SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
---- THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
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 1-3608
WARNER-LAMBERT SAVINGS AND STOCK PLAN
WARNER-LAMBERT COMPANY
(Name of issuer of securities held pursuant to the plan)
201 Tabor Road
Morris Plains, New Jersey 07950
(Address of issuer's principal executive offices)
WARNER-LAMBERT
SAVINGS AND STOCK PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND
DECEMBER 31, 199
WARNER-LAMBERT
SAVINGS AND STOCK PLAN
INDEX TO FINANCIAL STATEMENTS
Page(s)
-------
Report of Independent Accountants 2
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1999 3
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1998 4
Statement of Changes in Net Assets Available
for Benefits with Fund Information
for the year ended December 31, 1999 5
Statement of Changes in Net Assets Available
for Benefits with Fund Information
for the year ended December 31, 1998 6
Notes to Financial Statements 7 - 10
* Additional Information:
Schedule I - Schedule of Assets Held for Investment
Purposes at December 31, 1999 11
Signature 12
Exhibit I - Master Trust Statement of Net Assets
Available for Benefits with Fund
Information as of October 31, 1999
and 1998 13 - 14
Exhibit II - Master Trust Statement of Changes in
Net Assets Available for Benefits with
Fund Information for the years ended
October 31, 1999 and 1998 15 - 16
Exhibit III - Notes to the Master Trust Financial
Statements 17 - 18
Consent of Independent Accountants 19
Other schedules required by Section 2520.103-10 of the Department of
Labor Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because they are not applicable
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Warner-Lambert Savings and Stock Plan
In our opinion, the accompanying statements of net assets available for
benefits with fund information and the related statements of changes in net
assets available for benefits with fund information present fairly, in all
material respects, the net assets available for benefits of the Warner-
Lambert Savings and Stock Plan (the "Plan") at December 31, 1999 and 1998,
and the changes in net assets available for benefits for the years then
ended, in conformity with accounting principles generally accepted in the
United States. 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 of these
statements in accordance with auditing standards generally accepted in the
United States which 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, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental Schedule of
Assets Held for Investment Purposes is presented for purposes of additional
analysis and is not a required part of the basic financial statements but
is 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. This supplemental schedule is the
responsibility of the Plan's management. The Fund Information in the
statements of net assets available for benefits with fund information and
the statements of changes in net assets available for benefits with fund
information is presented for purposes of additional analysis rather than to
present the net assets available for benefits and changes in net assets
available for benefits of each fund. The Schedule of Assets Held for
Investment Purposes and the Fund Information 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.
June 6, 200
WARNER-LAMBERT
SAVINGS AND STOCK PLAN
STATEMENT OF NET ASSETS AVAILABLE
FOR BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1999
(Dollars in thousands)
Fund Information
--------------------------
W-L
Company Participant
Stock Directed
Fund Funds Total
--------- ----------- ----------
Assets:
Investment in Warner-
Lambert Master Trust,
at fair value $ 902,105 $1,206,147 $2,108,252
Participant loans - 15,590 15,590
--------- ---------- ----------
Net assets available
for benefits $ 902,105 $1,221,737 $2,123,842
========= ========== ==========
The accompanying notes are an integral part of the financial statements.
WARNER-LAMBERT
SAVINGS AND STOCK PLAN
STATEMENT OF NET ASSETS AVAILABLE
FOR BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1998
(Dollars in Thousands)
Fund Information
--------------------------
W-L
Company Participant
Stock Directed
Fund Funds Total
--------- ----------- ----------
Assets:
Investment in Warner-
Lambert Master Trust, $ 914,366 $ 1,081,740 $1,996,106
at fair value
Participant loans - 14,930 14,930
Receivables:
Participant contributions - 493 493
Employer contributions 25 - 25
--------- ----------- ----------
Net assets available
for benefits $ 914,391 $1,097,163 $2,011,554
========= ========== ==========
The accompanying notes are an integral part of the financial statements.
