1.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 3, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 No.)
235 East 42nd Street, New York, New York 10017
(Address of principal executive offices, including zip code)
(212) 573-2323
(Registrant's telephone number, including area code)
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
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
At April 29, 1994, there were 305,185,309 shares, par value $.10, of the
issuer's common stock outstanding.
<PAGE>
2.
PFIZER INC.
FORM 10-Q
For the Quarter Ended
April 3, 1994
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements: Page
Condensed Consolidated Statement of Income for the
three months ended April 3, 1994 and April 4, 1993. 3
Condensed Consolidated Balance Sheet at April 3, 1994,
December 31, 1993 and April 4, 1993. 4
Condensed Consolidated Statement of Cash Flows for the
three months ended April 3, 1994 and April 4, 1993. 5
Notes to Condensed Consolidated Financial Statements 6
Independent Auditors' Report 9
Item 2.
Management's Discussion and Analysis 10
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings 16
Item 6.
Exhibits and Reports on Form 8-K. 17
<PAGE>
3.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Three Months Ended
April 3, April 4,
1994 1993
(millions of dollars, except per share data)
Net sales....................................... $ 1,982.9 $ 1,867.3
Operating costs and expenses
Cost of sales................................. 432.2 423.4
Selling, informational and
administrative expenses..................... 730.5 740.7
Research and development expenses............. 254.7 215.4
Divestitures, restructuring and
unusual items - net......................... - 28.8
Income from operations.......................... 565.5 459.0
Interest income............................... 22.6 40.0
Interest expense.............................. (34.2) (24.9)
Other income.................................. 4.7 6.8
Other deductions.............................. (28.6) (36.6)
Non-operating income/
(deductions) - net....................... (35.5) (14.7)
Income before provision for taxes on
income and minority interests................. 530.0 444.3
Provision for taxes on income................... 159.0 115.5
Minority interests.............................. .3 (.2)
Net income...................................... $ 370.7 $ 329.0
========== ==========
Earnings per common share....................... $ 1.18 $ 1.01
========== ==========
Cash dividends per common share................. $ .47 $ .42
========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
4.
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEET
April 3, Dec. 31, April 4,
(millions of dollars) 1994* 1993** 1993*
ASSETS
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents....................... $ 796.8 $ 729.4 $1,019.0
Short-term investments.......................... 394.7 447.1 705.8
Accounts receivable, less allowances
April 3, 1994 - $40.0; Dec. 31, 1993 -
$40.6; April 4, 1993 - $37.7.................. 1,570.1 1,468.7 1,506.0
Short-term loans................................ 440.9 456.9 501.5
Inventories
Finished goods................................ 460.7 413.3 428.6
Work in process............................... 526.3 502.1 493.6
Raw materials and supplies.................... 187.5 178.1 188.6
Total inventories............................ 1,174.5 1,093.5 1,110.8
Prepaid expenses, taxes and other current
assets........................................ 565.9 537.6 592.6
Total current assets......................... 4,942.9 4,733.2 5,435.7
Long-term loans and marketable securities......... 661.9 586.7 640.3
Property, plant and equipment, less accumulated
depreciation April 3, 1994 - $1,760.9; Dec. 31,
1993 - $1,668.2; April 4, 1993 - $1,552.0....... 2,692.8 2,632.5 2,341.7
Goodwill, less accumulated amortization........... 261.1 231.1 358.4
Other assets, deferred taxes and deferred charges. 1,082.2 1,147.4 947.9
Total assets................................. $9,640.9 $9,330.9 $9,724.0
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings, including current portion
of long-term debt April 3, 1994 - $3.3;
Dec. 31, 1993 - $3.6; April 4, 1993 - $1.4.... $1,517.8 $1,178.8 $1,840.1
Accounts payable................................ 449.0 479.1 381.3
Income taxes payable............................ 567.9 606.2 339.6
Accrued compensation and related items.......... 341.5 408.6 334.7
Other current liabilities....................... 874.0 770.9 720.7
Total current liabilities.................... 3,750.2 3,443.6 3,616.4
Long-term debt.................................... 570.1 570.5 573.6
Postretirement benefit obligation other than
pension plans................................... 445.1 443.3 459.1
Deferred taxes on income.......................... 230.6 189.4 140.8
Other non-current liabilities..................... 769.7 779.3 446.7
Minority interests................................ 35.5 39.3 35.1
Total liabilities............................ 5,801.2 5,465.4 5,271.7
Shareholders' Equity
Preferred stock................................. - - -
Common stock.................................... 33.9 33.9 33.7
Additional paid-in capital...................... 355.9 491.7 386.1
Retained earnings............................... 5,460.6 5,240.7 5,312.6
Currency translation adjustment and other....... 70.8 31.7 (11.8)
Employee Benefit Trust.......................... (540.0) (690.0) -
Common stock in treasury, at cost............... (1,541.5) (1,242.5) (1,268.3)
