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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
---------------
<TABLE>
<S> <C>
(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, 1994
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
</TABLE>
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-3619
PFIZER INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
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 (Zip Code)
offices)
</TABLE>
(212) 573-2323
(Registrant's telephone number including area code)
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
<S> <C>
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
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X__ No ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the voting stock held by non-affiliates of
the registrant computed by reference to the closing price at which the stock was
sold as of February 27, 1995 was approximately $25.8 billion.
The number of shares outstanding of each of the registrant's classes of
common stock as of February 27, 1995 was: 314,219,772 shares of common stock,
all of one class.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<S> <C>
Annual Report to Shareholders for the fiscal year ended December 31, 1994 Parts I, II and IV
Proxy Statement dated March 16, 1995 Part III
</TABLE>
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<PAGE>
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
ITEM PAGE
----- ----
<C> <S> <C>
1. Business...................... 2
General....................... 2
Comparative Segment and
Geographic Data.............. 2
Health Care................... 2
Animal Health................. 4
Consumer Health Care.......... 5
Food Science.................. 5
Financial Subsidiaries........ 6
International Operations...... 6
Tax Matters................... 6
Patents and Research.......... 7
Employees..................... 8
Regulation.................... 8
Raw Materials and Energy...... 9
Environment................... 9
2. Properties.................... 9
3. Legal Proceedings............. 11
4. Submission of Matters to a
Vote of Security Holders..... 14
PART II
5. Market for the Registrant's
Common Equity and Related
Stockholder Matters.......... 15
6. Selected Financial Data....... 15
7. Management's Discussion and
Analysis of Financial
Condition and Results of
Operations................... 16
8. Financial Statements and
Supplementary Data........... 16
9. Changes in and Disagreements
with Accountants on
Accounting and Financial
Disclosure................... 16
PART III
10. Directors and Executive
Officers of the Registrant... 16
11. Executive Compensation........ 22
12. Security Ownership of Certain
Beneficial Owners and
Management................... 22
13. Certain Relationships and
Related Transactions......... 22
PART IV
14. Exhibits, Financial Statement
Schedules and Reports on Form
8-K.......................... 22
Signatures.................... 24
Financial Statement Schedule
Exhibit 11
Exhibit 12
Exhibit 23
</TABLE>
<PAGE>
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; Animal Health, which includes
animal health products and feed supplements; Consumer Health Care, which
includes a variety of nonprescription drugs and personal care products; 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, 1994 are set forth on pages 35 and 36, and in the Note "Financial
Subsidiaries" on page 42 of the Company's Annual Report to Shareholders for the
fiscal year ended December 31, 1994 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: new product development, 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 physicians, as well as to a variety of
managed care organizations. 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, central nervous system agents, anti-inflammatories and
anti-diabetes agents. In 1994, pharmaceuticals made up 70%
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of the Company's consolidated net sales, an increase from 69% in 1993 and 63% in
1992. Increases in both United States and international pharmaceutical revenues
in 1994 were principally the result of strong sales of products launched in the
1990s, including Norvasc (amlodipine besylate), Cardura (doxazosin mesylate),
Diflucan (fluconazole), Zithromax (azithromycin) and Zoloft (sertraline).
Cardiovascular products are the Company's largest therapeutic product line
accounting for 29% of the Company's consolidated 1994 net sales, an increase
from 27% in 1993 and 23% in 1992. These products realized sales growth of 20% in
1994, including an 85% increase in sales of Norvasc, an intrinsically once-a-day
calcium channel blocker for hypertension and angina, as well as a 27% increase
in sales of Cardura, an alpha blocker for hypertension. A supplemental New Drug
Application for the use of Cardura in the treatment of benign prostatic
hyperplasia ("BPH") was approved by the United States Food and Drug
Administration ("FDA") in February 1995. Sales of Procardia XL (nifedipine
GITS), a once-a-day calcium channel blocker for hypertension and angina,
increased by less than 1% in 1994. The Company's U.S. cardiovascular sales grew
12% and international sales of cardiovascular agents rose 38% in 1994.
Worldwide anti-infective sales increased 7% in 1994 on the strength of
Diflucan and Zithromax. U.S. anti-infective sales grew 14% while international
sales rose by 3%. Diflucan, an antifungal agent, is indicated for use in a
variety of fungal infections including certain types which afflict AIDS and
immunosuppressed cancer patients. The product also received U.S. approval for
the indication of vaginal candidiasis in 1994. Diflucan posted a sales increase
of 14% in 1994 and Zithromax, an oral antibiotic, posted a sales increase of
43%. Total anti-infective sales accounted for 21% of the Company's consolidated
1994 net sales, compared to 22% in 1993 and 20% in 1992.
Sales of Pfizer's central nervous system agents rose 46% in 1994, reflecting
increased sales of Zoloft, an anti-depressant introduced in the U.S. in 1992.
Central nervous system agents grew to 13% of 1994 net pharmaceutical sales and
9% of the Company's consolidated 1994 net sales.
The Company's anti-inflammatory agents, including Feldene (piroxicam),
accounted for less than 10% of the Company's consolidated 1994 net sales.
The Company's anti-diabetes agents, including Glucotrol (glipizide) and
Glucotrol XL (glipizide GITS), a sustained release anti-diabetic approved in the
U.S. in 1994, accounted for less than 10% of the Company's consolidated 1994 net
sales.
The Company currently is seeking approval by the FDA for the following
products for the indications listed:
<TABLE>
<CAPTION>
PRODUCT INDICATION(S)
----------------------------------- --------------------------------------------------
<S> <C>
Cetirizine (launched in Canada in
1991 under the name Reactine;
received "approvable" letter from
the FDA in February 1995 for
cetirizine as an antihistamine)... Low-sedating antihistamine; Pediatric
Enable (tenidap) (known as Enablex
outside the United States)........ Osteo- and rheumatoid arthritis
Unasyn (sulbactam/ampicillin)...... Injectable antibiotic-pediatric
Zithromax (received "approvable"
letter from the FDA in January
1995 for pediatric indications)... Oral antibiotic-pediatric; sexually transmitted
diseases
Zoloft............................. Obsessive-compulsive disorder ("OCD")
</TABLE>
3
<PAGE>
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 62 countries and regulatory approvals
have been obtained in 16 additional countries. Norvasc has been launched in 74
countries and approvals have been obtained in 14 additional countries. Cardura
has been launched in 23 countries and approvals have been obtained in 35
additional countries. In addition, Cardura for BPH has been approved in five
countries. Zithromax has been launched in 38 countries and approvals have been
obtained in 24 additional countries. Zoloft has been launched in 31 countries
for depression. Approvals have been obtained in an additional 16 countries.
Applications for regulatory approval for the OCD indication have been made
worldwide and approvals have been obtained in four additional countries,
although it has not yet been launched in these countries. In addition to the
United States, where regulatory approval is being sought for both the osteo- and
rheumatoid arthritis indications, regulatory approvals for Enablex capsules for
rheumatoid arthritis have been applied for in 29 countries and have been
obtained in two countries. No launches of Enablex have yet taken place.
HOSPITAL PRODUCTS
The Company's 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 -- Strato/Infusaid 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 Knees 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, is also a
market leader in vascular and non-vascular stent applications. In March 1995,
the Company acquired NAMIC U.S.A. Corporation ("NAMIC"), a Company that designs,
manufactures and markets a broad range of single-patient use medical products,
primarily for use in the diagnosis of atherosclerotic cardiovascular disease.
NAMIC's product lines complement those of Schneider and are expected to expand
the opportunities for this business. Valleylab is a worldwide leader in
electrosurgical devices. Valleylab continues to invest in new product lines to
enhance patient and physician safety. American Medical Systems is a leader in
impotence and incontinence implants. Its major product development activities in
1994 were focused on new therapies for the treatment of BPH and urological
strictures.
The merger and the consolidation of operations of Strato Medical
Corporation, a supplier of implantable vascular access ports, and Infusaid, an
innovator of implantable infusion pumps, were completed in 1994. The combined
operation will focus on advanced drug delivery systems. Biomedical Sensors grew
in 1994 reflecting the full year launch of the Paratrend 7 intravascular
continuous blood gas monitoring system, incorporating both electrochemical and
fiberoptic technology.
ANIMAL HEALTH
The Company's Animal Health Group discovers, develops, manufactures and
sells animal health products for the prevention and treatment of diseases in
livestock, poultry and other animals. The principal products are: Dectomax
(doramectin), the Company's new antiparasitic which was first launched in 1993
and is now available in much of Latin America, South Africa and the United
Kingdom; 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; Coxistac and Posistac (salinomycin) anticoccidials primarily for
poultry; Terramycin (oxytetracycline), a broad-spectrum antibiotic used for a
variety of
4
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animal diseases; Mecadox (carbadox), an antibacterial for pigs; and Advocin
(danofloxacin), the Company's new antibacterial for treating respiratory
diseases in livestock and poultry. Aviax (semduramicin), a potent,
broad-spectrum ionophore anticoccidial used to prevent coccidiosis in poultry,
is to be launched in 1995. Aviax is currently under regulatory review in many
countries, with approvals already received in a number of countries, including
the United States and Japan. In 1995, the Animal Health Group plans a total of
49 new market launches of Dectomax, Advocin and Aviax.
Animal health and nutrition products are sold through drug wholesalers,
distributors, retail outlets and directly to users, including feed
manufacturers, animal producers and veterinarians. Methods of competition with
respect to animal health products vary somewhat but include product innovation,
service, price, quality and effective transfer of technological advances to the
market through advertising and promotion.
In January 1995, the Company acquired the SmithKline Beecham Animal Health
("SBAH") business. SBAH is a world leader in animal vaccines and companion
animal health products, which complement the Company's existing animal health
business in terms of product, species and regional sales coverage. SBAH's
principal products are Stafac (virginiamycin), a feed additive anti-infective
for poultry, cattle and swine; Valbazen (albendazole), a bovine parasiticide;
Filaribits (diethylcarbamazine citrate), a pet parasiticide; and a variety of
vaccines including BoviShield, Leukocell, RespiSure and Vanguard.
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 injectable antibiotics, anthelmintics and anticoccidial products
for food animals. With the acquisition of SBAH, the Company became a significant
manufacturer of biologicals and pet products as well.
CONSUMER HEALTH CARE
The Company's Consumer Health Care Group's 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 Migraleve over-the-counter ("OTC")
migraine medication and the TCP line of antiseptic and germicidal products
marketed primarily in the United Kingdom.
Among the better-known OTC brands manufactured and marketed by Consumer
Health Care are Visine (tetrahydrozoline HCl) eyedrops, Ben-Gay topical
analgesics, Desitin diaper rash ointments, Unisom (doxylamine succinate) sleep
aids, Plax pre-brushing dental rinse, Rid anti-lice products and Barbasol shave
creams and gels. Line extensions introduced in recent years include: Unisom
SleepGels, soft liquid-filled gels with a maximum-strength sleep aid formula,
Daily Care from Desitin, a lotion for the prevention of diaper rash and new
formulations of Rid and Plax.
Many other OTC companies, large and small, manufacture and sell one or more
similar consumer products. The Company is a significant competitor in this
extensive OTC market, and its principal methods of competition include product
quality, product innovation, customer satisfaction, broad distribution
capabilities, significant advertising and promotion and price. In general, the
winning and retaining of consumer acceptance of the Company's consumer products
involve heavy expenditures for advertising, promotion and marketing.
FOOD SCIENCE
The Company's Food Science Group serves the global food processing industry
with innovative food ingredients to meet worldwide trends toward convenient and
healthful foods. Specialty ingredients with quality parameters of appeal, taste
and freshness, coupled with Food Science's technical,
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application and discovery skills, serve the needs of the worldwide food
industry. Food Science's longer-term goals are linked to the Company's
healthcare strategies by targeting a new generation of food ingredients to allow
better health maintenance through diet.
Food Science's specialty ingredients include: "lite" food ingredients such
as Litesse (polydextrose); flavors (veltols); food protectants (erythorbates);
and brewery ingredients. Currently under development are products for calorie
control utilizing bulking agents; products for fat replacement and reduced
calorie intake from fats; high temperature fat substitutes; intense sweeteners;
food protectants; and flavors. In October 1994, Food Science acquired certain
assets of Flavor Technology Inc., a company that specializes in the design,
customization and manufacture of proprietary flavorings.
The Food Science business competes with other organizations for sales of
most of its 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 corporations 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
Outside the United States, the Company has significant operations, both
direct and through distributors that, in general, parallel its United States
businesses. 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 the Company. It is impossible to predict future changes in foreign
exchange values or the effect they will have on the Company. The Company
actively manages its foreign exchange risk through routine transactional hedging
programs. In addition, from time to time, the Company engages in hedging
programs designed to protect selected balance sheet positions and future cash
flow exposures. Further information with respect to the financial instruments
used to carry out these hedging programs is incorporated by reference to the
note entitled "Financial Instruments and Concentrations of Credit Risk" found on
pages 42 and 43 of the Annual Report to Shareholders for the fiscal year ended
December 31, 1994.
TAX MATTERS
For tax years beginning after December 31, 1993, the Omnibus Budget
Reconciliation Act of 1993 ("OBRA") reduced by 40% the benefits accruing to the
Company under Section 936 of the Internal
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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 will be fixed at 40% of the level allowed prior
to the enactment of OBRA.
The Internal Revenue Service ("IRS") is currently auditing the years 1987
through 1989. In October 1994, the Company received a Notice of Proposed
Adjustments from the IRS. The proposed adjustments relate primarily to the tax
accounting treatment of certain swaps and related transactions undertaken by the
Company in 1987 and 1988. These transactions resulted in the receipt of cash in
those years, which the Company duly reported as income for tax purposes. In 1989
(in Notice 89-21), the IRS announced that it believed cash received in certain
swap transactions should be reported as income for tax purposes over the life of
the swaps, rather than when received. In the case of the Company, this would
cause some of the income to be reported in years subject to the Tax Reform Act
of 1986. The IRS proposed adjustment involves approximately $72 million in
federal taxes for the years 1987 through 1989, plus interest. If the proposed
adjustment is carried through to the maturity of the transactions in 1992, an
additional tax deficiency of approximately $86 million, plus interest, would
result. The Company disagrees with the proposed adjustment and continues to
believe that its tax accounting treatment for the transactions in question was
proper.
While it is impossible to determine the final disposition, the Company is of
the opinion that the ultimate resolution of this matter should not have a
material adverse effect on the financial position or the results of operations
of the Company.
The Company has satisfactorily resolved all issues with the Internal Revenue
Service for the years through 1986. The Company believes that its accrued tax
liabilities are adequate 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, Zithromax,
Diflucan, Zoloft and Norvasc patents. 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.
Zithromax is a novel, broad spectrum macrolide antibiotic patented by Pliva and
exclusively licensed to the Company for sales and marketing in all major
countries of the world. The U.S. product patent on Zithromax (azithromycin)
expires in 2005. The Company holds patents relating to Diflucan, Zoloft, and
Norvasc.
The Company spent in excess of $1.1 billion in 1994, $974 million in 1993,
and $863 million in 1992 on Company-sponsored research and development
throughout the world. In 1995, the Company plans to spend approximately $1.4
billion on research and development. In 1991, the Company also established
Pfizer Research and Development Company (PRDCO) in Ireland. In 1992, the Company
provided PRDCO with an initial capitalization of approximately $1 billion to
enable PRDCO to engage in research and development through a cost-sharing
arrangement with Pfizer Ltd. (a Pfizer U.K. subsidiary) in exchange for PRDCO's
receiving 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.
7
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EMPLOYEES
Approximately 40,800 persons were employed by the Company, as of December
31, 1994, throughout the world as follows: United States, 15,700; Europe,
11,600; Asia, 7,500; Canada/Latin America, 4,500; and Africa/Middle East, 1,500.
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 product 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.
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
1994 were reduced by Medicaid rebates and rebates under related state programs
which amounted to $74 million. In addition, in 1994, Pfizer provided $56 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.
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.
On January 1, 1995, the new European Medicines Evaluation Agency ("EMEA")
instituted a new drug-approval process for the member states of the European
Union ("EU"). The EMEA provides two new drug-approval procedures. A "centralized
procedure" allows for a single central approval that is valid in all EU states.
A "decentralized procedure" provides for approval in all EU states through
recognition of a first approval in one member state. The centralized procedure
must be used for all biotechnology products (including products derived from
recombinant DNA technology, hybridoma and monoclonal antibody methods) and is
available at the applicant's option for other products. While it is envisioned
that it will take several years for EMEA to be fully operational, it is expected
that a harmonized, centralized regulatory agency in Europe would offer benefits
to the human and veterinary drug industries.
During 1994, Congress continued debate on reform of the U.S. health care
system. While numerous health care reform bills were introduced, including the
Administration's "Health Security Act," Congress was unable to reach consensus
on an approach to health care reform. Health care has been identified by the
current Republican Congressional majority as a long-term priority item. The
focus in Congress on balancing the Federal budget may have a more immediate
impact on health care, however, if the Medicare and Medicaid programs are
targeted for significant cuts. Medicaid managed care systems driven by budget
concerns are already under consideration in several states. If the Medicare and
Medicaid programs implement managed care systems that severely restrict the
access of program participants to innovative new medicines, this could have a
significant adverse effect on the Company.
8
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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 1995. Energy was available to the Company
in sufficient quantities to meet Company requirements and this condition is
expected to continue in 1995.
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 or the results of operations
of the Company.
<TABLE>
<CAPTION>
UNITED STATES ALL OTHER TOTAL
---------------- ----------- --------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Environment-related capital expenditures:
1994 Actual..................................... $ 41.1 $13.7 $54.8
1995 Estimated.................................. 56.8 4.6 61.4
1996 Estimated.................................. 65.8 1.4 67.2
Other environmental-related expenses:
1994 Actual..................................... 34.7 11.6 46.3
1995 Estimated.................................. 37.9 13.9 51.8
</TABLE>
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. In the research complex, construction of significant new buildings is
continuing, with major enlargement (116,000 square feet) of the pharmaceutical
research and development facilities. These improvements are also scheduled for
completion 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.
Brooklyn Plant -- The Company's site in Brooklyn, New York, is on
approximately 17 acres, including a number of buildings containing approximately
888,000 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
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one to five stories containing approximately 740,000 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. Acquisition of an adjacent 9-acre site was recently approved. The
facilities contain four major manufacturing buildings (of two to four floors)
and twelve support buildings with a total approximate area of 403,000 square
feet of floor space; and ten additional facilities (tank farms, electrical
substations, cooling towers, etc.) with an approximate area of 81,000 square
feet, for a total plant facilities area of approximately 484,000 square feet.
The plant 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 15 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 nine-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 111,000 square feet.
Outside the United States -- The Company's major manufacturing facilities
outside the United States are located in Australia, Belgium, Brazil, France,
Germany, Great Britain, India, Ireland, Italy, Japan, Mexico and Spain. The
plants in these twelve countries have an aggregate of over two million square
feet of floor space. Other plants are located in over 17 additional countries
located in various parts of the world.
Sandwich -- 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 early 1995. An effluent treatment plant is also under construction
at this location.
Ringaskiddy -- The Ringaskiddy facility in Ireland comprises three important
bulk organic synthesis manufacturing plants, two of which are now in full
operation. The third has just been completed and is scheduled for startup in
early 1995. Ringaskiddy manufactures the majority of bulk products required by
the International Pharmaceuticals Group in its worldwide dosage-form operations.
These manufacturing plants are computer controlled and among them provide
considerable flexibility in supplying both the current and foreseeable
requirements for the Group. Ringaskiddy's manufacturing operations are
self-supported by a modern and efficient infrastructure, providing such services
as utilities, quality assurance, environmental treatment systems and
maintenance.
Nagoya -- The Nagoya facility in Japan encompasses several significant
individual operations in addition to its research function. Fermentation, bulk
organic synthesis and dosage-form manufacturing are important to the supply of
the Company's operations in Japan (the country with the second largest sales
after the United States) as well as elsewhere in the world. Various facilities
on the site are computer controlled and, similar to Ringaskiddy, the
manufacturing operations are self-supported by utility services, quality
assurance, environmental treatment systems and maintenance functions.
10
<PAGE>
In addition to the facilities outlined above, research laboratories also
exist in France 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.
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, and the U.S. Supreme Court denied a writ of certiorari on October
4, 1994. 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,
eight have cases pending; approximately 792 have been resolved; and
approximately 100 have never filed a case or claim.
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
11
<PAGE>
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.
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 court has determined that the
settlement is fair and reasonable. Subsequently, the court entered an injunction
enforcing its determination. An appeal from that injunction is pending in the
United States Court of Appeals for the Third Circuit.
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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. It is the CCR's intention to settle remaining and opt-out cases and
claims on a similar basis to past settlements. The total pending number of cases
as of December 31, 1994 is 14,543 asbestos cases against Quigley, 5,643 asbestos
cases against Pfizer Inc. and 147 talc cases against Pfizer Inc.
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
the 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
brand name prescription drugs and certain companies that distribute brand name
prescription drugs, in suits brought by retail pharmacy companies in federal and
state courts. The federal cases consist principally of a class action by retail
pharmacies (including approximately 30 named plaintiffs), as well as additional
actions by approximately 1,900 individual retail pharmacies (the "individual
actions"). These cases, all of which have been or are in the process of being
transferred to the United States District Court for the Northern District of
Illinois and coordinated for pretrial purposes, allege 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 allegedly extended to managed
care companies, mail order pharmacies and certain other institutional
purchasers. In addition, the individual actions also allege violations of the
Robinson-Patman Act in that the manufacturers allegedly have unlawfully
discriminated against retail pharmacy companies by not extending them such
discounts.
The federal court has certified a class consisting of all persons or
entities who, since October 15, 1989, bought prescription brand name drugs from
any manufacturer or wholesaler defendant, but specifically excluding government
entities, mail order pharmacies, HMOs, hospitals, clinics and nursing homes. The
federal court had denied a motion for certification made by a purported class of
Alabama consumers (in a case that was originally filed in state court, then
removed to federal court). In the state cases, motions for class certification
are anticipated, except in one Alabama action still in state court, where
plaintiffs have stated that they intend to amend their complaint to withdraw
their class allegations.
The Company believes that these cases are without merit and is vigorously
defending them.
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
13
<PAGE>
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 district court has denied the plaintiffs' motion to
certify the case as a class action. The Company believes that the suit is
without merit and is vigorously defending it.
During 1994, seven purported class actions were filed against American
Medical Systems ("AMS") in federal courts in South Carolina (later transferred
to Minnesota), California, Minnesota (2), Indiana, Ohio and Louisiana. In
January 1995, an additional purported class action was filed in state court in
Louisiana, replicating the federal suit. The California and Indiana suits and
one Minnesota suit also name Pfizer Inc. as a defendant, based on its ownership
of AMS. The suits seek monetary and injunctive relief on the basis of
allegations that implantable penile prostheses are prone to unreasonably high
rates of mechanical failure and/or various autoimmune diseases as a result of
silicone materials. On September 30, 1994, the federal Judicial Panel on
Multidistrict Litigation denied the various plaintiffs' motions to consolidate
or coordinate the cases for pretrial proceedings. On February 28, 1995, the
Court in the Ohio suit conditionally granted plaintiffs' motion for class
certification and on March 3, 1995, the Court in the California suit denied
plaintiffs' motion for class certification. The Company believes the suits are
without merit and is vigorously defending them.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
14
<PAGE>
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
"Quarterly Consolidated Statement of Income (Unaudited)" found on page 53 and to
page 58 of the Annual Report to Shareholders for the fiscal year ended December
31, 1994.
ITEM 6. SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED STATEMENT OF INCOME DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ------------- -------------- ------------- ----------
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales............................... $ 8,281.3 $ 7,477.7 $ 7,230.2 $ 6,950.0 $ 6,406.0
----------- ------------- -------------- ------------- ----------
----------- ------------- -------------- ------------- ----------
Income before cumulative effect of
accounting changes..................... $ 1,298.4 $ 657.5(a) $ 1,093.5(b) $ 722.1(d) $ 801.2
Cumulative effect of accounting
changes................................ -- -- (282.6)(c) -- --
----------- ------------- -------------- ------------- ----------
Net income.............................. $ 1,298.4 $ 657.5(a) $ 810.9(b) $ 722.1(d) $ 801.2
----------- ------------- -------------- ------------- ----------
----------- ------------- -------------- ------------- ----------
Earnings per common share (e):
Income before cumulative effect of
accounting changes..................... $ 4.19 $ 2.05 $ 3.25 $ 2.13 $ 2.38
Cumulative effect of accounting
changes................................ -- -- (.84)(c) -- --
----------- ------------- -------------- ------------- ----------
Net income.............................. $ 4.19 $ 2.05 $ 2.41 $ 2.13 $ 2.38
----------- ------------- -------------- ------------- ----------
----------- ------------- -------------- ------------- ----------
Cash dividends paid per common share
(e).................................... $ 1.88 $ 1.68 $ 1.48 $ 1.32 $ 1.20
----------- ------------- -------------- ------------- ----------
----------- ------------- -------------- ------------- ----------
</TABLE>
SELECTED CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ------------- -------------- ------------- ----------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
Total assets............................ $ 11,098.5 $ 9,330.9 $ 9,590.1 $ 9,634.6 $ 9,052.0
----------- ------------- -------------- ------------- ----------
----------- ------------- -------------- ------------- ----------
Long-term debt.......................... $ 604.2 $ 570.5 $ 571.3 $ 396.6 $ 193.3
----------- ------------- -------------- ------------- ----------
----------- ------------- -------------- ------------- ----------
<FN>
------------------------
(a) Includes pre-tax charges of $690.2 million for restructuring programs,
$121.7 million of unusual items relating to the write-down of goodwill and
a pre-tax gain of $59.9 million on the sale of a business.
(b) Includes a pre-tax gain of $258.6 million representing the gain on the sale
of certain businesses and pre-tax charges of $204.6 million 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) In 1991, the Company effected a two-for-one stock split of its common
stock. The year ended December 31, 1990 has been restated to reflect this
stock split.
</TABLE>
15
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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, 1994.
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 53 of
the Annual Report to Shareholders for the fiscal year ended December 31, 1994.
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 16, 1995.
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
NAME APRIL 27, 1995 WITH COMPANY PRESENTLY HELD
--------------------------------- ----------------------------- ------------------------------------------------------
<S> <C> <C>
Brian W. Barrett................. 55 Vice President; President, Northern Asia, Australasia
and Canada -- International Pharmaceuticals Group
Edward C. Bessey................. 60 Vice Chairman; President -- U.S. Pharmaceuticals
Group; Director; Member of the Corporate Management
Committee
M. Kenneth Bowler................ 52 Vice President -- Federal Government Relations
C. L. Clemente................... 57 Senior Vice President -- Corporate Affairs; Secretary
and Corporate Counsel; Member of the Corporate
Management Committee
Bruce R. Ellig................... 58 Vice President -- Personnel
Donald F. Farley................. 52 Vice President; President -- Food Science Group
David M. Fitzgerald.............. 61 Vice President; Executive Vice President -- Hospital
Products Group, and President, Howmedica Division
George A. Forcier................ 56 Vice President -- Quality Control
P. Nigel Gray.................... 56 Vice President; Executive Vice President -- Hospital
Products Group, and President, Medical Devices
Division
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
AGE AS OF THE DATE OF THE
COMPANY'S ANNUAL MEETING POSITIONS AND OFFICES
NAME APRIL 27, 1995 WITH COMPANY PRESENTLY HELD
--------------------------------- ----------------------------- ------------------------------------------------------
<S> <C> <C>
William E. Harvey................ 64 Vice President; Treasurer (Retired on December 31,
1994)
Gary N. Jortner.................. 50 Vice President; Group Vice President, Disease
Management -- U.S. Pharmaceuticals Group
Karen L. Katen................... 46 Vice President; Executive Vice President -- U.S.
