295; 1991-332,412,807 33.9 33.7 33.2 Additional paid-in capital 491.7 374.9 212.5 Retained earnings 5,240.7 5,119.3 4,794.9 Currency translation adjustment 31.7 45.3 157.8 Employee Benefit Trust: 1993-10,000,000 common shares (690.0) -- -- Common stock in treasury, at cost: 1993-17,642,269; 1992-11,831,522; 1991-2,766,197 (1,242.5) (854.6) (172.1) - ----------------------------------------------------------------------------------------------------------------- Total shareholders' equity 3,865.5 4,718.6 5,026.3 - ----------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $9,330.9 $9,590.1 $9,634.6 - -----------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements which are an integral part of these statements. 39 CONSOLIDATED STATEMENT OF CASH FLOWS Pfizer Inc and Subsidiary Companies
Year ended December 31 - ----------------------------------------------------------------------------------------------------------------------------- (millions of dollars) 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------------------- Operating Activities Net income $ 657.5 $ 810.9 $ 722.1 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of accounting changes -- 282.6 -- Depreciation and amortization of intangibles 258.2 263.9 244.1 Divestitures, restructuring and unusual items 752.0 (110.5) 300.0 Deferred taxes (336.1) (14.5) (108.3) Deferred income amortization (28.3) (74.3) (99.9) Other 39.3 5.0 24.0 Changes in assets and liabilities, net of effect of businesses acquired and divested: Accounts receivable (160.8) (193.8) (101.8) Inventories (142.3) (116.1) (118.0) Prepaid and other assets (44.8) (246.3) (158.3) Accounts payable and accrued liabilities 30.5 69.7 74.3 Income taxes payable 227.9 44.6 61.6 Other deferred items 9.9 85.8 7.8 - ----------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,263.0 807.0 847.6 - ----------------------------------------------------------------------------------------------------------------------------- Investing Activities Purchases of property, plant and equipment (634.2) (674.2) (593.8) Purchases of short-term investments (739.6) (535.7) (210.6) Proceeds from redemptions of short-term investments 846.8 459.8 178.6 Proceeds from sales of businesses 241.2 896.6 195.1 Purchases of long-term investments (175.9) (154.6) (139.3) Purchases and redemptions of short-term investments by financial subsidiaries (21.3) 51.0 63.8 Decrease in loans and long-term investments by financial subsidiaries 167.3 283.3 325.5 Other investing activities 118.8 63.7 55.5 - ----------------------------------------------------------------------------------------------------------------------------- Net cash (used in)/provided by investing activities (196.9) 389.9 (125.2) - ----------------------------------------------------------------------------------------------------------------------------- Financing Activities Proceeds from issuance of long-term debt 6.4 266.0 265.6 (Decrease)/increase in short-term debt (70.1) (407.7) 218.4 Employee benefit transactions 42.7 125.1 172.3 Purchases of common stock (1,019.6) (665.1) (463.9) Cash dividends paid (536.1) (486.5) (437.1) Other financing activities 9.7 (59.8) (17.9) - ----------------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (1,567.0) (1,228.0) (262.6) - ----------------------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents (26.8) (29.4) (12.5) - ----------------------------------------------------------------------------------------------------------------------------- Net (decrease)/increase in cash and cash equivalents (527.7) (60.5) 447.3 Cash and cash equivalents at beginning of year 1,257.1 1,317.6 870.3 - ----------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 729.4 $ 1,257.1 $1,317.6 - -----------------------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements which are an integral part of these statements. 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PFIZER INC AND SUBSIDIARY COMPANIES Significant Accounting Policies The consolidated financial statements include the accounts of Pfizer Inc and all significant subsidiaries. Material intercompany transactions are eliminated. The Company considers demand deposits, certificates of deposit and certain time deposits with maturities of three months or less at the date of purchase to be cash equivalents. Certain items which meet the definition of cash equivalents but are part of a larger pool of investments are included in Short-term investments. Inventories are valued at cost or market, whichever is lower. Except as noted below, raw materials and supplies are valued at average or latest actual costs and finished goods and work in process at average actual costs. Substantially all of the Company's U.S. sourced pharmaceuticals, animal health and food science inventories are valued utilizing the last-in, first-out (LIFO) method. Property, plant and equipment are recorded at cost. Significant improvements are capitalized. In general, the straight-line method of depreciation is used for financial reporting purposes and accelerated methods are used for U.S. and certain foreign tax reporting purposes. The assets and liabilities for most of the Company's international subsidiaries are translated into U.S. dollars using current exchange rates. Income statement items are generally translated at average exchange rates prevailing during the period. The resulting translation adjustments are recorded in the Currency translation adjustment account in Shareholders' equity. Exchange gains and losses on hedges of foreign net investments and on intercompany balances of a long-term investment nature are also recorded in the Currency translation adjustment account. Other foreign currency transaction gains and losses are included in net income. International subsidiaries and branches operating in highly inflationary economies translate non-monetary assets at historical rates, while net monetary assets are translated at current rates, with the resulting translation adjustments included in net income. For 1993 and 1992, deferred taxes on income are provided for the effects of temporary differences between financial and tax reporting using the asset and liability method by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. A valuation allowance is provided when it is more likely that some portion of the deferred tax assets will not be realized. For 1991, the deferred tax provision results from timing differences in the recognition of income and expenses for tax and financial reporting purposes. The accompanying consolidated financial statements generally do not include a provision for U.S. income taxes on international subsidiaries' unremitted earnings which, for the most part, are expected to be reinvested overseas. To the extent the parent company has received foreign earnings as dividends, the foreign taxes paid on those earnings have generated tax credits which have substantially offset related U.S. income taxes. Also, the Company does not provide for U.S. income taxes on the accumulated earnings of its Puerto Rican subsidiary, since these earnings are not taxable under U.S. law. Goodwill and other intangibles are recorded at cost. Amounts arising from acquisitions accounted for as purchases subsequent to October 31, 1970 are amortized over various periods not exceeding 40 years. Amounts arising prior to that date are not amortized unless there is a permanent diminution in value. Goodwill is shown separately, while other intangibles are included in Other assets, deferred taxes and deferred charges in the Consolidated Balance Sheet. Consolidated International Subsidiaries Subsidiaries operating outside the U.S. generally are included in the consolidated financial statements on a fiscal year basis ending November 30. Substantially all the international subsidiaries' unremitted earnings are free from legal or contractual restrictions. Additional information is shown on page 36. Net exchange losses, included in Other deductions in the Consolidated Statement of Income, were $40.0, $22.8 and $6.5 million in 1993, 1992 and 1991, respectively. Changes in the Currency translation adjustment included in the shareholders' equity section of the Consolidated Balance Sheet are as follows: (millions of dollars) 1993 1992 1991 - --------------------------------------------------------------- Currency translation adjustment January 1 $ 45.3 $157.8 $255.6 Translation adjustments and hedges (92.6) (84.0) (98.5) Income taxes allocated to translation adjustments and hedges .9 (13.1) .7 Transfer to income statement on sale or liquidation of businesses 78.1 (15.4) -- - --------------------------------------------------------------- Currency translation adjustment December 31 $ 31.7 $ 45.3 $157.8 - --------------------------------------------------------------- Financial Subsidiaries Combined financial data/segment information as of November 30, 1993, 1992 and 1991 applicable to the Company's financial subsidiaries, which include Pfizer International Bank Europe (PIBE) and a small captive insurance company, are presented below: Condensed Balance Sheet (millions of dollars) 1993 1992 1991 - --------------------------------------------------------------- Cash and interest-bearing deposits $ 222.2 $ 63.7 $ 649.6 Eurosecurities 46.8 25.0 139.9 Loans, net 794.1 960.4 1,181.4 Other assets 10.3 15.3 25.0 - --------------------------------------------------------------- Total assets $1,073.4 $1,064.4 $1,995.9 - --------------------------------------------------------------- Certificates of deposit and other liabilities $ 166.5 $ 171.5 $ 251.3 Deferred income 26.2 50.2 124.5 Shareholders' equity 880.7 842.7 1,620.1 - --------------------------------------------------------------- Total liabilities and shareholders' equity $1,073.4 $1,064.4 $1,995.9 - --------------------------------------------------------------- 41 Condensed Statement of Income (millions of dollars) 1993 1992 1991 - --------------------------------------------------------------- Interest income $ 48.1 $ 91.3 $ 116.3 Interest expense (4.2) (5.5) (5.5) Other income/(expense)--net 1.2 (4.2) .2 - --------------------------------------------------------------- Net income/Operating profit $ 45.1 $ 81.6 $ 111.0 - --------------------------------------------------------------- These subsidiaries had assets with maturities of less than one year or variable interest rates totaling $1.1, $1.1 and $2.0 billion at November 30, 1993, 1992 and 1991, respectively. Investments of the banking subsidiaries generally are recorded at amortized cost and are usually held until maturity. In 1992, the Company completed the transfer of its banking operation from Puerto Rico to the Republic of Ireland. In connection with the transfer, a portion of the bank's capital was transferred into operating subsidiaries, accounting for the decrease in financial subsidiaries' total assets between 1991 and 1992. Property, Plant and Equipment The major categories of property, plant and equipment and accumulated depreciation follow: (millions of dollars) 1993 1992 1991 - --------------------------------------------------------------- Land $ 81.8 $ 71.7 $ 85.3 Buildings 1,093.8 953.9 959.7 Machinery and equipment 1,897.8 1,706.9 1,876.4 Furniture, fixtures and other 812.8 698.3 663.5 Construction in progress 414.5 385.6 422.6 - --------------------------------------------------------------- 4,300.7 3,816.4 4,007.5 Less: accumulated depreciation 1,668.2 1,511.3 1,626.5 - --------------------------------------------------------------- $2,632.5 $2,305.1 $2,381.0 - --------------------------------------------------------------- Inventories Inventories valued on a LIFO basis comprised approximately 15% of worldwide inventories at December 31, 1993, 1992 and 1991. The estimated replacement cost of these inventories at December 31, 1993, 1992 and 1991 was $205, $199 and $223 million, respectively. Financial Instruments and Concentrations of Credit Risk The Company enters into forward-exchange contracts and purchases currency options to hedge foreign currency transactions on a continuing basis for periods consistent with its committed exposures. It does not engage in speculation. The Company's foreign exchange contracts do not subject the Company to risk from exchange-rate movements because gains and losses on these contracts offset losses and gains on the assets, liabilities and transactions being hedged. As of December 31, 1993, 1992 and 1991, the Company had approximately $600, $400 and $300 million, respectively, of forward-exchange contracts and currency options in U.S. dollars, European currencies and Japanese yen. The forward-exchange contracts generally have maturities which do not exceed six months. In 1992, the Company entered into interest-rate and currency swaps to hedge the Company's net U.K. sterling investments. The notional amount of these interest-rate swaps was $400 million. The Company also entered into other interest-rate swaps with a notional amount of $350 million to effectively convert its U.K. sterling instruments from variable into fixed rate. These swaps were terminated in 1993. The financial impact was not material. PIBE entered into a number of conventional interest-rate swaps, currency swaps, forward-rate agreements and other notional principal transactions as vehicles to hedge the interest-rate sensitivity of its investment portfolio. The notional amounts of these agreements, which generally have maturities or reset periods of six months or less, were $169, $55 and $221 million at November 30, 1993, 1992 and 1991, respectively. In connection with the other notional principal transactions, PIBE received amounts which have been deferred and are being amortized to income over the term of the contracts. Approximately $13, $24 and $74 million of this deferred income is included in Other current liabilities in the Consolidated Balance Sheet at December 31, 1993, 1992 and 1991, respectively. While PIBE received amounts which have been deferred, it remains committed to make floating interest-rate payments to its counterparties in these transactions. The payments approximate PIBE's floating-rate returns on its investment portfolio and are based upon a notional principal of $200 million at November 30, 1993. The Company is subject to interest-rate risk arising from these transactions. This risk is substantially offset by the manner in which these transactions hedge the return on PIBE's underlying asset portfolio. These commitments expire in 1995. As of December 31, 1993, the Company had no significant concentrations of credit risk. Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair values of financial instruments: For cash, short-term interest-bearing deposits and investments, accounts receivable and payable, accrued liabilities, commercial paper and certificates of deposit, short-term debt and other liabilities, the carrying amount approximates the fair value because of the short maturities of those instruments. For loans, the carrying amount approximates the fair value because of the short reset period. Quoted market prices or dealer quotes for the same or similar instruments were used for certain long-term interest-bearing deposits and investments, long-term debt, forward-exchange contracts and currency options. Interest-rate and currency swap agreements and other notional principal transactions have been valued by using the estimated amount that the Company would receive or pay to terminate the swap agreements at the reporting date based on broker quotes, taking into account current interest rates and the current creditworthiness of the swap counterparties. The estimated fair values of the financial instruments are as follows: 42 (millions of dollars) 1993 1992 - ------------------------------------------------------------------ Carrying Fair Carrying Fair Amount Value Amount Value - ------------------------------------------------------------------ Long-term interest-bearing deposits and investments $524.6 $543.1 $611.0 $602.9 Long-term debt* $570.5 $605.8 $571.3 $589.6 - ------------------------------------------------------------------ Forward-exchange contracts: Net payable $ -- $ -- $ 4.0 $ 3.4 Net receivable $ 1.4 $ 1.6 $ -- $ -- Currency options $ 9.8 $ 9.8 $ -- $ -- Interest-rate swaps:* In a net receivable position $ .6 $ 7.5 $ .9 $ 8.9 Foreign-currency swaps: In a net receivable position $ 2.1 $ 1.3 $ 40.8 $ 23.2 Other notional principal transactions: In a payable position $ 26.2 $ 16.6 $ 52.3 $ 40.0 - ------------------------------------------------------------------ * Certain interest-rate swaps hedge approximately $25 million included in the carrying amount of long-term debt. The amounts shown under carrying amount for interest-rate swaps and other notional principal transactions represent accruals or deferred income arising from those unrecognized financial instruments. Long-Term Debt Long-term debt, exclusive of current maturities of $3.6, $4.6 and $13.8 million in 1993, 1992 and 1991, respectively, is summarized as follows: (millions of dollars) 1993 1992 1991 - --------------------------------------------------------------- 7 1/8% Notes due 1996 $250.0 $250.0 $250.0 6 1/2% Notes due 1997 250.0 250.0 -- 8 1/2% Sinking Fund Debentures Due 1999 -- -- 50.1 10 1/4% Industrial Development Bonds Due 2001 22.0 22.0 22.0 8 3/4% Convertible Subordinated Debentures Due 2006 -- -- 10.8 Other borrowings and mortgages 48.5 49.3 63.7 - --------------------------------------------------------------- $570.5 $571.3 $396.6 - --------------------------------------------------------------- In June 1991, the Company filed a shelf registration with the U.S. Securities and Exchange Commission under which the Company could issue up to $750 million of debt securities. Under this shelf registration, the Company issued $250 million of notes in 1991 and $250 million of notes in 1992, leaving $250 million available to be issued as of December 31, 1993. The funds from the sale of these securities are used for general corporate purposes. Long-term debt maturities for the years ending December 31, 1995 through 1998 are $5.4, $254.7, $259.1 and $2.2 million, respectively. At December 31, 1993, the Company had approximately $1.2 billion in major unused lines of credit. During 1993, 1992 and 1991, respectively, the Company incurred interest costs of $120.5, $115.6 and $138.1 million, including $14.0, $12.2 and $8.0 million which was capitalized. Interest paid was approximately $122.2, $92.5 and $126.7 million in 1993, 1992 and 1991, respectively. Divestitures, Restructuring and Unusual Items Income from operations for 1993 includes a charge of $750 million to cover a worldwide restructuring program as well as unusual items. The restructuring is expected to generate substantial savings and, over several years, lead to a worldwide workforce reduction of approximately 3,000 employees. The charge is related to such worldwide actions as consolidation of manufacturing, distribution and administrative infrastructures and staff realignments. Unusual items include the writedown of goodwill and anticipated losses associated with certain tangible assets. The writedown of goodwill relates to a business evaluation, where it has now been determined that revenue and profitability levels are not meeting previously estimated levels and unamortized goodwill will not be recovered through future cash flows of the business. The charge is comprised of the following: (millions of dollars) - --------------------------------------------------------------- Writedown of intangibles $124.4 Costs associated with facilities closings or product discontinuances 325.6 Realignment of foreign operations 228.0 Other restructuring costs 72.0 - --------------------------------------------------------------- Total $750.0 - --------------------------------------------------------------- Included in costs associated with facilities closings or product discontinuances and realignment of foreign operations are the writedown of related tangible assets as well as severance, termination and other costs. The majority of other restructuring costs represents severance and termination benefits related to the realignment of administrative infrastructures. In 1993, the Company sold its remaining interest of approximately 40% in Minerals Technologies Inc. (MTI), a company comprised of the Company's former specialty minerals businesses. The sale resulted in a pre-tax gain of approximately $60 million that was offset by charges of $62 million for restructuring, consolidation and streamlining of certain of the Company's businesses. Income from operations for 1992 includes a restructuring credit of $110.5 million relating to the divestiture and restructuring of certain of the Company's businesses. This consists of a $54.0 million credit representing the gain on the sale of businesses, offset by charges for restructuring, consolidation and streamlining of certain businesses. In addition, curtailment gains of $56.5 million associated with postretirement benefits other than pensions of divested operations were recognized. Income from operations for 1991 was reduced by a charge of $300 million ($195 million after-tax) for potential future Shiley Convexo/Concave (C/C) heart valve fracture claims. The long-term portion of this charge was $240, $260 and $280 million at December 31, 1993, 1992 and 1991, respectively, and is included in Other non-current liabilities in the Consolidated Balance Sheet. Taxes on Income The Company adopted SFAS No. 109 effective January 1, 1992. The cumulative effect of this change increased net 43 income by $30.0 million ($.09 per share) and is reported separately in the 1992 Consolidated Statement of Income. Income before taxes for U.S. and international operations consists of the following: (millions of dollars) 1993 1992 1991 - --------------------------------------------------------- United States $442.2 $856.4 $233.2 International 409.2 678.4 710.5 - --------------------------------------------------------- Total income before taxes $851.4 $1,534.8 $943.7 - --------------------------------------------------------- The classification of items presented in the above table differs from that in the geographic table on page 36. The geographic table displays information by management organization, exclusive of certain corporate expenses. Income before taxes in the above table is classified based on the location of the operations of the Company. The provision for taxes on income consists of the following: (millions of dollars) 1993 1992 1991 - --------------------------------------------------------------- UNITED STATES Taxes currently payable U.S. $264.7 $176.2 $122.5 State and local 65.6 88.8 58.3 Deferred income taxes (273.4) (16.8) (126.8) - --------------------------------------------------------------- Tax provision 56.9 248.2 54.0 - --------------------------------------------------------------- INTERNATIONAL Taxes currently payable 197.1 188.1 145.9 Deferred income taxes (62.7) 2.3 18.5 - --------------------------------------------------------------- Tax provision 134.4 190.4 164.4 - --------------------------------------------------------------- Total tax provision $191.3 $438.6 $218.4 - --------------------------------------------------------------- The provision for taxes on income shown in the previous table is classified based on the location of the taxing authority, regardless of the location in which the taxable income is generated. A provision for U.S. income taxes of approximately $700 million has not been made on approximately $2.5 billion of international subsidiaries' unremitted earnings as of December 31, 1993. The earnings of the Company's pharmaceutical subsidiary operating in Puerto Rico are subject to taxes pursuant to an incentive grant which is effective through December 31, 2002. Under this grant, the Company is partially exempt from income, property and municipal taxes. The major elements contributing to the difference between the U.S. statutory tax rate and the consolidated effective tax rate are as follows: (percentages) 1993 1992 1991 - --------------------------------------------------------------- U.S. statutory tax rate 35.0 34.0 34.0 Effect of partially tax-exempt operations in Puerto Rico* (19.4) (8.2) (12.1) Effect of reduced rates in Ireland (4.0) (2.7) (4.4) Divestitures, restructuring and unusual items--net 4.4 1.8 -- State and local taxes 4.3 2.8 3.4 R&D tax credit (3.3) (.5) (1.8) All other--net 5.5 1.4 4.0 - --------------------------------------------------------------- Consolidated effective tax rate 22.5 28.6 23.1 - --------------------------------------------------------------- * Excluding the effect of divestitures, restructuring and unusual items--net, the effect of partially tax-exempt operations in Puerto Rico would have been approximately 10% in 1993 and 9% in 1992. Deferred tax assets and liabilities as of December 31, 1993 and 1992 are included in the Consolidated Balance Sheet as follows: (millions of dollars) 1993 1992 - --------------------------------------------------------------- Current--Prepaid expenses, taxes and other current assets $435.3 $347.3 Non-current--Other assets, deferred taxes and deferred charges 305.1 -- Non-current--Deferred taxes on income (189.4) (146.9) - --------------------------------------------------------------- Net deferred tax asset $551.0 $200.4 - --------------------------------------------------------------- Temporary differences which give rise to a significant portion of deferred tax assets and liabilities at December 31, 1993 and 1992 are as follows: (millions of dollars) 1993 1992 - ------------------------------------------------------------------------- Deferred Deferred Deferred Deferred Tax Tax Tax Tax Assets Liabilities Assets Liabilities - ------------------------------------------------------------------------- Prepaid and deferred items $ 149.4 $ 85.8 $115.8 $ 76.5 Inventories 143.1 31.9 121.6 36.2 Investments 14.1 -- 30.0 -- Property, plant and equipment 30.9 304.8 60.2 270.8 Employee benefits 206.8 129.1 208.8 132.8 Restructurings and special charge 377.9 -- 180.3 -- Foreign tax credit carryforwards 100.0 -- -- -- State and local taxes 34.3 -- 42.0 -- Other tax carryforwards 59.0 -- 40.4 -- All other 33.9 23.1 44.4 51.4 - ------------------------------------------------------------------------- Subtotal 1,149.4 574.7 843.5 567.7 Valuation allowance (23.7) -- (75.4) -- - ------------------------------------------------------------------------- Total deferred taxes $1,125.7 $574.7 $768.1 $567.7 - ------------------------------------------------------------------------- Net deferred tax asset $ 551.0 $200.4 - ------------------------------------------------------------------------- In 1993, foreign tax credit carryforwards arose from dividends received by the Company from foreign subsidiaries. The carryforwards expire through 1998. The major component of the 1993 and 1992 valuation allowances relates to the uncertainty of realizing certain foreign deferred tax assets. The valuation allowance at January 1, 1992 was $81.2 million. The net decrease in the total valuation allowance for 1993 of $51.7 was primarily due to a change in U.K. tax legislation. The net decrease in the total valuation allowance for 1992 of $5.8 million was primarily related to changes in foreign currency translation rates. The Company believes that its accrued tax liabilities are sufficient to cover its tax contingencies. The Company made income tax payments of approximately $323.6, $319.9 and $252.8 million during 1993, 1992 and 1991, respectively. Pension Plans The Company and its subsidiaries have pension plans covering substantially all eligible employees on a 44 contributory or non-contributory basis. The components of net periodic pension cost for 1993, 1992 and 1991 are as follows: (millions of dollars) 1993 1992 1991 - --------------------------------------------------------------- Service cost-benefits earned during the period $ 60.2 $ 56.7 $ 50.4 Interest cost on projected benefit obligations 107.5 110.8 98.8 Actual return on plan assets (197.4) (97.7) (329.4) Net amortization and deferral 71.4 (43.8) 217.7 - --------------------------------------------------------------- Net periodic pension cost $ 41.7 $ 26.0 $ 37.5 - --------------------------------------------------------------- Assumptions used to measure the projected benefit obligation for the U.S. plans were: 1993 1992 1991 - ---------------------------------------------------------------- Discount rate 7.5% 8.5% 9.0% Rate of increase in salary levels 5.5% 6.0% 6.0% Expected long-term rate of return on plan assets 9.0% 9.0% 9.0% - ---------------------------------------------------------------- As a result of declining long-term interest rates, the Company has reduced its assumed discount rate to 7.5% to remeasure its U.S. pension obligation as of December 31, 1993. The Company also reduced its rate of increase in salary levels from 6.0% to 5.5% because of lower inflation. The effect of these changes resulted in a net increase in the projected benefit obligations of $98.2 million. The assumed rates for the Company's significant international plans, which reflect the conditions of each plan, varied from the U.S. rates by no more than four percentage points. As of December 31, 1993, 1992 and 1991, the funded status of the Company's pension plans follows: (millions of dollars) 1993 1992 1991 - --------------------------------------------------------------- Actuarial present value of accumulated benefit obligations: Vested $(1,290.4)$ (969.7)$ (970.9) Non-vested (99.8) (156.3) (88.3) - --------------------------------------------------------------- Total (1,390.2)(1,126.0)(1,059.2) Effect of future salary increases (204.4) (224.5) (202.7) - --------------------------------------------------------------- Projected benefit obligations (1,594.6)(1,350.5)(1,261.9) Plan assets at fair value 1,774.9 1,662.1 1,632.3 - --------------------------------------------------------------- Plan assets in excess of projected benefit obligations 180.3 311.6 370.4 Unrecognized overfunding at date of adoption (29.6) (32.5) (41.2) Unrecognized net losses/(gains) 140.8 (20.5) (118.3) Unrecognized prior service costs 61.5 75.7 65.1 Minimum liability adjustment (21.1) (5.0) (13.6) - --------------------------------------------------------------- Net pension asset included in Consolidated Balance Sheet $ 331.9 $ 329.3 $ 262.4 - --------------------------------------------------------------- The preceding table includes 1993 accumulated benefit obligations of $133.2 million and assets at fair value of $8.2 million primarily related to partially funded international plans. The funding policy for the international plans conforms to local governmental and tax requirements. Benefits under defined benefit plans generally are based on years of service and the employee's career earnings. Employees become fully vested after as few as five years. The Company's funding policy for U.S. plans generally is to contribute annually into trust funds at a rate intended to remain at a level percentage of compensation for covered employees. The plans' assets are invested primarily in stocks, bonds and short-term investments. Approximately 12.2% of the major U.S. plan's assets consisted of the Company's common stock at December 31, 1993. Savings and Investment Plans The Company maintains voluntary Savings and Investment Plans for most employees in the U.S. and Puerto Rico. Within prescribed limits, the Company bases its contributions to the Plans on employee contributions. For 1993, 1992 and 1991, Company contributions amounted to $28.8, $29.1 and $26.4 million, respectively. Postretirement Benefits Other Than Pensions In addition to its pension plans, the Company has defined benefit postretirement plans that provide medical and life insurance benefits for retirees and eligible dependents. Employees become eligible for these benefits if they meet minimum age and service requirements and are eligible for retirement benefits. The Company reserves the right to modify or terminate these plans. The plans are not funded. In 1992, the Company adopted SFAS No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions. This Statement requires the accrual of the projected future cost of providing postretirement benefits during the period that employees render the services necessary to be eligible for such benefits. In prior years, the expense was recognized when claims were paid (pay-as-you-go basis). Most retirees outside the United States are covered by government-sponsored and -administered programs. The cost is not significant. The Company elected to immediately recognize the accumulated benefit obligation, measured as of January 1, 1992, and reflected a one-time pre-tax charge of $520.5 million ($312.6 million after taxes, or $.93 per share) as the cumulative effect of this accounting change. The initial accumulated postretirement benefit obligation was subsequently reduced as a result of curtailment gains of $56.5 million related to divestitures made during 1992. (See the footnote "Acquisitions and Divestitures" on page 47.) The obligation was further reduced as a result of plan modifications adopted in 1992. In accordance with SFAS No. 106, this reduction in the obligation is being amortized as a component of the net periodic postretirement expense. 