Total shareholders' equity................... 3,839.7 3,865.5 4,452.3
Total liabilities and shareholders' equity... $9,640.9 $9,330.9 $9,724.0
========= ========= =========
<FN>
* Unaudited
** Condensed from audited financial statements.
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
5.
PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
April 3, April 4,
(millions of dollars) 1994 1993
Operating Activities
Net income......................................... $ 370.7 $ 329.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of intangibles....... 71.1 62.1
Divestitures, restructuring and unusual items...... - 28.8
Deferred income amortization....................... (3.3) (11.3)
Other.............................................. (5.5) (8.9)
Changes in operating assets and liabilities:
Accounts receivable.............................. (95.5) (127.4)
Inventories...................................... (73.8) (67.2)
Prepaid and other assets......................... (15.7) (4.1)
Accounts payable and accrued liabilities......... 2.5 (143.5)
Income taxes payable............................. (39.7) (53.2)
Other deferred items............................. 34.5 27.2
Net cash provided by operating activities............ 245.3 31.5
Investing Activities
Purchases of property, plant and equipment......... (128.2) (129.8)
Purchases of short-term investments................ (351.9) (328.4)
Proceeds from redemptions of short-term
investments..................................... 369.9 99.9
Purchases of long-term investments................. (55.7) (73.8)
Purchases and redemptions of short-term
investments by financial subsidiaries........... 40.1 -
Decrease in loans and long-term investments by
financial subsidiaries.......................... 22.6 86.0
Other investing activities......................... 20.3 45.7
Net cash used in investing activities................ (82.9) (300.4)
Financing Activities
Proceeds from issuance of long-term debt........... .4 4.9
Increase in short-term debt........................ 348.3 594.1
Employee benefit transactions...................... 7.0 7.9
Purchases of common stock.......................... (299.2) (412.9)
Cash dividends paid................................ (150.8) (135.7)
Other financing activities......................... 6.1 (2.4)
Net cash (used in)/provided by financing activities.. (88.2) 55.9
Effect of exchange rate changes on cash and cash
equivalents..................................... (6.8) (25.1)
Net increase/(decrease) in cash and cash equivalents. 67.4 (238.1)
Cash and cash equivalents balance at beginning of
period.......................................... 729.4 1,257.1
Cash and cash equivalents balance at end of period... $ 796.8 $1,019.0
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
6.
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the rules and regulations of the United
States Securities and Exchange Commission. Accordingly, certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been con-
densed or omitted.
Subsidiaries operating outside the United States generally are included on
the basis of interim periods ended February 27, 1994 and February 28, 1993.
The Company records insurance recoveries related to accruals for contingent
liabilities only when it is ascertained that such recoveries are probable. At
April 3, 1994, expected recoveries related to environmental liabilities are
included in the Balance Sheet caption "Prepaid expenses, taxes and other
current assets". Such recoveries were previously netted against the related
liability.
Note 2: Responsibility for Interim Financial Statements
Pfizer Inc. (the "Company") is responsible for the accompanying unaudited
interim financial statements which reflect all normal and recurring adjust-
ments considered necessary for a fair presentation of the results for the
periods presented.
The interim financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's latest
annual report on Form 10-K.
The results of operations for the interim period ended April 3, 1994 are not
necessarily indicative of the results which ultimately might be expected for
the current year.
Note 3: Earnings Per Common Share
Earnings per common share are computed by dividing net income by the weighted
average number of common shares and common share equivalents outstanding.