Pharmaceuticals Group
Alan G. Levin.................... 33 Treasurer
Henry A. McKinnell............... 52 Executive Vice President and Chief Financial Officer;
President -- Hospital Products Group; Member of the
Corporate Management Committee
Brower A. Merriam................ 60 Vice President; President -- Animal Health Group
John C. Mesloh................... 60 Vice President -- Corporate Purchasing
Victor P. Micati................. 55 Vice President; President, Europe -- International
Pharmaceuticals Group
Paul S. Miller................... 56 Senior Vice President; General Counsel; Member of the
Corporate Management Committee
George M. Milne, Jr.............. 51 Vice President; President -- Central Research
Robert Neimeth................... 59 Executive Vice President; President -- International
Pharmaceuticals Group; Member of the Corporate
Management Committee
John F. Niblack.................. 56 Executive Vice President -- Research and Development;
Member of the Corporate Management Committee
William J. Robison............... 59 Vice President; President -- Consumer Health Care
Group
Herbert V. Ryan.................. 58 Controller
Craig Saxton..................... 52 Vice President; Executive Vice President -- Central
Research
Gerald H. Schulze................ 47 Vice President -- Pharmaceutical Planning
Robert L. Shafer................. 62 Vice President -- Public Affairs
David L. Shedlarz................ 47 Vice President -- Finance
William C. Steere, Jr............ 58 Chairman of the Board and Chief Executive Officer;
Director; Member of the Corporate Management
Committee
Frederick W. Telling............. 43 Vice President -- Corporate Strategic Planning and
Policy
</TABLE>
17
<PAGE>
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.
DAVID M. 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.
18
<PAGE>
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.
P. NIGEL GRAY
Mr. Gray joined the Company in 1975 as Export Sales Manager for Howmedica
U.K., Ltd. in England and progressed through a number of positions of increasing
responsibility before being named Vice President, Marketing for Howmedica Europe
in 1983. In 1987, Mr. Gray became Senior Vice President and General Manager of
Howmedica International in Staines, England, then President of Howmedica
International in 1992. In 1993, he came to New York as Executive Vice President
of the Company's Hospital Products Division and President of the Medical Devices
Division and in October 1994, he was elected a Vice President of the Company.
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 and served
in this capacity until his retirement on December 31, 1994.
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
1994, 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.
ALAN G. LEVIN
Mr. Levin joined the Company in 1987 as Senior Operations Auditor for the
Controllers Division, and in 1988 joined the Treasurer's Division as Controller,
Pfizer International Bank. He became Director -- Finance, International in 1991
and in 1993 was named Senior Director -- Finance, Asia. On January 1, 1995, Mr.
Levin was elected Treasurer of the Company.
19
<PAGE>
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 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, Pfizer 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, JR.
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.
20
<PAGE>
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 the
U.S. In 1980 he became President, Pfizer Europe and, in 1983, Mr. Neimeth became
a Vice President of the Company. In 1984, he was also elected Executive Vice
President of Pfizer International Subsidiaries and assumed supervision of the
pharmaceutical business in Africa and the Middle East, in addition to his
responsibilities in Europe. In 1990, he was named 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.
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.
In 1993, Mr. Ryan was elected Controller.
CRAIG SAXTON
Dr. Saxton joined the Company in 1976 as Clinical Projects Director for the
Central Research Division of Pfizer Ltd. 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
21
<PAGE>
and President of the Medical Devices Division. In November 1993, Mr. Schulze was
elected Vice President, Corporate Strategic Planning of the Company. In October
1994, he was elected Vice President, Pharmaceutical Planning.
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.
FREDERICK W. TELLING
Dr. Telling joined the Company in 1977 as Associate Personnel Manager for
the Pharmaceuticals Division and progressed through a number of positions of
increasing responsibility before being named Director of Planning for the
Pharmaceuticals Division in 1981. In 1987, he was named the Vice President of
Planning and Policy, and in 1994, Senior Vice President of Planning and Policy
for the Company's U.S. Pharmaceuticals Group. In October 1994, Dr. Telling was
elected Vice President, Corporate Strategic Planning and Policy.
ITEM 11. EXECUTIVE COMPENSATION
Information with regard to executive compensation is incorporated by
reference to pages 8 through 19 of the Company's Proxy Statement dated March 16,
1995.
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 16, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with regard to certain relationships and related transactions is
incorporated by reference to pages 20 and 21 of the Company's Proxy Statement
dated March 16, 1995.
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 Schedule
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Schedule II -- Valuation and Qualifying Accounts...................... 26
</TABLE>
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.
22
<PAGE>
(a)(3) Exhibits
<TABLE>
<S> <C> <C>
3(i) -- 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), as corrected by the Certificate of Correction of the Restated
Certificate of Incorporation of the Company (as filed in the Office of the
Secretary of State of the State of Delaware on January 3, 1995, and as
filed herewith).
3(ii) -- By-laws of the Company, as amended June 23, 1994 (incorporated by
reference to Exhibit 3(ii) of the Company's Form 8-K Current Report dated
June 23, 1994).
10(a) -- Executive Compensation Plans and Arrangements:
10.1 -- Form of Severance Agreement for Certain Executive Officers of the
Company.
10.2 -- Pfizer Inc. Performance-Contingent Share Award Program
(incorporated by reference to Exhibit 4 of Form S-8, Registration No.
33-56977).
10(b) -- Stock and Asset Purchase Agreement, dated as of November 23, 1994, between
SmithKline Beecham plc and Pfizer Inc., as amended (incorporated by
reference to Exhibit 2 of the Company's Form 8-K Report dated February 7,
1995).
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, 1994 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, 1994.
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, 1994.
21 -- Subsidiaries of the Registrant.
23 -- Report and consent of KPMG Peat Marwick LLP, independent certified public
accountants.
27 -- Financial Data Schedule
</TABLE>
(b) The Company filed a report on Form 8-K dated December 13, 1994.
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.
<TABLE>
<S> <C>
Exhibit 13(b)........... $ 1.40
Exhibit 13(c)........... 1.30
Exhibit 21.............. .60
</TABLE>
23
<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 23, 1995
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>
SIGNATURES TITLE DATE
------------------------------------------------ ------------------------------------------- ------------------
<C> <S> <C>
/s/ WILLIAM C. STEERE, JR.
-------------------------------------- Chairman of the Board, Director (Principal March 23, 1995
William C. Steere, Jr.) Executive Officer)
/s/ HENRY A. MCKINNELL
-------------------------------------- Executive Vice President (Principal March 23, 1995
(Henry A. McKinnell) Financial Officer)
/s/ HERBERT V. RYAN
-------------------------------------- Controller (Principal Accounting Officer) March 23, 1995
(Herbert V. Ryan)
/s/ EDWARD C. BESSEY
-------------------------------------- Director March 23, 1995
(Edward C. Bessey)
/s/ M. ANTHONY BURNS
-------------------------------------- Director March 23, 1995
(M. Anthony Burns)
-------------------------------------- Director March , 1995
(Grace J. Fippinger)
/s/ GEORGE B. HARVEY
-------------------------------------- Director March 23, 1995
(George B. Harvey)
/s/ CONSTANCE J. HORNER
-------------------------------------- Director March 23, 1995
(Constance J. Horner)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------------------------------------------ ------------------------------------------- ------------------
<C> <S> <C>
/s/ STANLEY O. IKENBERRY
-------------------------------------- Director March 23, 1995
(Stanley O. Ikenberry)
/s/ THOMAS G. LABRECQUE
-------------------------------------- Director March 23, 1995
(Thomas G. Labrecque)
/s/ JAMES T. LYNN
-------------------------------------- Director March 23, 1995
(James T. Lynn)
/s/ PAUL A. MARKS
-------------------------------------- Director March 23, 1995
(Paul A. Marks)
/s/ EDMUND T. PRATT, JR.
-------------------------------------- Director March 23, 1995
(Edmund T. Pratt, Jr.)
/s/ FRANKLIN D. RAINES
-------------------------------------- Director March 23, 1995
(Franklin D. Raines)
/s/ FELIX G. ROHATYN
-------------------------------------- Director March 23, 1995
(Felix G. Rohatyn)
/s/ JEAN-PAUL VALLES
-------------------------------------- Director March 23, 1995
(Jean-Paul Valles)
</TABLE>
25
<PAGE>
PFIZER INC. AND SUBSIDIARY COMPANIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING OF COSTS AND OTHER AT END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS(B) DEDUCTIONS(A)(C) PERIOD
-------------------------------------------------- ------------ ----------- ----------- -------------- ---------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1994
Valuation and qualifying accounts deducted from
assets to which they apply
Allowance for doubtful accounts............. $40.6 $11.5 $-- $ 8.0 $44.1
----- ----- --- ----- ---------
----- ----- --- ----- ---------
Allowance for credit losses................. $13.5 $ 7.0 $-- $-- $20.5
----- ----- --- ----- ---------
----- ----- --- ----- ---------
Year ended December 31, 1993
Valuation and qualifying accounts deducted from
assets to which they apply
Allowance for doubtful accounts............. $36.2 $12.1 $ 0.4 $ 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 $ 0.5 $14.6(e) $36.2
----- ----- --- ----- ---------
----- ----- --- ----- ---------
Allowance for credit losses................. $11.5 $ 3.0 $-- $-- $14.5
----- ----- --- ----- ---------
----- ----- --- ----- ---------
<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.
</TABLE>
26
<PAGE>
The following trademarks, found in this report, are among those used by
Pfizer Inc.
CARDURA (DOXAZOSIN MESYLATE)
DIFLUCAN (FLUCONAZOLE)
ENABLE (TENIDAP)
ENABLEX (TENIDAP)
E5 (ANTI-ENDOTOXIN ANTIBODY)
FELDENE (PIROXICAM)
GLUCOTROL (GLIPIZIDE)
GLUCOTROL XL (GLIPIZIDE GITS)
NORVASC (AMLODIPINE BESYLATE)
PROCARDIA (NIFEDIPINE)
PROCARDIA XL (NIFEDIPINE GITS)
REACTINE (CETIRIZINE)
UNASYN (SULBACTAM/AMPICILLIN)
ZITHROMAX (AZITHROMYCIN)
ZOLOFT (SERTRALINE)
ABG
ALTA
DURACON
GAMMA
LUHR
PARATREND
P.C.A.
SIMPLEX
LITESSE (POLYDEXTROSE)
ADVOCIN (DANOFLOXACIN)
AVIAX (SEMDURAMICIN)
BANMINTH (PYRANTEL TARTRATE)
BOVISHIELD
COXISTAC (SALINOMYCIN)
DECTOMAX (DORAMECTIN)
FILARIBITS (DIETHYLCARBAMAZINE CITRATE)
LEUKOCELL
MECADOX (CARBADOX)
NEMEX (PYRANTEL PAMOATE)
RESPISURE
STAFAC (VIRGINIAMYCIN)
TERRAMYCIN LA-200 (OXYTETRACYCLINE)
TM/LA (OXYTETRACYCLINE)
PARATECT (MORANTEL TARTRATE)
POSISTAC (SALINOMYCIN)
VALBAZEN (ALBENDAZOLE)
VANGUARD
BARBASOL
BEN-GAY
DAILY CARE FROM DESITIN
DESITIN
PLAX
RID
UNISOM (DOXYLAMINE SUCCINATE)
UNISOM SLEEPGELS
VISINE (TETRAHYDROZOLINE HCI)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
--------------- ---------------------------------------------------------------------------------------- ---------
<C> <S> <C>
3(i) 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) as corrected by the
Certificate of Correction of the Restated Certificate of Incorporation of the Company
(as filed in the Office of the Secretary of State of the State of Delaware on January
3, 1995, and as filed herewith)........................................................
3(ii) By-laws of the Company, as amended June 23, 1994 (incorporated by reference to Exhibit
3(ii) of the Company's Form 8-K Current Report dated June 23, 1994)....................
10(a) Executive Compensation Plans and Arrangements...........................................
10.1 Form of Severance Agreement for Certain Executive Officers of the Company...............
10.2 Pfizer Inc. Performance-Contingent Share Award Program (incorporated by reference to
Exhibit 4 of Form S-8, Registration No. 33-56977)......................................
10(b) Stock and Asset Purchase Agreement, dated as of November 23, 1994, between SmithKline
Beecham plc and Pfizer Inc., as amended (incorporated by reference to Exhibit 2 of the
Company's Form 8-K Report dated February 7, 1995)......................................
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, 1994
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, 1994....................................................
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, 1994.......
21 Subsidiaries of the Registrant..........................................................
23 Report and consent of KPMG Peat Marwick LLP, independent certified public accountants...
27 Financial Data Schedule.................................................................
</TABLE>
<PAGE>
CERTIFICATE OF CORRECTION
OF THE RESTATED CERTIFICATE OF INCORPORATION
OF
PFIZER INC.
Pfizer Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), pursuant to Section 103(f) of the General
Corporation Law of the State of Delaware, hereby certifies:
FIRST: That the Restated Certificate of Incorporation of the Corporation
(the "Restated Certificate") which was filed with the Secretary of State of the
State of Delaware on April 30, 1991 is an inaccurate record of the corporate
action therein referred to and requires correction as permitted by Section
103(f) of the General Corporation Law of the State of Delaware.
SECOND: The inaccuracy or defect in said Restated Certificate to be
corrected is that the terms of the Series A Junior Preferred Stock, as set forth
in an Amended and Restated Certificate of Designations filed in the Office of
the Secretary of State of the State of Delaware on June 22, 1989, were
inadvertently omitted from Article FOURTH of said Restated Certificate, and
should be added thereto.
THIRD: Article FOURTH of the Restated Certificate is corrected by
inserting at the end thereof the following:
SERIES A JUNIOR PREFERRED STOCK
Pursuant to authority conferred by this Article FOURTH upon the Board of
Directors of the Corporation, the Board of Directors, pursuant to the Amended
and Restated Certificate of Designations filed in the Office of the Secretary of
State of the
<PAGE>
State of Delaware on June 22, 1989, has provided for a series of Preferred Stock
of the Corporation and has stated the designation and number shares, and has
fixed the relative rights, preferences, and limitations thereof as follows:
Series A Preferred Stock:
"RESOLVED, the designation and amount of a series of Preferred Stock
of the Company previously designated as "Series A Junior Participating
Preferred Stock," and the voting powers, preferences and relative,
participating, optional or other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof, are hereby
amended and restated to read in their entirety as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Preferred Stock" (the "Series A Preferred Stock")
and the number of shares constituting such series shall be 1,900,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the provisions for adjustment hereinafter set forth, the
holders of shares of Series A Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) in the event the Board of Directors of the
Company shall, at any time after the issuance of any share of Series A Preferred
Stock, declare a cash dividend payable on the Common Stock, $.10 par value per
share, of the Company (the "Common Stock"), a preferential cash dividend in an
amount per share (rounded to the nearest cent) equal to 100 times the per share
amount of such cash dividend declared on a
-2-
<PAGE>
share of the Common Stock and (ii) a preferential cash dividend (the
"Preferential Dividends"), if any, on the first day of January, April, July and
October of each year (each a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount equal to $10 per
share of Series A Preferred Stock less the per share amount of all cash
dividends declared on the Series A Preferred Stock pursuant to clause (i) of
this sentence since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share of Series A Preferred Stock. In the event the Board of
Directors of the Company shall, at any time after the issuance of any share of
Series A Preferred Stock, declare a distribution on the shares of Common Stock
of the Company, whether by way of a dividend or a reclassification of stock, a
recapitalization, reorganization or partial liquidation of the Company or
otherwise, which is payable in cash or any debt security, debt instrument, real
or personal property or any other property (other than cash dividends subject to
the immediately preceding sentence, a distribution of shares of Common Stock or
other capital stock of the Company or a distribution of rights or warrants to
acquire any such share, including any debt security convertible into or
exchangeable for any such share, at a price less than the Fair Market Value of
such share), then and in each such event each holder of Series A Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of funds legally available for the purpose, a preferential
distribution on each then outstanding share of Series A
-3-
<PAGE>
Preferred Stock of the Company, in like kind, in an amount equal to 100 times
the amount of such distribution paid on a share of Common Stock (subject to the
provisions for adjustment hereinafter set forth). The dividends and
distributions on the Series A Preferred Stock to which holders thereof are
entitled pursuant to clause (i) of the first sentence of this paragraph and
pursuant to the second sentence of this paragraph are hereinafter referred to as
"Series A Dividends" and the multiple of such cash and non-cash dividends on the
Common Stock applicable to the determination of the Series A Dividends, which
shall be 100 initially but shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Dividend Multiple." In the event
the Company shall at any time after October 5, 1987 declare or pay any dividend
or make any distribution on Common Stock payable in shares of Common Stock, or
effect a subdivision or split or a combination, consolidation or reverse split
of the outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, then in each such case the Dividend Multiple thereafter
applicable to the determination of the amount of the Series A Dividends which
holders of shares of Series A Preferred Stock shall be entitled to receive shall
be the Dividend Multiple applicable immediately prior to such event multiplied
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) So long as any shares of Series A Preferred Stock are outstanding,
no dividend or other distribution (other than a dividend or distribution paid
in shares
-4-
<PAGE>
of Common Stock) shall be paid or set apart for payment by the Company on the
Common Stock, unless, in each case, the full dividends on all outstanding shares
of Series A Preferred Stock to which the holders thereof are entitled shall have
been paid. No dividends shall be paid or declared or set apart for payment on
the Series A Preferred Stock in respect of any period unless dividends shall be
or have been paid, or declared and set apart for payment, pro rata on all shares
of Preferred Stock at the time outstanding of each other series which ranks
equally as to dividends with the Series A Preferred Stock so that the amount of
dividends declared on the Series A Preferred Stock shall bear the same ratio to
the amount declared on each such other series as the accrued dividends on the
Series A Preferred Stock shall bear to the accrued dividends on each such other
series. Holders of shares of Series A Preferred Stock shall not be entitled to
any dividend, whether payable in cash, property or stock, in excess of full
dividends, as herein provided, on shares of Series A Preferred Stock. Accruals
of dividends shall not bear interest.
(C) Preferential Dividends shall begin to accrue on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issuance of any shares of Series A Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series A Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
-5-
<PAGE>
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the holder
thereof to 1 vote on all matters submitted to a vote of the stockholders of the
Company. Except as otherwise provided herein, in the Restated Certificate of
Incorporation or by law, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Company.
(B) In the event that the Preferential Dividends accrued on the Series A
Preferred Stock for four or more quarterly dividend periods, whether consecutive
or not, shall not have been declared and paid or set apart for payment, the
holders of record of the Series A Preferred Stock, together with any other
series of Preferred Stock in respect of which the following right is expressly
granted by the authorizing resolutions included in the Certificate of
Designations therefor, shall have the right, at the next meeting of stockholders
called for the election of directors, to elect two members to the Board of
Directors, which directors shall be in addition to the number required by the
By-laws prior to such event, to serve until the next Annual Meeting and until
their successors are elected and qualified or their earlier resignation, removal
or incapacity or until such earlier time as all accrued and unpaid Preferential
Dividends upon the outstanding shares of Series A Preferred Stock shall have
been paid (or set aside for payment) in full. The holders of shares of Series A
Preferred Stock shall continue to have the right to elect directors as provided
by the immediately preceding
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<PAGE>
sentence until all accrued and unpaid Preferential Dividends upon the
outstanding shares of Series A Preferred Stock shall have been paid (or set
aside for payment) in full. Such directors may be removed and replaced by such
stockholders, and vacancies in such directorships may be filled only by such
stockholders (or by the remaining director elected by such stockholders, if
there be one) in the manner permitted by law; provided, however, that any such
action by stockholders shall be taken at a meeting of stockholders and shall not
be taken by written consent thereto.
(C) Except as otherwise required by the Restated Certificate of
Incorporation or by law or set forth herein, holders of Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for the taking of any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever Preferential Dividends or the Series A Dividends are in
arrears or the Company shall be in default of payment thereof, thereafter and
until all accrued and unpaid Preferential Dividends and the Series A Dividends,
whether or not declared, on shares of Series A Preferred Stock outstanding shall
have been paid or set aside for payment in full, and in addition to any and all
other rights which any holder of shares of Series A Preferred Stock may have in
such circumstances, the Company shall not
(i) declare or pay dividends on, make any other distributions on
(other than a dividend or distribution paid in shares of Common Stock), or
-7-
<PAGE>
redeem or purchase or otherwise acquire for consideration, any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity as to dividends with the Series A
Preferred Stock, unless dividends are paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled if the full dividends accrued thereon
were to be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph
4(A), redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, provided
that the Company may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of
the Company ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series A Preferred Stock: or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), except in accordance with a purchase offer
-8-
<PAGE>
made to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Company shall not permit any Subsidiary (as hereinafter defined)
of the Company to purchase or otherwise acquire for consideration any shares of
stock of the Company unless the Company could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner. A "Subsidiary" of the Company shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
the Company or by any corporation or other entity that is otherwise controlled
by the Company.
(C) The Company shall not issue any shares of Series A Preferred Stock
except upon exercise of Rights issued pursuant to that certain Rights Agreement,
dated as of September 24, 1987, as amended by First Amendment to Rights
Agreement, dated as of May 25, 1989, between the Company and The Chase Manhattan
Bank, N.A., a copy of which is on file with the Secretary of the Company at its
principal executive office and shall be made available to stockholders of record
without charge upon written request therefor addressed to said Secretary.
Notwithstanding the foregoing sentence, nothing contained in the provisions
hereof
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<PAGE>
shall prohibit or restrict the Company from issuing for any purpose any series
of Preferred Stock with rights and privileges similar to, different from, or
greater than, those of the Series A Preferred Stock.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
upon their retirement and cancellation shall become authorized but unissued
shares of Preferred Stock, without designation as to series, and such shares may
be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, no
distribution shall be made (i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless the holders of shares of Series A Preferred
Stock shall have received, subject to adjustment as hereinafter provided, (A)
$300 per one-hundredth share plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (B) if greater than the amount specified in clause (i)(A) of
this sentence, an amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, as the same may be adjusted as
hereinafter provided, and (ii) to the holders of stock ranking on a parity upon
liquidation, dissolution or winding up with the Series A Preferred Stock, unless
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<PAGE>
simultaneously therewith distributions are made ratably on the Series A
Preferred Stock and all other shares of such parity stock in proportion to the
total amounts to which the holders of shares of Series A Preferred Stock are
entitled under clause (i)(A) of this sentence and to which the holders of such
parity shares are entitled, in each case upon such liquidation, dissolution or
winding up. The amount to which holders of Series A Preferred Stock may be
entitled upon liquidation, dissolution or winding up of the Company pursuant to
clause (i)(B) of the foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount" and the multiple of the amount to be
distributed to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the Company applicable pursuant to said clause to
the determination of the Participating Liquidation Amount, as said multiple may
be adjusted from time to time as hereinafter provided, is hereinafter referred
to as the "Liquidation Multiple." In the event the Company shall at any time
after October 5, 1987 declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or split or a combination,
consolidation or reverse split of the outstanding shares of Common Stock into a
greater or lesser number of shares of Common Stock, then in each such case the
Liquidation Multiple thereafter applicable to the determination of the
Participating Liquidation Amount to which holders of Series A Preferred Stock
shall be entitled after such event shall be the Liquidation Multiple applicable
immediately prior to such event multiplied by a fraction the numerator of which
is the number of shares of Common Stock outstanding
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<PAGE>
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. CERTAIN RECLASSIFICATIONS AND OTHER EVENTS.
(A) In the event that holders of shares of Common Stock of the Company
receive after October 5, 1987 in respect of their shares of Common Stock any
share of capital stock of the Company (other than any share of Common Stock of
the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise (a "Transaction"),
then and in each such event the dividend rights and rights upon the liquidation,
dissolution or winding up of the Company of the shares of Series A Preferred
Stock shall be adjusted so that after such event the holders of Series A
Preferred Stock shall be entitled, in respect of each share of Series A
Preferred Stock held, in addition to such rights in respect thereof to which
such holder was entitled immediately prior to such adjustment, to (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such Transaction multiplied by the additional dividends which the holder of a
share of Common Stock shall be entitled to receive by virtue of the receipt in
the Transaction of such capital stock and (ii) such additional distributions
upon liquidation, dissolution or winding up of the Company as equal the
Liquidation Multiple in effect immediately prior to such Transaction multiplied
by the additional amount which the holder of a share of Common Stock shall be
entitled to receive upon liquidation, dissolution or winding up of the Company
by virtue of the receipt in the Transaction of such capital stock, as the case
may be, all as provided by the terms of such capital stock.
-12-
<PAGE>
(B) In the event that holders of shares of Common Stock of the Company
receive after October 5, 1987 in respect of their shares of Common Stock any
right or warrant to purchase Common Stock (including as such a right, for all
purposes of this paragraph, any security convertible into or exchangeable for
Common Stock) at a purchase price per share less than the Fair Market Value (as
hereinafter defined) of a share of Common Stock on the date of issuance of such
right or warrant, then and in each such event the dividend rights and rights
upon the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall each be adjusted so that after such event the
Dividend Multiple and the Liquidation Multiple shall each be the product of the
Dividend Multiple and the Liquidation Multiple, as the case may be, in effect
immediately prior to such event multiplied by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding immediately before
such issuance of rights or warrants plus the maximum number of shares of Common
Stock which could be acquired upon exercise in full of all such rights or
warrants and the denominator of which shall be the number of shares of Common
Stock outstanding immediately before such issuance of rights or warrants plus
the number of shares of Common Stock which could be purchased, at the Fair
Market Value of the Common Stock at the time of such issuance, by the maximum
aggregate consideration payable upon exercise in full of all such rights or
warrants.
