NEW YORK, July 17 /PRNewswire-FirstCall/ -- In advance of the release of its Second Quarter 2006 Business Performance Report on July 20, Pfizer Inc will hold a conference call at 4 p.m. EDT today to review reclassified historical financial information reflecting Pfizer’s Consumer Healthcare business as a Discontinued Operation. Pfizer invites investors and the general public to listen to a webcast of the conference call.
During today’s conference call, led by Pfizer’s financial leadership, analysts will have the opportunity to discuss the attached financial statements and schedules: 1) quarterly 2005 and First Quarter 2006 Consolidated Statements of Income and 2) quarterly 2005 and First Quarter 2006 Reconciliations from Reported Net Income and Reported Diluted Earnings Per Share to Adjusted Income(1) and Adjusted Diluted Earnings Per Share(1) for Pfizer Inc, both reflecting the reclassification of Pfizer’s Consumer Healthcare (PCH) business as a Discontinued Operation.
On June 26, 2006, Pfizer announced that it had reached an agreement to sell its Consumer Healthcare business to Johnson & Johnson for approximately $16.6 billion. The transaction is expected to close by the end of 2006. The Company is now required to reflect its Consumer Healthcare business as a discontinued operation under generally accepted accounting principles. The reclassified financial statements and schedules reflect no change in Reported Net Income and Reported Diluted Earnings Per Share compared to previous disclosures. Rather, the financial results of PCH previously required to be reflected in various line items on the Consolidated Statement of Income (adjusted to reflect the business as defined by the sale agreement) are now captured on a single line -- Discontinued Operations. The conference call is intended solely to assist analysts in modeling Pfizer’s financial performance on this new basis in advance of the Company’s release of its second quarter 2006 earnings on July 20. Pfizer management will host a conference call on July 20 at 10:30 a.m. EDT to respond to investor queries with respect to its financial results for the second quarter.
To listen to today’s webcast, analysts, investors, and the general public should visit the Pfizer web site homepage at http://www.pfizer.com and click on the “Pfizer Consumer Healthcare P&L Reclassification Webcast” link.
Information about accessing, and pre-registering for, the webcast will be available at http://www.pfizer.com later today. Participants are advised to pre-register in advance of the conference call.
Visitors to http://www.pfizer.com will be able to listen to an archived copy of the webcast of the conference call through 12 Noon, Monday, July 24.
(1) “Adjusted income” and “adjusted diluted earnings per share (EPS)” are defined as reported net income and reported diluted EPS excluding purchase-accounting adjustments, merger-related costs, discontinued operations, and certain significant items. As described under Adjusted Income in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of Pfizer’s Form 10-Q for the quarterly period ended April 2, 2006, management uses adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. We believe that investors’ understanding of our performance is enhanced by disclosing this measure. Reconciliations of first quarter 2006 and quarterly 2005 adjusted income and adjusted diluted EPS to reported net income and reported diluted EPS are provided in the materials accompanying this report. The adjusted income and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and diluted EPS. PFIZER INC AND SUBSIDIARY COMPANIES QUARTERLY CONSOLIDATED STATEMENT OF INCOME
RECLASSIFICATION OF CONSUMER HEALTHCARE BUSINESS TO DISCONTINUED OPERATIONS
(UNAUDITED) (millions of dollars, except per common share data) First Quarter 2006 Revenues $11,747 Costs and expenses: Cost of sales 1,671 Selling, informational and administrative expenses 3,395 Research and development expenses 1,543 Amortization of intangible assets 825 Merger-related in-process research and development charges - Restructuring charges and merger-related costs 299 Other (income)/deductions--net (256) Income from continuing operations before provision for taxes on income and minority interests 4,270 Provision for taxes on income 262 Minority interests 2 Income from continuing operations 4,006 Discontinued operations: Income from discontinued operations--net of tax 102 Gains on sales of discontinued operations--net of tax 3 Discontinued operations--net of tax 105 Net income $4,111 Earnings per common share - Basic: Income from continuing operations $0.55 Discontinued operations--net of tax 0.01 Net income $0.56 Earnings per common share - Diluted: Income from continuing operations $0.55 Discontinued operations--net of tax 0.01 Net income $0.56 Weighted-average shares used to calculate earnings per common share: Basic 7,314 Diluted 7,324 Certain amounts may reflect rounding adjustments. PFIZER INC AND SUBSIDIARY COMPANIES QUARTERLY CONSOLIDATED STATEMENT OF INCOME