Common share equivalents consist of shares issuable upon exercise of stock
options. The weighted average number of common shares and common share
equivalents totaled 313.2 million and 326.4 million for the first quarters of
1994 and 1993, respectively.
<PAGE>
7.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Note 4: Currency Impact
An analysis of the changes in the Currency translation adjustment for the
three months ended April 3, 1994 is as follows:
(millions of dollars) (Debit)/Credit
Currency translation adjustment December 31, 1993 $ 31.7
Translation adjustments and gains and losses from certain
hedges and intercompany balances 20.6
Currency translation adjustment April 3, 1994 $ 52.3
========
Exchange losses included in "Other deductions" were as follows:
1994 1993
(millions of dollars)
First Quarter $(2.1) $(4.3)
======= ======
Note 5: Interest and Income Tax Payments
The Company made interest payments of approximately $31 million and $36
million and income tax payments of approximately $178 million and $165 million
during the first quarters of 1994 and 1993, respectively.
Note 6: Adoption of New Accounting Standard
In the first quarter of 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". The statement requires that investments in such
securities be designated as trading, held-to-maturity or available-for-sale.
Trading securities are reported at fair value with unrealized gains and losses
recognized in earnings. Available-for-sale securities are reported at fair
value with unrealized gains and losses recognized in the Balance Sheet
caption "Currency translation adjustment and other" included in Shareholders'
equity. Securities which are classified as held-to-maturity are reported at
amortized cost.
At April 3, 1994, the amortized cost and related fair values of such
securities are as follows:
(millions of dollars)
Amortized Fair Gross Unrealized
Held-to-Maturity: Cost Value Gains Losses
U.S. Government Agencies $ 27.4 $ 27.4 $ - $ -
Municipals 73.0 73.0 - -
Foreign Governments 57.3 58.5 1.4 (.2)
Certificates of Deposits 208.3 208.3 - -
Mortgage-Backed 36.2 37.5 1.3 -
Corporate Debt 283.8 285.1 2.4 (1.1)
Commercial Paper 48.0 48.0 - -
734.0 737.8 5.1 (1.3)
Available-for-Sale:
Equity Securities 58.2 76.7 25.8 (7.3)
$792.2 $814.5 $30.9 $(8.6)
====== ====== ===== ======
<PAGE>
<TABLE>
8.
Of the above securities, $80.0, $394.7 and $336.0 million are included in the
Balance Sheet captions Cash and cash equivalents, Short-term investments and
Long-term loans and marketable securities, respectively.
The contractual maturities of such securities are as follows:
<S> <C> <C> <C> <C> <C> <C>
Mortgage-
Within 1 to 5 5 to 10 After Backed
Held-to-Maturity: 1 Year Years Years 10 Years Securities Total
U.S. Government Agencies $ 27.4 $ - $ - $ - $ - $ 27.4
Municipals 73.0 - - - - 73.0
Foreign Governments 5.5 51.8 - - - 57.3
Certificates of Deposits 190.9 17.4 - - - 208.3
Mortgage-Backed - - - - 36.2 36.2
Corporate Debt 129.9 111.2 20.8 21.9 - 283.8
Commercial Paper 48.0 - - - - 48.0
$474.7 $180.4 $20.8 $21.9 $36.2 $734.0
====== ====== ======= ====== ====== ======
<FN>
Note 7: Divestitures, Restructuring and Unusual Items
Operating income for the first quarter of 1993 includes a $28.8 million charge
for restructuring, consolidation and streamlining of certain of the Company's
businesses.
Note 8: Subsequent Event
On May 3, 1994, the Company announced that it has entered into a set of agree-
ments with Value Health, Inc., a leading provider of specialty managed care
benefit programs and health care information services. The agreements are
intended to improve patient care and contain health care system costs while
strengthening the positions of both companies, in particular with managed
care organizations. The agreements between the companies have three key
elements:
~ The Company has broad access to Value Health's proprietary software,
databases and personnel, allowing joint development of programs to
support the Company's pharmaceutical and medical device products;
~ The companies have formed a partnership pursuant to one of the agreements
to develop and commercialize specialty disease management opportunities;
and
~ Value Health's subsidiary, ValueRx, has agreed to include Pfizer
pharmaceutical products on its pharmacy benefit management formularies.
</TABLE>
<PAGE>
9.