(C) In the event that holders of shares of Common Stock of the Company
receive after October 5, 1987 in respect of their shares of Common Stock
-13-
<PAGE>
any right or warrant to purchase capital stock of the Company (other than shares
of Common Stock), including as such a right, for all purposes of this paragraph,
any security convertible into or exchangeable for capital stock of the Company
(other than Common Stock), at a purchase price per share less than the Fair
Market Value of such shares of capital stock on the date of issuance of such
right or warrant, then and in each such event the dividend rights and rights
upon liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall each be adjusted so that after such event each
holder of a share of Series A Preferred Stock shall be entitled, in respect of
each share of Series A Preferred Stock held, in addition to such rights in
respect thereof to which such holder was entitled immediately prior to such
event, to receive (i) such additional dividends as equal the Dividend Multiple
in effect immediately prior to such event multiplied, first, by the additional
dividends to which the holder of a share of Common Stock shall be entitled upon
exercise of such right or warrant by virtue of the capital stock which could be
acquired upon such exercise and multiplied again by the Discount Fraction (as
hereinafter defined) and (ii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such event multiplied, first, by the additional
amount which the holder of a share of Common Stock shall be entitled to receive
upon liquidation, dissolution or winding up of the Company upon exercise of such
right or warrant by virtue of the capital stock which could be acquired upon
such exercise and multiplied again by the Discount Fraction. For purposes of
this paragraph, the "Discount Fraction" shall be a fraction the numerator
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<PAGE>
of which shall be the difference between the Fair Market Value of a share of the
capital stock subject to a right or warrant distributed to holders of shares of
Common Stock of the Company as contemplated by this paragraph immediately after
the distribution thereof and the purchase price per share for such share of
capital stock pursuant to such right or warrant and the denominator of which
shall be the Fair Market Value of a share of such capital stock immediately
after the distribution of such right or warrant.
(D) For purposes of this Section 7, the "Fair Market Value" of a share
of capital stock of the Company (including a share of Common Stock) on any date
shall be deemed to be the average of the daily closing price per share thereof
over the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that, in the event that such
Fair Market Value of any such share of capital stock is determined during a
period which includes any date that is within 30 Trading Days after (i) the
ex-dividend date for a dividend or distribution on stock payable in shares of
such stock or securities convertible into shares of such stock, or (ii) the
effective date of any subdivision, split, combination, consolidation, reverse
stock split or reclassification of such stock, then, and in each such case, the
Fair Market Value shall be appropriately adjusted by the Board of Directors of
the Company to take into account ex-dividend or post-effective date trading.
The closing price for any day shall be the last sale price, regular way, or, in
case, no such sale takes place on such day, the average of the closing bid and
asked prices, regular way (in either case, as reported in the applicable
transaction reporting system with respect
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<PAGE>
to securities listed or admitted to trading on the New York Stock Exchange), or,
if the shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares are listed or admitted to trading or, if the shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or if on any such date the shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares selected by the Board of
Directors of the Company. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares are listed or
admitted to trading is open for the transaction of business or, if the shares
are not listed or admitted to trading on any national securities exchange, on
which the New York Stock Exchange or such other national securities exchange as
may be selected by the Board of Directors of the Company is open. If the shares
are not publicly held or not so listed or traded on any day within the period of
30 Trading Days applicable to the determination of Fair Market Value thereof as
aforesaid, "Fair Market Value" shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors of the Company. In
either case referred to in the foregoing
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<PAGE>
sentence, the determination of Fair Market Value shall be described in a
statement filed with the Secretary of the Company.
Section 8. CONSOLIDATION, MERGER, ETC. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the higher of the Dividend Multiple or the Liquidation Multiple in
effect immediately prior to such event.
Section 9. EFFECTIVE TIME OF ADJUSTMENTS.
(A) Adjustments to the Series A Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
(B) The Company shall give prompt written notice to each holder of a
share of Series A Preferred Stock of the effect of any adjustment to the
dividend rights or rights upon liquidation, dissolution or winding up of the
Company of such shares required by the provisions hereof. Notwithstanding the
foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of or the force or effect of or the requirement for such
adjustment.
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<PAGE>
Section 10. NO REDEMPTION. The shares of Series A Preferred Stock shall
not be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may acquire
shares of Series A Preferred Stock in any other manner permitted by law, the
provisions hereof and the Restated Certificate of Incorporation of the Company.
Section 11. RANKING. Unless otherwise provided in the Restated
Certificate of Incorporation of the Company or a Certificate of Designations
relating to a subsequent series of preferred stock of the Company, the Series A
Preferred Stock shall rank junior to all other series of the Company's Preferred
Stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up and senior to the Common Stock.
Section 12. AMENDMENT. The provisions hereof and the Restated Certificate
of Incorporation of the Company shall not be amended in any manner which would
adversely affect the rights, privileges or powers of the Series A Preferred
Stock without, in addition to any other vote of stockholders required by law,
the affirmative vote of the holders to two-thirds or more of the outstanding
shares of Series A Preferred Stock, voting together as a single class."
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<PAGE>
IN WITNESS WHEREOF, Pfizer Inc. has caused this Certificate of Correction
to be executed by Terence J. Gallagher, its Vice President - Corporate
Governance and Assistant Secretary, this 27th day of December, 1994.
PFIZER INC.
--------------------------------------------
Terence J. Gallagher
Vice President - Corporate
Governance and Assistant
Secretary
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<PAGE>
, 1995
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Dear :
Pfizer Inc. (the "Company") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, should the Company receive a proposal
from a third party, whether solicited by the Company or unsolicited, concerning
a possible business combination with, or the acquisition of a substantial share
of the equity or voting securities of, the Company, the Board of Directors of
the Company (the "Board") has determined that it is imperative that it and the
Company be able to rely upon your continued services without concern that you
might be distracted by the personal uncertainties and risks that such a proposal
might otherwise entail.
Accordingly, the Board in the past has taken steps to reinforce and
encourage the continued attention and dedication of members of the Company's
management, yourself included, to their assigned duties without distraction in
the face of potentially disturbing circumstances that could arise out of a
proposal for a change in control of the Company. The Board has reviewed the
terms of the Company's existing severance arrangements with you and has
determined that it is appropriate to update and modify certain of such
arrangements, all upon the terms set forth herein.
In order to induce you to remain in the employ of the Company and
its subsidiaries and in consideration of your agreement set forth in Section
2(ii) hereof, the Company agrees that you shall receive the severance benefits
set forth in this letter agreement ("Agreement") in the event your employment
with the Company and its subsidiaries is terminated subsequent to a Change in
Control (as defined in Section 2 hereof) under the circumstances described
below.
1. TERM OF AGREEMENT. This Agreement shall commence on the
date hereof and shall continue in effect through September 30, 1996; provided,
however, the term of this Agreement shall automatically be extended for one
additional year commencing on October 1, 1996 and each October 1 thereafter,
unless, not later than June 30 of the preceding year, the Company shall have
given notice that it does not wish to extend this Agreement; provided, further,
that, notwithstanding any such notice by the Company not
<PAGE>
, 1995
Page 2
to extend, if a Change in Control shall have occurred during the original or any
extended term of this Agreement, this Agreement shall continue in effect for a
period of forty-eight (48) months beyond the expiration of the term in effect
immediately before such Change in Control.
2. CHANGE IN CONTROL. (i) No benefits shall be payable
hereunder unless there shall have been a Change in Control of the Company, as
set forth below. For purposes of this Agreement, and subject to the proviso set
forth in clause (C) below, a "Change in Control" of the Company shall mean a
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Company is then subject to such reporting requirement; provided that, without
limitation, such a Change in Control shall be deemed to have occurred if (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as determined for purposes of Regulation
13D-G under the Exchange Act as currently in effect), directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding securities; or (B) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board and any new director, whose election to the Board or nomination for
election to the Board by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority of the Board; or (C) the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the holders of the voting securities of
the Company outstanding immediately prior thereto holding immediately thereafter
securities representing more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or (D) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets.
(ii) You agree that, subject to the terms and conditions of this
Agreement, in the event of a potential change in control of the Company
occurring after the date hereof, you will not voluntarily terminate your
employment with the Company and its subsidiaries for a period of six (6) months
from the
<PAGE>
, 1995
Page 3
occurrence of such potential change in control of the Company. If more than one
potential change in control occurs during the term of this Agreement, the
provisions of the preceding sentence shall be applicable to each potential
change in control occurring prior to the occurrence of a Change in Control. For
purposes of this Agreement, a "potential change in control of the Company" shall
be deemed to have occurred if (A) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control; (B)
any person (including the Company) publicly announces an intention to take or to
consider taking actions which if consummated would constitute a Change in
Control; (C) any person becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 9.5% or more of the combined voting power
or the Company's then outstanding securities; or (D) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a potential
change in control of the Company has occurred.
3. TERMINATION FOLLOWING CHANGE IN CONTROL. If any of the events
described in Section 2(i) hereof constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Section 4(iv) hereof
upon the subsequent termination of your employment with the Company and its
subsidiaries during the term of this Agreement unless such termination is (A) a
result of your death or Retirement, or (B) by you for other than Good Reason, or
(C) by the Company or any of its subsidiaries for Disability or for Cause.
(i) DISABILITY; RETIREMENT. For purposes of this Agreement,
"Disability" shall mean permanent and total disability as such term is defined
under Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"). Any question as to the existence of your Disability upon which you and
the Company cannot agree shall be determined by a qualified independent
physician selected by you (or, if you are unable to make such selection, such
selection shall be made by any adult member of your immediate family or your
legal representative), and approved by the Company, said approval not to be
unreasonably withheld. The determination of such physician made in writing to
the Company and to you shall be final and conclusive for all purposes of this
Agreement. For purposes of this Agreement, "Retirement" shall mean your
voluntary termination of employment with the Company in accordance with the
Company's retirement policy (excluding early retirement) generally applicable to
its salaried employees or in accordance with any retirement arrangement
established with your consent with respect to you.
(ii) CAUSE. For purposes of this Agreement, "Cause" shall mean
your willful breach of duty in the course of your
<PAGE>
, 1995
Page 4
employment, or your habitual neglect of your employment duties. For purposes of
this Section 3(ii), no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best interest
of the Company and its subsidiaries. Notwithstanding the foregoing, you shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board you were guilty of conduct set forth above in this Section 3(ii) and
specifying the particulars thereof in detail.
(iii) GOOD REASON. You shall be entitled to terminate your
employment for Good Reason. For the purpose of this Agreement, "Good Reason"
shall mean the occurrence, without your express written consent, of any of the
following circumstances unless, in the case of paragraphs 3(iii)(A), (E), (F),
(G), or (H), such circumstances are fully corrected prior to the Date of
Termination (as defined in Section 3(v)) specified in the Notice of Termination
(as defined in Section 3(iv)) given in respect thereof:
(A) the assignment to you of any duties inconsistent with your status
as an executive officer of Pfizer Inc., your removal from that position, or
a substantial diminution in the nature or status of your responsibilities
from those in effect immediately prior to the Change in Control;
(B) a reduction by the Company or any of its subsidiaries in your
annual base salary or bonus as in effect on the date hereof or as the same
may be increased from time to time;
(C) the relocation of the office in which you are based to a location
(i) outside of the Borough of Manhattan if the office in which you are
based prior to the Change In Control is located in the Borough of Manhattan
or (ii) outside of the Town of Groton, Connecticut or the Borough of
Manhattan if the office in which you are based prior to the Change In
Control is located in the Town of Groton, Connecticut;
<PAGE>
, 1995
Page 5
(D) the failure by the Company to pay to you any portion of any
installment of deferred compensation under any deferred compensation
program of the Company within seven (7) days of the date such compensation
is due;
(E) the failure by the Company or any of its subsidiaries to continue
in effect any incentive compensation plan in which you participate prior to
the Change in Control, unless an equitable alternative compensation
arrangement (embodied in an ongoing substitute or alternative plan) has
been provided for you, or the failure by the Company or any of its
subsidiaries to continue your participation in any such incentive plan on
the same basis, both in terms of the amount of benefits provided and the
level of your participation relative to other participants, as existed at
the time of the Change in Control;
(F) except as required by law, the failure by the Company or any of
its subsidiaries to continue to provide you with benefits at least as
favorable as those enjoyed by you under the employee benefit and welfare
plans of the Company and its subsidiaries, including, without limitation,
the pension, life insurance, medical, dental, health and accident,
disability, deferred compensation retirement and savings plans, in which
you were participating at the time of the Change in Control, the taking of
any action by the Company or any of its subsidiaries which would directly
or indirectly materially reduce any of such benefits or deprive you of any
material fringe benefit enjoyed by you at the time of the Change in
Control, or the failure by the Company or any of its subsidiaries to
provide you with the number of paid vacation days to which you are entitled
at the time of the Change in Control;
(G) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 5 hereof; or
(H) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(iv) below (and, if applicable, the requirements of Section 3(ii)
above); for purposes of this Agreement, no such purported termination shall
be effective.
<PAGE>
, 1995
Page 6
Your continued employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstances constituting Good Reason hereunder.
(iv) NOTICE OF TERMINATION. Any purported termination of your
employment by the Company and its subsidiaries or by you shall be communicated
by written Notice of Termination to the other party hereto in accordance with
Section 6 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.
(v) DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(A) if your employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30) day period), and
(B) if your employment is terminated pursuant to Section 3(ii) or (iii) above or
for any reason (other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination pursuant to Section 3(ii) above
shall not be less than thirty (30) days, and in the case of a termination
pursuant to Section 3(iii) above shall not be less than thirty (30) nor more
than sixty (60) days, respectively, from the date such Notice of Termination is
given); provided that, if within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the grounds for termination, the
Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or the time for appeal therefrom
having expired and no appeal having been perfected); provided further that the
Date of Termination shall be extended by a notice of dispute only if such notice
is given in good faith and the party giving such notice pursues the resolution
of such dispute with reasonable diligence. Notwithstanding the pendency of any
such dispute, the Company and its subsidiaries will continue to pay you your
full compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary and bonus) and continue you as a
participant in all incentive compensation, benefit and insurance plans in which
you were participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this Section 3(v).
Amounts paid under this Section 3(v) are in addition to all other
<PAGE>
, 1995
Page 7
amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement.
4. COMPENSATION UPON TERMINATION OR DURING DISABILITY. Following
a Change in Control of the Company, as defined by Section 2(i), upon termination
of your employment or during a period of Disability you shall be entitled to the
following benefits, provided that such period of Disability or Date of
Termination occurs during the term of this Agreement:
(i) During any period that you fail to perform your full-time
duties with the Company and its subsidiaries as a result of your Disability, you
shall continue to receive an amount equal to your base salary and bonus at the
rate in effect at the commencement of any such period through the Date of
Termination for Disability. Thereafter, your benefits shall be determined in
accordance with the insurance programs of the Company and its subsidiaries then
in effect.
(ii) If your employment shall be terminated by the Company or any
of its subsidiaries for Cause or by you other than for Good Reason, the Company
(or one of its subsidiaries, if applicable) shall pay you your full base salary
and bonus through the Date of Termination at the rate in effect at the time
Notice of Termination is given and shall pay any amounts to be paid to you
pursuant to any other compensation plans, programs or employment agreements then
in effect, and the Company shall have no further obligations to you under this
Agreement.
(iii) If your employment shall be terminated by reason of your
death or Retirement, your benefits shall be determined in accordance with the
retirement and insurance programs of the Company and its subsidiaries then in
effect.
(iv) If your employment by the Company and its subsidiaries shall
be terminated by (a) the Company and its subsidiaries other than for Cause, your
death, Retirement, or Disability or (b) you for Good Reason, then you shall be
entitled to the benefits provided below:
(A) The Company (or one of its subsidiaries, if applicable) shall pay
you your full base salary and annual incentive payment through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, no later than the fifth day following the Date of Termination, plus
all other amounts to which you are entitled under any compensation plan of
the Company applicable to you, at the time such payments are due. For
purposes of this Section 4(iv)(A) and the other provisions
<PAGE>
, 1995
Page 8
of this Agreement, your annual incentive payment "in effect at the time the
Notice of Termination is given" shall mean the greater of (i) the target
amount of your annual incentive payment for the year in which the Notice of
Termination is given and (ii) the amount of the annual incentive payment
made to you in respect of the year immediately prior to the year in which
the Notice of Termination is given.
(B) The Company shall pay you, on a date that is no later than the
fifth day following the Date of Termination, as severance pay to you a
severance payment equal to 2.99 times the greater of (i) your "Base Amount"
as such term is defined under Section 280G(b)(3) of the Code or (ii) the
sum of (x) your full base salary and (y) annual incentive payment, in each
case in effect at the time the Notice of Termination is given. In
addition, the Company shall pay or otherwise transfer to you, on a date
that is no later than the fifth day following the Date of Termination,
amounts and property that you are eligible to receive in respect of awards
made to you prior to the Date of Termination pursuant to the Company's
Performance - Contingent Share Awards (or any successor long-term
compensation plan or award in effect as of the Date of Termination) that
remain outstanding as of the Date of Termination, such amounts and property
to be calculated using the maximum number of shares, payments or other
benefits that you could have received pursuant to all such outstanding
awards.
For purposes of this Section 4(iv)(B), your Base Amount shall be
determined in accordance with Section 280G(b)(3) of the Code and with any
proposed, temporary or final regulations promulgated under that Section in
effect. In the absence of such regulations, if you were not employed by
the Company (or any corporation affiliated with the Company (an
"Affiliate") within the meaning of Section 1504 of the Code or a
predecessor of the Company) during the entire five calendar years (the
"Base Period") preceding the calendar year in which a Change in Control of
the Company occurred, your average annual compensation for the purposes of
such determination shall be the average of your annual compensation for
both complete and partial calendar years during the Base Period during
which you were so employed, determined by annualizing any compensation
(other than nonrecurring items) includible in your gross income for any
partial calendar year. For purposes of the preceding sentence,
compensation payable to you by the Company or any Affiliate or predecessor
of the Company shall include every type and form of compensation includible
in your gross
<PAGE>
, 1995
Page 9
income in respect of your employment by the Company or any Affiliate or
predecessor of the Company, including compensation income recognized as a
result of your exercise of stock options or sale of the stock so acquired,
except to the extent otherwise provided in proposed, temporary or final
regulations promulgated under Section 280G of the Code defining base
amount.
The payment to be made to you pursuant to this Section 4(iv)(B)
shall not be reduced by the amount of any other payment or the value of any
benefit received or to be received by you in connection with your
termination of employment or contingent upon a Change in Control of the
Company (whether payable pursuant to the terms of this Agreement or any
other agreement, plan or arrangement with the Company or an Affiliate,
predecessor or successor of the Company or any person whose actions result
in a Change in Control of the Company or an Affiliate of such person).
(C) In the event that any payment or benefit received or to be
received by you pursuant to the terms of this Agreement (the "Contract
Payments") or in connection with your termination of employment or
contingent upon a Change in Control of the Company pursuant to any plan or
arrangement or other agreement with the Company (or any affiliate) ("Other
Payments" and, together with the Contract Payments, the "Payments") would
be subject to the excise tax (the "Excise Tax") imposed by Section 4999 of
the Code, as determined as provided below, the Company shall pay to you, at
the time specified in Section 4(iv)(D) below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by you, after
deduction of the Excise Tax on Contract Payments and Other Payments and any
federal, state and local income tax and Excise Tax upon the payment
provided for by this Section 4(iv)(C), and any interest, penalties or
additions to tax payable by you with respect thereto, shall be equal to the
total present value of the Contract Payments and Other Payments at the time
such Payments are to be made. For purposes of determining whether any of
the Payments will be subject to the Excise Tax and the amounts of such
Excise Tax, (1) the total amount of the Payments shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the Code,
and all "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
except to the extent that, in the opinion of independent tax counsel
selected by the Company's independent auditors and reasonably acceptable to
you ("Tax Counsel"), a Payment (in whole or in part) does not
<PAGE>
, 1995
Page 10
constitute a "parachute payment" within the meaning of Section 280G(b)(2)
of the Code, or such "excess parachute payments" (in whole or in part) are
not subject to the Excise Tax, (2) the amount of the Payments that shall be
treated as subject to the Excise Tax shall be equal to the lesser of (A)
the total amount of the Payments or (B) the amount of "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code (after
applying clause (1) hereof), and (3) the value of any noncash benefits or
any deferred payment or benefit shall be determined by Tax Counsel in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay federal income tax at the highest marginal rates of
federal income taxation applicable to individuals in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes
at the highest marginal rates of taxation applicable to individuals as are
in effect in the state and locality of your residence in the calendar year
in which the Gross-Up Payment is to be made, net of the maximum reduction
in federal income taxes that can be obtained from deduction of such state
and local taxes, taking into account any limitations applicable to
individuals subject to federal income tax at the highest marginal rates.
(D) The Gross-Up Payments provided for in Section 4(iv)(C) hereof
shall be made upon the earlier of (i) the payment to you of any Contract
Payment or Other Payment or (ii) the imposition upon you or payment by you
of any Excise Tax.
(E) If it is established pursuant to a final determination of a court
or an Internal Revenue Service proceeding or the opinion of Tax Counsel
that the Excise Tax is less than the amount taken into account under
Section 4(iv)(C) hereof, you shall repay to the Company within five days of
your receipt of notice of such final determination or opinion the portion
of the Gross-Up Payment attributable to such reduction (plus the portion of
the Gross-Up Payment attributable to the Excise Tax and federal, state and
local income tax imposed on the Gross-Up Payment being repaid by you if
such repayment results in a reduction in Excise Tax or a federal, state and
local income tax deduction) plus any interest received by you on the amount
of such repayment. If it is established pursuant to a final determination
of a court or an Internal Revenue Service proceeding or the opinion of Tax
Counsel that the Excise Tax exceeds the amount taken into account hereunder
(including by reason of
<PAGE>
, 1995
Page 11
any payment the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess within five days of the
Company's receipt of notice of such final determination or opinion.
(F) The Company shall also pay to you all legal fees and expenses
reasonably incurred by you in connection with this Agreement (including all
such fees and expenses, if any, incurred in contesting or disputing the
nature of any such termination for purposes of this Agreement or in seeking
to obtain or enforce any right or benefit provided by this Agreement); and
(G) (i) Upon the date of Termination, you (or your spouse or
applicable beneficiary in the event of your death) will receive a benefit
payable from the Company's general funds to be calculated using the benefit
calculation provisions of the Pfizer Retirement Annuity Plan ("PRAP") and
the Company's unfunded Supplemental Retirement Plan ("SRP") as if the
provisions thereunder contained the assumptions set forth herein, and
offset by any benefits actually payable under PRAP and SRP not taking into
account the assumptions set forth herein. Any elections made under SRP for
purposes of determining the form of payment will also apply for purposes of
this benefit. The assumptions to be used in calculating your benefit are:
(x) you have continued in the employ of the Company for an additional three
years after the Date of Termination, and (y) you have earned annually from
the Date of Termination to the date of your assumed continued employment
pursuant to clause (x) above the same compensation you earned in the twelve
months preceding the Date of Termination or in the twelve months preceding
the Change of Control, if greater. In addition, the pension payable to you
at age 55 (or upon the Date of Termination, if you are then age 55 or over)
shall not be reduced because it is payable prior to age 65.
(ii) There will be added three years to your actual age for
determining whether you are age 55 or over for the purposes of your
eligibility to commence receiving payments of benefits pursuant to Section
4(iv)(G)(i) above.
(H) You shall be immediately eligible for all benefits, in addition
to those described in Section 4(iv) (G) above, made available immediately
prior to the Date of Termination to retirees of the Corporation, including,
without limitation, retiree medical coverage and life insurance benefits,
as if you had at the Date of Termination
<PAGE>
, 1995
Page 12
satisfied the age and service conditions for coverage under the applicable
provisions of the Company's employee benefit plans. If the Company is
unable to provide you coverage under such plans, it shall provide you with
separate comparable coverage.
(I) Upon the Date of Termination (i) all restrictions and limitations
on any "restricted" stock awards previously made to you pursuant to the
Company's Stock and Incentive Plan or otherwise shall lapse and have no
further force and effect and you shall be entitled to receive in respect
thereof certificates evidencing shares of stock reflecting your right to
vote, dispose, receive distributions and enjoy all other rights in respect
of such stock free of the previously imposed restrictions and (ii) all
options to purchase stock that are not vested shall immediately vest and
become exercisable and all options to purchase stock then held by you shall
remain in effect for the respective terms of such options notwithstanding
any early termination provisions that otherwise would be applicable.
(J) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this Section
4 be reduced by any compensation earned by you as the result of employment
by another employer or by retirement benefits received after the Date of
Termination or otherwise.
5. SUCCESSORS; BINDING AGREEMENT.
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company is required to perform it. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled hereunder if you had terminated your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
<PAGE>
, 1995
Page 13
(ii) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
6. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the address set forth on the first page of this Agreement with respect to the
Company and on the signature page with respect to you, provided that all notices
to the Company shall be directed to the attention of the Senior Vice
President-General Counsel of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
7. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any conditions or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York, including Section 198 (1-a) of the New
York Labor Law. All references to sections of the Code shall be deemed also to
refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law. The obligations of the Company under Section 4
shall survive the expiration of the term of this Agreement.
8. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or
<PAGE>
, 1995
Page 14
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
9. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
11. EFFECT ON EXISTING AGREEMENT. This Agreement supersedes and
replaces that certain letter agreement, dated __________________, between you
and the Company, which shall have no further continuing force or effect.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
Pfizer Inc.
By:_____________________________________
Name:
Title:
Agreed to this ____ day
of , 1995.
____________________________________
<PAGE>
EXHIBIT 11
PFIZER INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF EARNINGS PER COMMON SHARE AND
FULLY DILUTED EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1993 1992
---------- --------- ---------
(IN MILLIONS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Net income....................................................................... $ 1,298.4 $ 657.5 $ 810.9
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
---------- --------- ---------
Adjusted net income for earnings per common share computation.................... $ 1,298.4 $ 657.5 $ 811.1
---------- --------- ---------
---------- --------- ---------
Weighted average number of common shares outstanding............................. 305.8 315.5 329.0
Common share equivalents applicable to stock option plans........................ 4.4 4.9 7.5
---------- --------- ---------
Weighted average number of common shares and common share equivalents used to
compute earnings per common share............................................... 310.2 320.4 336.5
---------- --------- ---------
---------- --------- ---------
Earnings per common share........................................................ $ 4.19 $ 2.05 $ 2.41
---------- --------- ---------
---------- --------- ---------
Adjusted net income for fully diluted earnings per common share computation...... $ 1,298.4 $ 657.5 $ 811.1
---------- --------- ---------
---------- --------- ---------
Weighted average number of common shares outstanding............................. 305.8 315.5 329.0
Common share equivalents applicable to stock option plans........................ 4.8 5.1 7.5
Common share equivalents applicable to 4% Convertible Subordinated Debentures Due
1997 (b)........................................................................ -- -- .1
---------- --------- ---------
Weighted average number of common shares and common share equivalents used to
compute fully diluted earnings per common share................................. 310.6 320.6 336.6
---------- --------- ---------
---------- --------- ---------
Fully diluted earnings per common share (c)...................................... $ 4.18 $ 2.05 $ 2.41
---------- --------- ---------
---------- --------- ---------
<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%.