RECLASSIFICATION OF CONSUMER HEALTHCARE BUSINESS TO DISCONTINUED OPERATIONS
(UNAUDITED) (millions of dollars, except per common share data) 2005 Quarters First Second Third Fourth Total Revenues $12,143 $11,452 $11,263 $12,547 $47,405 Costs and expenses: Cost of sales 1,877 1,762 1,611 1,982 7,232 Selling, informational and administrative expenses 3,665 3,766 3,526 4,356 15,313 Research and development expenses 1,717 1,830 1,739 1,970 7,256 Amortization of intangible assets 880 856 833 830 3,399 Merger-related in-process research and development charges 2 260 1,390 - 1,652 Restructuring charges and merger-related costs 216 264 303 573 1,356 Other (income)/deductions --net 1,052 (198) (151) (306) 397 Income from continuing operations before provision for taxes on income, minority interests and cumulative effect of a change in accounting principles 2,734 2,912 2,012 3,142 10,800 Provision for taxes on income 2,576 (464) 530 536 3,178 Minority interests 2 1 3 6 12 Income from continuing operations 156 3,375 1,479 2,600 7,610 Discontinued operations: Income from discontinued operations--net of tax 104 88 107 152 451 Gains on sales of discontinued operations-- net of tax 41 - 3 3 47 Discontinued operations--net of tax 145 88 110 155 498 Income before cumulative effect of a change in accounting principles 301 3,463 1,589 2,755 8,108 Cumulative effect of a change in accounting principles--net of tax - - - (23) (23) Net income $301 $3,463 $1,589 $2,732 $8,085 Earnings per common share - Basic: Income from continuing operations before cumulative effect of a change in accounting principles $0.02 $0.46 $0.20 $0.35 $1.03 Discontinued operations-- net of tax 0.02 0.01 0.02 0.02 0.07 Income before cumulative effect of a change in accounting principles 0.04 0.47 0.22 0.37 1.10 Cumulative effect of a change in accounting principles--net of tax - - - - - Net income $0.04 $0.47 $0.22 $0.37 $1.10 Earnings per common share - Diluted: Income from continuing operations before cumulative effect of a change in accounting principles $0.02 $0.46 $0.20 $0.35 $1.02 Discontinued operations-- net of tax 0.02 0.01 0.02 0.02 0.07 Income before cumulative effect of a change in accounting principles 0.04 0.47 0.22 0.37 1.09 Cumulative effect of a change in accounting principles--net of tax - - - - - Net income $0.04 $0.47 $0.22 $0.37 $1.09 Weighted-average shares used to calculate earnings per common share: Basic 7,416 7,366 7,333 7,327 7,361 Diluted 7,474 7,418 7,382 7,368 7,411 Certain amounts may reflect rounding adjustments. PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION FROM REPORTED NET INCOME AND REPORTED DILUTED EARNINGS PER
SHARE TO ADJUSTED INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE
RECLASSIFICATION OF CONSUMER HEALTHCARE BUSINESS TO DISCONTINUED OPERATIONS
(UNAUDITED) (millions of dollars, except per common share data) First Quarter 2006 Reported net income $4,111 Purchase accounting adjustments--net of tax 581 Merger-related costs--net of tax 3 Discontinued operations--net of tax (105) Certain significant items--net of tax (240) Adjusted income $4,350 Reported diluted earnings per common share $0.56 Purchase accounting adjustments--net of tax 0.07 Merger-related costs--net of tax - Discontinued operations--net of tax (0.01) Certain significant items--net of tax (0.03) Adjusted diluted earnings per common share $0.59 Certain amounts may reflect rounding adjustments. 1. Adjusted Income and Adjusted diluted earnings per common share as shown above reflect the following items: (millions of dollars) First Quarter 2006 Purchase accounting adjustments, pre-tax: Intangible amortization and other (a) $810 Total purchase accounting tax adjustments, pre-tax 810 Income taxes (229) Total purchase accounting adjustments--net of tax 581 Merger-related costs, pre-tax: Integration costs (b) 2 Restructuring costs (b) 3 Total merger-related costs, pre-tax 5 Income taxes (2) Total merger-related costs--net of tax 3 Discontinued operations, pre-tax: Loss/(income) from discontinued operations (c) (155) Gains on sales of discontinued businesses and product lines (c) (5) Total discontinued operations, pre-tax (160) Income taxes 55 Total discontinued operations--net of tax (105) Certain significant items, pre-tax Sanofi-aventis research and development milestone (g) (118) Restructuring charges - Adapting to Scale (b) 295 Implementation costs - Adapting to Scale (d) 185 Gain on disposals of investments (e) (51) Total certain significant items, pre-tax 311 Income taxes (110) Resolution of certain tax positions (f) (441) Tax impact for the repatriation of foreign earnings (f) - Total certain significant items--net of tax (240) Total purchase accounting adjustments, merger-related costs, discontinued operations, and certain significant items--net of tax $239 (a) Included primarily in Amortization of intangible assets. (b) Included in Restructuring charges and merger-related costs. (c) Included in Discontinued operations--net of tax is $102 million related to the Consumer Healthcare business. (d) Included in Cost of sales ($124 million), Selling, informational and administrative expenses ($39 million), and Research and development expenses ($22 million). (e) Included in Other (income)/deductions-net. (f) Included in Provision for taxes on income. (g) Included in Research and development expenses. PFIZER INC AND SUBSIDIARY COMPANIES