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of Pfizer Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of
Pfizer Inc. and subsidiary companies as of April 3, 1994 and April 4, 1993
and the related condensed consolidated statements of income and cash flows
for the three month periods then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Pfizer Inc. and subsidiary com-
panies as of December 31, 1993, and the related consolidated statements of
income, shareholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 24, 1994, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1993, is fairly presented, in all material
respects, in relation to the consolidated balance sheet from which it has
been derived.
As discussed in Note 6 to the condensed consolidated financial statements,
the Company adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", in 1994.
KPMG PEAT MARWICK
New York, New York
May 17, 1994
<PAGE>
10.
Item 2. Management's Discussion and Analysis
PFIZER INC. AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONDENSED CONSOLIDATED
STATEMENT OF INCOME
FOR THE PERIODS ENDED APRIL 3, 1994 AND APRIL 4, 1993
Percent
First Quarter Increase/(Decrease) Comparison
1994 1993 1st Qtr. 1994
% of % of from
Net Net 1st Qtr. 1993
Sales Sales
100.0 100.0 Net sales 6
Operating costs and expenses
21.8 22.7 Cost of sales 2
36.8 39.7 Other expenses (1) (1)
12.9 11.5 Research and development 18
Divestitures, restructuring
- 1.5 and unusual items - net *
28.5 24.6 Income from operations 23
1.1 2.1 Interest income (44)
(1.7) (1.3) Interest expense 37
.2 .4 Other income (31)
(1.4) (2.0) Other deductions (22)
Non-operating income/
(1.8) (.8) (deductions) - net 141
Income before provision for taxes
26.7 23.8 on income and minority interests 19
8.0 6.2 Provision for taxes on income 38
- - Minority interests *
18.7 17.6 Net income 13
======= =======
$ 1.18 $ 1.01 Earnings per common share 17
======= =======
$ .47 $ .42 Cash dividends per common share 12
======= =======
30.0% 26.0% Effective tax rate
======= =======
(1) Consists of selling, informational and administrative expenses.
* Calculation not meaningful.
<PAGE>
11.
Item 2.
PFIZER INC. AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
NET SALES BY BUSINESS SEGMENT
FOR THE PERIODS ENDED APRIL 3, 1994 AND APRIL 4, 1993
(MILLIONS OF DOLLARS)
Percent
Increase/(Decrease)
First Quarter Comparison
% of % of 1st Qtr. 1994
Net Net From
1994 Sales 1993 Sales 1st Qtr. 1993
$1,659.3 83.7 $1,549.3 83.0 Health Care 7
106.5 5.4 98.2 5.2 Consumer Health Care 8
71.8 3.6 77.6 4.2 Food Science (7)
145.3 7.3 142.2 7.6 Animal Health 2
$1,982.9 100.0 $1,867.3 100.0 Consolidated 6
======== ===== ======== =====
PFIZER INC. AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
NET SALES BY GEOGRAPHIC AREA
FOR THE PERIODS ENDED APRIL 3, 1994 AND APRIL 4, 1993
(MILLIONS OF DOLLARS)
Percent
Increase/(Decrease)
First Quarter Comparison
% of % of 1st Qtr. 1994
Net Net From
1994 Sales 1993 Sales 1st Qtr. 1993
$1,100.5 55.5 $1,059.3 56.8 United States 4
409.6 20.6 415.0 22.2 Europe (1)
281.2 14.2 241.0 12.9 Asia 17
140.6 7.1 114.4 6.1 Canada/Latin America 23
51.0 2.6 37.6 2.0 Africa/Middle East 36
$1,982.9 100.0 $1,867.3 100.0 Consolidated 6
======== ====== ======== ======
<PAGE>
12.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
NET SALES
The following statistical data are provided in order to assist the reader of
the Company's condensed consolidated financial statements in understanding the
composition of changes affecting the increase in net sales:
SALES GROWTH ANALYSIS
% INCREASE/(DECREASE) COMPARISON
FIRST QUARTER 1994
FROM
FIRST QUARTER 1993
Volume increases 6
Price increases 1
Currency fluctuations (1)
Total net sales increase 6
====
Consolidated net sales increased by 6% in the first quarter of 1994 versus the
same quarter of 1993. This increase in consolidated net sales was tempered by
a decline in U.S. sales of Feldene. The Company realized 64 percent of its
U.S. Feldene sales in the first quarter of 1993, with generic competition
rapidly eroding sales in the final three quarters. Excluding Feldene's U.S.
sales, consolidated net sales for the first quarter increased by 9 percent
over the same quarter of 1993.