</TABLE>
<PAGE>
EXHIBIT 12
PFIZER INC. AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1994 1993 1992 1991 1990
---------- --------- ---------- ---------- ----------
(MILLIONS OF DOLLARS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
Earnings
Income before provision for taxes on income,
minority interests and cumulative effect of
accounting changes................................. $ 1,861.5 $ 851.4 $ 1,534.8 $ 943.7 $ 1,103.3
Less: Minority interests........................ 4.6 2.6 2.7 3.2 4.2
Undistributed earnings (losses) of
unconsolidated subsidiaries................. (.7) .7 8.5 0.8 (0.3)
---------- --------- ---------- ---------- ----------
Adjusted income..................................... 1,857.6 848.1 1,523.6 939.7 1,099.4
Fixed charges, excluding capitalized interest....... 158.4 135.6 130.1 155.2 153.8
---------- --------- ---------- ---------- ----------
Total earnings.................................. $ 2,016.0 $ 983.7 $ 1,653.7 $ 1,094.9 $ 1,253.2
---------- --------- ---------- ---------- ----------
---------- --------- ---------- ---------- ----------
Fixed Charges
Interest expense (including amortization of debt
discount and expenses and capitalized
interest)........................................ $ 141.6 $ 120.5 $ 115.6 $ 138.1 $ 142.4
One-third of rental expense....................... 31.5 29.1 26.7 25.1 21.3
---------- --------- ---------- ---------- ----------
Total fixed charges............................. $ 173.1 $ 149.6 $ 142.3 $ 163.2 $ 163.7
---------- --------- ---------- ---------- ----------
---------- --------- ---------- ---------- ----------
Ratio of earnings to fixed charges (a)................ 11.6 6.6 11.6 6.7 7.7
---------- --------- ---------- ---------- ----------
---------- --------- ---------- ---------- ----------
<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, which are not material.
</TABLE>
<PAGE>
FINANCIAL REVIEW
SIGNIFICANT EVENTS AFFECTING COMPARABILITY
The comparability of income statement data is affected by the following:
/ / In September 1993, the Company recorded a $750 million pre-tax charge ($525
million after-tax) for certain restructuring and unusual items. This charge
covered restructuring costs, including personnel reductions and the
writedown of certain tangible assets as well as intangible assets whose
carrying value would not have been recovered through future cash flows.
/ / 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. The net proceeds ($226.6 million)
approximated the net book value of the interest sold. In April 1993, the
Company's remaining interest was sold, resulting in a pre-tax gain of
approximately $60 million.
/ / In 1992, the Company adopted new accounting standards for postretirement
health care and life insurance benefits and for income taxes. These
standards resulted in a one-time net after-tax charge ($282.6 million),
with no effect on cash flows. Postretirement benefit curtailment gains
($56.5 million) related to 1992 divestitures were included in divestitures,
restructuring and unusual items--net.
/ / 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.
/ / In March 1992, the Company sold certain product lines and other assets of
Shiley Incorporated to Sorin Biomedica S.p.A. for approximately $230
million, resulting in a gain which was used to offset costs associated with
the Bowling Settlement Agreement. See the footnote "Litigation" beginning
on page 49 for additional information.
OVERVIEW OF CONSOLIDATED OPERATING RESULTS
Restructuring initiatives and various divestitures over the past several years
were taken in order to position the Company as a research-based, health care
company operating in global markets.
Net income in 1994 was $1,298.4 million, or $4.19 per share, compared with
$657.5 million, or $2.05 per share, in 1993. Excluding the net effects of
divestitures, restructuring and unusual items, net income and earnings per share
in 1993 would have been $1,183.9 million, or $3.70 per share. Operating results,
excluding the items noted above as well as certain phased-out product lines, are
referred to in this report as results of ongoing operations. On this ongoing
basis, net income and earnings per share for 1994 increased 10% and 13%,
respectively.
Net sales in 1994 ($8,281.3 million) increased 11% compared with 1993.
Aggregate worldwide sales of the pharmaceutical products launched during the
1990s--Norvasc, Diflucan, Zoloft, Cardura, Zithromax and Glucotrol XL--
represented 33% and 25% of net sales for the years 1994 and 1993, respectively.
The 44% increase in sales of these six products compared with 1993 was almost
exclusively related to volume. These results continued to reflect the Company's
successful innovative research and development (R&D) efforts, which have
produced a broad product pipeline. In 1994, R&D expenditures were in excess of
$1.1 billion, an increase of 17% over 1993.
NET SALES
Net sales in 1994 increased $803.6 million, or 11% over 1993. Net sales in 1993
increased $247.5 million, or 3% over 1992. Net sales from ongoing operations in
1993 increased 9% over 1992. Both the U.S. and international markets reflected
net sales increases in 1994 and 1993. In 1994, the Company registered net sales
of more than $10 million in each of 43 countries outside the U.S., with no
single country, other than the U.S. and Japan, contributing more than 10% to
total net sales.
The following tables detail net sales by segment on a reported and ongoing
basis for 1994 and 1993. For 1994, the reported and ongoing net sales amounts
were the same.
1994 NET SALES BY SEGMENT
<TABLE>
<CAPTION>
% CHANGE COMPARED WITH
AS --------------------------
(MILLIONS OF DOLLARS) REPORTED AS REPORTED ONGOING
---------------------------------------------------------------------------
<S> <C> <C> <C>
Health Care $6,963.0 12 12
Animal Health 605.3 5 5
Consumer Health Care 409.0 10 10
Food Science 304.0 (4) 0
---------------------------------------------------------------------------
Total $8,281.3 11 11
---------------------------------------------------------------------------
</TABLE>
NET SALES
(The table below was represented by a graph in the printed Annual Report.)
Net Sales
(millions of dollars)
U.S. International Total
-----------------------------------------
1990 3,473 2,933 6,406
-----------------------------------------
1991 3,809 3,141 6,950
-----------------------------------------
1992 3,888 3,342 7,230
-----------------------------------------
1993 4,006 3,472 7,478
-----------------------------------------
1994 4,411 3,870 8,281
-----------------------------------------
The 1994 sales increase of 11% was spearheaded
by growth in pharmaceutical products.
26
<PAGE>
1993 NET SALES BY SEGMENT
<TABLE>
<CAPTION>
AS % %
(MILLIONS OF DOLLARS) REPORTED CHANGE ONGOING CHANGE
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care $6,210.3 11 $6,210.3 11
Animal Health 578.0 3 578.0 3
Consumer Health Care 373.5 (8) 373.5 0
Food Science* 315.9 (51) 303.8 (8)
---------------------------------------------------------------------------
Total $7,477.7 3 $7,465.6 9
---------------------------------------------------------------------------
</TABLE>
PERCENTAGE CHANGE IN NET SALES--AS REPORTED
<TABLE>
<CAPTION>
ANALYSIS OF CHANGE
TOTAL % --------------------------
CHANGE VOLUME PRICE CURRENCY
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care
1994 vs. 1993 12 12 0 0
1993 vs. 1992 11 11 2 (2)
Animal Health
1994 vs. 1993 5 3 1 1
1993 vs. 1992 3 0 6 (3)
Consumer Health Care
1994 vs. 1993 10 9 1 0
1993 vs. 1992 (8) (9) 2 (1)
Food Science
1994 vs. 1993 (4) (2) (2) 0
1993 vs. 1992* (51) (52) 1 0
Consolidated
1994 vs. 1993 11 11 0 0
1993 vs. 1992 3 3 2 (2)
---------------------------------------------------------------------------
<FN>
*REFLECTS THE SALE OF MTI IN 1992.
</TABLE>
There was no price impact on 1994 net sales growth. In 1993, the Company's
average pharmaceutical price increases in the U.S. were below the increase in
the U.S. Consumer Price Index.
The increase in 1993 consolidated net sales included a 9% rise in unit
volume from ongoing operations, offset by a reduction of 6% applicable to net
sales of businesses divested in 1992.
Reported 1994 and 1993 net sales for the health care segment reflected a
13% increase in worldwide pharmaceutical sales in both years.
The following table shows percentage sales growth of the Company's major
pharmaceuticals:
PERCENTAGE CHANGE IN NET SALES--MAJOR PHARMACEUTICALS
<TABLE>
<CAPTION>
% INCREASE/(DECREASE)
---------------------------------------------------------------------------
94/93 93/92
---------------------------------------------------------------------------
<S> <C> <C>
Cardiovasculars:
Procardia XL 0 11
Norvasc 85 119
Cardura 27 40
Anti-Infectives:
Diflucan 14 19
Zithromax 43 82
Unasyn (5) 7
Central Nervous System Agents:
Zoloft 55 138
Anti-Inflammatories:
Feldene (16) (41)
Antidiabetes Agents:
Glucotrol/Glucotrol XL (15) 13
---------------------------------------------------------------------------
</TABLE>
Procardia XL sales totaled $1.2 billion in 1994, an amount comparable to
the 1993 sales level. The underlying demand for Procardia XL declined modestly
in 1994. Decreases in Feldene and Glucotrol sales were attributable to a
combination of generic competition and new competitive brand-name products.
The 1990 Omnibus Budget Reconciliation Act included a provision requiring
pharmaceutical companies to rebate a portion of revenues from pharmaceutical
products dispensed to state Medicaid recipients. Medicaid rebates and related
state programs reduced net sales by $74 million in 1994 and $70 million in 1993.
In addition, the Company provided approximately $56 million and $51 million in
discounts to the federal government in 1994 and 1993, respectively.
Performance-based contracts with several customers in the U.S. reduced the price
impact on net sales for 1994, but were offset by increases in volume.
Net sales of the Hospital Products Group increased 6% and 2% in 1994 and
1993, respectively. Hospital Products continues to benefit from new product
introductions and from the success of its coronary catheters and stents,
although sales trends in this group continue to be tempered by overall market
conditions. The Hospital Products business was adversely affected in 1993 by
events influencing the industry in general, principally the deferral of medical
procedures and changes in purchasing practices, including shifts to lower-cost
products and reduced hospital inventories. Foreign exchange reduced net sales
growth from 6% to 2% for 1993.
Net sales in the animal health segment increased 5% in 1994 and reflected
the strong performance of Dectomax, particularly in Latin America, where sales
increased 21%. Net sales increased 3% in 1993 owing to strong U.S. sales of
Terramycin/Liquamycin LA-200 and the growth of Dectomax and Advocin in
international markets.
(The table below was represented by a graph in the printed Annual Report.)
Composition of Net Sales Growth
(As Reported)
Price Volume Currency
----------------------------------------
1992 3% 0% 1%
----------------------------------------
1993 2% 3% -2%
----------------------------------------
1994 0% 11% 0%
----------------------------------------
1994 sales growth was driven entirely by volume.
Aggregate sales of the six pharmaceutical products
launched in the 1990s increased by 44%.
27
<PAGE>
Net sales in the consumer health care segment increased 10% in 1994,
reflecting improved U.S. market share in Desitin, Unisom, BenGay and Rid, line
extensions of certain existing products and international expansion. Net sales
in 1993 decreased 8% from 1992, primarily as a result of the sale of the Coty
business, strong private-label competition and a weak economy.
Net sales in the food science segment declined 4% in 1994, reflecting the
continuing phase-out of commodity chemicals in favor of specialty food products,
sales of which increased 13%. Net sales in 1993 declined 51% primarily because
of the October 1992 divestment of MTI and the Company's de-emphasis and
phase-out of commodity chemicals.
An analysis of percentage changes in reported net sales in the U.S. and
international markets and the percentage of consolidated net sales by business
segment follows:
UNITED STATES OPERATIONS
<TABLE>
<CAPTION>
% INCREASE/(DECREASE)
IN NET SALES
---------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Health Care 12 12 14
Animal Health (1) 7 0
Consumer Health Care 4 (13) (45)
Food Science (2) (56)* (10)*
Total U.S. Operations 10 3 2
---------------------------------------------------------------------------
</TABLE>
INTERNATIONAL OPERATIONS
<TABLE>
<CAPTION>
% INCREASE/(DECREASE)
IN NET SALES
---------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Health Care 13 9 10
Animal Health 7 1 10
Consumer Health Care 22 6 (30)
Food Science (6) (44)* (11)*
Total International Operations 11 4 6
---------------------------------------------------------------------------
<FN>
*REFLECTS THE SALE OF MTI IN 1992.
</TABLE>
(The table below was represented by a graph in the printed Annual Report.)
Production Margin as Percentage of Net Sales
1990 65%
1991 68%
1992 72%
1993 76%
1994 77%
Improvement in production margin was essentially attributable
to the divestiture of low-margin businesses, cost reductions
and favorable product mix.
DIVERSIFICATION BY BUSINESS
<TABLE>
<CAPTION>
% OF CONSOLIDATED NET SALES
---------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Health Care 84 83 78
Animal Health 7 8 8
Consumer Health Care 5 5 5
Food Science 4 4* 9*
---------------------------------------------------------------------------
Consolidated 100 100 100
---------------------------------------------------------------------------
<FN>
*REFLECTS THE SALE OF MTI IN 1992.
</TABLE>
Geographically, the Company's business is diversified, as shown in the
following table:
DIVERSIFICATION BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
% OF CONSOLIDATED NET SALES
---------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. 53 54 54
---------------------------------------------------------------------------
Europe 22 22 24
Asia 15 15 14
Canada/Latin America 8 7 6
Africa/Middle East 2 2 2
---------------------------------------------------------------------------
International 47 46 46
---------------------------------------------------------------------------
Consolidated 100 100 100
---------------------------------------------------------------------------
</TABLE>
PRODUCT DEVELOPMENTS
The table below lists the Company's pending New Drug Applications (NDAs) and the
related filing dates with the U.S. Food and Drug Administration (FDA):
PRODUCT INDICATIONS DATE FILED
---------------------------------------------------------------------------
Cetirizine Pediatric January 1993
Enable Osteo- and rheumatoid arthritis December 1993
Unasyn Injectable antibiotic--pediatric November 1993
Zithromax Sexually transmitted diseases December 1994
Zoloft Obsessive-compulsive disorder May 1992
---------------------------------------------------------------------------
In November 1994, the Company received approval from the FDA for the
marketing of Diflucan for pediatric use. In addition, Cardura gained marketing
clearance from the FDA for the treatment of benign prostatic hyperplasia in
February 1995.In 1995, the Company was advised by the FDA that the following
chemical entities were approvable: Zithromax, an oral antibiotic, for pediatric
indications and cetirizine, an oral antihistamine, for allergic rhinitis and
chronic urticaria.
The Company currently has 15 new chemical entities in advanced development.
28
<PAGE>
INCOME BEFORE TAXES AND NET INCOME
The components of income before taxes and net income, expressed as a percentage
of net sales, for the years 1994, 1993 and 1992 are reflected in the following
table:
ANALYSIS OF INCOME BEFORE TAXES AND NET INCOME
<TABLE>
<CAPTION>
% INCREASE/
(DECREASE)
-----------------------------------------------------------------------------------------------------------------------------
(MILLIONS OF DOLLARS) 1994 1993 1992 94/93 93/92
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $8,281.3 $7,477.7 $7,230.2 11 3
Cost of sales $1,918.6 $1,772.0 $2,024.3 8 (12)
% of net sales 23.2% 23.7% 28.0%
-----------------------------------------------------------------------------------------------------------------------------
Production margin $6,362.7 $5,705.7 $5,205.9 12 10
% of net sales 76.8% 76.3% 72.0%
Selling, informational and administrative expenses $3,250.8 $3,066.0 $2,899.3 6 6
% of net sales 39.3% 41.0% 40.1%
R&D expenses $1,139.4 $ 974.4 $ 863.2 17 13
% of net sales 13.7% 13.0% 11.9%
Divestitures, restructuring and unusual items--net -- $ 752.0 $ (110.5) * *
% of net sales -- 10.1% (1.5%)
Other deductions--net $ 111.0 $61.9 $ 19.1 79 224
% of net sales 1.3% .8% .3%
-----------------------------------------------------------------------------------------------------------------------------
Income before taxes $1,861.5 $ 851.4 $1,534.8 119 (45)
% of net sales 22.5% 11.4% 21.2%
Taxes on income $ 558.5 $ 191.3 $ 438.6 192 (56)
Effective tax rate 30.0% 22.5% 28.6%
Net income $1,298.4 $ 657.5 $ 810.9 97 (19)
% of net sales 15.7% 8.8% 11.2%
-----------------------------------------------------------------------------------------------------------------------------
<FN>
*CALCULATION NOT MEANINGFUL.
</TABLE>
Production margin, as a percentage of net sales, increased in 1994 compared
with 1993. The improvement was attributable to the Company's cost-containment
program and favorable product mix reflecting continued growth in the
pharmaceutical business.
The 1994 increase in selling, informational and administrative expenses
(SI&A) over 1993 was primarily due to the rollout of new products and support
for recently launched products, particularly in the international markets. As a
percentage of net sales, SI&A decreased in 1994 compared with 1993. This
decrease reflects restrained growth in marketing expenses relative to the prior
year, as well as the beneficial impact of the Company's continuous improvement
and restructuring programs. The 1993 increase in selling expenses reflects costs
associated with the launch of new products.
SI&A includes expenses incurred in communicating scientific, medical and
clinical information about the Company's various products to the medical
community and others. In response to the changes in the health care environment,
the Company adopted a strategy in 1994 which focuses on the diverse needs of
managed care customers and decision makers. 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 such expenditures
are for the Company's consumer health care business.
R&D expenses reflect a 15% compound growth rate from 1992 through 1994.
Health care R&D expenses, expressed as a percentage of health care net sales,
were 14.9%, 14.3% and 13.6% for 1994, 1993 and 1992, respectively. In 1995, the
Company plans to spend approximately $1.4 billion on R&D.
Other deductions--net are summarized in the following table:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $(123.0) $(163.5) $(184.6)
Interest expense 126.9 106.5 103.4
Other income (20.0) (34.6) (34.6)
Other deductions 127.1 153.5 134.9
---------------------------------------------------------------------------
Other deductions--net $ 111.0 $ 61.9 $ 19.1
---------------------------------------------------------------------------
</TABLE>
Interest income decreased in 1994 from 1993 primarily because of changes in
the Company's capital structure. The decline in interest income in 1993 was
caused by lower interest rates.
Interest expense increased in 1994 from 1993 as a result of changes in the
scope and nature of the Company's foreign exchange hedging program and higher
interest rates. The increase in interest expense in 1993 was primarily due to
higher average borrowing levels, partially offset by lower interest rates.
Other deductions included net exchange losses of $1.5, $40.0 and $22.8
million in 1994, 1993 and 1992, respectively. In addition, amortization of
intangibles was approximately $13.8, $13.3 and $16.9 million in 1994, 1993 and
1992, respectively.
On an ongoing basis, income before taxes was $258.1 million higher in 1994
than in 1993, even though the Company increased the investment in its R&D
program. This increase was primarily attributable to the Company's aggressive
development of a large number of drug candidates. As a percentage of net sales,
the decrease in cost of sales and SI&A expenses more than offset the increase in
R&D expenses and Other deductions--net, so that income before taxes, as a
percentage of net sales, increased. This improved performance resulted from a
favorable business mix, moderation in expense growth and initial benefits of
restructuring. The increase in ongoing income before taxes in 1993 was primarily
attributable to improved production margins.
Excluding the impact of nonrecurring items from 1993 results, income before
taxes and net income would have been
29
<PAGE>
$1,603.4 million and $1,183.9 million, respectively. The 1993 effective tax rate
of 22.5% would have been 26%.
The Company's effective tax rate increased from an ongoing rate of 26% in
1993 to 30% in 1994 as a result of various changes contained in the Omnibus
Budget Reconciliation Act of 1993 which, among other provisions, included the
imposition of a limitation on the tax credit allowed to the Company for tax
years beginning after December 31, 1993 for U.S. tax on income earned in Puerto
Rico, where the Company has a major manufacturing facility.
The Internal Revenue Service is currently auditing the years 1987 through
1989. For further details, see the footnote "Taxes on Income" beginning on page
44.
The following tables show profit/(loss) by business segment on a reported
and ongoing basis for 1994 and 1993:
1994 SEGMENT PROFIT
<TABLE>
<CAPTION>
% CHANGE COMPARED WITH
AS --------------------------
(MILLIONS OF DOLLARS) REPORTED* AS REPORTED ONGOING
---------------------------------------------------------------------------
<S> <C> <C> <C>
Health Care $1,976.6 75 22
Animal Health 47.4 ** 26
Consumer Health Care 34.1 ** 9
Food Science 31.0 93 12
---------------------------------------------------------------------------
Total $2,089.1 101 22
---------------------------------------------------------------------------
<FN>
*REPORTED AND ONGOING AMOUNTS ARE THE SAME.
</TABLE>
1993 SEGMENT PROFIT/(LOSS)
<TABLE>
<CAPTION>
AS % %
(MILLIONS OF DOLLARS) REPORTED CHANGE ONGOING CHANGE
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Health Care $1,129.9 (9) $1,621.8 18
Animal Health (5.8) ** 37.5 (9)
Consumer Health Care (102.3) ** 31.3 (7)
Food Science 16.1 (23) 27.6 14
---------------------------------------------------------------------------
Total $1,037.9 (36) $1,718.2 17
---------------------------------------------------------------------------
<FN>
** CALCULATION NOT MEANINGFUL.
</TABLE>
For further details, see the footnote "Segment Information and Geographic
Data" on page 52.
LIQUIDITY AND CAPITAL RESOURCES
Company operations in 1994 provided a positive cash flow which, supplemented by
the ability to issue commercial paper and maintenance of other worldwide credit
facilities, provided adequate liquidity to meet the Company's operational needs.
Cash and cash equivalents and short-term investments are principal measures of
liquidity. These items amounted to $2.0, $1.2 and $1.7 billion at December 31,
1994, 1993 and 1992, respectively.
<TABLE>
<CAPTION>
1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Working capital (millions of dollars) $962.5 $1,289.6 $2,167.4
Current ratio 1.20:1 1.37:1 1.67:1
Debt to total capitalization 40% 31% 28%
Shareholders' equity per common share* $14.20 $ 12.43 $ 14.51
Days of sales outstanding 60 63 57
Months of inventory on hand 8.6 8.5 8.1
---------------------------------------------------------------------------
<FN>
*REPRESENTS SHAREHOLDERS' EQUITY DIVIDED BY THE ACTUAL NUMBER OF COMMON SHARES
OUTSTANDING.
</TABLE>
The increase in the percentage of debt to total capitalization in 1994
versus 1993 was primarily due to share purchases and an increase in short-term
borrowings. The increase in the percentage of debt to total capitalization in
1993 versus 1992 was due to a decrease in shareholders' equity arising from the
Company's program of purchasing its common stock.
The increase in shareholders' equity per common share to $14.20 in 1994
from $12.43 in the preceding year was due to the Company's enhanced
profitability resulting from growth in sales of its new pharmaceutical products,
partially offset by the stock purchase program. The decrease in shareholders'
equity per common share to $12.43 in 1993 from $14.51 in 1992 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:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash provided by/(used in):
Operating activities $1,488.5 $1,263.0 $ 807.0
Investing activities (840.3) (196.9) 389.9
Financing activities 61.9 (1,567.0) (1,228.0)
Effect of exchange rate changes on cash and cash equivalents 19.0 (26.8) (29.4)
--------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in cash and cash equivalents $ 729.1 $ (527.7) $ (60.5)
--------------------------------------------------------------------------------------------------------------
</TABLE>
OPERATING ACTIVITIES
Cash provided by operating activities amounted to $1,488.5 million in 1994 and
was primarily attributable to income generated by the introduction of new
pharmaceutical products and new indications for existing pharmaceutical
products. The $456.0 million increase in cash generated by operating activities
in 1993 was primarily a result of higher income before taxes, excluding
restructuring charges.
The environment in which the Company operates has undergone significant
change, as evidenced by the increase and change in competition, global health
care reform and the reduction of residual trade barriers in North America and
Europe. In 1993, the Company initiated a program which recognized the need to
restructure its global operations in response to such changes. The 1993
worldwide restructuring program encompasses more than 60 operations located in
over 25 countries. Restructuring actions include the consolidation of
manufacturing facilities with the planned elimination of 4 facilities in the
U.S. and 32 facilities internationally, the demolition of buildings resulting
from the consolidation, reconfiguration and rehabilitation of remaining
facilities and the consolidation of distribution and administrative
organizations and infrastructures, including the consolidation of U.S.
distribution facilities from 6 to 2 and the consolidation of finance
organizations in Europe from 34 to 6. Such actions are expected to result in a
reduction of approximately 3,000 employees. This program will require three
years to complete, given the global scope and nature of the programs involved
and the need to comply with various legal requirements.
30
<PAGE>
Since the program's initiation, the workforce has been reduced by approximately
900 people and 9 facilities have been closed. The initiatives are projected to
lower annual operating costs by at least $130 million when the full benefits of
efficiencies are realized. The annualized benefit of completed restructuring
efforts through December 31, 1994 is approximately $48 million. Through December
31, 1994, there have been no significant changes in estimates of the cost of the
plan. For further information regarding the components of the charge, see the
"Divestitures, Restructuring and Unusual Items" footnote on page 44.
Cash outlays for 1994 and 1993 related to the restructuring totaled $91.7
and $41.4 million, respectively. Expected cash outlays, funded through
operations, for the next two years are approximately $130 and $150 million,
respectively.
INVESTING ACTIVITIES
Cash used in investing activities increased $643.4 million because of the
increase in short-term investments, the change in loans and long-term
investments by financial subsidiaries and the fact that there were no sales of
businesses in 1994. Investing activities in 1993 reflected proceeds from the
sale of the Company's remaining interest in MTI.
Capital expenditures are primarily funded through operating activities. The
current research expansion programs undertaken at Groton, Connecticut and
Sandwich, England are expected to be completed in 1996 at a total cost of
approximately $500 million. In addition, the Company is in the process of
completing 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. The construction of the Company's
pharmaceutical plant in Dalian, China was completed in 1993 as part of a joint
venture.
FINANCING ACTIVITIES
Cash provided by financing activities in 1994 increased by $1,628.9 million from
1993. This increase related to higher levels of short-term borrowings used to
fund working capital needs as well as certain short-term investment
opportunities. In addition, cash used for the completion of stock purchase
programs decreased in 1994 as compared with 1993. Share purchases were funded
through cash generated by operating activities.
Cash dividends paid to shareholders in 1994 were $594.6 million compared
with $536.1 million in 1993 and reflected a 12% increase in the annual dividend
rate from $1.68 to $1.88 per common share. This increase was partially offset by
the Company's purchase of its common shares.
In December 1994, the Company announced that it planned to purchase up to
2.25 million shares of its common stock from time to time in the open market.
Under this plan, approximately 1.0 million shares were purchased in 1994 at a
cost of $74.8 million. The shares purchased under this plan are intended for use
in the acquisition of NAMIC U.S.A. Corporation (NAMIC) announced in October
1994.
In August 1993, the Company sold 10 million shares of treasury stock to the
Pfizer Inc. Grantor Trust (the Trust), an employee benefit trust which will
primarily fund future obligations for previously approved benefit plans. The
Trust acquired common stock from the Company in exchange for a promissory note
of approximately $600 million. The amount, representing unearned employee
benefits, has been recorded as a deduction from shareholders' equity and will be
reduced as employee benefits are satisfied.
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. Under this program, 7.5 and 12.5 million shares were purchased in
the open market at a cost of approximately $436.4 and $804.0 million in 1994 and
1993, respectively, thereby completing the 20 million share purchase program.
These shares are available for use in the Company's employee benefit plans and
for general corporate purposes.
The August 1992 program to purchase 10 million shares of its common stock
was completed in 1993 at a total cost of $721.6 million.