WARNER-LAMBERT SAVINGS AND STOCK PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1999
(Dollars in Thousands)
Fund Information
--------------------------
W-L
Company Participant
Stock Directed
Fund Funds Total
--------- ----------- ----------
Additions to net assets
attributable to:
Investment income from the
Warner-Lambert Master Trust $ 82,118 $ 142,571 $ 224,689
Investment income from
participant loans 54 1,181 1,235
Contributions:
Participant - 63,087 63,087
Company 25,564 (76) 25,488
Loan repayments 332 (332) -
--------- ---------- ----------
Total additions 108,068 206,431 314,499
--------- ---------- ----------
Deductions from net assets
attributable to:
Distributions to participants (81,110) (120,198) (201,308)
Loan issuances (311) 311 -
Administrative expenses (10) (893) (903)
Interfund transfers (38,923) 38,923 -
--------- ---------- ----------
Total deductions (120,354) (81,857) (202,211)
--------- ---------- ----------
Increase(decrease)in net
assets during the year (12,286) 124,574 112,288
Net assets available for benefits:
Beginning of period 914,391 1,097,163 2,011,554
End of period $ 902,105 $1,221,737 $2,123,842
========= ========== ==========
The accompanying notes are an integral part of the financial statements.
WARNER-LAMBERT SAVINGS AND STOCK PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
(Dollars in Thousands)
Fund Information
--------------------------
W-L
Company Participant
Stock Directed
Fund Funds Total
--------- ----------- ----------
Additions to net assets
attributable to:
Investment income from the
Warner-Lambert Master Trust $ 446,522 $ 332,394 $ 778,916
Investment income from
Participant Loans 50 1,066 1,116
Contributions:
Participant - 55,570 55,570
Company 18,484 115 18,599
Loan repayments 346 (346) -
--------- ---------- ----------
Total additions 465,402 388,799 854,201
--------- ---------- ----------
Deductions from net assets
attributable to:
Distributions to participants (61,861) (81,520) (143,381)
Loan issuances (439) 439 -
Administrative expenses (11) (739) (750)
Interfund transfers (36,743) 36,743 -
--------- ---------- ----------
Total deductions (99,054) (45,077) (144,131)
--------- ---------- ----------
Increase in net assets
during the year 366,348 343,722 710,070
Net assets available for benefits:
Beginning of period 548,043 753,441 1,301,484
--------- ---------- ----------
End of period $ 914,391 $1,097,163 $2,011,554
========= ========== ==========
The accompanying notes are an integral part of the financial statements.
WARNER-LAMBERT
SAVINGS AND STOCK PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The financial statements of the Warner-Lambert Savings and Stock Plan (the
"Plan") are prepared on the accrual basis of accounting.
Master Trust Arrangement
The assets of the Plan have been commingled with the assets of the Warner-
Lambert Savings and Stock Plan for Colleagues in Puerto Rico (collectively
referred to as the "Plans"), for investment and administrative purposes in the
Warner-Lambert Company Master Trust (the "Master Trust"). The Plans do not
own specific Master Trust assets but rather maintain an undivided beneficial
interest in such assets. Each Plan's interest in the Trust is credited or
charged for contributions, transfers and distributions. Net appreciation on
fair value of investments was allocated to the Plans based upon each Plan's
beneficial interest in the net assets of the Master Trust.
Expenses
All expenses incurred are borne by the Plan.
Risk and Uncertainties
Investment securities are exposed to various risks, such as interest rate,
market and credit. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that
changes in the risks in the near term would materially affect the amounts
reported in the Statement of Net Assets Available for Benefits and the
Statement of Changes in Net Assets Available for Benefits.