45 Postretirement benefit expense on a pay-as-you-go basis was $9.7 million in 1991. The components of the 1993 and 1992 expense were as follows: (millions of dollars) 1993 1992 - --------------------------------------------------------------- Service cost--benefits earned during the period $ 5.0 $ 9.8 Interest cost on the accumulated obligation 20.2 25.8 Net amortization and deferral (24.4) (19.9) - --------------------------------------------------------------- Net periodic postretirement expense $ .8 $ 15.7 - --------------------------------------------------------------- The accumulated postretirement benefit obligations, recognized in the December 31, 1993 and 1992 Consolidated Balance Sheets, consist of: (millions of dollars) 1993 1992 - --------------------------------------------------------------- Retirees $178.7 $164.5 Fully eligible active plan participants 47.1 41.6 Other active plan participants 57.0 46.9 - --------------------------------------------------------------- Accumulated postretirement benefit obligations 282.8 253.0 Unrecognized prior service cost 181.6 206.1 Unrecognized net loss (21.1) -- - --------------------------------------------------------------- Recorded obligation $443.3 $459.1 - --------------------------------------------------------------- A 13% increase in the cost of covered health care benefits was assumed for 1994 and is projected to decrease to 6.8% after 17 years and to then remain at that level. A 1% increase in the health care cost trend rate would have increased the accumulated postretirement benefit obligation as of December 31, 1993 by $16.4 million and the net periodic postretirement expense by $1.3 million. The discount rates used to estimate the accumulated postretirement benefit obligation were 7.5% and 8.5% at December 31, 1993 and 1992, respectively. Earnings per Common Share Earnings per common share are computed by dividing net income, adjusted for interest expense (net of taxes) relating to assumed debenture conversions, by the weighted-average number of common shares and common share equivalents outstanding. The latter consists primarily of shares issuable upon exercise of stock options. The information necessary for the calculation of earnings per common share for the years ended December 31, 1993, 1992 and 1991 is as follows: (millions of dollars and shares, except per share amounts) 1993 1992 1991 - --------------------------------------------------------------- Net income, adjusted $657.5 $811.1 $723.4 - --------------------------------------------------------------- Weighted average number of common shares outstanding 315.5 329.0 330.2 Common share equivalents 4.9 7.5 9.1 - --------------------------------------------------------------- Total 320.4 336.5 339.3 - --------------------------------------------------------------- Earnings per common share $ 2.05 $ 2.41 $ 2.13 - --------------------------------------------------------------- Common Stock In February 1993, the Company announced a program to purchase up to 20 million shares of its currently issued common stock in the open market or in privately negotiated transactions. These shares will be available for use in the Company's employee benefit plans and for general corporate purposes. In 1991, the Company effected a two-for-one stock split on its common stock. The par value remained at $.10 a share. Preferred Stock Purchase Rights In 1987, the Board of Directors declared a dividend of one Preferred Stock Purchase Right on each outstanding share of Pfizer Common Stock to holders of record on October 5, 1987. If the rights become exercisable, separate certificates evidencing the rights will be distributed and each right will entitle the holder to purchase from the Company a new series of preferred stock at a predefined price. The rights also contain an option to purchase shares in a change-of-control situation. The preferred stock, in addition to a preferred dividend and liquidation right, will entitle the holder to vote on a pro rata basis with the Company's common stock. The rights are not exercisable until either certain changes in ownership of the Company occur or an announcement of a tender offer for at least 30% of the Company's common stock is made. The rights are redeemable by Pfizer at a fixed price until 10 days, or longer as determined by the Board, after certain defined events, or at any time prior to the expiration of the rights on October 5, 1997, if such events do not occur. Through December 31, 1993, the Company had reserved 1.9 million preferred shares as issuable pursuant to these rights. At the present time, the rights have no dilutive effect on the earnings per common share calculation. Employee Benefit Trust In August 1993, the Company sold 10 million shares of treasury stock to an Employee Benefit Trust. The EBT will be used primarily to fund future obligations for previously approved Company benefit plans over the 15-year term of the Trust. The common stock was acquired by the EBT from the Company in exchange for a promissory note valued at approximately $600 million at the date of sale. The EBT, which represents unearned employee benefits, has been recorded as a deduction from shareholders' equity and will be reduced as employee benefits are satisfied. Cash Dividends Cash dividends of $536.1 million, or $1.68 per common share, were paid during 1993. In January 1994, a cash dividend of approximately $151 million, or $.47 per common share, was declared, payable in the first quarter of 1994. Stock Option Plan Under the Stock and Incentive Plan, the Company may grant options to any employee, including officers and directors, to purchase common stock at the market price on the date an option is granted. The options may be exercised subject to continued employment and certain other conditions. At December 31, 1993, options for 15,839,933 shares 46 were exercisable. The Plan also provides for stock appreciation rights, stock awards or performance unit awards, none of which have been granted as of December 31, 1993. In 1993, the shareholders approved amendments to the Plan to make available for future grants of options an additional 11 million shares. The following table summarizes changes in the number of common shares under option and available for future grants: (shares) 1993 1992 1991 - ---------------------------------------------------------------------- Under option January 1 17,860,189 16,961,631 19,199,034 Granted (per share: $63.00 in 1993; $69.50 to $81.00 in 1992; $65.25 to $70.00 in 1991) 3,214,059 5,064,322 3,270,735 Exercised (per share: $14.00 to $65.25 in 1993; $14.00 to $65.25 in 1992; $6.66 to $36.63 in 1991) (1,452,160) (3,750,610) (5,414,101) Cancelled--available for future grants (305,774) (415,154) (94,037) Cancelled--not available for future grants (21,997) -- -- - ---------------------------------------------------------------------- Under option December 31 (per share: $18.25 to $81.00 in 1993; $17.50 to $81.00 in 1992; $14.00 to $70.00 in 1991) 19,294,317 17,860,189 16,961,631 - ---------------------------------------------------------------------- Available for grant December 31 9,502,823 1,411,108 6,060,276 - ---------------------------------------------------------------------- Lease Commitments Rent expense, net of sublease rentals, for the years ended December 31, 1993, 1992 and 1991 amounted to approximately $87.2, $80.1 and $75.3 million, respectively. Total future minimum rental commitments under all non-cancellable leases for the years 1994 through 1998 and thereafter are approximately $28.6, $24.9, $14.1, $10.8, $8.6 and $196.9 million, respectively. Under the more significant lease agreements, the Company must either pay directly for taxes, insurance, maintenance and other operating expenses or pay higher rentals when such expenses increase. Acquisitions and Divestitures Acquisitions In 1993, the Company purchased Charwell Pharmaceuticals Limited, a distributor of over-the-counter consumer health care products located in the United Kingdom, for approximately $41.5 million. In 1992, the Company acquired certain assets and liabilities of Koshin Medical Corp., a distributor of hospital products in Japan, for approximately $16.4 million. Both of the above acquisitions were recorded under the purchase method of accounting. Divestitures In 1993, the Company sold its remaining interest of approximately 40% in MTI, in part through a public offering and in part through a sale of stock to MTI for gross proceeds of approximately $241.2 million. The sale resulted in a pre-tax gain of approximately $60 million. In 1992, the Company: o Sold the Coty business, a part of the Company's consumer health care segment, for gross proceeds of approximately $440 million resulting in a pre-tax gain of $258.6 million. o Closed the transaction to sell certain product lines of Shiley Incorporated and other assets to Sorin Biomedica S.p.A. for approximately $230 million in cash. The gain on this transaction was used to partly offset costs associated with the Bowling Settlement Agreement approved by the court in August 1992. See the "Litigation" footnote beginning on this page. o Sold a majority interest of approximately 60% in MTI. The proceeds of $226.6 million, net of associated expenses, approximated the net book value of the interest sold. In 1991, the Company sold its Plax international pre-brushing dental rinse business for $105 million in cash. There was no gain or loss on this transaction. Insurance The Company maintains insurance coverage it believes to be adequate for its needs. Under its insurance contracts, the Company usually accepts self-insured retentions appropriate for the specific risks of its business. Litigation The Company is involved in a number of claims and litigations, including product liability claims and litigations considered normal in the nature of its businesses. These include suits involving various pharmaceutical and hospital products that allege either reaction to or injury from use of the product. As previously disclosed, numerous claims have been brought against the Company and Shiley Incorporated, a wholly owned subsidiary, alleging either personal injury from fracture of 60(degree) or 70(degree) C/C heart valves, or anxiety that properly functioning implanted valves might fracture in the future, or, in a few cases, personal injury from a prophylactic replacement of a functioning valve. The Company believes that claims based on properly functioning implanted valves seeking recovery for alleged anxiety that the valves might fracture in the future do not state a cause of action and, accordingly, the Company has vigorously defended these cases. As of January 21, 1994, 59 cases have either been dismissed on motions to dismiss or for summary judgment, or have been voluntarily withdrawn by the plaintiffs. In the case of Kahn v. Shiley Incorporated and Pfizer Inc., however, the California Court of Appeal in 1990 held invalid all of the plaintiff's product liability claims relating to concerns with respect to plaintiff's properly functioning C/C heart valve, but permitted plaintiff to pursue claims based on deceit, which the trial court has held includes negligent and fraudulent misrepresentations. Cases involving approximately 200 implantees (and spouses of some of them) were consolidated for certain pretrial purposes under the caption of the Kahn case 47 pending in the Superior Court, Orange County, California. More than 100 of these were settled in early 1993. Trial of the first of the remaining cases, of six selected for trial, began July 29, 1993. After trial, but before verdict, most of the remaining cases as well as several unfiled claims, involving approximately 250 implantees, were settled. In an attempt to resolve all claims alleging anxiety that properly functioning valves might fracture in the future, the Company entered into a settlement agreement in January 1992 in Bowling v. Shiley et al., a case brought in the United States District Court for the Southern District of Ohio that establishes a worldwide settlement class of people with C/C heart valves and their spouses, except those who elect to exclude themselves. The settlement provides for a Consultation Fund of $90 to $140 million (depending on the number of claims filed) from which valve recipients who make claims will receive payments that are intended to cover their cost of consultation with cardiologists or other health care providers with respect to their valves. The settlement agreement establishes a second fund of at least $75 million to support C/C valve-related research, including the development of techniques to identify valve recipients who may have significant risk of fracture, and to cover the unreimbursed medical expenses that valve recipients may incur for certain procedures related to the valves. The Company's obligation as to coverage of these unreimbursed medical expenses is not subject to any dollar limitation. Following a hearing on the fairness of the settlement, it was approved by the court on August 19, 1992. An appeal of the court's approval of the settlement was dismissed on December 20, 1993 by the United States Court of Appeals for the Sixth Circuit. A motion for rehearing en banc is currently pending. It is expected that most of the costs arising from the Bowling class settlement will be covered by insurance and the proceeds of the sale of certain product lines of the Shiley businesses in 1992. Of approximately 900 implantees (and spouses of some of them) who opted out of the Bowling settlement class, 12 currently have cases or claims pending in the Kahn consolidation in California; 4 have cases or claims pending outside of California; approximately 675 whose claims were included in the Kahn consolidation have been settled; approximately 100 have never filed a case or claim; and approximately 10 have working valve cases pending. Several claims relating to elective reoperations of valve recipients are currently pending. Some of these claims relate to elective reoperations covered by the Bowling class settlement described above, and, therefore, the claimants are entitled to certain benefits in accordance with the settlement. Such claimants, if they irrevocably waive all of the benefits of the settlement, may pursue separate litigation to recover damages in spite of the class settlement. The Company is defending these claims. Generally, the plaintiffs in all of the pending heart valve litigations discussed above seek money damages. Based on the experience of the Company in defending these claims to date, including available insurance and reserves, the Company is of the opinion that these actions should not have a material adverse effect on the financial position or the results of operations of the Company. On September 30, 1993, Dairyland Insurance Co., a carrier providing excess liability coverage ("excess carrier") in the early 1980s, commenced an action in the California Superior Court in Orange County, seeking a declaratory judgment that it was not obligated to provide insurance coverage for Shiley heart valve liability claims. On October 8, 1993, Pfizer filed cross-complaints against Dairyland and filed third-party complaints against 73 other excess carriers who sold excess liability policies covering periods from 1978 to 1985, seeking damages and declaratory judgments that they are obligated to pay for defense and indemnity to the extent not paid by other carriers. The Company's operations are subject to federal, state and local environmental laws and regulations. Under the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended ("CERCLA" or "Superfund"), the Company has been designated as a potentially responsible party by the United States Environmental Protection Agency with respect to certain waste sites with which the Company may have had direct or indirect involvement. Similar designations have been made by some state environmental agencies under applicable state superfund laws. Such designations are made regardless of the extent of the Company's