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 $1.1 billion at December 31, 1994.
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 nine years. Moody's and
S&P are the major corporate rating organizations.
BANKING OPERATION
The Company's international banking operation, Pfizer International Bank Europe
(PIBE), operates under a full banking license from the Central Bank of Ireland.
PIBE extends credit to financially strong borrowers largely through U.S. dollar
loans 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. The net income of PIBE is
affected by fluctuations in market interest rates because of repricing and
maturity mismatches between its interest-sensitive assets and liabilities. When
PIBE is asset sensitive (more assets repricing in a given period than
liabilities), net income would be benefited in a
31
<PAGE>
period of increasing interest rates. PIBE's asset and liability management
reflects its liquidity, interest-rate outlook and general market conditions. The
interest-rate sensitivity of PIBE's largely U.S. dollar-denominated
floating-rate asset portfolio is largely offset by the corresponding
interest-rate sensitivity inherent in the Company's U.S. dollar-denominated
short-term debt. PIBE enters into interest-rate swaps, currency swaps and
forward-rate agreements as vehicles to manage the interest-rate sensitivity of
the portfolio.
The following table summarizes the composition of the loan portfolios, the
most significant of the interest-earning assets held by the international
banking operations, at November 30, 1994, 1993 and 1992:
BORROWERS
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial and industrial $526.3 $569.1 $587.2
Government 139.7 91.9 210.0
Financial institutions 120.9 146.6 177.7
---------------------------------------------------------------------------
Total $786.9 $807.6 $974.9
---------------------------------------------------------------------------
</TABLE>
MATURITIES
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Within one year $361.3 $456.9 $628.3
One to five years 425.6 350.7 346.6
---------------------------------------------------------------------------
Total $786.9 $807.6 $974.9
---------------------------------------------------------------------------
</TABLE>
The following table shows the percentage of interest-earning assets of the
international banking operations (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
---------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------------------------------
U.K. 19 19 19
U.S. 17 8 8
Switzerland 12 7 5
Netherlands 11 9 6
Denmark 8 12 9
France 8 12 8
Italy 7 6 20
Sweden 6 4 7
Canada 5 13 15
Germany 4 5 --
Spain -- 5 --
---------------------------------------------------------------------------
PROSPECTIVE INFORMATION
SUBSEQUENT EVENTS
On January 19, 1995, the Company acquired SmithKline Beecham's animal health
business for approximately $1.45 billion substantially financed by the
issuance of commercial paper. The Company expects to acquire NAMIC in a
stock-for-stock transaction, valued at approximately $175 million, in the
first quarter of 1995.
On February 23, 1995, the Company announced that its Board of Directors
intends to vote on a two-for-one split of Pfizer common stock on April 27, 1995.
At the annual meeting to take place on the same date, shareholders will vote on
a proposal to increase the authorized shares and reduce the par value of the
Company's common stock.
HEALTH CARE REFORM PROPOSAL
The Company's primary markets are highly competitive and subject to substantial
governmental regulation. In the U.S., legislation proposing changes in the
health care system was not enacted in 1994. New legislation may be introduced in
1995 and may make changes in the availability, delivery and payment for health
care products and services. International operations are also subject to a
degree of government regulation.
While the Company cannot predict with certainty the nature of the potential
future U.S. reforms, whether or not they will be enacted and the impact they may
have on its U.S. business, pressures on pricing and operating results as a
result of market competition are expected to continue in 1995.
COMPETITION
Mature products of the Company's pharmaceutical business will face significant
exposure from competitive brand names and generic competition during the next
several years. Feldene and Glucotrol have been subject to generic competition
since 1992 and 1994, respectively. The majority of the unfavorable impact on
Feldene sales was felt in 1993 and 1994. The combined U.S. net sales of these
products were $203, $308 and $473 million in 1994, 1993 and 1992, 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 different
delivery system from the patented technology used in Procardia XL, the Company's
product, which has a delivery system that is patent-protected until 2003. Other
forms of sustained-release nifedipine have been reported to be in various stages
of development by other companies. It is not possible to predict the impact of
possible future competition on sales of Procardia XL.
GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)
In December 1994, the U.S. Congress ratified the GATT world trade agreement. A
key provision relates to intellectual property protection. The 10-year
transition period relating to the major pharmaceutical patent-infringing
countries such as Brazil, Turkey, Argentina and India will result, however, in
32
<PAGE>
the continued discrimination against patents filed prior to the effective date
of the agreement. Necessary changes in the U.S. patent law have resulted in
limited extensions of the terms of patents for some of the Company's products.
FOREIGN EXCHANGE
Net sales outside the U.S. represented 47% and 46% of total sales in 1994 and
1993, respectively. Exchange-rate fluctuations had no impact on the Company's
net sales in 1994 and marginal impact in 1993. Sales and earnings growth in 1995
could be adversely affected if the U.S. dollar strengthens. The Company manages
its foreign exchange risk through a variety of techniques. For further details,
see the footnote "Financial Instruments and Concentrations of Credit Risk"
beginning on page 42.
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 49.
DIVIDEND GROWTH
The dividend payout ratio amounted to 44.9%, 82.0% and 61.4% in 1994, 1993 and
1992, respectively. Excluding the effect of divestitures, restructuring and
unusual items--net, this ratio would have been 45.4% and 48.4% in 1993 and 1992,
respectively.
In January 1995, the Board of Directors declared a first-quarter 1995
dividend increase of 11% to $.52 from $.47 in each quarter of 1994. This marked
the 28th consecutive year of dividend increases.
INFLATION AND CHANGING PRICES
Inflation, although moderate in many parts of the world during 1994, continues
to affect worldwide economies. Inflation had no material impact on the Company's
operations throughout the period.
RESPONSIBILITY FOR FINANCIAL STATEMENTS AND SYSTEM OF INTERNAL CONTROL
The financial statements which appear on pages 35 through 53 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 that
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
LLP, 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 LLP 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/ William C. Steere, Jr.
W. C. Steere, Jr.
PRINCIPAL EXECUTIVE OFFICER
/s/ H. McKinnell
H. McKinnell, Ph.D.
PRINCIPAL FINANCIAL OFFICER
/s/ H. V. Ryan
H. V. Ryan
PRINCIPAL ACCOUNTING OFFICER
February 23, 1995
33
<PAGE>
AUDIT COMMITTEE'S REPORT
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 LLP 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/ Stanley O. Ikenberry
S. O. Ikenberry, Ph.D.
CHAIR, AUDIT COMMITTEE
February 23, 1995
INDEPENDENT AUDITORS' REPORT
KPMG Peat Marwick LLP
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, 1994, 1993 and 1992 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, 1994, 1993 and 1992, 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 LLP
345 Park Avenue
New York, NY 10154
February 23, 1995
34
<PAGE>
SEGMENT INFORMATION
<TABLE>
<CAPTION>
CONSUMER CORPORATE/
HEALTH ANIMAL HEALTH FOOD FINANCIAL
(MILLIONS OF DOLLARS) CARE HEALTH CARE SCIENCE (A) SUBSIDIARIES (D) CONSOLIDATED
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994
Net sales $6,963.0 $605.3 $ 409.0 $304.0 $ -- $ 8,281.3
----------------------------------------------------------------------------------------------------------------------------------
Segment profit $1,976.6 $ 47.4 $ 34.1 $ 31.0 $ -- $ 2,089.1
----------------------------------------------------------------------------------------------------------------------------------
Interest income 123.0 123.0
Interest expense (126.9) (126.9)
Net corporate expenses (223.7) (223.7)
----------------------------------------------------------------------------------------------------------------------------------
Income before provision for taxes on income
and minority interests $1,861.5
----------------------------------------------------------------------------------------------------------------------------------
Identifiable assets $5,388.1 $501.8 $ 205.3 $447.6 $4,555.7 $11,098.5
----------------------------------------------------------------------------------------------------------------------------------
Capital additions $ 482.5 $ 45.9 $ 15.6 $ 58.3 $69.2 $ 671.5
----------------------------------------------------------------------------------------------------------------------------------
Depreciation $ 216.3 $ 16.9 $ 7.1 $ 19.3 $15.8 $ 275.4
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
1993
Net sales $6,210.3 $578.0 $ 373.5 $315.9 $ -- $ 7,477.7
----------------------------------------------------------------------------------------------------------------------------------
Segment profit/(loss)(B) $1,129.9 $ (5.8) $(102.3) $ 16.1 $ -- $ 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 $444.6 $ 152.4 $374.4 $3,709.2 $ 9,330.9
----------------------------------------------------------------------------------------------------------------------------------
Capital additions $ 480.9 $ 39.2 $ 15.4 $ 62.9 $35.8 $634.2
----------------------------------------------------------------------------------------------------------------------------------
Depreciation $ 182.6 $ 17.0 $ 6.5 $ 19.6 $15.4 $241.1
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
1992
Net sales $5,613.9 $560.8 $ 404.6 $650.9 $ -- $ 7,230.2
----------------------------------------------------------------------------------------------------------------------------------
Segment profit(C) $1,241.8 $ 41.2 $ 329.7 $ 21.0 $ -- $ 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 $4,153.2 $478.6 $ 285.9 $368.9 $4,303.5 $ 9,590.1
----------------------------------------------------------------------------------------------------------------------------------
Capital additions $ 436.4 $ 41.3 $ 9.2 $126.3 $61.0 $ 674.2
----------------------------------------------------------------------------------------------------------------------------------
Depreciation $ 147.0 $ 13.7 $ 6.9 $ 51.8 $23.2 $ 242.6
----------------------------------------------------------------------------------------------------------------------------------
<FN>
(A) INCLUDES THE RESULTS OF THE DIVESTED MINERALS BUSINESSES THROUGH OCTOBER
30, 1992.
(B) INCLUDES PRE-TAX CHARGES OF $750 MILLION AND APPROXIMATELY $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) SEGMENT INFORMATION FOR THE FINANCIAL SUBSIDIARIES CAN BE FOUND IN THE
"FINANCIAL SUBSIDIARIES" FOOTNOTE ON PAGE 42.
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART OF
THESE STATEMENTS.
35
<PAGE>
GEOGRAPHIC DATA
<TABLE>
<CAPTION>
CANADA/
UNITED LATIN
(MILLIONS OF DOLLARS) STATES (A) EUROPE ASIA AMERICA
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Net sales $4,411.2 $1,816.4 $1,249.1 $619.4
Intercompany sales 140.3 459.8 57.2 21.3
-----------------------------------------------------------------------------------------------------------------------------
Total $4,551.5 $2,276.2 $1,306.3 $640.7
-----------------------------------------------------------------------------------------------------------------------------
Geographic profit $1,426.8 $ 534.6 $ 115.2 $ 45.6
-----------------------------------------------------------------------------------------------------------------------------
Interest income
Interest expense
Net corporate expenses
-----------------------------------------------------------------------------------------------------------------------------
Income before provision for taxes on
income and minority interests
-----------------------------------------------------------------------------------------------------------------------------
Identifiable assets $2,768.1 $2,429.0 $1,303.4 $479.9
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
1993
Net sales $4,006.0 $1,632.0 $1,131.9 $528.3
Intercompany sales 134.5 489.6 23.1 20.4
-----------------------------------------------------------------------------------------------------------------------------
Total $4,140.5 $2,121.6 $1,155.0 $548.7
-----------------------------------------------------------------------------------------------------------------------------
Geographic profit/(loss)(B) $ 698.5 $ 381.8 $ 75.2 $ (.4)
-----------------------------------------------------------------------------------------------------------------------------
Interest income
Interest expense
Net corporate expenses
-----------------------------------------------------------------------------------------------------------------------------
Income before provision for taxes on
income and minority interests
-----------------------------------------------------------------------------------------------------------------------------
Identifiable assets $2,598.2 $2,034.6 $1,198.2 $393.7
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
1992
Net sales $3,888.2 $1,709.1 $1,012.7 $470.4
Intercompany sales 92.6 409.7 23.8 16.0
-----------------------------------------------------------------------------------------------------------------------------
Total $3,980.8 $2,118.8 $1,036.5 $486.4
-----------------------------------------------------------------------------------------------------------------------------
Geographic profit(C) $1,172.4 $ 404.8 $26.0 $ 54.2
-----------------------------------------------------------------------------------------------------------------------------
Interest income
Interest expense
Net corporate expenses
-----------------------------------------------------------------------------------------------------------------------------
Income before provision
for taxes on income, minority interests and
cumulative effect of accounting changes
-----------------------------------------------------------------------------------------------------------------------------
Identifiable assets $2,280.5 $2,018.6 $1,008.3 $325.0
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
AFRICA/ CORPORATE/
MIDDLE FINANCIAL ADJUSTMENTS/
(MILLIONS OF DOLLARS) EAST SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Net sales $185.2 $ -- $ -- $ 8,281.3
Intercompany sales 5.7 -- (684.3) --
-----------------------------------------------------------------------------------------------------------------------------
Total $190.9 $ -- $(684.3) $ 8,281.3
-----------------------------------------------------------------------------------------------------------------------------
Geographic profit $ 11.6 $ -- $ (44.7) $ 2,089.1
-----------------------------------------------------------------------------------------------------------------------------
Interest income 123.0 123.0
Interest expense (126.9) (126.9)
Net corporate expenses (223.7) (223.7)
-----------------------------------------------------------------------------------------------------------------------------
Income before provision for taxes on
income and minority interests $ 1,861.5
-----------------------------------------------------------------------------------------------------------------------------
Identifiable assets $140.6 $4,555.7 $(578.2) $11,098.5
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
1993
Net sales $179.5 $ -- $ -- $ 7,477.7
Intercompany sales 3.8 -- (671.4) --
-----------------------------------------------------------------------------------------------------------------------------
Total $183.3 $ -- $(671.4) $ 7,477.7
-----------------------------------------------------------------------------------------------------------------------------
Geographic profit/(loss)(B) $(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 $128.9 $3,709.2 $(731.9) $ 9,330.9
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
1992
Net sales $149.8 $ -- $ -- $ 7,230.2
Intercompany sales .7 -- (542.8) --
-----------------------------------------------------------------------------------------------------------------------------
Total $150.5 $ -- $(542.8) $ 7,230.2
-----------------------------------------------------------------------------------------------------------------------------
Geographic profit(C) $ 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 $108.9 $4,303.5 $(454.7) $ 9,590.1
-----------------------------------------------------------------------------------------------------------------------------
<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 APPROXIMATELY $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.
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART OF
THESE STATEMENTS.
36
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------------------------------------------------------------------
(MILLIONS OF DOLLARS EXCEPT PER SHARE DATA) 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $8,281.3 $7,477.7 $7,230.2
Costs and expenses
Cost of sales 1,918.6 1,772.0 2,024.3
Selling, informational and administrative expenses 3,250.8 3,066.0 2,899.3
Research and development expenses 1,139.4 974.4 863.2
Divestitures, restructuring and unusual items--net -- 752.0 (110.5)
Other deductions--net 111.0 61.9 19.1
-----------------------------------------------------------------------------------------------------------------------------
Income before provision for taxes on income, minority interests
and cumulative effect of accounting changes 1,861.5 851.4 1,534.8
Provision for taxes on income 558.5 191.3 438.6
Minority interests 4.6 2.6 2.7
-----------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting changes 1,298.4 657.5 1,093.5
Cumulative effect of change in accounting for:
Postretirement benefits, net of income taxes -- -- (312.6)
Income taxes -- -- 30.0
-----------------------------------------------------------------------------------------------------------------------------
Net income $1,298.4 $657.5 $810.9
-----------------------------------------------------------------------------------------------------------------------------
Earnings per common share
Income before cumulative effect of accounting changes $4.19 $2.05 $3.25
Cumulative effect of change in accounting for:
Postretirement benefits, net of income taxes -- -- (.93)
Income taxes -- -- .09
-----------------------------------------------------------------------------------------------------------------------------
Net income $4.19 $2.05 $2.41
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART OF
THESE STATEMENTS.
37
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------------- PAID-IN RETAINED
(MILLIONS) SHARES PAR VALUE CAPITAL EARNINGS
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance January 1, 1992 332.4 $33.2 $212.5 $4,794.9
Net income 810.9
Cash dividends declared (486.5)
Debenture conversions .8 .1 10.9
Currency translation adjustment
Stock option transactions 3.7 .4 142.1
Purchase of common stock
Shares purchased from Retirement Annuity Plan
Shares purchased from Savings and Investment Plan
Dividend reinvestment plan .1 -- 9.4
-----------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1992 337.0 33.7 374.9 5,119.3
Net income 657.5
Cash dividends declared (536.1)
Currency translation adjustment
Stock option transactions 1.4 .2 41.9
Purchase of common stock
Employee benefit trust transactions--net 63.2
Dividend reinvestment plan .2 -- 11.7
-----------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1993 338.6 33.9 491.7 5,240.7
Net income 1,298.4
Cash dividends declared (594.6)
Currency translation adjustment
Stock option transactions 1.5 .1 63.1
Purchase of common stock
Employee benefit trust transactions--net 83.4
Dividend reinvestment plan .2 -- 11.8
Unrealized net gain on available-for-sale securities
Other 1.4
-----------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1994 340.3 $34.0 $651.4 $5,944.5
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CURRENCY
TRANSLATION EMPLOYEE TREASURY STOCK
ADJUSTMENT BENEFITS ---------------------
(MILLIONS) AND OTHER TRUST SHARES COST TOTAL
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance January 1, 1992 $157.8 $ -- (2.8) $(172.1) $5,026.3
Net income 810.9
Cash dividends declared (486.5)
Debenture conversions 11.0
Currency translation adjustment (112.5) (112.5)
Stock option transactions (.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 9.4
-----------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1992 45.3 -- (11.8) (854.6) 4,718.6
Net income 657.5
Cash dividends declared (536.1)
Currency translation adjustment (13.6) (13.6)
Stock option transactions -- .6 42.7
Purchase of common stock (15.8) (1,019.6) (1,019.6)
Employee benefit trust transactions--net (690.0) 10.0 631.1 4.3
Dividend reinvestment plan 11.7
-----------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1993 31.7 (690.0) (17.6) (1,242.5) 3,865.5
Net income 1,298.4
Cash dividends declared (594.6)
Currency translation adjustment 162.3 162.3
Stock option transactions -- 1.0 64.2
Purchase of common stock (8.5) (511.2) (511.2)
Employee benefit trust transactions--net (59.3) 24.1
Dividend reinvestment plan 11.8
Unrealized net gain on available-for-sale securities 2.0 2.0
Other 1.4
-----------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1994 $196.0 $(749.3) (26.1) $(1,752.7) $4,323.9
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART OF
THESE STATEMENTS.
38
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------------------------------------------------------------------------------------------------------
(MILLIONS OF DOLLARS) 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,458.5 $ 729.4 $1,257.1
Short-term investments 560.1 447.1 446.6
Accounts receivable, less allowance for doubtful accounts:
1994-$44.1; 1993-$40.6; 1992-$36.2 1,665.0 1,468.7 1,400.3
Short-term loans 361.3 456.9 620.3
Inventories
Finished goods 528.0 413.3 413.5
Work in process 534.9 502.1 465.8
Raw materials and supplies 202.0 178.1 188.5
-----------------------------------------------------------------------------------------------------------------------------
Total inventories 1,264.9 1,093.5 1,067.8
-----------------------------------------------------------------------------------------------------------------------------
Prepaid expenses, taxes and other current assets 478.6 537.6 592.7
-----------------------------------------------------------------------------------------------------------------------------
Total current assets 5,788.4 4,733.2 5,384.8
Long-term loans and marketable securities 724.3 586.7 601.4
Property, plant and equipment, less accumulated depreciation 3,073.2 2,632.5 2,305.1
Goodwill, less accumulated amortization 325.7 231.1 368.2
Other assets, deferred taxes and deferred charges 1,186.9 1,147.4 930.6
-----------------------------------------------------------------------------------------------------------------------------
Total assets $11,098.5 $9,330.9 $9,590.1
-----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings, including current portion of long-term debt $ 2,220.0 $1,178.8 $1,252.3
Accounts payable 524.9 479.1 456.4
Income taxes payable 731.1 606.2 395.9
Accrued compensation and related items 419.0 408.6 332.9
Other current liabilities 930.9 770.9 779.9
-----------------------------------------------------------------------------------------------------------------------------
Total current liabilities 4,825.9 3,443.6 3,217.4
Long-term debt 604.2 570.5 571.3
Postretirement benefit obligation other than pension plans 432.6 443.3 459.1
Deferred taxes on income 211.7 189.4 146.9
Other non-current liabilities 661.4 779.3 441.9
Minority interests 38.8 39.3 34.9
-----------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,774.6 5,465.4 4,871.5
-----------------------------------------------------------------------------------------------------------------------------
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: 1994-340,330,816; 1993-338,564,752; 1992-336,972,295 34.0 33.9 33.7
Additional paid-in capital 651.4 491.7 374.9
Retained earnings 5,944.5 5,240.7 5,119.3
Currency translation adjustment and other 196.0 31.7 45.3
Employee benefit trust (749.3) (690.0) --
Common stock in treasury, at cost:
1994-26,104,841; 1993-17,642,269; 1992-11,831,522 (1,752.7) (1,242.5) (854.6)
-----------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 4,323.9 3,865.5 4,718.6
-----------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $11,098.5 $9,330.9 $9,590.1
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART OF
THESE STATEMENTS.
39
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------------------------------------------------------------------
(MILLIONS OF DOLLARS) 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,298.4 $ 657.5 $ 810.9
Adjustments to reconcile net income to net cash provided by
operating activities:
Cumulative effect of accounting changes -- -- 282.6
Depreciation and amortization of intangibles 292.0 258.2 263.9
Divestitures, restructuring and unusual items -- 752.0 (110.5)
Deferred taxes 32.6 (336.1) (14.5)
Deferred income amortization (11.4) (28.3) (74.3)
Other 5.5 39.3 5.0
Changes in assets and liabilities, net of effect of businesses
acquired and divested:
Accounts receivable (160.7) (160.8) (193.8)
Inventories (110.8) (142.3) (116.1)
Prepaid and other assets (11.5) (44.8) (246.3)
Accounts payable and accrued liabilities 167.9 30.5 69.7
Income taxes payable 121.3 227.9 44.6
Other deferred items (134.8) 9.9 85.8
-----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,488.5 1,263.0 807.0
-----------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (671.5) (634.2) (674.2)
Purchases of short-term investments (1,355.9) (739.6) (535.7)
Proceeds from redemptions of short-term investments 1,244.8 846.8 459.8
Proceeds from sales of businesses -- 241.2 896.6
Purchases of long-term investments (162.1) (175.9) (154.6)
Purchases and redemptions of short-term investments by financial subsidiaries 43.4 (21.3) 51.0
Decrease in loans and long-term investments by financial subsidiaries 20.7 167.3 283.3
Other investing activities 40.3 118.8 63.7
-----------------------------------------------------------------------------------------------------------------------------
Net cash (used in)/provided by investing activities (840.3) (196.9) 389.9
-----------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 39.8 6.4 266.0
Increase/(decrease) in short-term debt 1,030.8 (70.1) (407.7)
Stock option transactions 64.2 42.7 125.1
Purchases of common stock (511.2) (1,019.6) (665.1)
Cash dividends paid (594.6) (536.1) (486.5)
Other financing activities 32.9 9.7 (59.8)
-----------------------------------------------------------------------------------------------------------------------------
Net cash provided by/(used in) financing activities 61.9 (1,567.0) (1,228.0)
-----------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 19.0 (26.8) (29.4)
-----------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in cash and cash equivalents 729.1 (527.7) (60.5)
Cash and cash equivalents at beginning of year 729.4 1,257.1 1,317.6
-----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 1,458.5 $ 729.4 $ 1,257.1
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL PART OF
THESE STATEMENTS.
40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 with
resulting translation adjustments recorded 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 Shareholders'
equity. Income statement items are generally translated at average exchange
rates prevailing during the period. 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.
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. The
Company intends to remit a portion of future earnings. To the extent that the
parent company receives such foreign earnings as dividends, foreign taxes paid
on those earnings will generate tax credits which substantially offset the
related U.S. income taxes. The Omnibus Budget Reconciliation Act of 1993 imposed
a limitation on the tax credit allowed to the Company for U.S. taxes on income
earned in Puerto Rico for tax years beginning after December 31, 1993. As a
result, taxes have been provided to the extent required by this change in law.
Goodwill and other intangibles are recorded at cost. Amounts arising from
acquisitions accounted for as purchases subsequent to 1970 are amortized over
various periods not exceeding 40 years. Amounts arising prior to that year 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. When factors indicate
that goodwill and other intangibles be evaluated for possible impairment, the
Company assesses the recoverability from future operations using undiscounted
cash flows.
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 (which totaled $127.1,
$153.5 and $134.9 million in 1994, 1993 and 1992, respectively), were $1.5,
$40.0, and $22.8 million in 1994, 1993 and 1992, respectively.
Changes in the currency translation adjustment included in Shareholders'
equity are as follows:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Currency translation adjustment January 1 $ 31.7 $45.3 $157.8
Translation adjustments and hedges 161.8 (92.6) (84.0)
Income taxes allocated to translation adjustments and hedges .5 .9 (13.1)
Transfer to income statement on sale or liquidation of businesses -- 78.1 (15.4)
-----------------------------------------------------------------------------------------------------------------------------
Currency translation adjustment December 31 $194.0 $31.7 $ 45.3
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENTS IN DEBT AND EQUITY SECURITIES
In 1994, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES. The
statement requires that investments in such securities be designated as trading,
held-to-maturity or available-for-sale. Trading securities are reported at fair
value with unrealized gains and losses recognized in earnings.
Available-for-sale securities are reported at fair value with unrealized gains
and losses recognized in the caption "Currency translation adjustment and other"
included in Shareholders' equity. Securities classified as held-to-maturity are
reported at amortized cost.
41
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
As of December 31, 1994, the status of such securities is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-------------------------------------------------------------------------------
GROSS UNREALIZED
AMORTIZED FAIR ---------------------
(MILLIONS OF DOLLARS) COST VALUE GAINS LOSSES
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Held-to-Maturity:
U.S. Government agencies $ 28.2 $ 28.2 $ -- $ --
Municipals 88.6 88.4 .1 (.3)
Foreign governments 51.8 51.2 .1 (.7)
Certificates of deposit 234.7 234.7 -- --
Mortgage-backed 33.4 31.8 -- (1.6)
Corporate debt 381.5 375.4 .3 (6.4)
Commercial paper 91.0 91.0 -- --
--------------------------------------------------------------------------------
909.2 900.7 .5 (9.0)
Available for Sale:
Equity securities 56.7 60.1 18.8 (15.4)
--------------------------------------------------------------------------------
$965.9 $960.8 $19.3 $(24.4)
--------------------------------------------------------------------------------
</TABLE>
Of the above securities, amounts are included in the Consolidated Balance
Sheet as follows:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994
--------------------------------------------------------------------------------
<S> <C>
Cash $90.0
Short-term investments 560.1
Long-term loans and marketable securities 319.2
--------------------------------------------------------------------------------
</TABLE>
The contractual maturities of such securities as of December 31, 1994 are as
follows:
<TABLE>
<CAPTION>
YEARS
-----------------------------------------
OVER 1 OVER 5
(MILLIONS OF DOLLARS) WITHIN 1 TO 5 TO 10 OVER 10 TOTAL
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Held-to-Maturity:
U.S. Government agencies $ 28.2 $ -- $ -- $ -- $ 28.2
Municipals 78.6 10.0 -- -- 88.6
Foreign governments .7 51.1 -- -- 51.8
Certificates of deposit 220.7 14.0 -- -- 234.7
Corporate debt 211.6 128.2 21.8 19.9 381.5
Commercial paper 91.0 -- -- -- 91.0
--------------------------------------------------------------------------------
Subtotal $630.8 $203.3 $21.8 $19.9 875.8
-----------------------------------------------------------------------
Mortgage-backed 33.4
--------
Total $909.2
--------------------------------------------------------------------------------
</TABLE>
Interest income was $123.0, $163.5 and $184.6 million for 1994, 1993 and
1992, respectively.