NOTE 2 - DESCRIPTION OF THE PLAN:
The Plan is a defined contribution profit-sharing savings plan covering
employees of Warner-Lambert Company (the "Company") and its domestic
affiliates and subsidiary companies who meet certain eligibility and
participation requirements. The following brief description of the Plan is
provided for general information purposes only. Participants should refer to
the Plan agreement for more complete information.
Contributions
Participants may elect to contribute into the Plan from a minimum of 1% up to
a maximum of 15% of their basic earnings each year. Participants have the
option of contributing on a before-tax basis and/or an after-tax basis. The
Company contributes for each participant an amount equal to 35% and 25% of
such participant's pre-tax and after-tax contributions, respectively, limited
to those participant contributions less than or equal to 6% of the
participant's basic earnings. Based upon the participation and vesting
requirements of the Plan, additional lump-sum matching contributions are
recorded each year of 25% to 65% of such participants' contributions, up to 6%
of base earnings, based upon growth in the Company's earnings-per-share versus
the prior year. Standard Company contributions are invested in the Warner-
Lambert Company Stock Fund.
Investment Options
Participants can elect to have their contributions invested in any of the
funds noted below, with the exception of the Warner-Lambert Company Stock
Fund. At age fifty-five, participants can transfer assets out of the Warner-
Lambert Company Stock Fund into other investment funds. Participants are able
to invest in the following twenty-four funds, which have been combined for
financial statement purposes based on their investment direction:
Warner-Lambert Company Stock Fund - This fund invests employer contributions
in Warner-Lambert Company common stock.
PARTICIPANT DIRECTED FUNDS:
Warner-Lambert Colleague Stock Fund - This fund invests in Warner-Lambert
common stock, to provide an additional opportunity to participate in the
performance of Warner-Lambert Company common stock.
S&P 500 Fund - This fund invests in substantially all common stocks that make
up the S&P 500 to match, as closely as possible, the performance of the S&P
500 Composite Stock Index.
Fixed Income Fund - This fund invests in marketable fixed income securities,
as well as a diversified mix of guaranteed investment contracts, bank
investment contracts, structured investment contracts, and separate account
contracts issued by high-quality companies, to provide stability of principal
value, minimal credit risk and current income.
Small-Cap Value Fund - This fund invests in stocks of small companies believed
to be undervalued at the time of purchase and have potential for capital
growth, to provide long-term capital growth.
International Stock Fund - This fund invests primarily in stocks of
established growth companies outside the U.S., predominantly in Europe, East
Asia, Australia and Canada, as well as other areas, to provide the
diversification of an international fund, as well as the opportunity for long-
term capital growth.
Equity Income Fund - This fund invests in common stocks of established
companies that pay above-average dividends, and have prospects of future
dividend increases, primarily to provide a high level of dividend income, and
secondarily, capital growth.
Value Fund - This fund invests in common stocks deemed to be undervalued or
out of favor in the marketplace, primarily to provide long-term capital growth
and, secondarily, income.
Mid-Cap Growth Fund - This fund invests in stocks of medium-sized companies
with attractive growth prospects and established operating histories, to
provide long-term capital growth.
European Stock Fund - This fund invests in stocks of emerging and established
European companies which seek to benefit from opportunities created by
economic integration in Western Europe and potential new markets in Eastern
Europe, to provide the diversification of an international fund as well as the
opportunity for long-term capital growth.
Small-Cap Stock Fund - This fund invests in stocks of small, growth-oriented,
or undervalued companies traded in the over-the-counter market, to provide
long-term capital growth using a combined growth and value approach.
Emerging Markets Stock Fund - This fund invests in stocks of companies in the
developing markets of Latin America, East Asia, Europe and Africa, to provide
a high level of long-term capital growth.
Capital Opportunity Fund - This fund invests in a concentrated portfolio of
stocks of 30 to 50 U.S. companies, with a flexible investment strategy that
allows for both growth and value of small, medium-sized, and large companies,
to provide a high level of long-term capital growth.
