Main menu

Pfizer Reports Fourth-Quarter and Full-Year 2013 Results; Provides 2014 Financial Guidance

Tuesday, January 28, 2014 - 7:00am
EST
  • Fourth-Quarter 2013 Reported Revenues(1) of $13.6 Billion; Full-Year 2013 Reported Revenues(1) of $51.6 Billion
  • Fourth-Quarter 2013 Adjusted Diluted EPS(2) of $0.56, Reported Diluted EPS(1) of $0.39; Full-Year 2013 Adjusted Diluted EPS(2) of $2.22, Reported Diluted EPS(1) of $3.19
  • Repurchased $4.6 Billion and $16.3 Billion of Common Stock in Fourth-Quarter and Full-Year 2013, Respectively; Returned Approximately $23 Billion to Shareholders Through Share Repurchases and Dividends in 2013
  • Provides 2014 Financial Guidance

NEW YORK--(BUSINESS WIRE)-- Pfizer Inc. (NYSE: PFE) reported financial results for fourth-quarter and full-year 2013. As a result of the full disposition of Zoetis(3) on June 24, 2013, the financial results of the Animal Health business are reported as a discontinued operation in the consolidated statements of income for full-year 2013, and fourth-quarter and full-year 2012. Results and guidance are summarized below.

OVERALL RESULTS
($ in millions, except

per share amounts)

    Fourth-Quarter       Full-Year
     

  2013  

   

  2012  

   

 Change 

     

  2013  

   

  2012  

   

 Change 

Reported Revenues(1)    

$ 13,558

   

$ 13,891

    (2%)      

$ 51,584

   

$ 54,657

    (6%)
Adjusted Income(2)     3,686     3,391     9%       15,288     15,749     (3%)
Adjusted Diluted EPS(2)     0.56     0.46     22%       2.22     2.10     6%
Reported Net Income(1)     2,568     6,315     (59%)       22,003     14,570     51%
Reported Diluted EPS(1)     0.39     0.85     (54%)       3.19     1.94     64%
                                       
BUSINESS UNIT(4) REVENUES
($ in millions)

Favorable/(Unfavorable)

    Fourth-Quarter       Full-Year
     

  2013  

    2012     % Change       2013     2012     % Change
             

 Total 

   

  Oper.  

             

 Total 

   

  Oper.  

Primary Care     $ 3,442     $ 3,833     (10%)     (8%)       $ 13,272     $ 15,558     (15%)     (13%)
Specialty Care     3,397     3,668     (7%)     (5%)       13,288     14,151     (6%)     (4%)
Emerging Markets     2,749     2,652     4%     9%       10,215     9,960     3%     6%
Established Products     2,424     2,370     2%     6%       9,457     10,235     (8%)     (5%)
Consumer Healthcare     943     936     1%     2%       3,342     3,212     4%     5%
Oncology     468     370     26%     29%       1,646     1,310     26%     29%
Other(5)     135     62     *     *       364     231     58%     57%
Total     $ 13,558     $ 13,891     (2%)     1%       $ 51,584     $ 54,657     (6%)     (4%)
                                                   

* Calculation not meaningful.

SELECTED ADJUSTED COSTS AND EXPENSES(2)
($ in millions)

(Favorable)/Unfavorable

 

 

Fourth-Quarter       Full-Year
      2013     2012     % Change       2013     2012     % Change
             

 Total 

   

  Oper.  

             

 Total 

   

  Oper.  

Cost of Sales(2)     $ 2,672     $ 2,686     (1%)     5%       $ 9,273     $ 9,492     (2%)     2%
Percent of Revenues(2)     19.8 %     19.3 %     N/A     N/A       18.0 %     17.4 %     N/A     N/A
SI&A Expenses(2)     4,093     4,276     (4%)     (2%)       14,172     15,029     (6%)     (5%)
R&D Expenses(2)     1,790     1,884     (5%)     (4%)       6,554     6,958     (6%)     (6%)
Total     $ 8,555     $ 8,846     (3%)           $ 29,999     $ 31,479     (5%)     (3%)
                                                   
Effective Tax Rate(2)     27.7 %     29.7 %                   27.5 %     28.7 %            
                                                           

2014 FINANCIAL GUIDANCE(6)

Pfizer's 2014 financial guidance is summarized below.

