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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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(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)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange
on which registered
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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
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Securities registered pursuant to Section 12(g) of the Act:
None
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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
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TABLE OF CONTENTS
PART I
Item Page
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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
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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).
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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)
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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
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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
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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
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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
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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
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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
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(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
Item 6. Selected Financial Data
Selected Consolidated Statement of Income Data
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(Millions of dollars, except per share data)
<S> <C> <C> <C> <C> <C>
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
======== ======== ======== ======== ========
<FN>
- --------------
(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.
</FN>
</TABLE>
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
<PAGE>
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.
<TABLE>
<CAPTION>
Age as of
the date of the
Company's
Annual Meeting Positions and Offices With
Name April 28, 1994 Company Presently Held
----- ------------ -----------------------
<S> <C> <C>
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
<PAGE>
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
</TABLE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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)
<PAGE>
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/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
<PAGE>
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)
</TABLE>
22
<PAGE>
PFIZER INC. AND SUBSIDIARY COMPANIES
SCHEDULE V-PROPERTY, PLANT AND EQUIPMENT (a)
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C> <C> <C>
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
======== ====== ===== ====== ======== ========
<FN>
- ------------
(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.
</FN>
</TABLE>
23
<PAGE>
PFIZER INC. AND SUBSIDIARY COMPANIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C> <C> <C>
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
======== ====== ===== ====== ======== ========
<FN>
- ------------
(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.
</FN>
</TABLE>
24
<PAGE>
PFIZER INC. AND SUBSIDIARY COMPANIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C> <C>
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
===== ===== ===== ===== =====
<FN>
- ------------
(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.
</FN>
</TABLE>
25
<PAGE>
PFIZER INC. AND SUBSIDIARY COMPANIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C> <C>
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
========
<FN>
- --------------
(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.
</FN>
</TABLE>
26
<PAGE>
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
<PAGE>
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.
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)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
1993 1992 1991
------ ------ -------
<S> <C> <C> <C>
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
====== ====== ======
<FN>
- ------------
(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%.
</FN>
</TABLE>
Exhibit 12
PFIZER INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars, Except Ratios)
<TABLE>
<CAPTION>
Year Ending December 31,
----------------------------------------------
1993 1992 1991 1990 1989
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
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
======= ======== ======== ======== ========
<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, 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.
</FN>
</TABLE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
% 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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
SEGMENT INFORMATION
Pfizer Inc and Subsidiary Companies
<TABLE>
<CAPTION>
Consumer Corporate/
Health Health Food Animal Financial
(millions of dollars) Care Care Science(a) Health Subsidiaries(e) Consolidated
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
(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.
</FN>
</TABLE>
See Notes to Consolidated Financial Statements which are an integral part of
these statements.
35
<PAGE>
GEOGRAPHIC DATA
Pfizer Inc and Subsidiary Companies
<TABLE>
<CAPTION>
Canada/ Africa/ Corporate/
United Latin Middle Financial Adjustments/
(millions of dollars) States(a) Europe Asia America East Subsidiaries Eliminations Consolidated
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(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.
</FN>
</TABLE>
See Notes to Consolidated Financial Statements which are an integral part of
these statements.
36
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
Pfizer Inc and Subsidiary Companies
<TABLE>
<CAPTION>
Year ended December 31
- ---------------------------------------------------------------------------------------------------
(millions of dollars except per share data) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
- ---------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements which are an integral part of
these statements.
37
<PAGE>
Consolidated Statement of Shareholders' Equity
Pfizer Inc and Subsidiary Companies
<TABLE>
<CAPTION>
Common Stock Additional Currency Employee Treasury Stock
------------------ Paid-In Retained Translation Benefit -----------------
(millions) Shares Par Value Capital Earnings Adjustment Trust Shares Cost Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements which are an integral part of
these statements.
38
<PAGE>
CONSOLIDATED BALANCE SHEET
Pfizer Inc and Subsidiary Companies
<TABLE>
<CAPTION>
December 31
- -----------------------------------------------------------------------------------------------------------------
(millions of dollars) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements which are an integral part of
these statements.
39
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Pfizer Inc and Subsidiary Companies
<TABLE>
<CAPTION>
Year ended December 31
- -----------------------------------------------------------------------------------------------------------------------------
(millions of dollars) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements which are an integral part of
these statements.
40
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
QUARTERLY CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Pfizer Inc and Subsidiary Companies
<TABLE>
<CAPTION>
Quarters
-----------------------------------------
(millions of dollars except per share data) First Second Third Fourth Year
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
51
================================================================================
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
================================================================================
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE
FOR PLAN BENEFITS
December 31, 1993
(thousands of dollars except unit values)
<TABLE>
<CAPTION>
Company
Common Loan
Assets Total Stock Fund Fund A Fund B Fund C Fund
------ -------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
See Notes to Financial Statements which are
an integral part of these statements.
