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

Stocks in this article: PFE

Adjusted cost of sales (2), adjusted SI&A expenses (2) and adjusted R&D expenses (2) in the aggregate were $9.8 billion in fourth-quarter 2012, a decrease of 8% compared with $10.6 billion in fourth-quarter 2011. Excluding the unfavorable impact of foreign exchange of $161 million, or 1%, these costs decreased 9%, primarily reflecting the benefits of cost-reduction and productivity initiatives.

Savings in adjusted R&D expenses (2) were generated in fourth-quarter 2012 primarily by the discontinuation of certain therapeutic areas and R&D programs in connection with our previously announced initiatives. Lower adjusted SI&A expenses (2) compared with the year-ago period primarily reflect a reduction in the field force and a decrease in promotional spending, both partially in response to product losses of exclusivity, and more streamlined corporate support functions. Adjusted cost of sales (2) and adjusted cost of sales (2) as a percent of revenues were favorably impacted by the benefits generated from the ongoing cost-reduction and productivity initiatives to streamline the manufacturing network, while unfavorably impacted by the decline in revenues contributing to a shift in geographic, business and product mix as well as by foreign exchange. Additionally, adjusted cost of sales (2) compared with the same period last year reflects reduced manufacturing volumes given the aforementioned products that lost exclusivity in various markets.

In full-year 2012, adjusted cost of sales (2), adjusted SI&A expenses (2) and adjusted R&D expenses (2) in the aggregate were $34.6 billion, a decrease of 12% compared with $39.2 billion in full-year 2011. Excluding the favorable impact of foreign exchange of $840 million, or 2%, these costs decreased 10%, primarily reflecting the aforementioned items.

The fourth-quarter 2012 effective tax rate on adjusted income (2) was 31.0%, compared with 29.8% in fourth-quarter 2011. The 2012 full-year effective tax rate on adjusted income (2) was 29.3%, compared with 29.6% for the 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 foreign audits pertaining to multiple tax years, recorded in third-quarter 2012.

The diluted weighted-average shares outstanding for fourth-quarter and full-year 2012 were 7.4 billion and 7.5 billion shares, respectively, a reduction of approximately 292 million and 362 million shares, respectively, compared with the same periods in 2011. These declines were primarily due to the Company’s ongoing share-repurchase program.

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