RECONCILIATION FROM REPORTED NET INCOME AND REPORTED DILUTED EARNINGS PER
SHARE TO ADJUSTED INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE
RECLASSIFICATION OF CONSUMER HEALTHCARE BUSINESS TO DISCONTINUED OPERATIONS
(UNAUDITED) (millions of dollars, except per common share data) 2005 Quarters First Second Third Fourth Total Reported net income $301 $3,463 $1,589 $2,732 $8,085 Purchase accounting adjustments--net of tax 621 815 1,962 569 3,967 Merger-related costs--net of tax 148 172 65 214 599 Discontinued operations--net of tax (145) (88) (110) (155) (498) Cumulative effect of a change in accounting principle - - - 23 23 Certain significant items--net of tax 2,955 (1,042) 172 208 2,293 Adjusted income $3,880 $3,320 $3,678 $3,591 $14,469 Reported diluted earnings per common share $0.04 $0.47 $0.22 $0.37 $1.09 Purchase accounting adjustments--net of tax 0.08 0.11 0.26 0.08 0.54 Merger-related costs--net of tax 0.02 0.02 0.01 0.03 0.08 Discontinued operations--net of tax (0.02) (0.01) (0.02) (0.02) (0.07) Cumulative effect of a change in accounting principle - - - - - Certain significant items-- net of tax 0.40 (0.14) 0.02 0.03 0.31 Adjusted diluted earnings per common share $0.52 $0.45 $0.49 $0.49 $1.95 Certain amounts may reflect rounding adjustments. 1. Adjusted Income and Adjusted diluted earnings per common share as shown above reflect the following items: (millions of dollars) 2005 Quarters First Second Third Fourth Total Purchase accounting adjustments, pre-tax: In-process research and development charges (a) $2 $260 $1,390 $- $1,652 Intangible amortization and other (b) 849 826 808 802 3,285 Sale of acquired inventory written up to fair value (c) 4 - - - 4 Total purchase accounting adjustments, pre-tax 855 1,086 2,198 802 4,941 Income taxes (234) (271) (236) (233) (974) Total purchase accounting adjustments--net of tax 621 815 1,962 569 3,967 Merger-related costs, pre-tax: Integration costs (d) 106 191 93 160 550 Restructuring costs (d) 109 50 59 141 359 Total merger-related costs, pre-tax 215 241 152 301 909 Income taxes (67) (69) (87) (87) (310) Total merger-related costs--net of tax 148 172 65 214 599 Discontinued operations, pre-tax: Loss/(income) from discontinued operations (e) (157) (134) (174) (232) (697) Gains on sales of discontinued businesses and product lines (e) (65) - (7) (5) (77) Total discontinued operations, pre-tax (222) (134) (181) (237) (774) Income taxes 77 46 71 82 276 Total discontinued operations--net of tax (145) (88) (110) (155) (498) Cumulative effect of a change in accounting principles--net of tax - - - 23 23 Certain significant items, pre- tax Asset impairment charges (f) 1,213 - 3 24 1,240 Restructuring charges - Adapting to Scale (d) - 21 145 266 432 Implementation costs - Adapting to Scale (g) - 33 100 192 325 Gain on disposals of investments (h) - - - (134) (134) Total certain significant items, pre-tax 1,213 54 248 348 1,863 Income taxes (447) (20) (76) (105) (648) Resolution of certain tax positions (i) - (586) - - (586) Tax impact for the repatriation of foreign earnings (i) 2,189 (490) - (35) 1,664 Total certain significant items-- net of tax 2,955 (1,042) 172 208 2,293 Total purchase accounting adjustments, merger-related costs, discontinued operations, and certain significant items-- net of tax $3,579 $(143) $2,089 $859 $6,384 (a) Included in Merger-related in-process research and development charges. (b) Included primarily in Amortization of intangible assets. (c) Included in Cost of sales. (d) Included in Restructuring charges and merger-related costs. (e) Included in Discontinued operations--net of tax is $116 million for the first quarter, $97 million for the second quarter, $123 million for the third quarter and $146 million for the fourth quarter related to the Consumer Healthcare business . (f) Included primarily in Cost of Sales ($73 million), Selling, informational and administrative expenses ($8 million) and Other (income)/deductions-net ($1.2 billion) related to the suspension of sales of Bextra. (g) Included in Cost of sales ($124 million), Selling, informational and administrative expenses ($151 million), and Research and development expenses ($50 million) for the full year 2005. (h) Included in Other (income)/deductions-net. (i) Included in Provision for taxes on income.
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