involvement. There are also claims that the Company is a potentially responsible party or participant with respect to several waste sites in Canada. Such claims have been made by the filing of a complaint, the issuance of an administrative directive or order, or the issuance of a notice or demand letter. These claims are in various stages of administrative or judicial proceedings. They include demands for recovery of past governmental costs and for future investigative or remedial actions. In many cases, the dollar amount of the claim is not specified. In most cases, claims have been asserted against a number of other entities for the same recovery or other relief as was asserted against the Company. The Company is currently participating in remedial action at a number of sites under federal, state and local laws. To the extent possible with the limited amount of information available at this time, the Company has evaluated its responsibility for costs and related liability with respect to the above sites and is of the opinion that the Company's liability with respect to these sites should not have a material adverse effect on the financial condition or the results of operations of the Company. In arriving at this conclusion, the Company has considered, among other things, the payments that have been made with respect to the sites in the past; the factors, such as volume and relative toxicity, ordinarily applied to allocate defense and remedial costs at such sites; the probable costs to be paid by the other potentially responsible parties; total projected 48 remedial costs fo a site, if known; existing technology; and the currently enacted laws and regulations. The Company anticipates that a portion of these costs and related liability will be covered by available insurance. The Company agreed to a consent order issued by the State of Connecticut's Department of Environmental Protection on January 28, 1994 in connection with the Company's operation of its pharmaceutical research and production facilities in Groton, Connecticut. The consent order, pursuant to which the Company agreed to pay a civil penalty of $150,000, resolves all matters raised in an administrative action brought by the agency against the Company. The action had alleged certain violations of state environmental regulations which incorporate provisions of the federal Resource Conservation and Recovery Act. Through the early 1970s, Pfizer (Minerals Division) and Quigley Company, Inc., a wholly owned subsidiary, sold a minimal amount of one construction product and several refractory products containing some asbestos. These sales were discontinued thereafter. Although these sales represented a minor market share, the Company has been named as one of a number of defendants in numerous lawsuits. These actions, and actions related to the Company's sale of talc products in the past, claim personal injury resulting from exposure to asbestos-containing products, and nearly all seek general and punitive damages. In these actions, the Company or Quigley is typically one of a number of defendants, and both are members of the Center for Claims Resolution (the "CCR"), a joint defense organization that is defending these claims. The Company and Quigley are responsible for varying percentages of defense and liability payments for all members of the CCR. Prior to September 1990, the cases involving talc products were defended by the CCR, but the Company is now overseeing its own defense of these actions. A number of cases alleging property damage from asbestos-containing products installed in buildings have also been brought against Pfizer. On January 15, 1993, a class action complaint and settlement agreement were filed in the United States District Court for the Eastern District of Pennsylvania involving all personal injury claims by persons who have been exposed to asbestos-containing products but who have not yet filed a personal injury action against the 20 members of the CCR. The settlement agreement establishes a claims-processing mechanism that will provide historic settlement values upon proof of impaired medical condition as well as claims-processing rates over 10 years. In addition, the shares allocated to the CCR members eliminate joint and several liability. The settlement is subject to the court's determination that the settlement is fair and reasonable. Concurrently with the filing of the future claims class action, the CCR settled approximately 16,360 personal injury cases on behalf of Pfizer and Quigley, leaving approximately 22,900 cases pending (15,400 against Quigley and 7,500 against Pfizer). It is the CCR's intention to settle remaining and opt-out cases and claims on a similar basis to past settlements. Costs incurred by the Company in defending the asbestos personal injury claims and the property damage claims, as well as settlements and damage awards in connection therewith, are largely insured against under policies issued by several primary insurance carriers and a number of excess carriers. The Company believes that its costs incurred in defending and ultimately disposing of the asbestos personal injury claims, as well as the property damage claims, will be largely covered by insurance policies issued by carriers that have agreed to provide coverage, subject to deductibles, exclusions, retentions and policy limits. In connection with the future claims settlement, the defendants have commenced a third-party action against their respective excess insurance carriers that have not agreed to provide coverage seeking a declaratory judgment that (a) the future claims settlement is fair and reasonable as to the carriers; (b) the carriers had adequate notice of the future claims class settlement; and (c) the carriers are obligated to provide coverage for asbestos personal injury claims. Based on the Company's experience in defending the claims to date and the amount of insurance coverage available, the Company is of the opinion that these actions should not ultimately have a material adverse effect on the financial position or the results of operations of the Company. The Company has been named, together with numerous other manufacturers of prescription drugs and certain companies which distribute prescription pharmaceuticals, in at least 51 lawsuits (the majority of which are purported to be class actions) in the United States District Courts in Illinois, Pennsylvania, California, Texas, Minnesota and New York, as well as three lawsuits in California state courts, all brought by certain retail pharmacy companies. These cases allege, in essence, that the defendant drug manufacturers have violated the Sherman Act in that they have unlawfully agreed with each other (and, as alleged in some cases, with wholesalers) not to extend to retail pharmacy companies the same discounts which they allege were extended to managed care companies, mail order pharmacies and other institutional purchasers. Certain of the cases also allege violations of the Robinson-Patman Act in that the manufacturers allegedly have unlawfully discriminated against retail pharmacy companies by not extending to them such discounts. It is anticipated that additional cases may be filed. Several motions have been filed to transfer all cases filed in United States District Courts to a single United States District Court for coordinated pretrial proceedings. These motions were heard on January 21, 1994 by the Judicial Panel on Multidistrict Litigation. The Company believes these cases are without merit and will vigorously defend them. In connection with the divestiture of MTI, Pfizer and Quigley agreed to indemnify MTI against any liability with respect to products manufactured and sold prior to October 30, 1992, as well as against liability for certain environmental matters. FDA administration proceedings relating to Plax are pending, principally an industry-wide call for data on all 49 anti-plaque products by the FDA. The call for data notice specified that products that have been marketed for a material time and to a material extent may remain on the market pending FDA review of the data, provided the manufacturer has a good-faith belief that the product is generally recognized as safe and effective and is not misbranded. The Company believes that Plax satisfied these requirements and prepared a response to the FDA's request, which was filed on June 17, 1991. This filing, as well as the filings of other manufacturers, is still under review and is currently being considered by an FDA Advisory Committee. A consolidated class action on behalf of persons who allegedly purchased Pfizer common stock during the March 24, 1989 through February 26, 1990 period is pending in the United States District Court for the Southern District of New York. This lawsuit, which commenced on July 13, 1990, alleges that the Company and certain officers and former directors and officers violated federal securities law by failing to disclose potential liability arising out of personal injury suits involving Shiley heart valves and seeks damages in an unspecified amount. The defendants in this action believe that the suit is without merit and are vigorously defending it. A derivative action commenced on April 2, 1990 against certain directors and officers and former directors and officers alleging breaches of fiduciary duty and other common law violations in connection with the manufacture and distribution of Shiley heart valves is pending in the Superior Court, Orange County, California. The complaint seeks, among other forms of relief, damages in an unspecified amount. The defendants in the action believe that the suit is without merit and are vigorously defending it. On January 28, 1993, a purported class action entitled Kearse v. Pfizer Inc. and Howmedica Inc. was commenced in the United States District Court for the Northern District of Ohio. Howmedica Inc. ("Howmedica") is a wholly owned subsidiary of the Company. The action sought monetary and injunctive relief, including medical monitoring, on behalf of patients implanted with the Howmedica P.C.A. one-piece acetabular hip component, which was manufactured by Howmedica from 1983 to 1990. The complaint alleged that the prostheses were defectively designed and manufactured and posed undisclosed risks to implantees. On August 3, 1993, a virtually identical purported class action, Bradshaw/Davids v. Pfizer Inc. and Howmedica Inc., was brought and the Kearse case was subsequently voluntarily dismissed. The Company believes that the suit is without merit and is vigorously defending it. Segment Information and Geographic Data Segment information (including major product groups) and geographic data for the years ended December 31, 1993, 1992 and 1991 are shown on pages 35 and 36 and in the footnote "Financial Subsidiaries" on page 41 and are incorporated in this footnote. Substantially all net sales represent merchandise shipments to third parties. Operating expenses were deducted from net sales to arrive at segment operating profit. Those operating expenses directly traceable to individual segments were charged to them. Other operating expenses were allocated to the segments on a reasonable basis. Interest income, interest expense and net corporate expenses were not allocated to individual segments and include those amounts that relate to the operations of the financial subsidiaries. In many instances, various segments use common production facilities which require allocation among segments of property, plant and equipment, as well as capital additions and depreciation. Physical production is the principal method used for the allocation. Each segment is then considered the owner of its own assets, as well as its allocated facilities. Corporate assets consist principally of cash, short-term investments and long-term marketable securities. Products are transferred between geographic areas for additional processing, as well as for ultimate sale, on a basis intended to recognize economic and competitive circumstances in the market of end use. The assets physically located in one area are considered assets of that area even though they provide goods and/or services to other areas. The Company's segments consist of four product lines and a financial subsidiaries group: Health care: a broad line of pharmaceutical products (including anti-infectives, cardiovascular agents, anti-inflammatories, central nervous system agents and antidiabetes agents) as well as hospital products (including bone and joint prostheses, diagnostic and therapeutic products used in the treatment of cardiovascular disease, electrosurgical and ultrasonic surgical devices and implantable urological devices). Consumer health care: over-the-counter health care items and oral care products. Food science: specialty food ingredients and innovative technology for the global food processing industry. Animal health: animal health products, antibiotic and vitamin feed supplements and veterinary items. Financial subsidiaries: a banking operation which makes loans and accepts deposits in U.S. dollars in international markets and an insurance operation which reinsures certain assets, inland transport and marine cargo of the Company's subsidiaries. Quarterly Data (unaudited) Quarterly Data appear on page 51 of this Annual Report. Stock Prices* (unaudited) 1993 1992 - ------------------------------------------------------------------- Quarters High Low High Low - ------------------------------------------------------------------- First 72-3/4 52-1/2 87 68-3/8 Second 75-5/8 57-1/2 75-1/4 65-1/8 Third 66-1/4 55-5/8 83-1/4 71-3/4 Fourth 70-3/8 57-3/4 80 69-1/2 - ------------------------------------------------------------------- * As reported in The Wall Street Journal. As of January 31, 1994, there were approximately 61,500 holders of the Company's common stock (symbol PFE). 50 QUARTERLY CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Pfizer Inc and Subsidiary Companies
Quarters ----------------------------------------- (millions of dollars except per share data) First Second Third Fourth Year - ---------------------------------------------------------------------------------------------------------------- 1993 Net sales $1,867.3 $1,748.7 $1,872.5 $1,989.2 $7,477.7 Operating costs and expenses Cost of sales 423.4 437.1 436.4 475.1 1,772.0 Selling, informational and administrative expenses 740.7 757.9 745.3 822.1 3,066.0 Research and development expenses 215.4 230.8 242.6 285.6 974.4 Divestitures, restructuring and unusual items--net 28.8 (26.8) 750.0 -- 752.0 - ---------------------------------------------------------------------------------------------------------------- Income/(loss) from operations 459.0 349.7 (301.8) 406.4 913.3 - ---------------------------------------------------------------------------------------------------------------- Interest income 40.0 42.0 39.1 42.4 163.5 Interest expense (24.9) (26.8) (29.6) (25.2) (106.5) Other income 6.8 17.5 7.4 2.9 34.6 Other deductions (36.6) (38.5) (43.4) (35.0) (153.5) - ---------------------------------------------------------------------------------------------------------------- Non-operating income/(deductions)--net (14.7) (5.8) (26.5) (14.9) (61.9) - ---------------------------------------------------------------------------------------------------------------- Income/(loss) before provision for taxes on income and minority interests 444.3 343.9 (328.3) 391.5 851.4 Provision for/(benefit from) taxes on income 115.5 89.6 (115.5) 101.7 191.3 Minority interests (.2) .5 1.4 .9 2.6 - ---------------------------------------------------------------------------------------------------------------- Net income/(loss) $ 329.0 $ 253.8 $ (214.2) $ 288.9 $ 657.5 - ---------------------------------------------------------------------------------------------------------------- Earnings/(loss) per common share $ 1.01 $ .79 $ (.65) $ .90 $ 2.05 - ---------------------------------------------------------------------------------------------------------------- Cash dividends paid per common share $ .42 $ .42 $ .42 $ .42 $ 1.68 - ---------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- 1992 Net sales $1,761.3 $1,694.2 $1,827.6 $1,947.1 $7,230.2 Operating costs and expenses Cost of sales 491.2 494.4 521.5 517.2 2,024.3 Selling, informational and administrative expenses 685.9 711.4 690.3 811.7 2,899.3 Research and development expenses 189.3 214.0 212.8 247.1 863.2 Divestitures, restructuring and unusual items--net (17.0) (78.2) -- (15.3) (110.5) - ---------------------------------------------------------------------------------------------------------------- Income from operations 411.9 352.6 403.0 386.4 1,553.9 - ---------------------------------------------------------------------------------------------------------------- Interest income 45.3 46.1 46.0 47.2 184.6 Interest expense (29.3) (25.5) (23.3) (25.3) (103.4) Other income 6.0 9.2 2.7 16.7 34.6 Other deductions (31.7) (32.5) (26.0) (44.7) (134.9) - ---------------------------------------------------------------------------------------------------------------- Non-operating income/(deductions)--net (9.7) (2.7) (.6) (6.1) (19.1) - ---------------------------------------------------------------------------------------------------------------- Income before provision for taxes on income, minority interests and cumulative effect of accounting changes 402.2 349.9 402.4 380.3 1,534.8 Provision for taxes on income 104.6 129.8 104.6 99.6 438.6 Minority interests .2 .3 .3 1.9 2.7 - ---------------------------------------------------------------------------------------------------------------- Income before cumulative effect of accounting changes 297.4 219.8 297.5 278.8 1,093.5 Cumulative effect of accounting changes (282.6) -- -- -- (282.6) - ---------------------------------------------------------------------------------------------------------------- Net income $ 14.8 $ 219.8 $ 297.5 $ 278.8 $ 810.9 - ---------------------------------------------------------------------------------------------------------------- Earnings per common share Income before cumulative effect of accounting changes $ .88 $ .66 $ .88 $ .83 $ 3.25 Cumulative effect of accounting changes (.84) -- -- -- (.84) - ---------------------------------------------------------------------------------------------------------------- Net income $ .04 $ .66 $ .88 $ .83 $ 2.41 - ---------------------------------------------------------------------------------------------------------------- Cash dividends paid per common share $ .37 $ .37 $ .37 $ .37 $ 1.48 - ----------------------------------------------------------------------------------------------------------------