Health Sciences Fund - This fund invests primarily in the common stocks of
companies engaged in the research, development, production, or distribution of
health-related products and services, to provide long-term capital growth.
New America Growth Fund - This fund invests primarily in the common stocks of
U.S. companies in service industries, such as health care, financial services
and food services, to provide long-term capital growth.
New Horizons Fund - This fund invests in common stocks of small, rapidly
growing companies in a broad range of industries, early in the corporate life
cycle, to provide long-term capital growth.
Science & Technology Fund - This fund invests in common stocks of companies
that are expected to benefit from the development, advancement, and use of
science and technology, such as those in computer, electronics, biotechnology
and chemical industries, to provide long-term capital growth.
Balanced Fund - This fund invests in a balanced mix of approximately 60%
stocks and 40% bonds, to provide long-term growth of capital and current
income.
Spectrum Income Fund - This fund invests in a managed mix of T. Rowe Price
funds, including four U.S. bond funds, an international bond fund, and a money
market fund, to provide higher income from a managed mix of funds.
Spectrum Growth Fund - This fund invests in a managed mix of T. Rowe Price
funds, including five U.S. stock funds, an international stock fund and a
money market fund, to provide long-term growth of capital and income from a
managed mix of funds.
Personal Strategy Income Fund - This fund invests in a diversified mix of
approximately 40% stocks, 40% bonds and 20% money market securities, to
provide a high total return over time consistent with a primary emphasis on
income (bonds) and a secondary emphasis on capital appreciation(stocks).
Personal Strategy Growth Fund - This fund invests in a diversified mix of
approximately 80% stocks and 20% bonds and money market securities, to provide
a high total return over time consistent with a primary emphasis on capital
appreciation and a secondary emphasis on income.
New Income Fund - This fund invests in U.S. Treasury securities, corporate
bonds, and bank obligations with medium to long-term maturity dates, to
provide a high level of income over the long term consistent with preservation
of capital.
High Yield Fund - This fund invests primarily in longer-term, lower-quality
corporate ("junk") bonds that have an average maturity of approximately 10
years, primarily to provide a high level of income and, secondarily, capital
growth.
Changes in the participants' allocations relating to their contributions and
the allocation of past contributions and earnings can be requested at any
time. A participant may also suspend contributions or withdraw from the Plan
at any time, subject to certain restrictions and penalties.
Vesting
Generally, participating employees become fully vested in Company
contributions made on their behalf to the Plan after completing three years of
Plan membership or five years of service. Forfeitures reduce contributions
otherwise due from the Company.
Forfeitures for the plan years 1999 and 1998 were $867 and $301, respectively.
Participant Loans
Loans may not exceed the lesser of (1) fifty thousand dollars or (2) 50% of
the participant's before-tax balance. Each loan must be for a minimum of one
thousand dollars. All loans will be repaid with interest at a rate that is
equal to the prime rate effective at the close of business on the first
business day of the quarter in which the loan is taken. Such rate remains in
effect for the life of the loan. The term of the loan shall not exceed 48
months. A participant may take only one loan per year and only two loans will
be permitted to be outstanding at any time. Participants may borrow from both
the before-tax account balance and the vested account balance in the Warner-
Lambert Company Stock Fund. Participant loans are presented at cost, which
approximates fair value. For administrative purposes, a loan fund has been
created.
Benefit Payments
Upon retirement, total disability, or death, participants may elect to have
account balances paid as a lump sum payment or in annual installments, or they
can purchase an annuity contract. If employment is terminated for any other
reason, participants can elect to have a lump-sum payment of participant
account balances in the Warner-Lambert Company Stock Fund if vested, and all
other savings investment funds.
Plan Termination
In the event of termination of the Plan, or if there is a complete
discontinuance of contributions under the Plan, all rights of participants in
accumulated investments credited to them become fully vested. If the Plan is
terminated by resolution of the Warner-Lambert Company Board of Directors, the
balance in accumulated investments credited to each participant shall be
distributed to the participant.
