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

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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