51 EX-13.(B) 5 FORM 11-K (U.S.) ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- FORM 11-K FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) /X/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1993 OR / / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ....... to ....... Commission file number 1-3619 A. Full title of the Plan and the address of the Plan, if different from that of the issuer named below: PFIZER SAVINGS AND INVESTMENT PLAN B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive offices: PFIZER INC. 235 East 42nd Street New York, New York 10017 ================================================================================ PFIZER SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1993 (thousands of dollars except unit values)
Company Common Loan Assets Total Stock Fund Fund A Fund B Fund C Fund ------ -------- ---------- -------- -------- -------- -------- Investments, at fair value: Pfizer Inc. common stock: Company Common Stock Fund, 5,279,097 shares, cost $107,260; Fund C, 4,675,949 shares, cost $120,604......................... $690,009 $365,907 $ -- $ -- $324,102 $ -- Intermediate Treasury Bond Fund, cost $33,548............................ 33,502 -- 33,502 -- -- -- Other marketable securities, cost $31,562. 58,580 -- -- 58,580 -- -- Guaranteed interest contracts, at cost...... 118,998 -- 118,998 -- -- -- Short-term securities, at cost, which approximates fair value................... 1,983 792 223 333 635 -- Loans to participants....................... 14,867 -- -- -- -- 14,867 Interest receivable......................... 433 2 428 1 2 -- Contributions receivable from employers, including amounts collected from employees................................. 7,335 2,383 2,413 958 1,581 -- -------- -------- -------- -------- -------- -------- 925,707 369,084 155,564 59,872 326,320 14,867 Payables arising from securities purchased.. (853) (170) (289) (79) (315) (-- ) -------- -------- -------- -------- -------- -------- Net assets available for plan benefits...... $924,854 $368,914 $155,275 $ 59,793 $326,005 $ 14,867 ======== ======== ======== ======== ======== ======== Number of units outstanding at end of year.. 7,763,499 20,233,118 7,207,663 12,489,551 Unit value.................................. $47.52 $7.67 $8.30 $26.10
See Notes to Financial Statements which are an integral part of these statements. 1 PFIZER SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1992 (thousands of dollars except unit values)
Company Common Assets Total Stock Fund Fund A Fund B Fund C ------ -------- ---------- -------- -------- -------- Investments, at fair value: Pfizer Inc. common stock: Company Common Stock Fund, 5,499,266 shares, cost $100,290; Fund C, 4,736,896 shares, cost $109,373..... $747,240 $401,446 $ -- $ -- $345,794 Intermediate Treasury Bond Fund, cost $10,000.................................. 9,987 -- 9,987 -- -- Other marketable securities, cost $28,390....... 52,681 -- -- 52,681 -- Guaranteed interest contracts, at cost............ 137,890 -- 137,890 -- -- Short-term securities, at cost, which approximates fair value......................... 8,701 470 7,635 471 125 Dividends and interest receivable................. 1,099 2 1,095 1 1 Contributions receivable from employers, including amounts collected from employees...... 6,829 2,290 2,145 755 1,639 -------- -------- -------- -------- -------- 964,427 404,208 158,752 53,908 347,559 Other payables.................................... (15) (-- ) (-- ) (15) (-- ) -------- -------- -------- -------- -------- Net assets available for plan benefits............ $964,412 $404,208 $158,752 $ 53,893 $347,559 ======== ======== ======== ======== ======== Number of units outstanding at end of year........ 8,416,371 22,809,258 7,221,492 13,217,564 Unit value ....................................... $48.03 $6.96 $7.46 $26.30
See Notes to Financial Statements which are an integral part of these statements. 2 PFIZER SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS For The Year Ended December 31, 1993 (thousands of dollars)
Company Common Loan Total Stock Fund Fund A Fund B Fund C Fund -------- ---------- -------- -------- -------- -------- Net investment income Cash dividends: Pfizer Inc. common stock................ $ 16,712 $ 8,852 $ -- $ -- $ 7,860 $ -- Other marketable securities............. 1,508 -- -- 1,508 -- -- Interest.................................. 12,946 50 12,622 17 47 210 -------- -------- -------- -------- -------- -------- 31,166 8,902 12,622 1,525 7,907 210 Investment management fees-- Note 4......... (41) -- (3) (38) -- -- -------- -------- -------- -------- -------- -------- 31,125 8,902 12,619 1,487 7,907 210 -------- -------- -------- -------- -------- -------- Realized gains on investments -- Note 5 Pfizer Inc. common stock.................. 39,136 22,278 -- -- 16,858 -- Other securities ........................ 945 -- 13 932 -- -- -------- -------- -------- -------- -------- -------- 40,081 22,278 13 932 16,858 -- -------- -------- -------- -------- -------- -------- Unrealized appreciation (depreciation) of investments-- Note 6...................... (72,738) (42,509) (33) 2,727 (32,923) -- -------- -------- -------- -------- -------- -------- (1,532) (11,329) 12,599 5,146 (8,158) 210 -------- -------- -------- -------- -------- -------- Contributions -- Note 7: Employees................................. 57,267 -- 14,226 8,099 34,942 -- Employers................................. 27,580 27,580 -- -- -- -- Withdrawals-- Note 8........................ (122,873) (48,734) (24,752) (7,074) (42,313) -- Transfers between funds-- net............... -- (2,811) (3,057) (1,136) (7,653) 14,657 Transfers at fair market value-- net........ -- -- (2,493) 865 1,628 -- -------- -------- -------- -------- -------- -------- (38,026) (23,965) (16,076) 754 (13,396) 14,657 -------- -------- -------- -------- -------- -------- Net increase (decrease)..................... (39,558) (35,294) (3,477) 5,900 (21,554) 14,867 Net assets available for plan benefits: Beginning of year......................... 964,412 404,208 158,752 53,893 347,559 -- -------- -------- -------- -------- -------- -------- End of year............................... $924,854 $368,914 $155,275 $ 59,793 $326,005 $ 14,867 ======== ======== ======== ======== ======== ========
See Notes to Financial Statements which are an integral part of these statements. 3 PFIZER SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS For The Year Ended December 31, 1992 (thousands of dollars)
Company Common Total Stock Fund Fund A Fund B Fund C --------- ---------- -------- -------- -------- Net investment income Cash dividends: Pfizer Inc. common stock .................... $ 15,229 $ 8,271 $ -- $ -- $ 6,958 Other marketable securities .................. 1,509 -- -- 1,509 -- Interest ...................................... 13,189 68 13,024 16 81 --------- -------- -------- -------- -------- 29,927 8,339 13,024 1,525 7,039 Investment management fees-- Note 4 .............. (43) -- -- (43) -- --------- -------- -------- -------- -------- 29,884 8,339 13,024 1,482 7,039 --------- -------- -------- -------- -------- Realized gains on investments -- Note 5 Pfizer Inc. common stock ...................... 27,445 16,453 -- -- 10,992 Other securities .............................. 748 -- -- 748 -- --------- -------- -------- -------- -------- 28,193 16,453 -- 748 10,992 --------- -------- -------- -------- -------- Unrealized appreciation (depreciation) of investments-- Note 6............................ (129,989) (73,903) (13) 1,551 (57,624) --------- -------- -------- -------- -------- (71,912) (49,111) 13,011 3,781 (39,593) --------- -------- -------- -------- -------- Contributions -- Note 7: Employees ...................................... 55,785 -- 15,737 6,443 33,605 Employers ...................................... 28,249 28,249 -- -- -- Withdrawals-- Note 8.............................. (124,821) (51,713) (26,498) (6,136) (40,474) Transfers at fair market value ................... -- -- (5,137) (1,249) 6,386 --------- -------- -------- -------- -------- (40,787) (23,464) (15,898) (942) (483) --------- -------- -------- -------- -------- Net increase (decrease) .......................... (112,699) (72,575) (2,887) 2,839 (40,076) Net assets available for plan benefits: Beginning of year............................... 1,077,111 476,783 161,639 51,054 387,635 --------- -------- -------- -------- -------- End of year..................................... $ 964,412 $404,208 $158,752 $ 53,893 $347,559 ========= ======== ======== ======== ========
See Notes to Financial Statements which are an integral part of these statements. 4 PFIZER SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1993 and 1992 Note 1 -- Summary Plan Description General -- The Pfizer Savings and Investment Plan (the "Plan") was originally adopted by Pfizer Inc. (the "Company") in 1965 as the Pfizer Savings Plan and has been amended from time to time since that date. Participation in the Plan is open to employees of the Company and any corporation which, with the consent of the Company, adopts the Plan ("Associate Companies"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974. An employee who first became a member of the Plan on or after March 1, 1991 is entitled to withdraw in cash at any time an amount equal to all or any part of his account attributable to Company matched contributions only if such contributions have been held under the Plan for at least two years from the date of contribution, or at least five years have elapsed since the employee enrolled in the Plan, or if the employee would be entitled to make a hardship withdrawal of such Company matched contributions under the hardship withdrawal provisions of the Plan. Effective December 31, 1992, all new contributions, in excess of withdrawals and transfers, directed to Fund A of the Plan will be invested in an intermediate U. S. Treasury bond fund. In addition, as the guaranteed interest contracts in Fund A mature, the contracts' proceeds will be invested in an intermediate U. S. Treasury bond fund. Contributions -- Each participant may make contributions on an after-tax basis or on a before-tax basis (that is, choose to reduce his or her compensation and have the Company contribute on his or her behalf), or may contribute on a basis combining the two. Before-tax contributions are subject to certain restrictions for employees who are considered highly compensated under the Internal Revenue Code of 1986, as amended. Contributions of up to 2% of compensation are matched 100% by the Company and the next 4% is matched 50%. Employee contributions in excess of 6% are not matched. Investment options -- Each participant in the Plan elects to have his or her contribution invested in any one or any combination of three investment funds. These funds are described as follows: Fund A -- Guaranteed interest contracts with one or more insurance companies and an intermediate U.S. Treasury bond fund (see General above for a description of Fund A investments effective December 31, 1992). Fund B -- An index fund of corporate common stocks. Fund C -- Common stock of the Company. At December 31, 1993 and 1992, respectively, there were 14,197 and 15,141 employees participating in the Plan, some of whom had investments in more than one employee investment fund. On the basis of allocations by the employees of their contributions at December 31, 1993 and 1992, respectively, Fund A had 6,768 and 7,514 participating employees; Fund B, 4,261 and 3,757 and Fund C, 11,274 and 11,925. All Company matched contributions are invested by the Trustee in a fourth fund designated the "Company Common Stock Fund," which consists solely of common stock of the Company. The Trust Agreement provides that any portion of any of the funds may, pending its permanent investment or distribution, be invested in short-term investments. Vesting -- Members are immediately vested in the full value of their accounts (i.e., participants' and employers' contributions) in Funds A, B and C and the Company Common Stock Fund. Withdrawals -- A participant in the Plan may make full or partial withdrawal of funds subject to the provisions of the Plan. Loans -- Effective July 1, 1993, the Plan participants were permitted to borrow against their vested balance. The minimum amount a participant may borrow is $1,000 and the maximum amount is the lesser of 50% of the 5 PFIZER SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS--(Continued) December 31, 1993 and 1992 vested account balance reduced by any current outstanding loan balance or $50,000 reduced by the highest outstanding loan balance in the preceding 12 months. Under the terms of the Plan, general loans must be repaid within five years, unless the funds are used to purchase a primary residence. Primary residence loans must be repaid over 10 or 15 years. The interest rate on all loans is based on the prime rate plus 1%. Interest paid by the participant is credited to the participant's account. Termination -- The Company expects to continue the Plan indefinitely, but necessarily reserves the right to amend, suspend or discontinue it in whole or in part at any time by action of the Company's Board of Directors. Upon termination of the Plan, each member affected thereby shall receive the full value of his or her share in Funds A, B and C and his or her share in the Company Common Stock Fund as though he or she had retired as of the date of such termination. No part of the assets in the investment funds established pursuant to the Plan will at any time revert to the Company. Note 2 -- Summary of Significant Accounting Policies Investment valuation -- The investment in the index fund of corporate common stocks represents the estimated fair value of the number of units of participation held by the Plan in that fund. Pfizer Inc. common stock is valued at the average of the high and low market price on the last business day of the year. The investment in the intermediate U.S. Treasury bond fund represents the estimated fair value of the bonds held by the Plan in that fund. Investments in The Bank of New York Collective Short Term Investment Fund and guaranteed interest contracts are recorded at cost plus reinvested interest. Other short-term investments and time deposits are recorded at cost, which approximates fair value. The policy of the Plan in general is to hold short-term investments and time deposits until maturity. Security transactions -- Purchases and sales of securities are reflected on a trade-date basis. Realized gains and losses on sales of securities are computed using an actual basis when the entire position in a security is sold, or an average basis when less than the entire position in a security is sold. Unrealized appreciation (depreciation) -- Amounts shown as unrealized appreciation (depreciation) reflect changes between cost and fair value from the beginning of the year or date of purchase, whichever is later, to the end of the year. Revenue recognition -- Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned. Reclassification -- Certain amounts in the 1992 Financial Statements have been reclassified to conform to the 1993 presentation. Note 3 -- Income Taxes No provision has been made for Federal income tax in reliance upon a determination letter issued by the Internal Revenue Service, which states that the Plan meets the requirements of Section 401(a) of the Internal Revenue Code and that the trust established thereunder is entitled to exemption under the provisions of Section 501(a). All contributions made to the Plan by the Company, including before-tax contributions made on the employee's behalf by the Company and the appreciation on all funds in the employee's account are not taxable to the employee under Federal income tax law while these amounts remain in the Plan. Note 4 -- Administrative Costs Except for certain member transfer costs and the investment management fees (Fund A and Fund B), all costs and expenses of administering the Plan were borne by the Company. 