1
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE
FOR PLAN BENEFITS
December 31, 1992
(thousands of dollars except unit values)
<TABLE>
<CAPTION>
Company
Common
Assets Total Stock Fund Fund A Fund B Fund C
------ -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <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
</TABLE>
See Notes to Financial Statements which are
an integral part of these statements.
2
<PAGE>
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)
<TABLE>
<CAPTION>
Company
Common Loan
Total Stock Fund Fund A Fund B Fund C Fund
-------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
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
======== ======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements which are
an integral part of these statements.
3
<PAGE>
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)
<TABLE>
<CAPTION>
Company
Common
Total Stock Fund Fund A Fund B Fund C
--------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <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
========= ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements which are
an integral part of these statements.
4
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
1993 1992
-------- -------
(thousands of dollars)
<S> <C> <C>
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
======== =======
</TABLE>
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
<PAGE>
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
<PAGE>
SCHEDULE 1
PFIZER SAVINGS AND INVESTMENT PLAN
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS
December 31, 1993
(thousands of dollars)
<TABLE>
<CAPTION>
INVESTMENTS:
FUND A:
Guaranteed Interest Interest Maturity
Contracts Rate Date Cost
- --------------------------------------------------------------- -------- -------- --------
<S> <C> <C> <C>
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
========
</TABLE>
<TABLE>
<CAPTION>
Fair
Fixed Income Investments Cost Value
- --------------------------------------------------------------- -------- --------
<S> <C> <C>
Northern Trust Intermediate Treasury Bond Fund ............... $ 33,548 $ 33,502
======== ========
</TABLE>
<TABLE>
<CAPTION>
FUND B:
Number of Fair
Common Stock Index Fund Units Cost Value
- -------------------------------------------------------------------- --------- -------- --------
<S> <C> <C> <C>
Northern Trust Index Fund .......................................... 1,539,163 $ 31,562 $ 58,580
========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM SECURITIES:
Interest Maturity Number Fair
Name of Issuer Rate Date of Units Cost Value
- ---------------------------------------------------- -------- -------- -------- ------ -----
<S> <C> <C> <C> <C> <C>
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
====== ======
</TABLE>
10
<PAGE>
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:
<TABLE>
<CAPTION>
Number
Number of of
Securities Purchased Transactions Shares Cost
-------------------- ------------ ------- -------
<S> <C> <C> <C>
Pfizer Inc. common stock............................................ 27 577,115 $36,699
== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Fair
Value of
Number of Number of Disposed Realized
Securities Disposed* Transactions Shares Cost Shares Gains
-------------------- ------------ --------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Pfizer Inc. common stock............................ 201 858,231 $18,498 $57,634 $39,136
=== ======= ======= ======= =======
<FN>
- --------------
* 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.
</FN>
</TABLE>
11
<PAGE>
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
<PAGE>
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
<PAGE>
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
================================================================================
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
================================================================================
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN
FOR EMPLOYEES RESIDENT IN PUERTO RICO
STATEMENT OF NET ASSETS
AVAILABLE FOR PLAN BENEFITS
December 31, 1993
<TABLE>
<CAPTION>
Company
Common
Total Stock Fund Fund A Fund B Fund C
---------- ---------- ---------- ---------- ----------
ASSETS
------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
See Notes to Financial Statements which are an
integral part of these statements.
1
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN
FOR EMPLOYEES RESIDENT IN PUERTO RICO
STATEMENT OF NET ASSETS
AVAILABLE FOR PLAN BENEFITS
December 31, 1992
<TABLE>
<CAPTION>
Company
Common
Total Stock Fund Fund A Fund B Fund C
---------- ---------- ---------- ---------- ----------
ASSETS
------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
See Notes to Financial Statements which are an
integral part of these statements.
2
<PAGE>
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
<TABLE>
<CAPTION>
Company
Common
Total Stock Fund Fund A Fund B Fund C
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <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
=========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements which are an
integral part of these statements.
3
<PAGE>
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
<TABLE>
<CAPTION>
Company
Common
Total Stock Fund Fund A Fund B Fund C
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <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
=========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements which are an
integral part of these statements.
4
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
SCHEDULE 1
PFIZER SAVINGS AND INVESTMENT PLAN
FOR EMPLOYEES RESIDENT IN PUERTO RICO
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS
December 31, 1993
<TABLE>
<CAPTION>
FUND A:
Interest Fair
U.S. Government Securities Rate Maturity Cost Value
- ------------------------------------------------------ --------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
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
============ ============
</TABLE>
<TABLE>
<CAPTION>
FUND B:
Number of
Common Stock Index Fund Units
- ------------------------------------------------------ ---------
<S> <C> <C> <C>
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
============ ============
</TABLE>
8
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
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