         
Adjusted Revenues(2)       $49.2 to $51.2 billion
Adjusted Cost of Sales(2) as a Percentage of Adjusted Revenues(2)       19.0% to 20.0%
Adjusted SI&A Expenses(2)       $13.5 to $14.5 billion
Adjusted R&D Expenses(2)       $6.4 to $6.9 billion
Adjusted Other (Income)/Deductions(2)       Approximately $100 million
Effective Tax Rate on Adjusted Income(2)       Approximately 27.0%
Reported Diluted EPS(1)       $1.57 to $1.72
Adjusted Diluted EPS(2)       $2.20 to $2.30
         

EXECUTIVE COMMENTARY

Ian Read, Chairman and Chief Executive Officer, stated, “The just-completed year was highlighted by solid financial performance and shareholder-friendly capital allocation, a strengthening of our innovative core as well as the formation of our new commercial structure designed to enable each business to have a sharper focus on its distinct market opportunities and challenges.”

“We enter 2014 with confidence in the competitive positioning of our commercial businesses, the prospects for our recently launched products and the strength of our research pipeline. We remain focused on those areas and opportunities we believe will continue to create value for our shareholders, and we seek to identify additional opportunities that will strengthen our innovative and established pharmaceutical businesses as well as our Consumer business. We will focus on advancing science and innovation to deliver new therapies in areas with unmet need and ensuring our shareholders' capital is allocated toward the most attractive opportunities for value creation.”

Mr. Read continued, “During 2014, we expect to report on several, important clinical data readouts for our mid- and late-stage pipeline compounds. In the near term, we expect to report top-line results for the Phase 2 study for palbociclib in patients with post-menopausal, ER-positive, advanced breast cancer and for the CAPiTA study for Prevnar 13 in adults age 65 and older. In addition, we anticipate data presentations at upcoming medical conferences of Phase 2b data for bococizumab, our PCSK9 inhibitor for LDL cholesterol reduction, and Phase 2a data for our staphylococcus aureus vaccine. During the second quarter, we anticipate reporting top-line results for two pivotal Phase 3 studies for Xeljanz in psoriasis.”

“We see attractive opportunities globally to deliver value to patients, payors and other stakeholders through a combination of innovative, established and over-the-counter pharmaceutical products. I believe we have the business structure, leadership team and financial capability firmly in place to facilitate our continued success,” Mr. Read concluded.

Frank D’Amelio, Chief Financial Officer, stated, “For full-year 2013, I am pleased with our financial performance, our strategic accomplishments and our ability to continue delivering shareholder value through prudent capital allocation. Regarding our financial performance, we achieved or exceeded all elements of our 2013 financial guidance despite an operating environment that remains challenging. We completed two important strategic initiatives in 2013: the separation of our Animal Health business through the disposition of Zoetis(3), and the formation of the new commercial structure that was successfully implemented at the start of 2014. Finally, we delivered significant shareholder value through share repurchases and dividends. With our strong operating cash flow as well as the proceeds generated from the separations of our Nutrition and Animal Health businesses, we repurchased $16.3 billion of our common stock in 2013. As a result of those share repurchases as well as Pfizer common stock tendered in the Zoetis(3) exchange offer, we reduced the number of shares of outstanding common stock by approximately one billion, or 13%, in 2013 compared to year-end 2012. In addition, we paid $6.6 billion in dividends. In total, we returned approximately $23 billion to shareholders through share repurchases and dividends in 2013.”

“We are also providing our 2014 financial guidance, including ranges for adjusted revenues(2) of $49.2 to $51.2 billion and for adjusted diluted EPS(2) of $2.20 to $2.30. Our guidance for adjusted revenues(2)reflects the anticipated negative impact of approximately $3.0 billion due to recent and expected product losses of exclusivity, as well as the expiration and near-term termination of certain collaboration agreements that continue to significantly negatively impact alliance revenue, partially offset by anticipated revenue growth from certain other products. We expect adjusted R&D expenses(2) to be between $6.4 billion and $6.9 billion, which reflects the late-2013 and early-2014 initiations of Phase 3 clinical programs for certain pipeline compounds. Lastly, our reported(1) and adjusted(2) diluted EPS guidance reflects anticipated share repurchases totaling approximately $5 billion this year. These planned repurchases will more than offset the potential dilution related to employee compensation programs,” concluded Mr. D’Amelio.