6 PFIZER SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS--(Continued) December 31, 1993 and 1992 Note 5 -- Realized Gains on Investments The $39,136,000 realized gains on Pfizer Inc. common stock for 1993 represents the difference between the $57,634,000 fair value and $18,498,000 cost (on an average basis) of shares disposed and includes $11,161,000 related to shares sold and shares distributed in kind to members who withdrew from the Plan on retirement or termination. In addition, the realized gains include $27,975,000 related to the transfer of Plan assets of former Pfizer Inc. participants to the Minerals Technologies Inc. Savings and Investment Plan. The $27,445,000 realized gains on Pfizer Inc. common stock for 1992 represents the difference between the $36,919,000 fair value and the $9,474,000 cost (on an average basis) of shares disposed and includes $14,775,000 related to shares sold and shares distributed in kind to members who withdrew from the Plan. In addition, the realized gains include $8,879,000 related to the transfer of Plan assets of former Pfizer Inc. participants to the Sorin Biomedical Inc. Savings and Investment Plan and the Deknatel Savings and Investment Plan and $3,791,000 related to the sale of Pfizer Inc. common stock to the Company. The $945,000 realized gains on other securities for 1993 represents the excess of the aggregate actual proceeds of $8,722,000 over the $7,777,000 aggregate cost (actual or average) of securities sold. The $748,000 realized gains on other securities for 1992 represents the excess of the aggregate actual proceeds of $1,239,000 over the $491,000 aggregate cost (actual or average) of securities sold. Note 6 -- Unrealized Appreciation (Depreciation) of Investments The change in the amount of unrealized appreciation (depreciation) was as follows: Balance --------------------------------------- December 31, December 31, Change 1993 1992 During 1993 ------------ ------------ ----------- (thousands of dollars) Company Common Stock Fund .... $ 258,647 $ 301,156 $ (42,509) Fund A ....................... (46) (13) (33) Fund B ....................... 27,018 24,291 2,727 Fund C ....................... 203,498 236,421 (32,923) --------- --------- --------- $ 489,117 $ 561,855 $ (72,738) ========= ========= ========= Balance --------------------------------------- December 31, December 31, Change 1992 1991 During 1992 ------------ ------------ ----------- (thousands of dollars) Company Common Stock Fund .... $ 301,156 $ 375,059 $ (73,903) Fund A ....................... (13) -- (13) Fund B ....................... 24,291 22,740 1,551 Fund C ....................... 236,421 294,045 (57,624) --------- --------- --------- $ 561,855 $ 691,844 $(129,989) ========= ========= ========= 7 PFIZER SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS--(Continued) December 31, 1993 and 1992 Note 7--Contributions The participating employees and their employers contributed the following amounts to the Plan: 1993 ------------------------------------------- Participating Participating Employees Employers Total ------------- ------------- --------- (thousands of dollars) Pfizer Inc ............. $ 43,967 $ 21,759 $ 65,726 Associate Companies .... 13,300 5,821 19,121 -------- -------- -------- $ 57,267 $ 27,580 $ 84,847 ======== ======== ======== 1992 ------------------------------------------- Participating Participating Employees Employers Total ------------- ------------- --------- (thousands of dollars) Pfizer Inc ........... $42,639 $21,557 $64,196 Associate Companies .. 13,146 6,692 19,838 ------- ------- ------- $55,785 $28,249 $84,034 ======= ======= ======= Note 8--Withdrawals In 1993, the proportionate interest in the assets of the Plan, amounting to $53,140,087 of former employees of Pfizer Inc. Specialty Minerals Group were transferred to the Minerals Technologies Inc. Savings and Investment Plan. Assets transferred consisted of cash, guaranteed interest contracts and shares of Pfizer Inc. common stock. During 1992, the proportionate interest in the assets of the Plan, amounting to $17,766,000, of former employees of Pfizer Inc.'s divested Shiley, Inc. and Deknatel businesses were transferred to the Sorin Biomedical Inc. Savings and Investment Plan and the Deknatel Savings and Investment Plan. Assets transferred consisted of cash and shares of Pfizer Inc. common stock. The net assets available for plan benefits as of December 31, 1993 and 1992 include the following benefits payable to participants who had requested withdrawals as of December 31, but which were not distributed until the subsequent year:
1993 1992 -------- ------- (thousands of dollars) Company Common Stock Fund........................... $ 7,796 $2,145 Fund A.............................................. 3,783 1,734 Fund B.............................................. 1,027 278 Fund C.............................................. 7,363 1,371 -------- ------- $19,969 $5,528 ======== =======
Note 9--Reconciliation with Form 5500 For financial statement purposes, participant withdrawals and distributions are recorded when paid rather than when processed and approved for payment. For the purposes of Form 5500, such withdrawals and distributions are recorded when processed and approved for payment; therefore, benefits payable to participants who have requested withdrawals as of December 31, 1993 and 1992 of $19,969,000 and $5,528,000, respectively, have been included in benefit expense within Form 5500 for those years. 8 PFIZER SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS--(Continued) December 31, 1993 and 1992 Note 10--Subsequent Event The market value of Pfizer Inc. Common Stock declined subsequent to December 31, 1993, resulting in an unrealized depreciation for the period from January 1, 1994 through March 14,1994 of approximately $63,679,000 for the Company Common Stock Fund and approximately $56,404,000 for Fund C, based on the number of shares in these funds as of December 31, 1993. 9 SCHEDULE 1 PFIZER SAVINGS AND INVESTMENT PLAN INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS December 31, 1993 (thousands of dollars)
INVESTMENTS: FUND A: Guaranteed Interest Interest Maturity Contracts Rate Date Cost - --------------------------------------------------------------- -------- -------- -------- Continental Assurance Co. Group Annuity Contract #12682 ....... 8.46% 6/3/96 $ 23,299 Metropolitan Life Group Annuity Contract #1612-3 .............. 9.50% 3/31/95 39,997 New York Life Insurance Group Annuity Contract #05426.......... 10.00% 5/2/94 44,061 Provident National Assurance Co. Group Annuity Contract #027-65041 ........................................ 8.43% 6/3/96 11,641 -------- Total Guaranteed Interest Contracts ........................... $118,998 ========
Fair Fixed Income Investments Cost Value - --------------------------------------------------------------- -------- -------- Northern Trust Intermediate Treasury Bond Fund ............... $ 33,548 $ 33,502 ======== ========
FUND B: Number of Fair Common Stock Index Fund Units Cost Value - -------------------------------------------------------------------- --------- -------- -------- Northern Trust Index Fund .......................................... 1,539,163 $ 31,562 $ 58,580 ========= ======== ========
SHORT-TERM SECURITIES: Interest Maturity Number Fair Name of Issuer Rate Date of Units Cost Value - ---------------------------------------------------- -------- -------- -------- ------ ----- Company Common Stock Fund: The Bank of New York Collective Short Term Investment Fund .......... Various Various 791,840 $ 792 $ 792 FUND A: The Bank of New York Collective Short Term Investment Fund .......... Various Various 222,635 223 223 FUND B: The Bank of New York Collective Short Term Investment Fund........... Various Various 332,959 333 333 FUND C: The Bank of New York Collective Short Term Investment Fund .......... Various Various 634,507 635 635 ------ ------ Total Short-Term Securities ................ $1,983 $1,983 ====== ======
10 SCHEDULE 2 PFIZER SAVINGS AND INVESTMENT PLAN SERIES OF TRANSACTIONS INVOLVING AN AMOUNT IN EXCESS OF 5% OF PLAN ASSETS Year Ended December 31, 1993 (thousands of dollars) FUND C AND COMPANY COMMON STOCK FUND:
Number Number of of Securities Purchased Transactions Shares Cost -------------------- ------------ ------- ------- Pfizer Inc. common stock............................................ 27 577,115 $36,699 == ======= =======
Fair Value of Number of Number of Disposed Realized Securities Disposed* Transactions Shares Cost Shares Gains -------------------- ------------ --------- ------- -------- -------- Pfizer Inc. common stock............................ 201 858,231 $18,498 $57,634 $39,136 === ======= ======= ======= ======= - -------------- * Dispositions represent sales of stock, shares distributed in kind to members who withdrew from the Plan and shares which were transferred to the Minerals Technologies Inc. Savings and Investment Plan.
11 INDEPENDENT AUDITORS' REPORT To the Savings and Investment Plan Committee Pfizer Savings and Investment Plan: We have audited the accompanying statement of net assets available for plan benefits of the Pfizer Savings and Investment Plan as of December 31, 1993 and 1992, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Pfizer Savings and Investment Plan at December 31, 1993 and 1992, and its changes in net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of (1) investments in securities of unaffiliated issuers and (2) series of transactions involving an amount in excess of 5% of plan assets, as of or for the year ended December 31, 1993, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. KPMG Peat Marwick New York, New York March 24, 1994 12 SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Savings and Investment Plan Committee have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. Pfizer Savings and Investment Plan By: /s/ William E. Harvey ----------------------- William E. Harvey Vice President; Treasurer Chair, Savings and Investment Plan Committee Date: March 24, 1994 13 Exhibit 23 CONSENT OF INDEPENDENT AUDITORS To the Savings and Investment Plan Committee Pfizer Savings and Investment Plan: We consent to incorporation by reference in the Registration Statement on Form S-8 dated January 24, 1991 (File No. 33-38708) of our report dated March 24, 1994, relating to the statement of net assets available for plan benefits of the Pfizer Savings and Investment Plan as of December 31, 1993 and 1992, and the related statements of changes in net assets available for plan benefits for the years then ended, which report appears in the December 31, 1993 annual report on Form 11-K of the Pfizer Savings and Investment Plan. KPMG Peat Marwick New York, New York March 24, 1994 14 EX-13.(C) 6 FORM 11-K (PUERTO RICO) ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- FORM 11-K FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) /X/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 934 (FEE REQUIRED) For the fiscal year ended December 31, 1993 OR / / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ....... to ....... Commission file number 1-3619 A. Full title of the Plan and the address of the Plan, if different from that of the issuer named below: PFIZER SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES RESIDENT IN PUERTO RICO B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive offices: PFIZER INC. 235 East 42nd Street New York, New York 10017 ================================================================================ PFIZER SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES RESIDENT IN PUERTO RICO STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1993
Company Common Total Stock Fund Fund A Fund B Fund C ---------- ---------- ---------- ---------- ---------- ASSETS ------ Investments, at fair value: Pfizer Inc. common stock: Company Common Stock Fund, 32,077 shares, cost $1,671,787; Fund C, 27,856 shares; cost $1,675,218 .......................... $4,135,377 $2,213,342 $ -- $ -- $1,922,035 Other marketable securities, cost $1,165,593 1,232,599 -- 999,584 233,015 -- ---------- ---------- ---------- ---------- ---------- Total investments .................... 5,367,976 2,213,342 999,584 233,015 1,922,035 Interest receivable .......................... 15,808 104 15,609 -- 95 Contributions receivable: Employees .................................. 217,493 -- 66,693 12,306 138,494 Employers .................................. 119,914 119,914 -- -- -- Cash and cash equivalents .................... 88,399 46 88,331 -- 22 ---------- ---------- ---------- ---------- ---------- Net assets available for plan benefits including benefits payable to participants of $225,066 of which $90,637 corresponds to Company Common Stock Fund, $50,967 to Fund A, $13,275 to Fund B and $70,187 to Fund C ..... $5,809,590 $2,333,406 $1,170,217 $ 245,321 $2,060,646 ========== ========== ========== ========== ========== Numbers of units outstanding at end of year .. 1,106,225 901,809 171,281 1,011,238 Unit value ................................... $2.11 $1.30 $1.43 $2.04
See Notes to Financial Statements which are an integral part of these statements. 1 PFIZER SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES RESIDENT IN PUERTO RICO STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1992
Company Common Total Stock Fund Fund A Fund B Fund C ---------- ---------- ---------- ---------- ---------- ASSETS ------ Investments, at fair value: Pfizer Inc. common stock: Company Common Stock Fund, 25,648 shares, cost $1,262,812; Fund A, 13 shares, cost $958; Fund B, 14 shares, cost $1,032;Fund C, 19,961 shares; cost $1,171,060 ...................... $3,307,958 $1,859,510 $ 943 $ 1,015 $1,446,490 Other marketable securities, cost $928,557 ............ 982,020 -- 785,777 196,243 -- ---------- ---------- ---------- ---------- ---------- Total investments ............................... 4,289,978 1,859,510 786,720 197,258 1,446,490 Interest receivable ..................................... 13,221 -- 13,213 8 -- Contributions receivable: Employees ............................................. 178,985 -- 53,022 7,548 118,415 Employers ............................................. 101,268 101,268 -- -- -- Cash and cash equivalents ............................... 24,021 235 21,582 2,046 158 ---------- ---------- ---------- ---------- ---------- Net assets available for plan benefits including benefits payable to participants of $149,300 of which $50,801 corresponds to Company Common Stock Fund, $35,609 to Fund A, $5,650 to Fund B and $57,240 to Fund C ................. $4,607,473 $1,961,013 $ 874,537 $ 206,860 $1,565,063 ========== ========== ========== ========== ========== Numbers of units outstanding at end of year ............. 909,916 715,675 156,264 755,337 Unit value .............................................. $2.16 $1.22 $1.32 $2.07