NOTE 3 - TAX STATUS OF THE PLAN:
The Internal Revenue Service ("IRS") issued a favorable determination letter
to the Plan, dated September 20, 1995, indicating that the Plan documentation
as reviewed by the IRS satisfied the requirements of Section 401(a) of the
Internal Revenue Code. The Company believes that the Plan is designed and is
currently being operated in compliance with the applicable requirements of the
Internal Revenue Code. Accordingly, no provision has been made for federal
income taxes.
NOTE 4 - PLAN ADMINISTRATION:
The Retirement and Savings Plan Committee of the Warner-Lambert Company Board
of Directors (the "Committee") monitors and reports on the selection and
termination of trustees and investment managers and on the investment activity
and performance. The Committee also implements the overall asset allocation
guidelines as established by the Board of Directors and decides on benefit
appeals. The Investment Committee, established by the Warner-Lambert Company
Board of Directors, is responsible for the daily administration of the Plan,
including oversight of plan investments, plan trustees and investment
managers.
NOTE 5 - MASTER TRUST FINANCIAL INFORMATION:
At December 31, 1999 and 1998, the Plan has a 98.3% and 98.4% interest,
respectively, in the Master Trust. The financial statements for the Master
Trust are prepared on the cash basis. The financial statements for the years
ended October 31, 1999 and 1998 follow.
The Plan's financial statements have been adjusted for November and December
activity. All adjustments necessary to reflect the Plan's financial
statements on an accrual basis have been recorded.
NOTE 6 - SUBSEQUENT EVENTS:
Warner-Lambert, Pfizer Inc. (Pfizer) and a wholly-owned subsidiary of Pfizer
entered into a definitive merger agreement dated as of February 6, 2000.
Under the terms of the proposed transaction, which has been approved by the
Board of Directors and shareholders of both Warner-Lambert and Pfizer, each
share of Warner-Lambert common stock will be exchanged for 2.75 shares of
Pfizer common stock. This transaction is subject to customary conditions,
including qualifying as a tax-free reorganization and usual regulatory
approvals. The merger is expected to close in June of 2000.
Schedule I
Warner-Lambert
Savings and Stock Plan
Schedule of Assets
Held for Investment Purposes
at December 31, 1999
(Dollars in Thousands)
Current
Cost Value
-------- -----------
Investment in Warner-Lambert Master
Trust $843,089 $2,108,252
Participant loans - 15,590
(Interest rate 6.0%-10.0%) -------- ----------
(Maturity dates 1/1/2000-12/31/2004) $843,089 $2,123,842
======== ==========
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Warner-Lambert Investment Committee has duly caused this
annual report to be signed by the undersigned thereunto duly authorized.
WARNER-LAMBERT SAVINGS
AND STOCK PLAN
Date: June 7, 2000 By: /s/ Ernest J. Larini
--------------------------
Ernest J. Larini
Chairman
Warner-Lambert Investment
Committee
EXHIBIT I
1 of 2
WARNER-LAMBERT COMPANY
MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE
FOR BENEFITS WITH FUND INFORMATION
AS OF OCTOBER 31, 1999
(Dollars in Thousands)
Fund Information
------------------------
W-L
Company Participant
Stock Directed
Fund Funds Total
--------- ------------ ----------
Investments at fair value:
Warner-Lambert Common Stock $ 915,455 $ 576,747 $1,492,202
Equity Funds - 410,672 410,672
Short-term investments - 20,996 20,996
Investments at contract value:
Group annuity contracts - 29,653 29,653
Investment contracts - 124,226 124,226
--------- ----------- ----------
Net assets available for
benefits $ 915,455 $1,162,294 $2,077,749
========= ========== ==========
The accompanying notes are an integral part of the financial statements.