The health care sales performance in the first quarter of 1994 versus the
prior year reflects an 8% increase in worldwide sales of pharmaceuticals and
a 1% increase in worldwide sales of hospital products. Excluding Feldene's
U.S. sales from the first quarter of 1994 and 1993, worldwide pharmaceutical
sales increased 12%. The net sales of hospital products reflects changes in
the marketplace including changes in hospital purchasing practices, delayed
capital investments and reductions in inventory.
The six most recently introduced pharmaceutical products, Procardia XL,
Diflucan, Zoloft, Zithromax, Norvasc and Cardura, had an aggregate sales
increase of 25 percent compared to the first quarter of last year. The
aggregate sales increase for the four newest products, Zoloft, Zithromax,
Norvasc and Cardura was 62 percent. The following table shows the percentage
sales growth of the Company's major pharmaceuticals for the first quarter of
1994:
<PAGE>
13.
Net Sales Growth of Major Pharmaceuticals 1994 vs. 1993
Percentage Increase/(Decrease)
First Quarter
Procardia XL 1
Zithromax 17
Zoloft 66
Norvasc 114
Cardura 23
Diflucan 11
Feldene (*) (37)
(*) This decline is largely a result of generic competition.
Consumer health care sales increased by 8 percent, resulting primarily from
international expansion which reflects the increase in U.K. sales due to the
Charwell acquisition and a strong performance by hair care products in Mexico.
Animal health sales increased by 2 percent worldwide, driven by 9-percent
growth in international markets, reflecting increased demand for new products.
Food science sales declined by 7 percent, reflecting the ongoing transition of
the business from commodity chemicals to proprietary food products. Net sales
of proprietary food products increased by 11 percent compared to the first
quarter of 1993.
OPERATING COSTS AND EXPENSES
Operating income for the first quarter of 1993 included a $28.8 million
provision for restructuring, consolidation and streamlining of certain of the
Company's businesses. As a percentage of net sales, cost of sales and
selling, informational and administrative expenses decreased in the first
quarter of 1994 compared to last year's first quarter. The improvement in
cost of sales was attributable to cost reductions and favorable product mix,
while lower selling, informational and administrative expenses reflect
differences in the timing of marketing programs relative to the prior year as
well as the beneficial impact of continuous improvement and restructuring
programs. The decrease in cost of sales as well as selling, informational and
administrative expenses, as a percentage of net sales, more than offset the
increase in research and development expenses as a percentage of net sales, so
that operating margins increased in the first quarter of 1994 versus last
year's first quarter.
The Company is committed to an expanding research effort, particularly in the
health care segment. Health care research and development expenses, expressed
as a percentage of health care net sales, were 14.8% and 14.3% in the first
quarters of 1994 and 1993, respectively. In 1994, the Company plans to spend
in excess of $1.1 billion on research and development expenses.
NON-OPERATING INCOME (DEDUCTIONS)
The decline in interest income versus the first quarter of last year was
primarily attributable to changes in the capital structure of the Company.
Given the introduction of new products in the Latin American market, the
Company changed the scope and nature of its foreign exchange hedging program
which served to increase interest expense but reduce the devaluation impact in
the Income Statement. This accounted for the decrease in Other Deductions
versus the first quarter of 1993.
<PAGE>
14.
PRE-TAX AND NET INCOME
The Company's effective tax rate increased from 26 percent in 1993 to 30
percent this year, largely attributable to the reduction in the tax benefit
associated with manufacturing operations in Puerto Rico.
OTHER
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. Common stock purchased under the program will be
held in the Company treasury and will be available for use in the Company's
employee benefit plans and for general corporate purposes. Under this stock
repurchase program, in the first quarter of 1994, approximately 5.2 million
shares were purchased in the open market at an average price of $58 per share.
To date, approximately 17.7 million shares of the announced 20 million share
program have been repurchased.