See Notes to Financial Statements which are an integral part of these statements. 2 PFIZER SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES RESIDENT IN PUERTO RICO STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS For The Year Ended December 31, 1993
Company Common Total Stock Fund Fund A Fund B Fund C ----------- ----------- ----------- ----------- ----------- Net investment income: Cash dividends: Pfizer Inc. common stock ............ $ 89,147 $ 48,343 $ -- $ -- $ 40,804 Interest .............................. 67,033 1,057 59,201 5,533 1,242 ----------- ----------- ----------- ----------- ----------- 156,180 49,400 59,201 5,533 42,046 Investment management fees (note 4) ..... (2,050) -- -- (2,050) -- Other ................................... (5,584) (2,679) -- (2,905) -- ----------- ----------- ----------- ----------- ----------- 148,546 46,721 59,201 578 42,046 ----------- ----------- ----------- ----------- ----------- Realized gains on investments (note 5): Pfizer Inc. common stock .............. 1,300 -- -- -- 1,300 Other marketable securities ............. 2,746 -- 269 2,477 -- ----------- ----------- ----------- ----------- ----------- 4,046 -- 269 2,477 1,300 ----------- ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) of investments (note 6) ................. (70,182) (55,143) (1,579) 15,152 (28,612) ----------- ----------- ----------- ----------- ----------- Contributions (note 7): Employees ............................. 1,783,139 -- 519,176 104,384 1,159,579 Employers ............................. 995,301 995,301 -- -- -- Withdrawals ............................. (1,658,733) (595,472) (375,412) (73,630) (614,219) Transfers at market value ............... -- (19,014) 94,025 (10,500) (64,511) ----------- ----------- ----------- ----------- ----------- 1,119,707 380,815 237,789 20,254 480,849 ----------- ----------- ----------- ----------- ----------- Net increase ............................ 1,202,117 372,393 295,680 38,461 495,583 Net assets available for plan benefits: Beginning of year ..................... 4,607,473 1,961,013 874,537 206,860 1,565,063 ----------- ----------- ----------- ----------- ----------- End of year ........................... $ 5,809,590 $ 2,333,406 $ 1,170,217 $ 245,321 $ 2,060,646 =========== =========== =========== =========== ===========
See Notes to Financial Statements which are an integral part of these statements. 3 PFIZER SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES RESIDENT IN PUERTO RICO STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS For The Year Ended December 31, 1992
Company Common Total Stock Fund Fund A Fund B Fund C ----------- ----------- ----------- ----------- ----------- Net investment income: Cash dividends: Pfizer Inc. common stock ................... $ 56,593 $ 33,709 $ -- $ -- $ 22,884 Interest ..................................... 54,642 1,182 51,640 290 1,530 ----------- ----------- ----------- ----------- ----------- 111,235 34,891 51,640 290 24,414 Investment management fees (note 4) ............ 2,104 -- -- 2,104 -- Other .......................................... 15,431 -- -- 15,431 -- ----------- ----------- ----------- ----------- ----------- 128,770 34,891 51,640 17,825 24,414 ----------- ----------- ----------- ----------- ----------- Realized gains (losses) on investments (note 5): Pfizer Inc. common stock ..................... (280) 63 -- (411) 68 Other marketable securities .................. 5,822 -- -- 5,822 -- ----------- ----------- ----------- ----------- ----------- 5,542 63 -- 5,411 68 ----------- ----------- ----------- ----------- ----------- Unrealized appreciation (depreciation) of investments (note 6) ......................... (401,186) (240,941) 730 (16,984) (143,991) ----------- ----------- ----------- ----------- ----------- Contributions (note 7): Employees .................................... 1,409,395 -- 409,365 80,475 919,555 Employers .................................... 808,269 808,269 -- -- -- Withdrawals .................................... (1,094,461) (407,534) (268,833) (53,327) (364,767) Transfers at market value ...................... -- (286) (71,130) (45,988) 117,404 ----------- ----------- ----------- ----------- ----------- 1,123,203 400,449 69,402 (18,840) 672,192 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) ........................ 856,329 194,462 121,772 (12,588) 552,683 Net assets available for plan benefits: Beginning of year ............................ 3,751,144 1,766,551 752,765 219,448 1,012,380 ----------- ----------- ----------- ----------- ----------- End of year .................................. $ 4,607,473 $ 1,961,013 $ 874,537 $ 206,860 $ 1,565,063 =========== =========== =========== =========== ===========
See Notes to Financial Statements which are an integral part of these statements. 4 PFIZER SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES RESIDENT IN PUERTO RICO NOTES TO FINANCIAL STATEMENTS December 31, 1993 and 1992 (1) Summary Plan Description General -- The Pfizer Savings and Investment Plan for Employees Resident in Puerto Rico (the "Plan") is a contributory defined contribution savings plan which was adopted on February 1, 1990. Participation in the Plan is open to employees of Pfizer Pharmaceuticals, Inc. and Pfizer Corporation (Puerto Rico Branch) (individually and collectively, the "Companies"). Employees of Pfizer International Bank (the Bank) participated in the Plan until the Bank closed operations in Puerto Rico on June 30, 1992. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974. Contributions -- Each participant may make contributions on an after-tax basis or on a before-tax basis (that is, choose to reduce his or her compensation and have the Companies contribute on his or her behalf), or may contribute on a basis combining the two. Before-tax contributions are subject to certain restrictions for employees who are considered highly compensated under Section 165(e) of the Puerto Rico Income Tax Act of 1954, as amended. Contributions of up to 2% of compensation are matched 100% by the Companies and the next 4% is matched 50%. Employee contributions in excess of 6% are not matched. Investment Options -- Each participant in the Plan elects to have his or her contributions invested in any one or any combination of the three investment funds. These funds are described below: Fund A -- Fixed income Fund B -- An index fund of corporate common stocks Fund C -- Common stock of Pfizer Inc. (parent of the Companies) At December 31, 1993 and 1992, there were 811 and 720 employees, respectively, participating in the Plan, some of whom had investments in more than one employee investment fund. All matching contributions are invested by the Trustee in a fourth fund designated the "Company Common Stock Fund", which consists solely of common stock of Pfizer Inc. The Plan's trust agreement provides that any portion of any of the funds may, pending its permanent investment or distribution, be invested in short-term investments. Eligibility and Vesting -- An employee is eligible to participate in the Plan if he or she is a regular employee of the Companies and enrolls to make contributions. Any employee who was employed on February 1, 1990, by the Companies, and is eligible for participation, may become a member effective on the employee's next payroll date. Any employee hired after February 1, 1990, and who is eligible to participate, may become a member as of the January 1 following his or her employment. A member is immediately vested in the full value of his or her accounts (i.e., participant and employer contributions) in Funds A, B and C and the Company Common Stock Fund. Withdrawals -- A participant in the Plan may make full or partial withdrawals of funds subject to the provisions of the Plan. Termination -- The Companies expect to continue the Plan indefinitely, but necessarily reserve the right to amend, suspend or discontinue it in whole or in part, at any time, by action of the Companies' Boards of Directors. Upon termination of the Plan, each member affected thereby shall receive the full value of his or her share in Fund A, B and C and his or her share in the Company Common Stock Fund as though he or she had retired as of the date of such termination. No part of the assets in the investment fund established pursuant to the Plan will at any time revert to the Companies. (2) Summary of Significant Accounting Policies Cash equivalents -- Securities purchased under resale agreements with maturities of three months or less when purchased are considered to be cash equivalents. Investment valuation -- The investment in the index fund of corporate common stocks represents the estimated fair value of the number of units of participation held by the Plan in that fund. Pfizer Inc. common stock and marketable securities included in the fixed income fund are valued at the market price on the last business day of the year. 5 PFIZER SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES RESIDENT IN PUERTO RICO NOTES TO FINANCIAL STATEMENTS -- (Continued) December 31, 1993 and 1992 Security transactions -- Purchases and sales of securities are reflected on a trade-date basis. Realized gains and losses on sales of securities are computed using an actual basis when the entire position in a security is sold, or an average basis when less than the entire position in a security is sold. Unrealized appreciation (depreciation) of investments -- Amounts shown as unrealized appreciation (depreciation) reflect changes between the cost and fair value from the beginning of the year or the date of the purchase, whichever is later, to the end of the year. Revenue recognition -- Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned. Reclassifications -- Certain amounts in the 1992 financial statements have been reclassified to conform to the 1993 presentation. (3) Income Taxes On March 25, 1992, the Plan received a favorable determination from the Treasury Department of the Commonwealth of Puerto Rico that it is a nontaxable entity. This determination was effective as of January 1, 1990. (4) Administrative Costs In 1993 and 1992, all costs and expenses of administering the Plan were borne by the Companies. In addition, $2,104 of 1991 investment fees were reimbursed during 1992. Investment fees for 1993 were reimbursed by the Companies, except for certain investment fees (Fund B) amounting to $2,050. (5) Realized Gains (Losses) on Investments The $1,300 realized gains and $280 realized losses on Pfizer Inc. Common Stock for 1993 and 1992, respectively, and the $2,477 and $5,822 realized gains on Fund B for 1993 and 1992, respectively, represents the difference between the following market values and costs (on an average basis) of shares sold and shares distributed in kind to members who withdrew from the Plan: Pfizer Inc. Common Stock Fund B -------------------- -------------------- 1993 1992 1993 1992 --------- --------- --------- --------- Market values ................. $ 7,344 $ 18,860 $ 14,450 $ 35,890 Cost .......................... 6,044 19,140 11,973 30,068 -------- -------- -------- -------- Realized gain (loss) .......... $ 1,300 $ (280) $ 2,477 $ 5,822 ======== ======== ======== ======== The $269 realized gains on Fund A for 1993 represents the difference between the $90,000 market value and the $89,731 amortized cost of the bonds redeemed. (6) Unrealized Appreciation (Depreciation) of Investments The change in the amount of unrealized appreciation (depreciation) was as follows: Balance -------------------------------------------- December 31, December 31, Change 1993 1992 During 1993 ------------ ----------- ----------- Company Common Stock Fundzzz ...... $ 541,555 $ 596,698 $ (55,143) Fund A ............................ 22,601 24,180 (1,579) Fund B ............................ 44,405 29,253 15,152 Fund C ............................ 246,817 275,429 (28,612) --------- --------- --------- $ 855,378 $ 925,560 $ (70,182) ========= ========= ========= 6 PFIZER SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES RESIDENT IN PUERTO RICO NOTES TO FINANCIAL STATEMENTS -- (Continued) December 31, 1993 and 1992 Balance -------------------------------------------- December 31, December 31, Change 1992 1991 During 1992 ------------ ------------ ----------- Company Common Stock Fund .. $ 596,698 $ 837,639 $ (240,941) Fund A ..................... 24,180 23,450 730 Fund B ..................... 29,253 46,237 (16,984) Fund C ..................... 275,429 419,420 (143,991) ---------- ---------- ---------- $ 925,560 $1,326,746 $ (401,186) ========== ========== ========== (7) Contributions The participating employees and their employers contributed the following amounts to the Plan: 1993 -------------------------------------- Participating Participating Employees Employers Total ------------- ------------- ---------- Pfizer Pharmaceuticals, Inc. ............ $1,467,399 $ 820,065 $2,287,464 Pfizer Corporation (Puerto Rico Branch) . 315,740 175,236 490,976 ---------- ---------- ---------- $1,783,139 $ 995,301 $2,778,440 ========== ========== ========== 1992 -------------------------------------- Participating Participating Employees Employers Total ------------- ------------- ---------- Pfizer Pharmaceuticals, Inc. ............ $1,162,023 $ 658,440 $1,820,463 Pfizer Corporation (Puerto Rico Branch) . 236,984 142,832 379,816 Pfizer International Bank ............... 10,388 6,997 17,385 ---------- ---------- ---------- $1,409,395 $ 808,269 $2,217,664 ========== ========== ========== (8) Reconciliation with Form 5500 For financial statement purposes, participant withdrawals and distributions are recorded when paid rather than when processed and approved for payment. For the purposes of Form 5500, such withdrawals and distributions are recorded when processed and approved for payment; therefore, benefits payable to participants who have requested withdrawals as of December 31, 1993 and 1992 of $225,066 and $149,300, respectively, have been included in benefit expense within Form 5500 for those years. (9) Subsequent Event The market value of Pfizer Inc. Common Stock declined subsequent to December 31, 1993, resulting in an unrealized depreciation for the period from January 1, 1994 through March 14, 1994 of approximately $377,000 for the Company Common Stock Fund and approximately $327,000 for Fund C, based on the number of shares in these funds as of December 31, 1993. 7 SCHEDULE 1 PFIZER SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES RESIDENT IN PUERTO RICO INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS December 31, 1993
FUND A: Interest Fair U.S. Government Securities Rate Maturity Cost Value - ------------------------------------------------------ --------- ---------- ---------- ------------- U.S. Treasury Notes ................................ 6.875% 10-31-96 $ 50,594 $ 53,032 U.S. Treasury Notes ................................ 6.000% 11-15-94 50,141 50,984 U.S. Treasury Notes ................................ 8.500% 8-15-95 49,844 53,407 Federal Home Loan Bank Medium Term Note ............ 6.970% 11-20-97 75,000 79,559 Federal National Mortgage Association .............. 7.850% 9-10-98 25,969 27,516 Federal National Mortgage Association .............. 7.050% 10-10-96 25,812 26,539 Federal National Mortgage Association .............. 7.900% 4-10-02 44,944 48,403 Federal National Mortgage Association .............. 6.950% 9-10-02 44,788 47,123 Federal National Mortgage Association .............. 8.800% 7-15-97 49,406 56,219 Federal National Mortgage Association .............. 5.740% 2-12-98 71,050 71,015 ------------ ------------ Subtotal...................................... 487,548 513,797 ------------ ------------ Corporate Debentures - ------------------------------------------------------ World Bank Medium Term Note ........................ 9.190% 6-23-98 42,807 46,120 Tennessee Valley Authority Bond..................... 6.125% 7-15-03 76,640 74,813 Tennessee Valley Authority Bond..................... 7-15-03 87,554 69,300 Bell South Telephone Bond........................... 6.375% 6-15-04 40,000 40,575 Georgia Power First Mortgage Bond................... 6.625% 4-1-03 29,888 30,158 New Jersey Bell Telephone Bond ..................... 7.250% 6-1-02 9,882 10,890 Exxon Corporation Bond ............................. 7.875% 8-15-97 57,520 59,868 International Business Machines Bond ............... 7.250% 11-1-02 29,738 31,612 Shell Oil Company Bond ............................. 6.950% 12-15-98 50,406 52,850 General Electric Credit Corp. Bond ................. 7.460% 9-30-96 40,000 43,004 General Electric Credit Corp. Bond ................. 6.940% 11-22-96 25,000 26,597 ------------ ------------ Subtotal...................................... 489,435 485,787 ------------ ------------ Total of Fund A ............................ $976,983 $999,584 ============ ============