EXHIBIT I
2 of 2
WARNER-LAMBERT COMPANY
MASTER TRUST
STATEMENT OF NET ASSETS AVAILABLE
FOR BENEFITS WITH FUND INFORMATION
AS OF OCTOBER 31, 1998
(Dollars in Thousands)
Fund Information
------------------------
W-L
Company Participant
Stock Directed
Fund Funds Total
--------- ------------ ----------
Investments at fair value:
Warner-Lambert Common Stock $ 978,159 $ 641,202 $1,619,361
Equity Funds - 290,421 290,421
Short-term investments - 45,653 45,653
Investments at contract value:
Group annuity contracts - 39,334 39,334
Investment contracts - 76,807 76,807
--------- ----------- ----------
Net assets available for
benefits $ 978,159 $1,093,417 $2,071,576
========= ========== ==========
The accompanying notes are an integral part of the financial statements.
EXHIBIT II
1 of 2
WARNER-LAMBERT COMPANY MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED OCTOBER 31, 1999
(Dollars in Thousands)
Fund Information
------------------------
W-L
Company Participant
Stock Directed
Fund Funds Total
--------- ------------ -----------
Additions to net assets
attributable to:
Investment income:
Interest income $ 76 $ 1,208 $ 1,284
Dividend income 9,173 24,293 33,466
Net appreciation on fair value of
investments 8,182 59,848 68,030
Contributions:
Participant - 65,382 65,382
Company 26,540 220 26,760
Loan repayments 500 8,251 8,751
--------- ----------- ---------
Total additions 44,471 159,202 203,673
--------- ----------- ---------
Deductions from net assets
attributable to:
Distributions to participants (74,217) (111,542) (185,759)
Loan issuances (572) (10,139) (10,711)
Administrative expenses (14) (1,016) (1,030)
Interfund transfers (32,372) 32,372 -
--------- ----------- ---------
Total deductions (107,175) (90,325) (197,500)
--------- ----------- ---------
Increase(decrease)in net assets
during the year (62,704) 68,877 6,173
Net assets available for benefits:
Beginning of period 978,159 1,093,417 2,071,576
--------- ----------- ----------
End of period $ 915,455 $ 1,162,294 $2,077,749
========= =========== ==========
The accompanying notes are an integral part of the financial statements.
EXHIBIT II
2 of 2
WARNER-LAMBERT COMPANY MASTER TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED OCTOBER 31, 1998
(Dollars in Thousands)
Fund Information
------------------------
W-L
Company Participant
Stock Directed
Fund Funds Total
--------- ------------ -----------
Additions to net assets
attributable to:
Investment income:
Interest income $ 63 $ 1,089 $ 1,152
Dividend income 7,952 22,083 30,035
Net appreciation on fair value of
investments 397,130 275,097 672,227
Contributions:
Participant - 57,132 57,132
Company 19,234 27 19,261
Loan repayments 417 8,228 8,645
--------- ----------- ---------
Total additions 424,796 363,656 788,452
--------- ----------- ---------
Deductions from net assets
attributable to:
Distributions to participants (57,022) (73,135) (130,157)
Loan issuances (668) (9,877) (10,545)
Administrative expenses (21) (932) (953)
Interfund transfers (32,131) 32,131 -
--------- ----------- ---------
Total deductions (89,842) (51,813) (141,655)
--------- ----------- ---------
Increase in net assets during
the year 334,954 311,843 646,797
Net assets available for benefits:
Beginning of period 643,205 781,574 1,424,779
--------- ----------- ----------
End of period $ 978,159 $ 1,093,417 $2,071,576
========= =========== ==========
The accompanying notes are an integral part of the financial statements.
Exhibit III
WARNER-LAMBERT COMPANY
MASTER TRUST
NOTES TO THE FINANCIAL STATEMENTS
(Dollars in Thousands)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Financial Statement Presentation
The financial statements of the Warner-Lambert Company Master Trust
(the "Master Trust") include the assets of the Warner-Lambert Savings
and Stock Plan and the Warner-Lambert Savings and Stock Plan for
Colleagues in Puerto Rico (collectively the "Plans") and are prepared
on the cash basis of accounting. The Plans are defined contribution
profit-sharing savings plans, subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as
amended.
