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Pfizer Reports Fourth-Quarter And Full-Year 2012 Results; Provides 2013 Financial Guidance

Stocks in this article: PFE

(b) In fourth-quarter 2012, primarily includes charges related to Chantix litigation. In full-year 2012, primarily includes a $491 million charge resulting from an agreement-in-principle with the U.S. Department of Justice to resolve an investigation into Wyeth’s historical promotional practices in connection with Rapamune, a $450 million settlement of a lawsuit by Brigham Young University related to Celebrex, and charges related to hormone-replacement therapy litigation and Chantix litigation. In 2011, primarily includes charges for hormone-replacement therapy litigation.

(c) In fourth-quarter and full-year 2012, primarily relates to certain intangible assets acquired in connection with our acquisitions of Wyeth and King, including in-process research and development (IPR&D) intangible assets. In fourth-quarter 2011, primarily relates to our indefinite-lived brand asset, Xanax, as a result of an increased competitive environment. In full-year 2011, substantially all relates to certain intangible assets acquired in connection with our acquisition of Wyeth, including IPR&D intangible assets, and our indefinite-lived brand asset, Xanax, as mentioned in the previous sentence.

(d) Costs incurred in connection with the potential initial public offering of up to a 19.8% ownership stake in Zoetis. Includes expenditures for banking, legal, accounting and similar services related to the potential transaction.

4. Effective Tax Rate

ReportedThe effective tax rate for continuing operations was 31.3% for the fourth quarter of 2012 compared with 34.4% for the fourth quarter of 2011, and 21.2% for full-year 2012 compared with 31.8% for full-year 2011. The lower rates for 2012 compared with the prior-year rates reflect the impact of the change in the jurisdictional mix of earnings and the expiration of the U.S. research and development tax credit. The full-year 2012 effective tax rate was also favorably impacted by a settlement with the U.S. Internal Revenue Service related to audits for multiple tax years and the resolution of foreign audits pertaining to multiple tax years, partially offset by the unfavorable impact of the non-deductibility of a legal charge related to Rapamune, all recorded in third-quarter 2012.

AdjustedThe effective tax rate on adjusted income (1) was 31.0% in fourth-quarter 2012 compared with 29.8% in fourth-quarter 2011, and 29.3% in full-year 2012 compared with 29.6% in full-year 2011. The rates for 2012 compared with the prior-year rates reflect the impact of the change in the jurisdictional mix of earnings and the expiration of the U.S. research and development tax credit. The full-year 2012 effective tax rate compared to the prior-year rate also reflects the favorable impact of the resolution of the aforementioned foreign audits recorded in third-quarter 2012.

5. Reconciliation of 2013 Adjusted Income (1) and Adjusted Diluted EPS (1) Guidance to 2013 Reported Net Income Attributable to Pfizer Inc. and Reported Diluted EPS Attributable to Pfizer Inc. Common Shareholders Guidance (a)

  Full-Year 2013 Guidance

(Billions of dollars, except per share amounts)

Net Income (b)   Diluted EPS (b)

Income/(Expense)

 
Adjusted Income/Diluted EPS (1) Guidance (c) ~$15.4 - $16.1 ~$2.20 - $2.30
Purchase Accounting Impacts of Transactions Completed as of

12/31/12

(3.4

)

(0.49

)

Acquisition-Related Costs (0.4 - 0.5 ) (0.06 - 0.07 )
Non-Acquisition-Related Restructuring Costs (d) (0.5 – 0.8 ) (0.08 - 0.12 )
Costs associated with the potential separation of Zoetis (c)   (0.2 )   (0.02 )
Reported Net Income Attributable to Pfizer Inc./Diluted EPS Guidance (c)   ~$10.5 - $11.6   ~$1.50 - $1.65

(a) The exchange rates assumed in connection with the 2013 financial guidance are as of mid-January 2013.

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