FINANCIAL SUBSIDIARIES
Combined financial data/segment information as of November 30, 1994, 1993
and 1992 applicable to the Company's financial subsidiaries, which include
Pfizer International Bank Europe (PIBE) and a small captive insurance company,
are presented as follows:
<TABLE>
<CAPTION>
CONDENSED BALANCE SHEET
(MILLIONS OF DOLLARS) 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and interest-bearing deposits $ 285.2 $ 222.2 $ 63.7
Eurosecurities 3.8 46.8 25.0
Loans, net 766.4 794.1 960.4
Other assets 13.2 10.3 15.3
-------------------------------------------------------------------------------
Total assets $1,068.6 $1,073.4 $ 1,064.4
-------------------------------------------------------------------------------
Certificates of deposit and
other liabilities $ 184.5 $ 166.5 $ 171.5
Deferred income 13.0 26.2 50.2
Shareholders' equity 871.1 880.7 842.7
-------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $1,068.6 $1,073.4 $1,064.4
-------------------------------------------------------------------------------
CONDENSED STATEMENT OF INCOME
(MILLIONS OF DOLLARS) 1994 1993 1992
-------------------------------------------------------------------------------
Interest income $ 49.2 $ 48.1 $ 91.3
Interest expense (4.6) (4.2) (5.5)
Other (expense)/income--net (12.0) 1.2 (4.2)
-------------------------------------------------------------------------------
Net income $ 32.6 $ 45.1 $ 81.6
-------------------------------------------------------------------------------
</TABLE>
Investments of the banking subsidiary generally are recorded at amortized
cost and are held until maturity.
PROPERTY, PLANT AND EQUIPMENT
The major categories of property, plant and equipment and accumulated
depreciation follow:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Land $ 85.2 $ 81.8 $ 71.7
Buildings 1,218.6 1,093.8 953.9
Machinery and equipment 2,108.4 1,897.8 1,706.9
Furniture, fixtures and other 940.2 812.8 698.3
Construction in progress 640.5 414.5 385.6
-------------------------------------------------------------------------------
4,992.9 4,300.7 3,816.4
Less: accumulated depreciation 1,919.7 1,668.2 1,511.3
-------------------------------------------------------------------------------
$ 3,073.2 $2,632.5 $2,305.1
-------------------------------------------------------------------------------
</TABLE>
INVENTORIES
Inventories valued on a LIFO basis comprised approximately 15% of worldwide
inventories at December 31, 1994, 1993 and 1992. The estimated replacement
cost of these inventories at December 31, 1994, 1993 and 1992 was $220.3,
$204.7 and $199.0 million, respectively.
FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
Changes in the value of the U.S. dollar and other currencies affect the
Company's financial position and results of operations since the Company has
manufacturing operations in 31 countries and sells its products on a worldwide
basis. Changes in interest rates affect the Company's financial position and
results of operations as a result of its investments
42
<PAGE>
and borrowings. The Company manages its foreign exchange and interest-rate risks
through a variety of techniques, including the use of derivative financial
instruments. The Company does not leverage or trade derivative financial
instruments.
Generally, gains and losses arising from financial instruments used for
foreign exchange and interest-rate risk management are recognized in income
simultaneously with the net income effect of the related transactions generating
such risks.
Forward-exchange contracts with maturities of six months or less are used
to match local market short-term assets and liabilities denominated in
currencies other than the local currency. Changes in the fair value of
forward-exchange contracts are included in Other deductions--net, together with
foreign exchange gains and losses. At December 31, 1994, 1993 and 1992, the
Company had approximately $750, $420 and $380 million, respectively, of
forward-exchange contracts. The December 31, 1994 contracts include $383 million
of currencies exchanged for U.S. dollars, $132 million exchanged for U.K.
pounds, $92 million exchanged for Irish punt, $55 million exchanged for German
marks and $88 million for other currencies. The principal currencies exchanged
for U.S. dollars are Japanese yen, U.K. pounds, Irish punt, French francs and
German marks of $107, $61, $49, $34 and $29 million, respectively. The principal
currency exchanged for U.K. pounds is U.S. dollars of $129 million, exchanged
for Irish punt is U.K. pounds of $72 million and exchanged for German marks is
U.S. dollars of $52 million.
Currency options purchased to hedge anticipated inventory purchases and
sales are reported at amortized cost. The cost is amortized to operations on a
straight-line basis through the inventory delivery date. Unrealized gains at
that date are deferred as a reduction of inventory cost and recognized in net
income as sales occur. At December 31, 1994 and 1993, $150 and $180 million of
yen-denominated currency options were purchased with maturities through 1996 and
1995, respectively, to hedge anticipated inventory purchases and sales.
Interest-rate swap agreements are used to manage interest-rate risk on
assets and liabilities with the differential to be paid or received under the
agreements accrued over the lives of the contracts as interest rates change.
Such amounts are included in Other deductions--net.
At December 31, 1994, the Company had interest-rate swap contracts
outstanding with notional amounts of approximately $275 million. Interest-rate
swap contracts of $25 million, maturing in 2001, have the effect of converting
fixed-rate long-term debt into a floating rate based on the Bankers Trust Tax
Exempt Note Rate. A contract of $50 million maturing shortly after year-end
converts certain fixed-rate assets of PIBE into floating rate based on the
London Interbank Offered Rate (LIBOR). Contracts of $200 million convert certain
floating-rate assets of PIBE to fixed-rate. The Company sold the right to
receive the fixed-rate payments under the swap contracts totaling $200 million
in order to reduce counterparty credit risk. Income on this transaction was
deferred and is being amortized over the life of the swap contracts, all of
which expire in 1995. Approximately $13, $13 and $24 million of this deferred
income is included in Other current liabilities in the Consolidated Balance
Sheet at December 31, 1994, 1993 and 1992, respectively.
At December 31, 1994, the Company had currency swap contracts with notional
amounts of approximately $90 million outstanding, maturing in 1995 through 1997.
Such contracts effectively convert certain PIBE foreign currency assets into
floating rate (based on LIBOR) U.S. dollar denominated assets.
The Company periodically reviews the credit quality of financial
institutions which are counterparties to derivative financial instruments and
does not expect any loss from the failure of such institutions to perform under
the contracts.
At December 31, 1994, the Company had no significant concentrations of
credit risk related to financial instruments.
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 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 difference between the fair values and the carrying values of the
Company's long-term interest-bearing deposits and investments and long-term
debt, as well as each class of derivative financial instrument, is not material
and, therefore, such amounts are not presented herein.
LONG-TERM DEBT
Long-term debt, exclusive of current maturities of $6.5, $3.6 and $4.6 million
in 1994, 1993 and 1992, respectively, is summarized as follows:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
7-1/8% Notes due 1996 $250.0 $250.0 $250.0
6-1/2% Notes due 1997 250.0 250.0 250.0
10-1/4% Industrial Development
Bonds Due 2001 22.0 22.0 22.0
7% Solid Waste Disposal Facilities
Revenue Bonds Due 2025 18.0 -- --
Other borrowings and mortgages 64.2 48.5 49.3
-------------------------------------------------------------------------------
$604.2 $570.5 $571.3
-------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In 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 an
aggregate of $500 million of notes, leaving $250 million available to be issued
as of December 31, 1994.
Long-term debt maturities for the years ending December 31, 1996 through
1999, are $276.3, $260.8, $2.4 and $2.0 million, respectively.
The weighted average interest rate on short-term and long-term debt
outstanding as of December 31, 1994 and 1993 was 6.0% and 5.1%, respectively.
At December 31, 1994, the Company had approximately $1.1 billion in major
unused lines of credit.
During 1994, 1993 and 1992, respectively, the Company incurred interest
costs of $141.6, $120.5 and $115.6 million, including $14.7, $14.0 and $12.2
million which was capitalized. Interest paid was approximately $106.9, $122.2
and $92.5 million in 1994, 1993 and 1992, respectively.
DIVESTITURES, RESTRUCTURING AND UNUSUAL ITEMS
Income before taxes for 1993 included a third-quarter charge of $750 million to
cover a worldwide restructuring program, as well as unusual items. Unusual items
included the write-down of goodwill of $121.7 million which related to a
business evaluation, where it was determined that revenue and profitability
levels were not meeting previously estimated levels and unamortized goodwill
would not be recovered through future cash flows of the business. An additional
1993 restructuring charge of $61.9 million was taken prior to the third quarter.
Restructuring actions for the program included the consolidation of
manufacturing facilities, the demolition of buildings resulting from the
consolidation, reconfiguration and rehabilitation of remaining facilities and
the consolidation of distribution and administrative infrastructures, including
the consolidation of finance organizations in Europe. It is expected that the
1993 program will be completed within three years.
The following table indicates the status of the 1993 restructuring charges
by component:
<TABLE>
<CAPTION>
1993 Utilization Reserves at
Restructuring ------------- December 31,
charges 1993 1994 1994
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Employee severance
payments $230.7 $ 25.8 $ 26.5 $178.4
Operating assets to
be sold/disposed of 211.7 61.5 44.3 105.9
Closed facilities' costs 101.1 1.5 18.6 81.0
Currency translation adjustment
related to the liquidation/
disposal of businesses 57.8 57.8 -- --
Administrative infrastructures 37.6 .7 33.7 3.2
Lease and third-party contract
termination costs 37.0 .8 20.8 15.4
Other 14.3 1.2 9.0 4.1
-------------------------------------------------------------------------------
$690.2 $149.3 $152.9 $388.0
-------------------------------------------------------------------------------
</TABLE>
Closed facilities' costs relate primarily to the rationalization of
manufacturing capacity, as well as costs related to the demolition of structures
within certain manufacturing facilities. Administrative infrastructure costs
relate primarily to consulting costs involved in restructuring the
administrative support organizations and the distribution centers. Writedowns of
operating assets, which primarily involve manufacturing rationalizations, are
considered utilized and the reserve charged when the asset is sold or otherwise
disposed of by the Company.
In 1993, the Company sold its remaining interest of approximately 40% in
Minerals Technologies Inc. (MTI), the Company's former specialty minerals
businesses. The sale resulted in a pre-tax gain of approximately $60 million.
Income before taxes for 1992 included a net credit of $110.5 million
consisting of a $258.6 million gain on the sale of a business, offset by $204.6
million for restructuring, consolidation and streamlining of certain businesses.
In addition, curtailment gains ($56.5 million) associated with postretirement
benefits other than pensions of divested operations were recognized.
TAXES ON INCOME
Income before taxes for U.S. and international operations consists of the
following:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $1,074.0 $442.2 $856.4
International 787.5 409.2 678.4
-------------------------------------------------------------------------------
Total income before taxes $1,861.5 $851.4 $1,534.8
-------------------------------------------------------------------------------
</TABLE>
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:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES
Taxes currently payable
U.S. $ 243.5 $ 264.7 $ 176.2
State and local 14.4 65.6 88.8
Deferred income taxes 35.2 (273.4) (16.8)
-------------------------------------------------------------------------------
Tax provision 293.1 56.9 248.2
-------------------------------------------------------------------------------
INTERNATIONAL
Taxes currently payable 268.0 197.1 188.1
Deferred income taxes (2.6) (62.7) 2.3
-------------------------------------------------------------------------------
Tax provision 265.4 134.4 190.4
-------------------------------------------------------------------------------
Total provision for taxes on income $ 558.5 $ 191.3 $ 438.6
-------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
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 $730 million has not been made on approximately $2.9 billion of
international subsidiaries' unremitted earnings as of December 31, 1994.
The earnings of the Company's pharmaceutical subsidiary operating in Puerto
Rico are subject to taxes pursuant to an incentive grant effective through
December 31, 2002. Under this grant, the Company is partially exempt from
income, property and municipal taxes. The Omnibus Budget Reconciliation Act of
1993 imposed a limitation on the tax credit allowed to the Company for U.S.
taxes on income earned in Puerto Rico for tax years beginning after December 31,
1993. As a result, taxes have been provided to the extent required by this
change in law. The major elements contributing to the difference between the
U.S. statutory tax rate and the consolidated effective tax rate are as follows:
<TABLE>
<CAPTION>
(PERCENTAGES) 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. statutory tax rate 35.0 35.0 34.0
Effect of partially tax-exempt
operations in Puerto Rico (9.9) (19.4) (8.2)
Effect of reduced rates in Ireland (2.6) (4.0) (2.7)
Divestitures, restructuring
and unusual items--net -- 4.4 1.8
State and local taxes 1.2 4.3 2.8
R&D tax credit (1.1) (3.3) (.5)
All other--net 7.4 5.5 1.4
-------------------------------------------------------------------------------
Consolidated effective tax rate 30.0 22.5 28.6
-------------------------------------------------------------------------------
</TABLE>
Excluding the effect of divestitures, restructuring and unusual items--net,
the effect of partially tax-exempt operations in Puerto Rico and the effect of
reduced rates in Ireland would have been approximately (10.0%) and (2.1%) in
1993, respectively.
Deferred tax assets and liabilities, netted by jurisdiction, as of December
31, 1994, 1993 and 1992 are included in the Consolidated Balance Sheet as
follows:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Current--Prepaid expenses, taxes
and other current assets $ 373.8 $ 435.3 $ 347.3
Non-current--Other assets, deferred
taxes and deferred charges 336.2 305.1 --
Non-current--Deferred taxes
on income (211.7) (189.4) (146.9)
--------------------------------------------------------------------------------
Net deferred tax asset $ 498.3 $ 551.0 $ 200.4
--------------------------------------------------------------------------------
</TABLE>
Temporary differences which give rise to a significant portion of deferred
tax assets and liabilities at December 31, 1994, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
(MILLIONS
OF DOLLARS) 1994 1993 1992
-------------------------------------------------------------------------------
Deferred Tax Deferred Tax Deferred Tax
-----------------------------------------------------------
Assets Liabilities Assets Liabilities Assets Liabilities
<S> <C> <C> <C> <C> <C> <C>
Prepaid/
deferred items $ 157.8 $ 150.1 $ 149.4 $ 85.8 $ 115.8 $ 76.5
Inventories 185.5 67.3 143.1 31.9 121.6 36.2
Investments 5.7 -- 14.1 -- 30.0 --
Property, plant
and equipment 31.5 322.1 30.9 304.8 60.2 270.8
Employee benefits 207.4 127.7 206.8 129.1 208.8 132.8
Restructurings and
special charge 280.3 -- 377.9 -- 180.3 --
Foreign tax credit
carryforwards 165.1 -- 100.0 -- -- --
State and local
taxes 37.7 -- 34.3 -- 42.0 --
Other carry-
forwards 117.1 -- 59.0 -- 40.4 --
All other 32.6 27.4 33.9 23.1 44.4 51.4
-------------------------------------------------------------------------------
Subtotal 1,220.7 694.6 1,149.4 574.7 843.5 567.7
Valuation
allowance (27.8) -- (23.7) -- (75.4) --
-------------------------------------------------------------------------------
Total deferred
taxes $1,192.9 $694.6 $1,125.7 $ 574.7 $768.1 $567.7
--------------------------------------------------------------------------------
Net deferred
tax asset $ 498.3 $ 551.0 $200.4
--------------------------------------------------------------------------------
</TABLE>
In 1994 and 1993, foreign tax credit carryforwards arose from dividends
received by the Company from foreign subsidiaries. These carryforwards expire
through 1999.
A valuation allowance is provided when it is more likely that some portion
of the deferred tax assets will not be realized. The major component of the
valuation allowance relates to the uncertainty of realizing certain foreign
deferred tax assets. The net decrease in the total valuation allowance for 1993
of $51.7 million 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 valuation
allowance at January 1, 1992, was $81.2 million.
The Internal Revenue Service (IRS) is currently auditing the years 1987
through 1989. In October 1994, the Company received a Notice of Proposed
Adjustments from the IRS. The proposed adjustments relate primarily to the tax
accounting treatment of certain swaps and related transactions undertaken by the
Company in 1987 and 1988. These transactions resulted in the receipt of cash in
those years, which the Company duly reported as income for tax purposes. In
45
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1989 (in Notice 89-21), the IRS announced that it believed cash received in
certain swap transactions should be reported as income for tax purposes over the
life of the swaps, rather than when received. In the case of the Company, this
would cause some of the income to be reported in years subject to the Tax Reform
Act of 1986. The IRS proposed adjustment involves approximately $72 million in
federal taxes for the years 1987 through 1989, plus interest. If the proposed
adjustment is carried through to the maturity of the transactions in 1992, an
additional tax deficiency of approximately $86 million, plus interest, would
result. The Company disagrees with the proposed adjustment and continues to
believe that its tax accounting treatment for the transactions in question was
proper. While it is impossible to determine the final disposition, the Company
is of the opinion that the ultimate resolution of this matter should not have a
material adverse effect on the financial position or the results of operations
of the Company.
The Company believes that its accrued tax liabilities are adequate for all
open years.
The Company made income tax payments of approximately $414.1, $323.6 and
$319.9 million during 1994, 1993 and 1992, respectively.
The Company adopted SFAS No. 109 effective January 1, 1992. The cumulative
effect of this change increased net income by $30.0 million ($.09 per share) and
is reported separately in the 1992 Consolidated Statement of Income.
PENSION PLANS
The Company and its subsidiaries have pension plans covering substantially all
eligible employees on a contributory or non-contributory basis. The components
of net periodic pension cost for 1994, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during the period $ 79.2 $ 60.2 $ 56.7
Interest cost on projected
benefit obligations 115.8 107.5 110.8
Actual return on
plan assets (32.8) (197.4) (97.7)
Net amortization and
deferral (88.4) 71.4 (43.8)
-------------------------------------------------------------------------------
Net periodic pension cost $ 73.8 $ 41.7 $ 26.0
-------------------------------------------------------------------------------
</TABLE>
Assumptions used to measure the projected benefit obligations were:
1994 1993 1992
-------------------------------------------------------------------------------
U.S. PLANS
Discount rate 8.5% 7.5% 8.5%
Rate of increase in salary levels 5.5% 5.5% 6.0%
Expected long-term rate
of return on plan assets 9.0% 9.0% 9.0%
INTERNATIONAL PLANS (WEIGHTED AVERAGE)
Discount rate 7.1% 6.7% 7.7%
Rate of increase in salary levels 4.6% 4.4% 5.3%
Expected long-term rate of
return on plan assets 8.1% 8.5% 9.2%
As a result of changes in long-term interest rates, the Company modified
its assumed discount rate for U.S. plans to 8.5% and 7.5% in 1994 and 1993,
respectively. The Company also reduced its rate of increase in salary levels
from 6.0% to 5.5% in 1993 because of lower inflation. The effect of these
changes resulted in a net decrease in projected benefit obligations of $117.2
million for 1994 and a net increase of $98.2 million for 1993.
As of December 31, 1994, 1993 and 1992, the funded status of the Company's
pension plans are as follows:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Actuarial present value of
accumulated benefit obligations:
Vested $(1,312.0) $(1,290.4) $(969.7)
Non-vested (133.3) (99.8) (156.3)
-------------------------------------------------------------------------------
Total (1,445.3) (1,390.2) (1,126.0)
Effect of future salary increases (258.9) (204.4) (224.5)
-------------------------------------------------------------------------------
Projected benefit obligations (1,704.2) (1,594.6) (1,350.5)
Plan assets at fair value 1,773.6 1,774.9 1,662.1
-------------------------------------------------------------------------------
Plan assets in excess of projected
benefit obligations 69.4 180.3 311.6
Unrecognized overfunding at date
of adoption (26.9) (29.6) (32.5)
Unrecognized net losses/(gains) 162.6 140.8 (20.5)
Unrecognized prior service costs 118.1 61.5 75.7
Minimum liability adjustment (36.3) (21.1) (5.0)
-------------------------------------------------------------------------------
Net pension asset included in
Consolidated Balance Sheet $ 286.9 $ 331.9 $ 329.3
-------------------------------------------------------------------------------
</TABLE>
The preceding table includes 1994 accumulated benefit obligations of $172.6
million and assets at fair value of $5.5 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 employee career earnings. Participants become fully vested after as
few as five years of employment.
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. At December 31, 1994, the major U.S. plan held approximately 2.0
million shares of the Company's common stock with a fair value of $152.6
million. Dividends of $3.7 million were paid on such shares in 1994.
46
<PAGE>
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 1994, 1993 and 1992,
Company contributions amounted to $29.8, $28.8 and $29.1 million, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
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 pre-tax charge of
$520.5 million ($312.6 million after taxes) 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 1992
divestitures. Plan modifications adopted in 1992 further reduced the obligation,
with this reduction being amortized as a component of the net periodic
postretirement expense.
The components of the 1994, 1993 and 1992 expense were as follows:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost--benefits earned
during the period $ 5.8 $ 5.0 $ 9.8
Interest cost on the accumulated
obligation 21.7 20.2 25.8
Net amortization and deferral (24.2) (24.4) (19.9)
---------------------------------------------------------------------------
Net periodic postretirement expense $ 3.3 $ .8 $ 15.7
---------------------------------------------------------------------------
</TABLE>
The accumulated postretirement benefit obligation recognized in the
December 31, 1994, 1993 and 1992 Consolidated Balance Sheets, consist of:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS) 1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Retirees $192.1 $178.7 $164.5
Fully eligible active plan participants 35.1 47.1 41.6
Other active plan participants 52.7 57.0 46.9
---------------------------------------------------------------------------
Accumulated postretirement benefit obligation 279.9 282.8 253.0
Unrecognized prior service cost 157.2 181.6 206.1
Unrecognized net loss (4.5) (21.1) --
---------------------------------------------------------------------------
Recorded obligation $432.6 $443.3 $459.1
---------------------------------------------------------------------------
</TABLE>
An average increase of 12% in the cost of covered health care benefits was
assumed for 1995 and is projected to decrease to 6.2% after 16 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, 1994 by $16.8 million and the total of service and interest cost by $1.5
million. The discount rates used to estimate the accumulated postretirement
benefit obligation were 8.5%, 7.5% and 8.5% at December 31, 1994, 1993 and 1992,
respectively.
POSTEMPLOYMENT BENEFITS
The Company adopted SFAS No. 112, EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT
BENEFITS effective January 1, 1994. This statement pertains to benefits provided
to former or inactive employees after employment but before retirement. Because
the Company's past accounting practices were in compliance with this statement,
no cumulative effect adjustment was required.
EARNINGS PER COMMON SHARE
Earnings per common share are computed by dividing net income by the weighted
average number of common shares and common share equivalents outstanding. The
latter consists 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, 1994, 1993 and 1992, is as follows:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS AND SHARES,
EXCEPT PER SHARE AMOUNTS) 1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Net income, adjusted $1,298.4 $657.5 $811.1
---------------------------------------------------------------------------
Weighted average number of
common shares outstanding 305.8 315.5 329.0
Common share equivalents 4.4 4.9 7.5
---------------------------------------------------------------------------
Total 310.2 320.4 336.5
---------------------------------------------------------------------------
Earnings per common share $4.19 $2.05 $2.41
---------------------------------------------------------------------------
</TABLE>
COMMON STOCK
In December 1994, the Company announced that it plans to purchase up to 2.25
million shares of its common stock in the open market to be used for the
acquisition of NAMIC U.S.A. Corporation (NAMIC). Under this plan, approximately
1.0 million shares were purchased in 1994.
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. This program was completed during the
third quarter of 1994. These shares are available for use in the Company's
employee benefit plans and for general corporate purposes.
47
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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, 1994, 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 1993, the Company sold 10 million shares of treasury stock to the Pfizer Inc.
Grantor Trust (the Trust). The Trust will be used primarily to fund future
obligations for previously approved Company benefit plans over its 15-year term.
Common stock was acquired by the Trust from the Company in exchange for a
promissory note valued at approximately $600 million at the date of sale. The
amount, representing unearned employee benefits, is recorded as a deduction from
shareholders' equity and is reduced as employee benefits are satisfied.
In 1994, .3 million shares were released from the Trust to satisfy employee
stock options exercised and the Company's obligation under other employee
benefit plans. Compensation costs related to the other employee benefit plans
are recorded at fair market value at the date the shares are released.
STOCK OPTION PLANS AND PERFORMANCE AWARDS
Under the Stock and Incentive Plan, the Company may grant options to any
employee, including officers, 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, 1994, options for
15,046,075 shares were exercisable. The Plan also provides for stock
appreciation rights, stock awards or performance unit awards.
In 1994, under the terms of the Stock and Incentive Plan, restricted stock
awards were made to several key employees. Restrictions generally expire over a
three-year period from the date of grant. Under the award, 20,609 shares were
outstanding at December 31, 1994.
In 1993, the shareholders approved amendments to the Plan for an additional
11 million shares to be made available for future grants of options. The
following table summarizes information relative to the Plan:
<TABLE>
<CAPTION>
(SHARES) 1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Under option January 1 19,294,317 17,860,189 16,961,631
Granted (per share:
$56.25 to $69.75 in 1994;
$63.00 in 1993;
$69.50 to $81.00 in 1992) 4,959,018 3,214,059 5,064,322
Exercised (per share:
$18.25 to $65.25 in 1994;
$14.00 to $65.25 in 1993;
$14.00 to $65.25 in 1992) (1,781,025) (1,452,160) (3,750,610)
Cancelled--available for
future grants (348,776) (305,774) (415,154)
Cancelled--not available for
future grants (20,055) (21,997) --
---------------------------------------------------------------------------
Under option December 31
(per share:
$24.25 to $81.00 in 1994;
$18.25 to $81.00 in 1993;
$17.50 to $81.00 in 1992) 22,103,479 19,294,317 17,860,189
---------------------------------------------------------------------------
Available for grant
December 31 4,892,581 9,502,823 1,411,108
---------------------------------------------------------------------------
</TABLE>
The Performance-Contingent Share Award Program (the Program), established
in 1993, provides executives and other key employees with the right to earn
awards payable in shares of the Company's common stock. The actual payout of
shares is determined using two performance criteria measuring the Company's
performance relative to a determined industry peer group. The Program provides
for up to 10 million shares to be awarded. At December 31, 1994, executives and
other key employees had the right to earn up to 563,670 shares, although no
shares have yet been issued. Actual issuances of shares can only occur when the
performance period is completed and the criteria measured. Compensation cost to
date related to the Program aggregated $7.5 million.