In the first quarter of 1993, total shares purchased in the open market were
6.6 million at an average cost of approximately $62 a share.
In the full year 1993, the Company recorded charges of $750 million and $62
million relating to restructuring and unusual items. These charges provided
for a wide range of targeted restructuring initiatives, including various
consolidations in the Company's manufacturing, distribution and administrative
infrastructures. These initiatives are scheduled to be completed in the next
several years and are projected to lower annual operating costs by at least
$130 million when the full benefit of efficiencies is realized. During the
first quarter of 1994, cash outlays associated with these charges were $22.2
million. At April 3, 1994, reserves of $494.3 million were unutilized. The
restructuring initiatives are proceeding as planned and initial cost savings
have begun to be realized.
The Food and Drug Administration has recently approved the marketing of
Glucotrol XL, the oral diabetes drug using the same advanced GITS drug
delivery system used in Procardia XL. The Company will begin marketing
Glucotrol XL immediately under a royalty-bearing license from Alza
Corporation, with which the Company developed the controlled-release tablet.
ANALYSIS OF LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and short-term investments totaled $1,191.5 million
at April 3, 1994, as compared to $1,176.5 million at year-end 1993. Total
borrowings were $2,087.9 million at April 3, 1994 compared to $1,749.3 million
at year-end 1993. Working capital at April 3, 1994, decreased versus December
31, 1993 and April 4, 1993. The decrease from December 31, 1993 was primarily
attributable to higher short-term borrowings, partially offset by higher cash
and cash equivalents, accounts receivable and inventories. The decrease from
April 4, 1993 was primarily due to lower cash and cash equivalents and short-
term investments partially offset by lower short-term borrowings.
<PAGE>
15.
ANALYSIS OF LIQUIDITY AND CAPITAL RESOURCES
APRIL 3, DEC. 31, APRIL 4,
1994 1993 1993
Working capital (millions of dollars) $1,192.7 $1,289.6 $1,819.3
Current ratio 1.32:1 1.37:1 1.50:1
Debt to total capitalization (percentage)* 35% 31% 35%
Shareholders' equity per common share** $ 12.55+ $ 12.43 $ 13.96
Days of sales outstanding - trade accounts
receivable 69 63 69
Months of inventory on hand 8.6 8.5 8.0
___________________________________________________________________________
* Represents total short and long-term borrowings divided by the sum of
total short and long-term borrowings and total shareholders' equity.
** Represents shareholders' equity divided by the actual number of common
shares outstanding.
+ The decrease in shareholders' equity per common share from the first
quarter of 1993 is due to the Company's program of purchasing its common
stock.
<PAGE>
16.
FORM 10-Q
PART II - OTHER INFORMATION
Item 1: 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.
For a discussion of matters relating to claims and actions involving the
Shiley Convexo-Concave heart values, see the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993.
For a discussion of environmental matters, see the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993.
As previously reported in greater detail in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, the Company and
Quigley Company, Inc., a wholly-owned subsidiary, have been named as one of a
number of defendants in numerous lawsuits claiming personal injury resulting
from exposure to asbestos-containing products. The total pending caseload as
of April 22, 1994 is 9,705 asbestos cases against Quigley, 5,725 asbestos
cases against Pfizer Inc., and 414 talc cases against Pfizer Inc.
For a discussion of matters relating to the Company's indemnification of
Minerals Technologies Inc. against liability with respect to certain products
manufactured and sold by the Company prior to October 30, 1992 and with
respect to certain environmental matters, see the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993.
As previously reported in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, the Company has been named, together
with numerous other manufacturers of prescription drugs and certain companies
which distribute prescription pharmaceuticals, as a defendant in a series of
related actions alleging violations of federal or state antitrust laws, or
both, and common law. A majority of the federal actions have been coordi-
nated and consolidated for pretrial proceedings in the Northern District of
Illinois. The state actions currently consist of six actions in California
and one in Alabama, which was filed on April 8, 1994. The Company believes
these cases are without merit and is vigorously defending them.
For a discussion of matters relating to Plax, the Company's pre-brushing
dental rinse product, see the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.
For a discussion of matters relating to: a pending class action lawsuit
against the Company and certain officers and former directors and officers
alleging certain federal securities law violations by failing to disclose
potential liability arising out of personal injury suits involving Shiley
heart valves; and, a pending derivative action 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, see the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993.