The assets of the Plans have been commingled for investment and
administrative purposes in the Master Trust. Accordingly, the Plans
do not own specific Master Trust assets but rather maintain an
undivided beneficial interest in such assets. Each Plan's interest
in the Trust is credited or charged for contributions, transfers and
distributions. Net appreciation on fair value of investments was
allocated to the Plans based upon each Plan's beneficial interest in
the net assets of the Master Trust.
Valuation of Investments
Investments traded on a national exchange are valued based upon the
last published quotations for the last business day of the year.
Short-term investments are valued at cost which approximates market
value. The fully benefit-responsive group annuity and investment
contracts, the principal and interest of which are guaranteed, are
valued at contract value representing contributions made under the
contracts, plus interest at the contract rate, less funds withdrawn.
Contract value approximates fair value. The average annual yield and
average annual crediting interest rate of these investments for each
of the years ended 12/31/99 and 12/31/98 was 6%.
Investment Income
Dividend and interest income are recorded by T. Rowe Price (the
"Trustee") as earned. Net appreciation on fair value of investments
consists of realized and unrealized gains and losses.
Expenses
All expenses incurred are borne by the Plans.
Risk and Uncertainties
Investment securities are exposed to various risks, such as interest
rate, market and credit. Due to the level of risk associated with
certain investment securities and the level of uncertainty related to
changes in the value of investment securities, it is at least
reasonably possible that changes in the risks in the near term would
materially affect the amounts reported in the Statement of Net Assets
Available for Benefits and the Statement of Changes in Net Assets
Available for Benefits.
NOTE 2 - TAX STATUS OF THE MASTER TRUST:
The Plans in the Master Trust are intended to be qualified plans
under Section 401(a) of the Internal Revenue Code, and the Master
Trust established thereunder is entitled to exemption from federal
income tax under the provisions of Section 501(a) of the Code.
Accordingly, no provision for federal income tax has been made.
Note 3 - SIGNIFICANT INVESTMENTS:
The following investments represent over 5% of the assets held for
investment purposes by the Master Trust at:
October 31, October 31,
1998 1999 1998
---------- -----------
Warner-Lambert Company Common Stock $1,492,202 $1,619,361
S&P 500 Fund 183,901 138,238
Note 4 - TRUST ADMINISTRATION:
The Retirement and Savings Plan Committee of the Warner-Lambert
Company Board of Directors (the "Committee") monitors and reports on
the selection and termination of trustees and investment managers and
on the investment activity and performance. The Committee also
implements the overall asset allocation guidelines as established by
the Board of Directors and decides on benefit appeals. The Investment
Committee, established by the Warner-Lambert Company Board of
Directors, is responsible for the daily administration of the Master
Trust, including oversight of plan investments, plan trustees and
investment managers.
Note 5 - SUBSEQUENT EVENTS:
Warner-Lambert, Pfizer Inc. (Pfizer) and a wholly-owned subsidiary of
Pfizer entered into a definitive merger agreement dated as of
February 6, 2000. Under the terms of the proposed transaction, which
has been approved by the Board of Directors and shareholders of both
Warner-Lambert and Pfizer, each share of Warner-Lambert common stock
will be exchanged for 2.75 shares of Pfizer common stock. This
transaction is subject to customary conditions, including qualifying
as a tax-free reorganization and usual regulatory approvals. The
merger is expected to close during June of 2000.
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-8 (Nos. 33-12209,
333-78645 and 33-49244) of Warner-Lambert Company of our report dated June
6, 2000 appearing on page 2 of this Form 11-K.
PRICEWATERHOUSECOOPERS LLP
Florham Park, New Jersey
June 7, 2000
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