LEASE COMMITMENTS
Rent expense, net of sublease rentals, for the years ended December 31, 1994,
1993 and 1992 amounted to approximately $94.4, $87.2 and $80.1 million,
respectively. Total future minimum rental commitments under all non-cancellable
leases for the years 1995 through 1999 and thereafter are approximately $26.4,
$20.8, $17.0, $9.9, $12.1 and $188.2 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.
48
<PAGE>
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS
In 1994, the Company acquired:
- Certain assets of Flavor Technology Inc., a specialty flavors business, for
approximately $32 million.
- Restiva Italiana S.p.A. for approximately $26 million. Restiva produces and
sells a wide range of innovative products for health and skin care.
- Rovi Farma, S.A., in Spain, for approximately $24 million. Rovi is a
distributor and producer of a variety of over-the-counter products.
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 Japanese distributor of hospital products, for approximately
$16.4 million.
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,
through a public offering and 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:
- 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.
- 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. See the "Litigation" footnote beginning
on this page.
- Sold a majority interest of approximately 60% in MTI. The net proceeds of
$226.6 million approximated the net book value of the interest sold.
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 DEG. or 70 DEG. 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.
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, and the U.S. Supreme Court denied a writ of certiorari on October
4, 1994. 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,
eight have cases pending; approximately 792 have been resolved; and
approximately 100 have never filed a case or claim.
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.
49
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
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 court has determined that the
settlement is fair and reasonable. Subsequently, the court entered an injunction
enforcing its determination. An appeal from that injunction is pending in the
United States Court of Appeals for the Third Circuit.
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. It is the CCR's intention to settle remaining and opt-out cases and
claims on a similar basis to past settlements. The total pending number of cases
as of December 31, 1994 is 14,543 asbestos cases against Quigley, 5,643 asbestos
cases against Pfizer Inc. and 147 talc cases against Pfizer Inc.
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
50
<PAGE>
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 the 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
brand name prescription drugs and certain companies that distribute brand name
prescription drugs, in suits brought by retail pharmacy companies in federal and
state courts. The federal cases consist principally of a class action by retail
pharmacies (including approximately 30 named plaintiffs), as well as additional
actions by approximately 1,900 individual retail pharmacies (the "individual
actions"). These cases, all of which have been or are in the process of being
transferred to the United States District Court for the Northern District of
Illinois and coordinated for pretrial purposes, allege 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 allegedly extended to managed
care companies, mail order pharmacies and certain other institutional
purchasers. In addition, the individual actions also allege violations of the
Robinson-Patman Act in that the manufacturers allegedly have unlawfully
discriminated against retail pharmacy companies by not extending them such
discounts.
The federal court has certified a class consisting of all persons or
entities who, since October 15, 1989, bought prescription brand name drugs from
any manufacturer or wholesaler defendant, but specifically excluding government
entities, mail order pharmacies, HMOs, hospitals, clinics and nursing homes. The
federal court had denied a motion for certification made by a purported class of
Alabama consumers (in a case that was originally filed in state court, then
removed to federal court). In the state cases, motions for class certification
are anticipated, except in one Alabama action still in state court, where
plaintiffs have stated that they intend to amend their complaint to withdraw
their class allegations.
The Company believes that these cases are without merit and is vigorously
defending them.
Food and Drug Administration (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.
51
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 district court has denied the plaintiffs' motion to
certify the case as a class action. The Company believes that the suit is
without merit and is vigorously defending it.
During 1994, seven purported class actions were filed against American
Medical Systems ("AMS") in federal courts in South Carolina (later transferred
to Minnesota), California, Minnesota (2), Indiana, Ohio and Louisiana. In
January 1995, an additional purported class action was filed in state court in
Louisiana, replicating the federal suit. The California and Indiana suits and
one Minnesota suit also name Pfizer Inc. as a defendant, based on its ownership
of AMS. The suits seek monetary and injunctive relief on the basis of
allegations that implantable penile prostheses are prone to unreasonably high
rates of mechanical failure and/or various autoimmune diseases as a result of
silicone materials. On September 30, 1994, the federal Judicial Panel on
Multidistrict Litigation denied the various plaintiffs' motions to consolidate
or coordinate the cases for pretrial proceedings. On February 28, 1995, the
Court in the Ohio suit conditionally granted plaintiffs' motion for class
certification, and on March 3, 1995, the Court in the California suit denied
plaintiffs' motion for class certification. The Company believes the suits are
without merit and is vigorously defending them.
SUBSEQUENT EVENTS
On January 19, 1995, the Company acquired SmithKline Beecham's animal health
business for approximately $1.45 billion substantially financed by the issuance
of commercial paper. The Company expects to acquire NAMIC in a stock-for-stock
transaction valued at approximately $175 million, in the first quarter of 1995.
Both of these acquisitions will be accounted for as purchase transactions,
with goodwill generated to be amortized on a straight-line basis over a period
not exceeding 40 years.
SEGMENT INFORMATION AND GEOGRAPHIC DATA
Segment information (including major product groups) and geographic data for the
years ended December 31, 1994, 1993 and 1992 are shown on pages 35 and 36 and in
the footnote "Financial Subsidiaries" on page 42 and are incorporated in this
footnote.
Net sales represent merchandise shipments to third parties. Expenses were
deducted from net sales to arrive at segment profit. Those expenses directly
traceable to individual segments were charged to them. Other 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
cardiovascular agents, anti-infectives, central nervous system agents,
anti-inflammatories 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).
Animal health: animal health products, antibiotic and vitamin feed
supplements and veterinary items.
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.
Financial subsidiaries: a banking operation that makes loans and accepts
deposits in international markets and an insurance operation that reinsures
certain assets, inland transport and marine cargo of the Company's subsidiaries.
52
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
QUARTERS
--------------------------------------
(MILLIONS OF DOLLARS EXCEPT PER SHARE DATA) FIRST SECOND THIRD FOURTH YEAR
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Net sales $1,982.9 $1,923.3 $2,074.9 $2,300.2 $8,281.3
Costs and expenses
Cost of sales 432.2 464.1 476.0 546.3 1,918.6
Selling, informational and administrative expenses 730.5 800.0 796.6 923.7 3,250.8
Research and development expenses 254.7 262.0 295.4 327.3 1,139.4
Other deductions--net 35.5 27.4 24.1 24.0 111.0
------------------------------------------------------------------------------------------------------------------------
Income before provision for taxes on income and minority interests 530.0 369.8 482.8 478.9 1,861.5
Provision for taxes on income 159.0 110.9 144.9 143.7 558.5
Minority interests .3 1.7 1.4 1.2 4.6
------------------------------------------------------------------------------------------------------------------------
Net income $370.7 $257.2 $336.5 $334.0 $1,298.4
------------------------------------------------------------------------------------------------------------------------
Earnings per common share $1.18 $.84 $1.09 $1.08 $4.19
------------------------------------------------------------------------------------------------------------------------
Cash dividends paid per common share $.47 $.47 $.47 $.47 $1.88
------------------------------------------------------------------------------------------------------------------------
Stock prices*
High $69-7/8 $64-3/4 $70-1/2 $79-3/8
Low $53-1/8 $53-1/4 $59-1/8 $68
------------------------------------------------------------------------------------------------------------------------
1993
Net sales $1,867.3 $1,748.7 $1,872.5 $1,989.2 $7,477.7
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
Other 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
------------------------------------------------------------------------------------------------------------------------
Stock prices*
High $72-3/4 $75-5/8 $66-1/4 $70-3/8
Low $52-1/2 $57-1/2 $55-5/8 $57-3/4
------------------------------------------------------------------------------------------------------------------------
<FN>
*AS REPORTED IN The Wall Street Journal.
</TABLE>
As of January 31, 1995, there were approximately 59,749 holders of the
Company's common stock (symbol PFE).
53
<PAGE>
<TABLE>
<CAPTION>
CORPORATE SHAREHOLDER
INFORMATION INFORMATION
<S> <C> <C>
BUSINESS SEGMENTS STOCK LISTINGS ANNUAL MEETING
Pfizer Common Stock is listed on the New The Pfizer Annual Meeting will be held
HEALTH CARE York Stock Exchange. It is also listed on Thursday, April 27, 1995, at 10:00
ANIMAL HEALTH on the London, Paris, and Brussels A.M. at The Empire State Ballroom, The
CONSUMER HEALTH CARE exchanges and Swiss exchanges in Basel, Grand Hyatt, 42nd Street at Lexington
FOOD SCIENCE Zurich, and Geneva. Pfizer Common Stock Avenue, New York City. Detailed
is also traded on various United States information about the meeting is
MAJOR BUSINESS GROUPS, regional stock exchanges. contained in the Notice of Annual
THEIR PRINCIPAL DIVISIONS, AND Meeting and Proxy Statement sent with a
SUBSIDIARIES REGISTRAR copy of the Annual Report to each
Mellon Securities Trust Company shareholder of record as of February 21,
U.S. PHARMACEUTICALS GROUP 120 Broadway 1995.
New York, NY 10271
Customer Advocacy FORM 10-K
Disease Management TRANSFER AGENT The Company, upon written request, will
National Accounts Pfizer Inc provide without charge to each
Sales Management Inquiries concerning transfer shareholder a copy of the Company's
National Healthcare Operations requirements, stock holdings, dividend annual report on Securities and Exchange
Pfizer Labs checks, and change of address should be Commission Form 10-K for the fiscal year
Pratt Pharmaceuticals directed to: ended December 31, 1994, including the
Roerig financial schedules thereto. The report
Shareholder Services will be available on or about March 31,
INTERNATIONAL PHARMACEUTICALS GROUP Pfizer Inc 1995. Requests should be directed to:
Pfizer International subsidiaries 235 East 42nd Street
New York, NY 10017-5755 Secretary
HOSPITAL PRODUCTS GROUP Tel: (800) PFE 9393 Pfizer Inc
Howmedica 235 East 42nd Street
Medical Devices DUPLICATE MAILINGS New York, NY 10017-5755
American Medical Systems When several shareholders live at the
Biomedical Sensors same address, they may receive more POLITICAL ACTION COMMITTEE
Schneider copies of quarterly reports than they A report of campaign contributions made
Strato/Infusaid need. The excess can be eliminated by by the Company's Political Action
Valleylab writing to: Committee in 1994 is available to
shareholders upon written request to:
ANIMAL HEALTH GROUP Shareholder Services
Pfizer Inc Secretary
CONSUMER HEALTH CARE GROUP 235 East 42nd Street Pfizer Inc
New York, NY 10017-5755 235 East 42nd Street
FOOD SCIENCE GROUP New York, NY 10017-5755
Please be sure to include the numbers of
PFIZER INTERNATIONAL BANK EUROPE those accounts whose duplicate mailing INVESTOR RELATIONS
should be eliminated. This will not Security analysts and investment
affect dividend or proxy mailings. professionals should direct their
business-related inquiries to:
SHAREHOLDER PROGRAMS
A shareholder of record interested in James Gardner, Ph.D.
the Shareholder Investment Program, the Vice President--Investor Relations
Direct Deposit of Dividends Service, or Pfizer Inc
inquiring about an established program 235 East 42nd Street
account should direct inquiry to: New York, NY 10017-5755
Tel: (212) 573 3267
Shareholder Services
Pfizer Inc CUSTOMER HELP LINE
235 East 42nd Street Consumers or health care professionals
New York, NY 10017-5755 who have questions about any Pfizer
Tel: (800) PFE 9393 medication should call: (800) 438 1985
SHAREHOLDER HELP LINE
Shareholders with questions about their
account should call: (800) PFE 9393
CORPORATE AFFAIRS HELP LINE
People interested in receiving
literature about Pfizer should call:
(800) PFE 4717
</TABLE>
58
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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, 1994
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, 1994
(THOUSANDS OF DOLLARS EXCEPT UNIT VALUES)
<TABLE>
<CAPTION>
NON-PARTICIPANT
DIRECTED
--------------- PARTICIPANT DIRECTED
COMPANY COMMON ------------------------------------------------------
TOTAL STOCK FUND FUND A FUND B FUND C FUND D LOAN FUND
---------- --------------- ---------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair value:
Pfizer Inc. common stock:
Company Common Stock Fund, 5,342,855
shares, cost $121,680; Fund C, 4,718,276
shares, cost $132,224..................... $ 777,223 $412,736 $ -- $ -- $364,487 $ -- $ --
Intermediate Treasury Bond Fund, cost
$120,852.................................. 114,791 -- 114,791 -- -- -- --
Other marketable securities, cost
$40,603................................... 66,783 -- -- 66,783 -- -- --
Investment contracts with insurance
companies, at contract value................ 37,892 -- 37,892 -- -- -- --
Cash and short-term securities, at fair
value....................................... 4,584 78 250 107 71 4,078 --
Loans to participants........................ 24,528 -- -- -- -- -- 24,528
Interest receivable.......................... 2,334 5 2,306 1 4 18 --
Contributions receivable from employers,
including amounts collected from
employees................................... 7,149 2,268 1,758 868 919 1,336 --
--------- ----------- -------- ------- -------- ------ --------
1,035,284 415,087 156,997 67,759 365,481 5,432 24,528
Payables arising from securities purchased... (5) -- (2) (3) -- -- --
--------- ----------- -------- ------- -------- ------ --------
Net assets available for plan benefits --
Note 8...................................... $1,035,279 $415,087 $156,995 $67,756 $365,481 $5,432 $24,528
--------- ----------- -------- ------- -------- ------ --------
--------- ----------- -------- ------- -------- ------ --------
Number of units outstanding at end of year... 35,818,415 15,360,416 6,808,008 31,611,989 493,338
Unit Value -- Note 1......................... $11.38 $10.00 $9.77 $11.38 $10.08
</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, 1993
(THOUSANDS OF DOLLARS EXCEPT UNIT VALUES)
<TABLE>
<CAPTION>
NON-PARTICIPANT
DIRECTED
--------------- PARTICIPANT DIRECTED
COMPANY COMMON --------------------------------------------
TOTAL STOCK FUND FUND A FUND B FUND C LOAN 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 -- --
Investment contracts with insurance companies, at
contract value.......................................... 118,998 -- 118,998 -- -- --
Short-term securities, at 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 -- Note 8......... $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 -- Note 1..................................... $47.52 $7.67 $8.30 $26.10
</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
YEAR ENDED DECEMBER 31, 1994
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
NON-
PARTICIPANT
DIRECTED
----------
COMPANY PARTICIPANT DIRECTED
COMMON ----------------------------------------------
TOTAL STOCK FUND FUND A FUND B FUND C FUND D LOAN FUND
---------- ---------- -------- ------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income
Cash dividends:
Pfizer Inc. common stock.............................. $ 18,635 $ 9,852 $ -- $ -- $ 8,783 $ -- $ --
Other marketable securities........................... 1,699 -- -- 1,699 -- --
Interest................................................ 12,759 35 11,628 24 38 28 1,006
---------- ---------- -------- ------- -------- ------ ---------
33,093 9,887 11,628 1,723 8,821 28 1,006
Investment management fees -- Note 4...................... (39) -- (24) (15) -- -- --
---------- ---------- -------- ------- -------- ------ ---------
33,054 9,887 11,604 1,708 8,821 28 1,006
---------- ---------- -------- ------- -------- ------ ---------
Realized gains (losses) on investments -- Note 5
Pfizer Inc. common stock................................ 20,942 10,582 -- -- 10,360 -- --
Other securities........................................ (343) -- (350) 7 -- -- --
---------- ---------- -------- ------- -------- ------ ---------
20,599 10,582 (350) 7 10,360 -- --
---------- ---------- -------- ------- -------- ------ ---------
Unrealized appreciation (depreciation) of investments --
Note 6................................................... 54,321 32,408 (6,015) (838) 28,766 -- --
---------- ---------- -------- ------- -------- ------ ---------
107,974 52,877 5,239 877 47,947 28 1,006
---------- ---------- -------- ------- -------- ------ ---------
Contributions -- Note 7
Employees............................................... 60,115 -- 14,525 11,603 33,952 35 --
Employers............................................... 28,723 28,723 -- -- -- -- --
Withdrawals -- Note 8..................................... (86,387) (33,694) (19,644) (5,467) (27,582) -- --
Loan transaction transfers -- net......................... -- (1,733) (2,015) (678) (4,225) (4) 8,655
Transfers at fair market value -- net..................... -- -- 3,615 1,628 (10,616) 5,373 --
---------- ---------- -------- ------- -------- ------ ---------
2,451 (6,704) (3,519) 7,086 (8,471) 5,404 8,655
---------- ---------- -------- ------- -------- ------ ---------
Net increase.............................................. 110,425 46,173 1,720 7,963 39,476 5,432 9,661
Net assets available for plan benefits:
Beginning of year....................................... 924,854 368,914 155,275 59,793 326,005 -- 14,867
---------- ---------- -------- ------- -------- ------ ---------
End of year............................................. $1,035,279 $ 415,087 $156,995 $67,756 $365,481 $5,432 $24,528
---------- ---------- -------- ------- -------- ------ ---------
---------- ---------- -------- ------- -------- ------ ---------
</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
YEAR ENDED DECEMBER 31, 1993
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
NON-
PARTICIPANT
DIRECTED
----------
COMPANY PARTICIPANT DIRECTED
COMMON --------------------------------------
TOTAL STOCK FUND FUND A FUND B FUND C LOAN 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) --
Loan transaction transfers -- 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.
4
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
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.
Effective December 31, 1992, all new contributions, in excess of withdrawals
and transfers, directed to Fund A of the Plan are invested in an intermediate
U.S. Treasury bond fund. In addition, as the investment contracts with insurance
companies in Fund A mature, the contracts' proceeds are 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 four investment funds.
These funds are described as follows:
Fund A -- An intermediate U.S. Treasury bond fund and investment
contracts with one or more insurance companies (see GENERAL
caption 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.
Fund D -- U.S. Treasury and government agency money market investments
with short maturities less than one year (fund became
available to participants in October 1994).
At December 31, 1994 and 1993, respectively, there were 14,670 and 14,197
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, 1994 and 1993, respectively, Fund A had
5,506 and 6,768 participating employees; Fund B, 4,242, and 4,261, Fund C, 9,299
and 11,274 and Fund D, 55 participating employees in 1994.
All Company matching contributions are invested by the Trustee in a fifth
fund designated the "Company Common Stock Fund," which consists solely of common
stock of the Company. These contributions are non-participant directed.
In 1994, the Company changed the Plan Administrator, resulting in unit
values established at $10.00 per unit at the date of the change. On the current
Plan Administrator's basis, the December 31, 1993 unit values would have been
$9.66, $9.63, $9.94 and $9.94 for Funds A, B, C and the Company Common Stock
Fund, respectively.
The Trust Agreement provides that any portion of any of the five funds may,
pending its permanent investment or distribution, be invested in short-term
investments.
5
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994 AND 1993
NOTE 1 -- SUMMARY PLAN DESCRIPTION (CONTINUED)
VESTING -- Members are immediately vested in the full value of their
accounts (i.e., participants' and employers' contributions) in Funds A, B, C and
D and the Company Common Stock Fund.
WITHDRAWALS -- A participant in the Plan may make a full or partial
withdrawal of funds subject to the provisions of the Plan.
LOANS -- Effective July 1, 1993, Plan participants are 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 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, 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, C, D 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 closing 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 as of the last business day of the
year. Investments in the Collective Short Term Investment Fund included in Cash
and short-term securities are recorded at fair value and the investment
contracts with insurance companies are recorded at contract value. Other
short-term investments and time deposits are recorded at fair value.
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.
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).
6
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994 AND 1993
NOTE 3 -- INCOME TAXES (CONTINUED)
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, Fund B and Fund D), all costs and expenses of administering the Plan
were borne by the Company.
NOTE 5 -- REALIZED GAINS (LOSSES) ON INVESTMENTS
The $20,942,000 realized gains on Pfizer Inc. common stock for 1994
represents the difference between the $32,958,000 net proceeds and the
$12,016,000 cost (on an average basis) of shares disposed of and includes
$15,172,000 related to shares sold and shares distributed in kind to members who
withdrew from the Plan on retirement or termination.
The $39,136,000 realized gains on Pfizer Inc. common stock for 1993
represents the difference between the $57,634,000 net proceeds and $18,498,000
cost (on an average basis) of shares disposed of 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 1993 realized gains
include $27,975,000 related to the transfer of Plan assets of the former
employees of the Pfizer Inc. Specialty Minerals Group to the Minerals
Technologies Inc. Savings and Investment Plan.
The $343,000 realized losses on other securities for 1994 represents the
difference between the aggregate actual proceeds of $19,928,000 and the
$20,271,000 aggregate cost (actual or average) of securities sold.
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.
NOTE 6 -- UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
The change in the amount of unrealized appreciation (depreciation) was as
follows:
<TABLE>
<CAPTION>
BALANCE
----------------------------------------------------------
DECEMBER 31, 1994 DECEMBER 31,1993 CHANGE DURING 1994
----------------- ----------------- ------------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Company Common
Stock Fund........ $291,055 $258,647 $ 32,408
Fund A............. (6,061) (46) (6,015)
Fund B............. 26,180 27,018 (838)
Fund C............. 232,264 203,498 28,766
----------------- ----------------- --------
$543,438 $489,117 $ 54,321
----------------- ----------------- --------
----------------- ----------------- --------
</TABLE>
<TABLE>
<CAPTION>
BALANCE
----------------------------------------------------------
DECEMBER 31, 1993 DECEMBER 31,1992 CHANGE DURING 1993
----------------- ----------------- ------------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
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)
----------------- ----------------- --------
----------------- ----------------- --------
</TABLE>
7
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1994 AND 1993
NOTE 7 -- CONTRIBUTIONS
The participating employees and their employers contributed the following
amounts to the Plan:
<TABLE>
<CAPTION>
1994
---------------------------------------
PARTICIPATING PARTICIPATING
EMPLOYEES EMPLOYERS TOTAL
------------- ------------- -------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Pfizer Inc. ........................... $46,405 $22,914 $69,319
Associate Companies.................... 13,710 5,809 19,519
------------- ------------- -------
$60,115 $28,723 $88,838
------------- ------------- -------
------------- ------------- -------
</TABLE>
<TABLE>
<CAPTION>
1993
---------------------------------------
PARTICIPATING PARTICIPATING
EMPLOYEES EMPLOYERS TOTAL
------------- ------------- -------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Pfizer Inc. ........................... $43,967 $21,759 $65,726
Associate Companies.................... 13,300 5,821 19,121
------------- ------------- -------
$57,267 $27,580 $84,847
------------- ------------- -------
------------- ------------- -------
</TABLE>
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, investment contracts with insurance
companies and shares of Pfizer Inc. common stock.
The net assets available for Plan benefits as of December 31, 1994 and 1993
do not reflect a reduction for 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>
1994 1993
------- -------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Company Common Stock Fund..................................... $ 7,588 $ 7,796
Fund A........................................................ 3,253 3,783
Fund B........................................................ 1,250 1,027
Fund C........................................................ 5,856 7,363
Fund D........................................................ 461 --
------- -------
$18,408 $19,969
------- -------
------- -------
</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, 1994 and 1993 of $18,408,000
and $19,969,000, respectively, have been included in benefit expense within Form
5500 for those years.
8
<PAGE>
SCHEDULE 1
PFIZER SAVINGS AND INVESTMENT PLAN
ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1994
(THOUSANDS OF DOLLARS)
INVESTMENTS:
FUND A:
<TABLE>
<CAPTION>
INTEREST MATURITY CONTRACT
INVESTMENT CONTRACTS WITH INSURANCE COMPANIES RATE DATE VALUE
----------------------------------------------- --------- -------- --------
<S> <C> <C> <C>
Continental Assurance Co. Group Annuity
Contract #12682............................... 8.46% 6/3/96 $ 25,270
Provident National Assurance Co. Group Annuity
Contract #027-65041........................... 8.43% 6/3/96 12,622
--------
Total Investment Contracts with Insurance
Companies................................. $ 37,892
--------
--------
</TABLE>
<TABLE>
<CAPTION>
FAIR
FIXED INCOME INVESTMENTS COST VALUE
------------------------------------------------- -------- --------
<S> <C> <C> <C>
Northern Trust Intermediate Treasury Bond Fund... $120,852 $114,791
-------- --------
-------- --------
FUND B:
<CAPTION>
NUMBER OF FAIR
COMMON STOCK INDEX FUND UNITS COST VALUE
------------------------------------------------- --------- -------- --------
<S> <C> <C> <C>
Northern Trust Collective Stock Index Fund....... 1,732,831 $ 40,603 $ 66,783
--------- -------- --------
--------- -------- --------
</TABLE>
SHORT-TERM SECURITIES:
<TABLE>
<CAPTION>
INTEREST MATURITY NUMBER FAIR
NAME OF ISSUER RATE DATE OF UNITS COST VALUE
--------------------------------- -------- -------- --------- ------ ------
<S> <C> <C> <C> <C> <C>
Northern Trust Collective
Short-Term Investment Fund:
Company Common Stock Fund Various Various 77,669 $ 78 $ 78
FUND A Various Various 249,777 250 250
FUND B Various Various 106,765 107 107
FUND C Various Various 70,517 71 71
Northern Trust Government
Short-Term Investment Fund:
FUND D Various Various 4,078,227 4,078 4,078
------ ------
Total Short-Term
Securities.................. $4,584 $4,584
------ ------
------ ------
</TABLE>
9
<PAGE>
SCHEDULE 2
PFIZER SAVINGS AND INVESTMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1994
(THOUSANDS OF DOLLARS)
FUND C AND COMPANY COMMON STOCK FUND:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SECURITIES PURCHASED TRANSACTIONS SHARES COST
------------------------------------------- ------------ --------- --------
<S> <C> <C> <C>
Pfizer Inc. common stock................... 33 609,641 $ 38,056
------------ --------- --------
------------ --------- --------
</TABLE>
<TABLE>
<CAPTION>
FAIR VALUE
SECURITIES NUMBER OF NUMBER OF OF DISPOSED REALIZED
DISPOSED* TRANSACTIONS SHARES COST SHARES GAINS
------------------- ------------ --------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
Pfizer Inc. common
stock............. 208 503,556 $12,016 $32,958 $ 20,942
------------ --------- ------- ----------- --------
------------ --------- ------- ----------- --------
<FN>
------------------------
* Dispositions represent sales of stock and shares distributed in kind to
members who withdrew from the Plan on retirement or termination.