<PAGE>
17.
For a discussion of matters relating to a purported class action lawsuit
on behalf of patients implanted with the Howmedica PCA one-piece acetabular
hip component, see the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
1) Exhibit 11 - Computation of Earnings Per Common Share
2) Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges
3) Exhibit 15 - Accountants' Acknowledgement
(b) No reports on Form 8-K have been filed by the Company during the first
quarter ended April 3, 1994.
<PAGE>
18.
PFIZER INC. AND SUBSIDIARY COMPANIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
Pfizer Inc.
(Registrant)
Date: May 17, 1994 _____________________________________________
H. V. Ryan; Controller
(Principal Accounting Officer and
Duly Authorized Officer)
<PAGE>
19.
Exhibit 11
PFIZER INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(in millions, except per share data)
(unaudited)
Three Months Ended
April 3, April 4,
1994 1993
Net income.................................. $ 370.7 $ 329.0
======== ========
Weighted average number of common shares
outstanding............................... 309.1 321.4
Common share equivalents (a)................ 4.1 5.0
Weighted average number of common shares
and common share equivalents used to
compute earnings per common share......... 313.2 326.4
======== ========
Earnings per common share................... $ 1.18 $ 1.01
======== ========
Adjusted net income for fully diluted
earnings per common share computation..... $ 370.7 $ 329.0
======== ========
Weighted average number of common shares
outstanding............................... 309.1 321.4
Common share equivalents and other
dilutive securities(a).................... 4.2 5.1
Weighted average number of common shares
and common share equivalents used to
compute fully diluted earnings per
common share.............................. 313.3 326.5
======== ========
Fully diluted earnings per common share(b).. $ 1.18 $ 1.01
======== ========
(a) Includes common share equivalents applicable to stock option plans.
(b) 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%.
<PAGE>
20.
<TABLE>
EXHIBIT 12
PFIZER INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(millions of dollars except ratios)
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Three
Months
Ended
April 3, Year Ended December 31,
1994 1993 1992 1991 1990 1989
Earnings
Income before provision
for taxes on income,
minority interests, and
cumulative effect of
accounting changes...... $ 530.0 $ 851.4 $1,534.8 $ 943.7 $1,103.3 $ 916.5
Less: Minority interests.. .3 2.6 2.7 3.2 4.2 4.1
Undistributed earn-
ings/(losses) of
unconsolidated
persons............ 1.6 .7 8.5 .8 (.3) 6.9
Adjusted income........ 528.1 848.1 1,523.6 939.7 1,099.4 905.5
Fixed charges, excluding
capitalized interest.... 41.2 135.6 130.1 155.2 153.8 144.2
Total earnings......... $ 569.3 $ 983.7 $1,653.7 $1,094.9 $1,253.2 $1,049.7
======== ======== ======== ========= ======== ========
Fixed Charges
Interest expense (includ-
ing interest expense,
amortization of debt
discount and expenses
and capitalized inter-
est).................... $ 37.2 $ 120.5 $ 115.6 $ 138.1 $ 142.4 $ 131.2
One-third of rental ex-
pense................... 7.0 29.1 26.7 25.1 21.3 18.2
Total fixed charges.... $ 44.2 $ 149.6 $ 142.3 $ 163.2 $ 163.7 $ 149.4
======== ======== ======== ======== ======== ========
Ratio of earnings to fixed
charges (a)............... 12.9 6.6 11.6 6.7 7.7 7.0
======== ======== ======== ======== ======== ========
<FN>
(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, capitalize interest and
one-third of rental expense which the Company believes conservative
estimate of an interest factor in its leases. It is not practicable to
calculate the interest factor in a material portion
</TABLE>
<PAGE>
21.
Exhibit 15
ACCOUNTANTS' ACKNOWLEDGEMENT
Board of Directors
Pfizer Inc.:
We hereby acknowledge the incorporation by reference of our report dated
May 17, 1994 included within the Quarterly Report on Form 10-Q of Pfizer
Inc. for the quarter ended April 3, 1994 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).
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is
not considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of sections 7 and 11 of the Act.
KPMG PEAT MARWICK
New York, New York
May 17, 1994