FUND B: Number of Common Stock Index Fund Units - ------------------------------------------------------ --------- Northern Trust Index Fund .......................... 6,116 $188,370 $232,775 Northern Trust Short-Term Investment Fund .................................. 240 240 240 ------------ ------------ Total of Fund B ............................ $188,610 $233,015 ============ ============
8 SCHEDULE 2 PFIZER SAVINGS AND INVESTMENT PLAN FOR EMPLOYEES RESIDENT IN PUERTO RICO SERIES OF TRANSACTIONS INVOLVING AN AMOUNT IN EXCESS OF 5% OF PLAN ASSETS December 31, 1993 FUNDS A, C AND COMPANY COMMON STOCK FUND: Number of Number of Securities Purchased Transactions Shares Cost - -------------------------------------- ------------ --------- ---- Pfizer Inc. common stock ............. 23 14,575 $929,121 ======== ======== ======== Number of Number of Fair Realized Securities Disposed* Transactions Shares Cost Value Gain - ----------------------------- ----------- --------- ---- ----- -------- Pfizer Inc. common stock ..... 6 278 $17,978 $19,278 $ 1,300 ======= ======= ======= ======= ======= - -------------- * Dispositions include sales of stock and shares distributed in kind to members who withdrew from The Plan. 9 INDEPENDENT AUDITORS' REPORT To the Administrative Committee Pfizer Savings and Investment Plan for Employees Resident in Puerto Rico: We have audited the accompanying statements of net assets available for plan benefits of the Pfizer Savings and Investment Plan for Employees Resident in Puerto Rico (the Plan) as of December 31, 1993 and 1992, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1993 and 1992, and its changes in net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of (1) investments in securities of unaffiliated issuers and (2) series of transactions involving an amount in excess of 5% of plan assets, as of or for the year ended December 31, 1993, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. KPMG Peat Marwick February 3, 1994, except as to note 9, which is as of March 14, 1994 Stamp No. 1187397 of the Puerto Rico Society of Certified Public Accountants was affixed to the record copy of this report. 10 SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Savings and Investment Plan Committee have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. Pfizer Savings and Investment Plan for Employees Resident in Puerto Rico By: /s/ Natale Ricciardi ------------------------ Natale Ricciardi Vice President, Pfizer Pharmaceuticals, Inc. Chair, Savings and Investment Plan Committee Date: March 24, 1994 11 Exhibit 23 CONSENT OF INDEPENDENT AUDITORS To the Administrative Committee Pfizer Savings and Investment Plan for Employees Resident in Puerto Rico: We consent to incorporation by reference in the Registration Statement on Form S-8 dated November 18, 1991 (File No. 33-44053) of our report dated February 3, 1994, except as to Note 9, which is as of March 14, 1994, relating to the statements of net assets available for plan benefits of the Pfizer Savings and Investment Plan for Employees Resident in Puerto Rico as of December 31, 1993 and 1992, and the related statements of changes in net assets available for plan benefits for the years then ended, which report appears in the December 31, 1993 annual report on Form 11-K of the Pfizer Savings and Investment Plan for Employees Resident in Puerto Rico. KPMG Peat Marwick San Juan, Puerto Rico March 24, 1994 12 EX-21 7 EXHIBIT 21 -- SUBSIDIARIES OF THE REGISTRANT Exhibit 21 Subsidiaries of the Registrant The following is a list of subsidiaries of the Company as of the date hereof, omitting certain subsidiaries which, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary. Percentage of Voting Where Securities Owned by Name Incorporated Immediate Parent ---- ------------ -------------------- (a) Subsidiaries of Pfizer Inc.: Radiologic Sciences, Inc. California 100 Shiley Incorporated California 100 Valleylab Inc. Colorado 100 Redmond Holdings Inc. Delaware 100 Howmedica Inc. Delaware 100 Pfizer Diagnostic Products Delaware 100 International Ltd. Pfizer Pharmaceuticals, Inc. Delaware 100 Site Realty, Inc. Delaware 100 Pfizer Pigments Inc. Delaware 100 Pfizer Genetics Inc. Delaware 100 Health Care Ventures, Inc. Delaware 100 Pfizer Medical Systems, Inc. Delaware 100 Pfizer Enterprises Inc. Delaware 100 Strato Medical Corporation Delaware 100 Infusaid, Inc. Massachusetts 100 American Medical Systems, Inc. Minnesota 100 Schneider (USA) Inc. Minnesota 100 Adforce Inc. New York 100 Quigley Company Inc. New York 100 Pfizer International Inc. New York 100 Howmedica G.m.b.H. Austria 100 Cadsand Medica N.V. Belgium 100 Laboratorios Pfizer Ltd. Brazil 100 176864 Canada Inc. Canada 100 Orsim, S.A. France 100 Pfizer Diagnostic Products S.A.R.L. France 100 Van Cadsand Beheer B.V. Netherlands 100 Pfizer Trading Corp. Taiwan 100 (b) Subsidiaries of Pfizer International Inc. (a subsidiary of Pfizer Inc.): Pfizer Overseas Inc. Delaware 100 Pfizer Products Corporation Delaware 100 Pfizer Corporation Austria Austria 100 G.m.b.H. Pfizer S.A. Belgium 100 Pfizer European Service Center N.V. Belgium 97.5(1) The Kodiak Company Ltd. Bermuda 100 Pfizer Holding Ltd. Canada 100 Roerig S.A. Chile 100 Pfizer A/S Denmark 100 Pfizer Oy Finland 100 - -------------- (1) 2.5% owned by Pfizer Research and Development Company N.V. December 31, 1993 1 Percentage of Voting Where Securities Owned by Name Incorporated Immediate Parent ---- ------------ -------------------- (b) Subsidiaries of Pfizer International Inc. (a subsidiary of Pfizer Inc.):--(Continued) Pfizer Biogal L.L.C. Hungary 71.35 Pfizer Sales Company Limited Ireland 100 Pfizer Chemical Corp. Ltd. Isle of Man 100 Compania Distribuidora Del Centro, S.A. de C.V. Mexico 100 Pfizer S.A. de C.V. Mexico 100 Laboratoires Pfizer S.A. Morocco 98 Pfizer Specialties Limited Nigeria 100 Pfizer Pharmaceuticals Panama 100 Production Corporation Pfizer S.G.P.S. Limitada Portugal 100 Bioquimica Industrial Espanola, Spain 100 S.A.--BINESA Pfizer S.A. Spain 100 Pfizer A.G. Switzerland 100 Pfizer Group Limited United Kingdom 100 (c) Subsidiaries of Pfizer Pharmaceuticals Production Corporation (a subsidiary of Pfizer International Inc.): Pfizer Research and Belgium 100(4) Development Company N.V. Kirchimie Ltee. Canada 100 Pfizer C. & G. Inc. Canada 86.8(1) Pfizer Pension Trustees Ireland 100 (Ireland) Limited Pfizer International Bank Europe Ireland 82(2) Pfizer Service Company Ireland Ireland 100 Roerig Farmaceutici Italiana S.r.l. Italy 100 Pfizer (N.Z.) Ltd. New Zealand 100 Pfizer Corporation Panama 100 Howmedica Faimon, S.A. Spain 100 (d) Subsidiaries of Pfizer Corporation (a subsidiary of Pfizer Pharmaceuticals Production Corporation): Pfizer Limitada Angola 100 Pficonprod Pty. Limited Australia 100(3) Pfizer Agricare Pty. Ltd. Australia 100 Pfizer Pty. Ltd. Australia 100 Pfizer S.A. Colombia 100 Pfizer S.A. Costa Rica 100 Pfizer C.A. Ecuador 100 Pfizer Egypt S.A.E. Egypt 85 Pfizer Limited Ghana 50 Pfizer Hellas, A.E. Greece 100 Pfizer Limited India 40 - -------------- (1) 13.2% owned by Kirchimie Ltee. (2) 18% owned by Pfizer Research and Development Co. (3) Includes 24.7% of the voting securities owned by subsidiaries of Howmedica Inc., a subsidiary of Pfizer Inc. (4) Includes 5% owned by Pfizer International Inc. 2 Percentage of Voting Where Securities Owned by Name Incorporated Immediate Parent ---- ------------ -------------------- (d) Subsidiaries of Pfizer Corporation (a subsidiary of Pfizer Pharmaceuticals Production Corporation): --(Continued) PT Pfizer Indonesia Indonesia 80(1) Pfizer Kabushiki Kaisha Japan 100 Pfizer Laboratories Limited Kenya 100 Pfizer (Malaysia) Sendirian Berhad Malaysia 100 Pfizer Limitada Mozambique 100 Pfizer (Namibia) (Proprietary) Limited Namibia 100 Pfizer Laboratories Limited New Zealand 100 Livestock Feeds PLC Nigeria 60 Pfizer Products PLC Nigeria 60 Pfizer A/S Norway 100 Pfizer Laboratories Limited Pakistan 76.3 Pfizer International Corporation S.A. Panama 100 Harmag Inc. Panama 100 Corporation Farmaceutica S.A.-- COFASA Peru 100 Pfizer Inc. Philippines 100 Pfizer Private Limited Singapore 100 Pfizer Laboratories South Africa 100 (Proprietary) Limited Pfizer (Proprietary) Limited South Africa 100 Pfizer Korea Limited South Korea 50 Pfizer Limited South Korea 100 Pfizer A.B. Sweden 100 Roerig A.B. Sweden 100 Pfizer Limited Taiwan 100 Pfizer Limited Tanzania 100 Pfizer Limited Thailand 100 Pfizer Ilaclari A.S. Turkey 100 Pfizer Limited Uganda 100 Laboratorios Pfizer de Venezuela, S.A. Venezuela 100 Pfizer Limited Zambia 100 (e) Miscellaneous Subsidiaries: Shiley International, Inc. California Shiley Incorporated 100% Schneider (USA) Pittsburgh, Inc. Delaware Schneider (USA) Inc. 100% Angiomedics Inc. Minnesota Schneider (USA) Inc. 100% Pfizer S.A.C.I. Argentina Pfizer International Corporation S.A. 100% Valleylab Australia Pty. Ltd. Australia Valleylab Inc. 100% Pfizer Med-Inform Beratungs Austria Pfizer Corporation Austria G.m.b.H. G.m.b.H. 100% Pfizer Hospital Products Belgium Pfizer Hospital Products (Belgium) N.V. (Netherlands) B.V. 100% Roerig S.A. Belgium Pfizer S.A. Belgium 100% Societe Industrielle et Technique, S.A. ("INTEC") Belgium Pfizer Products Corporation 100% Rogar/STB Inc. Canada Pfizer Canada Inc. 100% 3 - -------------- (1) Includes 11.77% of the voting securities owned by Heinrich Mack Nachf. Percentage of Voting Where Securities Owned by Name Incorporated Immediate Parent ---- ------------ -------------------- (e) Miscellaneous Subsidiaries: --(Continued) Pfizer Canada Inc. Canada Pfizer Holding Ltd. 100% Pfizer s.r.o. Czech Pfizer Products Corporation Republic 100% Laboratoire Beral, S.A. France Pfizer S.A. 100% C.A.L. Pfizer S.A. France Pfizer S.A. 100% Howmedica France S.A. France Pfizer S.A. 100% S.A. Benoist Girard & Cie France Pfizer S.A. 100% Pfizer S.A. France Pfizer Research and Development Company N.V. 100% Forster & Hug KG(1) Germany Pfizer G.m.b.H. 100% Heinrich Mack Nachf. (1) Germany Pfizer G.m.b.H. 100% Pfizer Holding Und Germany Pfizer Research and Verwaltungs G.m.b.H. Development Company N.V. 95%; Pfizer International Inc. 5% Pfizer G.m.b.H. Germany Pfizer Holding Und Verwaltungs G.m.b.H. 100% Taylor Kosmetik G.m.b.H. Germany Pfizer Holding Und Verwaltungs G.m.b.H. 100% Hilekes G.m.b.H. Germany Howmedica G.m.b.H. 100% Pfizer LLC Hungary Pfizer Products Corporation 100% Dumex limited India Pfizer Limited (India) 100% Duchem Laboratories Limited India Pfizer Limited (India) 100% Pfizer Italiana, S.p.A. Italy Pfizer Research and Development Company N.V. 100% SudFarma S.r.l. Italy Roerig Farmaceutici Italiana S.r.l. 90%; Pfizer Italiana S.p.A. 10% Pfizer Pharmaceuticals Inc. Japan Pfizer Research and Development Company N.V. 100% Schneider Japan K.K. Japan Pfizer Pharmaceuticals Inc. (Japan) 100% Pfizer Oral Care Inc. Japan Pfizer Pharmaceuticals Inc. (Japan) 100% Pfizer Shoji Co., Ltd. Japan Pfizer Pharmaceuticals Inc. (Japan) 100% Pfizer S.A. Morocco Pfizer S.A. 56%; Laboratoire Beral, S.A. 44% Pfizer B.V. Netherlands Pfizer Research and Development Company N.V. 100% Pfizer Hospital Products Netherlands Shiley International, Inc. (Netherlands) B.V. 100% Roerig B.V. Netherlands Pfizer B.V. 100% Cadsand Medica N.V. Netherlands Van Cadsand Beheer B.V. 100% Pfizer Pharmaceuticals Ltd. People's Pfizer Enterprises Inc. Republic of 67.1% China Laboratorios Pfizer S.A. Portugal Pfizer S.G.P.S. Limitada 100% Shiley Scandinavia A.B. Sweden Shiley International, Inc. 100% Schneider (Europe) A.G. Switzerland Pfizer Research and Development Company N.V. 100% AMS Medinvent S.A. Switzerland Nilo Holdings, S.A. 100% Nilo Holdings, S.A. Switzerland Schneider (Europe) A.G. 100% Feldene Limited United Pfizer Limited 100% Kingdom T.C.P. Limited United Unicliffe Limited 100% Kingdom Coty Limited United Pfizer Limited 100% Kingdom Pfizer Limited United Pfizer Group Limited 100% Kingdom Invicta Pharmaceuticals Ltd. United Pfizer Limited 100% Kingdom - -------------- (1) Partnership 4 Percentage of Voting Where Securities Owned by Name Incorporated Immediate Parent ---- ------------ -------------------- Unicliffe Limited United Pfizer Limited 100% Kingdom Pfizer Pension Trustees Ltd. United Pfizer Limited 100% Kingdom Richborough Pharmaceuticals Ltd. United Pfizer Limited 100% Charwell Pharmaceuticals Limited United Unicliffe Limited 100% Kingdom The Stoppers Limited United Charwell Pharmaceuticals Kingdom Limited 100% Biomedical Sensors Ltd. United Biomedical Sensors Kingdom (Holdings) Ltd. 100% Biomedical Sensors United Howmedica International (Holdings) Ltd. Kingdom Limited 100% Measurim Ltd. United Howmedica International Kingdom Limited 100% Howmedica International Limited United Pfizer Group Limited 100% Kingdom Shiley Ltd. United Howmedica International Kingdom Limited 100% Pfizer Hospital Products, Ltd. United Howmedica International Kingdom Limited 100% Pfizer Hospital Products Group United Pfizer Hospital Products Pension Trustees Ltd. Kingdom Ltd. (U.K.) 100% Pfizer Bioquimicos S.A. Venezuela Laboratorios Pfizer de Venezuela, S.A. 100% Pfizer S.A. Venezuela Laboratorios Pfizer de Venezuela, S.A. 100% (f) Subsidiaries of Howmedica Inc. (a subsidiary of Pfizer Inc.): Howmedica Investments Pty. Ltd. Australia 100 S.D. Investments Pty. Ltd. Australia 100 Pfizer Hospital Products Ltd. Canada 100 Howmedica Management and Delaware 100 Technical Services, Ltd. Howmedica G.m.b.H. Germany 100(1) Howmedica International, Inc. Panama 100 Howmedica Iberica S.A. Spain 100 Jaquet Orthopedie S.A. Switzerland 100 - -------------- (1) Includes 32.4% of the voting securities owned by Howmedica International, Inc. and 2.7% of the voting securities owned by Shiley International, Inc. 5 EX-23 8 EXHIBIT 23 EXHIBIT 23 REPORT AND CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Shareholders and Board of Directors of PFIZER INC.: Under date of February 24, 1994, we reported on the consolidated balance sheet of Pfizer Inc. and subsidiary companies as of December 31, 1993, 1992 and 1991 and the related consolidated statements of income, shareholders' equity and cash flows for the years then ended, as contained in the 1993 annual report to shareholders. These consolidated financial statements and our report thereon are incorporated by reference in this annual report on Form 10-K for the year 1993. The audits referred to in our report dated February 24, 1994 included the related financial statement schedules as of December 31, 1993, 1992 and 1991 and for the years then ended. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. We consent to the use of our reports included and incorporated herein by reference. We also consent to the incorporation by reference of our reports in the Prospectus dated December 27, 1972, as supplemented February 6, 1973, of Pfizer Inc., filed under the Securities Act of 1933 on Registration Statement Form S-16 dated October 27, 1972 (File No. 2-46157), as amended, in the Prospectus dated June 14, 1979, of Pfizer Inc., in the Registration Statement on Form S-16 dated April 26, 1979 (File No. 2-64610), as amended, in the Registration Statement on Form S-15 dated December 13, 1982 (File No. 2-80884), as amended, in the Registration Statement on Form S-8 dated October 27, 1983 (File No. 2-87473), as amended, in the Registration Statement on Form S-8 dated March 22, 1990 (File No. 33-34139), in the Registration Statement on Form S-8 dated January 24, 1991 (File No. 33-38708), in the Registration Statement on Form S-3 dated June 26, 1991 (File No. 33-41367), as amended, in the Registration Statement on Form S-8 dated November 18, 1991 (File No. 33-44053), in the Registration Statement on Form S-3 dated May 27, 1993 (File No. 33-49629) and in the Registration Statement on Form S-8 dated May 27, 1993 (File No. 33-49631). KPMG Peat Marwick New York, New York March 24, 1994 -----END PRIVACY-ENHANCED MESSAGE-----