</TABLE>
10
<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 (the Plan) as of December 31,
1994 and 1993, 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, 1994 and 1993, and the changes in net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes and (2) reportable transactions, as of or for the
year ended December 31, 1994, 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 Fund Information in the statements of net assets
available for plan benefits and the statements of changes in net assets
available for plan benefits is presented for purposes of additional analysis
rather than to present the net assets available for plan benefits and changes in
net assets available for plan benefits of each fund. The supplemental schedules
and Fund Information have been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
New York, New York
March 23, 1995
11
<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/ DAVID L. SHEDLARZ
-----------------------------------
David L. Shedlarz
VICE PRESIDENT, FINANCE
CHAIR, SAVINGS AND INVESTMENT
PLAN COMMITTEE
Date: March 23, 1995
12
<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
23, 1995, relating to the statement of net assets available for plan benefits of
the Pfizer Savings and Investment Plan as of December 31, 1994 and 1993, 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, 1994 annual report on
Form 11-K of the Pfizer Savings and Investment Plan.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
New York, New York
March 23, 1995
13
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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, 1994
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, 1994
<TABLE>
<CAPTION>
NON-
PARTICIPANT
DIRECTED
-------------
COMPANY PARTICIPANT DIRECTED
COMMON STOCK -----------------------------------------
TOTAL FUND FUND A FUND B FUND C
------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
------------------------------------------------
Investments, at fair value:
Pfizer Inc. common stock:
Pfizer Inc. Common Stock Fund, 38,207
shares, cost $2,059,026; Fund C, 33,927
shares, cost $2,056,665.................... $ 5,572,351 $ 2,951,523 $ -- $ -- $ 2,620,828
Other marketable securities, cost
$1,659,293................................... 1,634,171 -- 1,369,619 264,552 --
Interest-bearing deposits..................... 159,799 47,863 107,407 4,529 --
------------- ------------- ------------- ----------- -------------
Total investments......................... 7,366,321 2,999,386 1,477,026 269,081 2,620,828
Interest receivable............................. 28,067 212 27,721 16 118
Contributions receivable:
Employees..................................... 240,606 -- 91,543 12,747 136,316
Employers..................................... 131,149 131,149 -- -- --
------------- ------------- ------------- ----------- -------------
Net assets available for plan benefits (note
7)......................................... $ 7,766,143 $ 3,130,747 $ 1,596,290 $ 281,844 $ 2,757,262
------------- ------------- ------------- ----------- -------------
------------- ------------- ------------- ----------- -------------
Number of units outstanding at end of year...... 1,297,807 1,233,674 199,889 1,174,996
Unit value...................................... $2.41 $1.29 $1.41 $2.35
</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, 1993
<TABLE>
<CAPTION>
NON-
PARTICIPANT
DIRECTED
-------------
COMPANY PARTICIPANT DIRECTED
COMMON STOCK -------------------------------------------
TOTAL FUND FUND A FUND B FUND C
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
----------------------------------------------
Investments, at fair value:
Pfizer Inc. common stock:
Pfizer Inc. 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
$1,165,353................................. 1,232,359 -- 999,584 232,775 --
Interest-bearing deposits................... 88,639 46 88,331 240 22
------------- ------------- ------------- ------------- -------------
Total investments....................... 5,456,375 2,213,388 1,087,915 233,015 1,922,057
Interest receivable........................... 15,808 104 15,609 -- 95
Contributions receivable:
Employees................................... 217,493 -- 66,693 12,306 138,494
Employers................................... 119,914 119,914 -- -- --
------------- ------------- ------------- ------------- -------------
Net assets available for plan benefits (note
7)......................................... $ 5,809,590 $ 2,333,406 $ 1,170,217 $ 245,321 $ 2,060,646
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Number 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.
2
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN
FOR EMPLOYEES RESIDENT IN PUERTO RICO
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
NON-
PARTICIPANT
DIRECTED
-------------
COMPANY PARTICIPANT DIRECTED
COMMON STOCK -----------------------------------------
TOTAL FUND FUND A FUND B FUND C
-------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net investment income:
Cash Dividends:
Pfizer Inc. common stock................... $ 126,512 $ 66,877 $ -- $ -- $ 59,635
Other marketable securities................ 6,102 -- -- 6,102 --
Interest..................................... 84,462 1,803 80,710 295 1,654
-------------- ------------- ------------- ----------- -------------
217,076 68,680 80,710 6,397 61,289
Investment management fees (note 4)............ (1,026) -- -- (1,026) --
-------------- ------------- ------------- ----------- -------------
216,050 68,680 80,710 5,371 61,289
Realized gains on investments.................. 1,356 -- -- 1,356 --
Unrealized appreciation (depreciation) of
investments (note 5).......................... 576,161 350,942 (81,819) (10,308) 317,346
-------------- ------------- ------------- ----------- -------------
793,567 419,622 (1,109) (3,581) 378,635
-------------- ------------- ------------- ----------- -------------
Contributions (note 6):
Employees.................................... 2,068,551 -- 789,189 130,285 1,149,077
Employers.................................... 1,093,036 1,093,036 -- -- --
Withdrawals.................................... (1,998,601) (716,082) (399,980) (89,122) (793,417)
Transfers between funds -- net................. -- 765 37,973 (1,059) (37,679)
-------------- ------------- ------------- ----------- -------------
1,162,986 377,719 427,182 40,104 317,981
-------------- ------------- ------------- ----------- -------------
Net increase................................... 1,956,553 797,341 426,073 36,523 696,616
Net assets available for plan benefits:
Beginning of year............................ 5,809,590 2,333,406 1,170,217 245,321 2,060,646
-------------- ------------- ------------- ----------- -------------
End of year.................................. $ 7,766,143 $ 3,130,747 $ 1,596,290 $ 281,844 $ 2,757,262
-------------- ------------- ------------- ----------- -------------
-------------- ------------- ------------- ----------- -------------
</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
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
NON-
PARTICIPANT
DIRECTED
-------------
COMPANY PARTICIPANT DIRECTED
COMMON STOCK -----------------------------------------
TOTAL 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
Other marketable securities................ 2,445 -- -- 2,445 --
Interest..................................... 61,514 1,057 59,032 183 1,242
-------------- ------------- ------------- ----------- -------------
153,106 49,400 59,032 2,628 42,046
Investment management fees (note 4)............ (2,050) -- -- (2,050) --
-------------- ------------- ------------- ----------- -------------
151,056 49,400 59,032 578 42,046
-------------- ------------- ------------- ----------- -------------
Realized gains (losses) on investments:
Pfizer Inc. common stock..................... (1,379) (2,679) -- -- 1,300
Other marketable securities.................. 2,915 -- 438 2,477 --
-------------- ------------- ------------- ----------- -------------
1,536 (2,679) 438 2,477 1,300
-------------- ------------- ------------- ----------- -------------
Unrealized appreciation (depreciation) of
investments (note 5).......................... (70,182) (55,143) (1,579) 15,152 (28,612)
-------------- ------------- ------------- ----------- -------------
82,410 (8,422) 57,891 18,207 14,734
-------------- ------------- ------------- ----------- -------------
Contributions (note 6):
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 between funds -- net................. -- (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.
4
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN FOR
EMPLOYEES RESIDENT IN PUERTO RICO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(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. (Puerto Rico Branch) and Pfizer
Corporation (Puerto Rico Branch) (individually and collectively, the
"Companies"). 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, 1994 and 1993, there were 970 and 811 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.
5
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN FOR
EMPLOYEES RESIDENT IN PUERTO RICO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(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 and other
marketable securities are valued at the market price on the last business day of
the year. Interest-bearing deposits are recorded at cost, which approximates
fair value.
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 1993 financial statements have
been reclassified to conform to the 1994 presentation.
(3) INCOME TAXES
No provision has been made for Puerto Rico income tax in reliance upon a
determination letter issued by the Puerto Rico Department of Treasury, which
states that the Plan meets the requirements of Section 165(a) of the Puerto Rico
Income Tax Act of 1954 and that the trust established thereunder is entitled to
exemption.
All contributions made to the Plan by the Companies, including before-tax
contributions made on the employee's behalf by the Companies and the
appreciation on all funds in the employee's account are not taxable to the
employee under Puerto Rico income tax law while these amounts remain in the
Plan.
(4) ADMINISTRATIVE COSTS
Except for certain investment management fees (Fund B), all costs and
expenses of administering the Plan were borne by the Companies.
6
<PAGE>
PFIZER SAVINGS AND INVESTMENT PLAN FOR
EMPLOYEES RESIDENT IN PUERTO RICO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
(5) UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
The change in the amount of unrealized appreciation (depreciation) was as
follows:
<TABLE>
<CAPTION>
BALANCE
-----------------------------------------
DECEMBER 31, DECEMBER 31, CHANGE
1994 1993 DURING 1994
------------- ------------ ------------
<S> <C> <C> <C>
Company Common Stock Fund............................................. $ 892,497 $ 541,555 $ 350,942
Fund A................................................................ (59,218) 22,601 (81,819)
Fund B................................................................ 34,097 44,405 (10,308)
Fund C................................................................ 564,163 246,817 317,346
------------- ------------ ------------
$ 1,431,539 $ 855,378 $ 576,161
------------- ------------ ------------
------------- ------------ ------------
<CAPTION>
BALANCE
-----------------------------------------
DECEMBER 31, DECEMBER 31, CHANGE
1993 1992 DURING 1993
------------- ------------ ------------
<S> <C> <C> <C>
Company Common Stock Fund............................................. $ 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)
------------- ------------ ------------
------------- ------------ ------------
</TABLE>
(6) CONTRIBUTIONS
The participating employees and their employers contributed the following
amounts to the Plan:
<TABLE>
<CAPTION>
1994
-------------------------------------------
PARTICIPATING PARTICIPATING
EMPLOYEES EMPLOYERS TOTAL
------------- ------------- -------------
<S> <C> <C> <C>
Pfizer Pharmaceuticals, Inc. (Puerto Rico Branch).................... $ 1,669,542 $ 904,692 $ 2,574,234
Pfizer Corporation (Puerto Rico Branch).............................. 399,009 188,344 587,353
------------- ------------- -------------
$ 2,068,551 $ 1,093,036 $ 3,161,587
------------- ------------- -------------
------------- ------------- -------------
<CAPTION>
1993
-------------------------------------------
PARTICIPATING PARTICIPATING
EMPLOYEES EMPLOYERS TOTAL
------------- ------------- -------------
<S> <C> <C> <C>
Pfizer Pharmaceuticals, Inc. (Puerto Rico Branch).................... $ 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
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
(7) 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, 1994 and 1993 of $208,824 and
$225,066, respectively, have been included in benefit expense within Form 5500
for those years.
7
<PAGE>
SCHEDULE 1
PFIZER SAVINGS AND INVESTMENT PLAN
FOR EMPLOYEES RESIDENT IN PUERTO RICO
ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1994
FUND A:
<TABLE>
<CAPTION>
INTEREST RATE MATURITY COST FAIR VALUE
------------- -------- ---------- ------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES
--------------------------------------------------
U.S. Treasury Notes............................... 6.875 % 10-31-96 $ 50,594 $ 49,328
U.S. Treasury Notes............................... 7.875 8-15-01 111,033 111,243
U.S. Treasury Notes............................... 8.500 8-15-95 49,844 50,453
---------- ------------
211,471 211,024
---------- ------------
OTHER MARKETABLE SECURITIES
--------------------------------------------------
Federal Home Loan Bank Medium Term Note........... 6.970 11-20-97 75,000 79,547
Federal National Mortgage Association............. 7.850 9-10-98 25,969 25,086
Federal National Mortgage Association............. 7.050 10-10-96 25,813 24,649
Federal National Mortgage Association............. 7.900 4-10-02 44,944 43,355
Federal National Mortgage Association............. 6.950 9-10-02 44,788 41,203
Federal National Mortgage Association............. 8.800 7-15-97 49,406 51,453
Federal National Mortgage Association............. 5.740 2-12-98 71,050 68,832
Federal Home Loan Mortgage Corporation Note....... 6.350 3-07-01 26,757 25,620
Federal Home Loan Bank Note....................... 9.150 3-25-97 43,168 42,984
Federal National Mortgage Association Note........ 5.800 12-10-03 8,938 8,625
Federal Farm Credit Bank Bond..................... 6.050 4-21-03 29,822 26,325
---------- ------------
445,655 437,679
---------- ------------
<CAPTION>
CORPORATE DEBENTURES
--------------------------------------------------
<S> <C> <C> <C> <C>
New Jersey Bell Telephone Bond.................... 5.875 2-01-04 39,048 34,007
Dean Witter, Discover & Co. Bond.................. 6.250 3-15-00 22,809 21,649
Dean Witter, Discover & Co. Bond.................. 6.875 3-01-03 25,499 24,152
General Telephone Company of Florida Note......... 8.000 3-01-01 39,684 38,956
Merril Lynch Corp. Bond........................... 6.375 3-30-99 31,920 29,424
Merril Lynch Corp. Bond........................... 6.250 6-01-08 22,906 21,316
Lehman Brothers Holdings, Inc. Note............... 8.375 4-01-97 100,409 98,271
World Bank Medium Term Note....................... 9.190 6-23-98 42,807 41,371
Tennessee Valley Authority Bond................... 6.125 7-15-03 76,641 65,484
Tennessee Valley Authority Bond................... zero coupon 7-15-03 87,554 79,790
Bell South Telephone Bond......................... 6.375 6-15-04 40,000 35,200
Georgia Power First Mortgage Bond................. 6.625 4-1-03 29,888 26,779
New Jersey Bell Telephone Bond.................... 7.250 6-1-02 9,882 9,447
Exxon Corporation Bond............................ 7.875 8-15-97 57,520 54,784
International Business Machines Bond.............. 7.250 11-1-02 29,738 28,050
Shell Oil Company Bond............................ 6.950 12-15-98 50,406 47,873
General Electric Credit Corp. Bond................ 7.460 9-30-96 40,000 39,770
General Electric Credit Corp. Bond................ 6.940 11-22-96 25,000 24,593
---------- ------------
771,711 720,916
---------- ------------
Banco Popular de Puerto Rico time deposit open
account.......................................... 5.71 % -- 107,407 107,407
---------- ------------
Total of Fund A............................. $1,536,244 $ 1,477,026
---------- ------------
---------- ------------
</TABLE>
8
<PAGE>
SCHEDULE 1 (CONTINUED)
PFIZER SAVINGS AND INVESTMENT PLAN
FOR EMPLOYEES RESIDENT IN PUERTO RICO
ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
FUND B:
NUMBER OF INTEREST
COMMON STOCK INDEX FUND UNITS RATE COST FAIR VALUE
-------------------------------------------------- ------------- -------- ---------- ------------
Northern Trust Collective Stock Index Fund........ 7,021 -- $ 230,456 $ 264,552
<S> <C> <C> <C> <C>
INTEREST-BEARING DEPOSITS
--------------------------------------------------
Northern Trust Short-Term Investment Fund......... -- -- 484 484
Banco Popular de Puerto Rico time deposit open
account.......................................... -- 5.71% 4,045 4,045
---------- ------------
Total of Fund B............................. $ 234,985 $ 269,081
---------- ------------
---------- ------------
FUND C:
<CAPTION>
PFIZER INC. COMMON STOCK
--------------------------------------------------
<S> <C> <C> <C> <C>
Pfizer Inc. (33,927 shares)....................... -- -- $2,056,665 $ 2,620,828
---------- ------------
---------- ------------
COMPANY COMMON STOCK FUND:
PFIZER INC. COMMON STOCK
--------------------------------------------------
Pfizer Inc. (38,207 shares)....................... -- -- $2,059,026 $ 2,951,523
INTEREST-BEARING DEPOSIT
--------------------------------------------------
Banco Popular de Puerto Rico time deposit open
account.......................................... -- 5.71% 47,863 47,863
---------- ------------
Total Company Common Stock Fund............. $2,106,889 $ 2,999,386
---------- ------------
---------- ------------
</TABLE>
9
<PAGE>
SCHEDULE 2
PFIZER SAVINGS AND INVESTMENT PLAN FOR
EMPLOYEES RESIDENT IN PUERTO RICO
REPORTABLE TRANSACTIONS
DECEMBER 31, 1994
FUNDS A, B, C AND COMPANY COMMON STOCK FUND:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
INVESTMENTS PURCHASED TRANSACTIONS SHARES COST
------------------------------------------------------------------------- --------------- ---------- -------------
<S> <C> <C> <C>
Pfizer Inc. common stock................................................. 20 12,201 $ 768,686
Interest-bearing deposits................................................ 171 -- 3,467,432
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF REALIZED
INVESTMENTS DISPOSED TRANSACTIONS COST FAIR VALUE GAIN
----------------------------------------------------------- --------------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Interest-bearing deposits.................................. 191 $ 3,396,517 $ 3,396,517 --
</TABLE>
10
<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, 1994 and 1993, 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, 1994 and 1993, and the changes in net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes and (2) reportable transactions, as of or for the
year ended December 31, 1994, 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 Fund Information in the statements of net assets
available for plan benefits and the statements of changes in net assets
available for plan benefits is presented for purposes of additional analysis
rather than to present the net assets available for plan benefits and changes in
net assets available for plan benefits of each Fund. The supplemental schedules
and Fund Information have been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
February 10, 1995
Stamp No. 1252929 of the Puerto Rico
Society of Certified Public Accountants was
affixed to the record copy of this report.
11
<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 23, 1995
12
<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 10, 1995, 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, 1994 and 1993, 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, 1994 annual report on Form 11-K of the
Pfizer Savings and Investment Plan for Employees Resident in Puerto Rico.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
San Juan, Puerto Rico
March 23, 1995
13
<PAGE>
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.
<TABLE>
<CAPTION>
PERCENTAGE OF
VOTING
SECURITIES OWNED
BY
NAME WHERE INCORPORATED IMMEDIATE PARENT
-------------------------------------------------------------- -------------------- ------------------
<C> <S> <C> <C>
a) Subsidiaries of Pfizer Inc.:
Radiologic Sciences, Inc...................................... California 100
Shiley Incorporated........................................... California 100
Valleylab Inc................................................. Colorado 100
Dart Acquisition Corporation.................................. Delaware 100
Disease Management Sciences Inc............................... Delaware 100
Flavor Technology Corporation................................. Delaware 100
Health Care Ventures, Inc..................................... Delaware 100
Howmedica Inc................................................. Delaware 100
Pfizer Diagnostic Products International Ltd.................. Delaware 100
Pfizer Enterprises Inc........................................ Delaware 100
Pfizer H.C.P. Corporation..................................... New York 100
Pfizer Health Sciences, Inc................................... Delaware 100
Pfizer Medical Systems, Inc................................... Delaware 100
Pfizer Pharmaceuticals, Inc................................... Delaware 100
Pfizer Pigments Inc........................................... Delaware 100
Site Realty, Inc.............................................. Delaware 100
Strato/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
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 G.m.b.H............................ Austria 100
Pfizer S.A.................................................... Belgium 100
Pfizer European Service Center N.V............................ Belgium 97.5 (1)
<FN>
------------------------
(1) 2.5% owned by Pfizer Research and Development Company N.V./S.A.
</TABLE>
December 31, 1994
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
VOTING
SECURITIES OWNED
BY
NAME WHERE INCORPORATED IMMEDIATE PARENT
-------------------------------------------------------------- -------------------- ------------------
<C> <S> <C> <C>
(b) Subsidiaries of Pfizer International Inc. (a
subsidiary of Pfizer Inc.): -- (Continued)
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
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 Production Corporation..... Panama 100
Pfizer S.G.P.S. Limitada.......................... Portugal 100
Bioquimica Industrial Espanola, S.A. -- BINESA.... Spain 100
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 Development Company Belgium 100 (1)
N.V./S.A.........................................
Kirchimie Ltee.................................... Canada 100
Pfizer C. & G. Inc................................ Canada 86.8 (2)
Pfizer Pension Trustees (Ireland) Limited......... Ireland 100
Pfizer International Bank Europe.................. Ireland 82 (3)
Pfizer Service Company Ireland.................... Ireland 100
Pfizer Ringaskiddy Production Company............. Isle of Man 100
Roerig Farmaceutici Italiana S.r.1................ Italy 100
Pfizer (N.Z.) Ltd................................. New Zealand 100
Pfizer Corporation................................ Panama 100
<FN>
------------------------
(1) Includes 5% owned by Pfizer International Inc.
(2) 13.2% owned by Kirchimie Ltee.
(3) 18% owned by Pfizer Research and Development Company N.V./S.A.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
SECURITIES OWNED BY
NAME WHERE INCORPORATED IMMEDIATE PARENT
--------------------------------------------------------------- ------------------ ----------------------
<C> <S> <C> <C>
(d) Subsidiaries of Pfizer Corporation (a subsidiary of Pfizer
Pharmaceuticals Production Corporation):
Pfizer Limitada................................................ Angola 100
Pficonprod Pty. Limited........................................ Australia 100(1)
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
PT Pfizer Indonesia............................................ Indonesia 80(2)
Pfizer Kabushiki Kaisha........................................ Japan 100
Pfizer Laboratories Limited (Kenya)............................ 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 (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
<FN>
------------------------
(1) Includes 24.7% of the voting securities owned by subsidiaries of Howmedica
Inc., a subsidiary of Pfizer Inc.
(2) Includes 11.77% of the voting securities owned by Heinrich Mack Nachf.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
SECURITIES OWNED BY
NAME WHERE INCORPORATED IMMEDIATE PARENT
------------------------------------------------- ------------------ ---------------------------------
<C> <S> <C> <C>
(e) Subsidiaries of Pfizer Research and Development
Company N.V./S.A. (a subsidiary of Pfizer
Pharmaceuticals Production Corporation):
Pfizer S.A....................................... France 100
Pfizer Holding Und Verwaltungs G.m.b.H........... Germany 95
Pfizer Italiana S.p.A............................ Italy 100
Pfizer Pharmaceuticals Inc....................... Japan 100
Pfizer B.V....................................... Netherlands 100
Howmedica Iberica S.A............................ Spain 87.8
Rovi Farma S.A................................... Spain 50
Schneider (Europe) A.G........................... Switzerland 100
(f) Miscelleaneous 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 G.m.b.H.............. Austria Pfizer Corporation Austria
G.m.b.H. 100%
Pfizer Hospital Products (Belgium) N.V........... Belgium Pfizer Hospital Products
(Netherlands) B.V. 100%
Rogar/STB Inc.................................... Canada Pfizer Canada Inc. 100%
Pfizer Canada Inc................................ Canada Pfizer Holding Ltd. 100%
Pfizer s.r.o..................................... Czech Republic Pfizer Products Corporation 100%
Laboratoire Beral, S.A........................... France Pfizer S.A. 100%
C.A.L. Pfizer S.C.A. (1)......................... France Pfizer S.A. 100%
Howmedica France S.C.A. (1)...................... France Pfizer S.A. 100%
Benoist Girard & Cie S.C.A. (1).................. France Pfizer S.A. 100%
Forster & Hug (KG) (1)........................... Germany Pfizer G.m.b.H. 100%
Heinrich Mack Nachf. (1)......................... Germany Pfizer G.m.b.H. 100%
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%
<FN>
------------------------
(1) Partnership.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
SECURITIES OWNED BY
NAME WHERE INCORPORATED IMMEDIATE PARENT
-------------------------------------------- --------------------- ------------------------------------
<C> <S> <C> <C>
(f) Miscellaneous Subsidiaries: (Continued)
Duchem Laboratories Limited................. India Pfizer Limited (India) 100%
SudFarma S.r.1.............................. Italy Roerig Farmaceutici Italiana S.r.1.
90%; Pfizer Italiana S.p.A. 10%
Saninvest S.r.1............................. Italy Roerig Farmaceutici Italiana S.r.1.
100%
Restiva Italiana S.p.A...................... Italy Saninvest S.r.1. 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 Hospital Products (Netherlands)
B.V........................................ Netherlands Shiley International, Inc. 100%
Roerig B.V.................................. Netherlands Pfizer B.V. 100%
Cadsand Medica B.V.......................... Netherlands Van Cadsand Beheer B.V. 100%
Pfizer Pharmaceuticals Ltd.................. People's Republic of Pfizer Enterprises Inc. 67.1%
China
Laboratorios Pfizer S.A..................... Portugal Pfizer S.G.P.S. Limitada 100%
Pfizer Hospital Products A.B................ Sweden Shiley International, Inc. 100%
AMS Medinvent S.A........................... Switzerland Nilo Holdings, S.A. 100%
Nilo Holdings, S.A.......................... Switzerland Schneider (Europe) A.G. 100%
T.C.P. Limited.............................. United Kingdom Unicliffe Limited 100%
Coty Limited................................ United Kingdom Pfizer Limited 100%
Pfizer Limited.............................. United Kingdom Pfizer Group Limited 100%
Unicliffe Limited........................... United Kingdom Pfizer Limited 100%
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
SECURITIES OWNED BY
NAME WHERE INCORPORATED IMMEDIATE PARENT
-------------------------------------------- --------------------- ------------------------------------
<C> <S> <C> <C>
(f) Miscellaneous Subsidiaries: (Continued)
Pfizer Pension Trustees Ltd................. United Kingdom Pfizer Limited 100%
Charwell Pharmaceuticals Limited............ United Kingdom Unicliffe Limited 100%
The Stoppers Limited........................ United Kingdom Charwell Pharmaceuticals Limited
100%
Biomedical Sensors Ltd...................... United Kingdom Biomedical Sensors (Holdings) Ltd.
100%
Biomedical Sensors (Holdings) Ltd........... United Kingdom Howmedica International Inc. 100%
Measureaim Ltd.............................. United Kingdom Howmedica International Limited 100%
Howmedica International Limited............. United Kingdom Pfizer Group Limited 100%
Shiley Ltd.................................. United Kingdom Howmedica International Limited 100%
Pfizer Hospital Products, Ltd............... United Kingdom Howmedica International Limited 100%
Pfizer Hospital Products Pension Trustees,
Ltd........................................ United Kingdom Pfizer Hospital Products, 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%
(g) Subsidiaries of Howmedica Inc. (a subsidiary
of Pfizer Inc.):
Orthopedic Sciences Inc..................... Delaware 100
Howmedica Investments Pty. Ltd.............. Australia 100
S.D. Investments Pty. Ltd................... Australia 100
Pfizer Hospital Products Ltd................ Canada 100
Howmedica G.m.b.H........................... Germany 100(1)
Howmedica International Inc................. Panama 100
Jaquet Orthopedie S.A....................... Switzerland 100
<FN>
------------------------
(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.
</TABLE>
6
<PAGE>
EXHIBIT 23
REPORT AND CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
PFIZER INC.:
Under date of February 23, 1995, we reported on the consolidated balance
sheet of Pfizer Inc. and subsidiary companies as of December 31, 1994, 1993 and
1992 and the related consolidated statements of income, shareholders' equity and
cash flows for the years then ended, as contained in the 1994 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 1994.
The audits referred to in our report dated February 23, 1995 included the
related financial statement schedule as of December 31, 1994, 1993 and 1992 and
for the years then ended. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits. In our
opinion, such financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents 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), in the Registration Statement
on Form S-8 dated May 27, 1993 (File No. 33-49631), in the Registration
Statement on Form S-8 dated May 19, 1994, (File No. 33-53713), in the
Registration Statement on Form S-8 dated October 5, 1994 (File No. 33-55771), in
the Registration Statement on Form S-3 dated November 14, 1994 (File No.
33-56435), in the Registration Statement on Form S-8 dated December 20, 1994
(File No. 33-56979) and in the Registration Statement on Form S-4 dated February
14, 1995 (File No. 33-57709).
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
New York, New York
March 23, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PFIZER
INC. AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET AND CONDENSED STATEMENT
OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
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0
0
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</TABLE>