QUARTERLY FINANCIAL HIGHLIGHTS (Fourth-Quarter 2013 vs. Fourth-Quarter 2012)

  • Reported revenues(1) decreased $333 million, or 2%, which reflects operational growth of $64 million, or 1%, and the unfavorable impact of foreign exchange of $397 million, or 3%. The operational increase was primarily due to the strong growth of Lyrica, Inlyta and Xalkori globally, Enbrel outside of North America, as well as Celebrex, Eliquis and Xeljanz, primarily in the U.S. In addition, fourth-quarter 2013 reported revenues(1) included $65 million from the transitional manufacturing and supply agreements with Zoetis(3). Revenues were negatively impacted primarily by the expiration on October 31, 2013 of the collaboration agreement for Enbrel in North America, continued erosion for branded Lipitor in developed Europe and certain other developed markets, the ongoing expiration of the Spiriva collaboration in certain countries, other product losses of exclusivity in certain markets, decreased government purchases of Prevnar in certain emerging markets, and various other events.
  • Business unit revenues were impacted by the following:
    • Primary Care: Revenues declined 8% operationally, primarily due to the shift in the reporting of Lipitor revenues in developed Europe and Australia to the Established Products unit beginning January 1, 2013, as well as certain other product losses of exclusivity in various markets, including Viagra in most major European markets in June 2013 and Lyrica in Canada in February 2013, and the termination of the co-promotion agreement for Aricept in Japan in December 2012. Additionally, in the U.S. and certain European countries, the co-promotion collaboration for Spiriva is in its final year, which, per the terms of the collaboration agreement, has resulted in a decline in Pfizer’s share of Spiriva revenues; the agreement has terminated in certain other countries. These declines were partially offset by the strong operational performance of Lyrica in developed markets as well as Celebrex, Eliquis and Premarin, primarily in the U.S.
    • Specialty Care: Revenues decreased 5% operationally, primarily due to the expiration of the collaboration agreement for Enbrel in North America on October 31, 2013; for a 36-month period thereafter, Pfizer is entitled to royalty payments that are expected to be significantly less than the share of Enbrel profits prior to the expiration of the collaboration agreement, and those royalty payments are and will be included in Other (income)/deductionsnet rather than in Revenues. Revenues were also negatively impacted by the shift in the reporting of Geodon and Revatio revenues in the U.S. and Xalabrands revenues in developed Europe and Australia to the Established Products unit beginning January 1, 2013. These declines were partially offset by the growth of Prevnar, Enbrel outside of North America as well as Xeljanz and the hemophilia portfolio (BeneFIX and ReFacto AF/Xyntha) in the U.S.
    • Emerging Markets: Revenues grew 9% operationally, primarily due to volume growth in China, most notably for Lipitor, which was partially offset by the impact of the transfer of certain product rights to the Pfizer-Hisun joint venture in first-quarter 2013. Revenues were also negatively impacted by decreased government purchases of Prevnar as well as government cost-containment measures in certain other emerging markets.
    • Established Products: Revenues increased 6% operationally. This performance was driven by the favorable impact of revenues from products in certain markets that were shifted to the Established Products unit from other business units beginning January 1, 2013, including Lipitor, Caduet and Xalbrands in developed Europe and Australia and Geodon in the U.S., as well as the contribution from the collaboration with Mylan Inc. to market generic drugs in Japan. Revenues were unfavorably impacted by the continued erosion of branded Lipitor in Japan due to generic competition and additional generic competition for Metaxalone/Skelaxin in the U.S.
    • Consumer Healthcare: Revenues increased 2% operationally, primarily due to strong emerging markets growth for core supplement products, including Centrum and Caltrate, as a result of several recent product launches and increased promotional activities in those markets, as well as growth of Emergen-C in the U.S. due to additional promotional activities. This growth was partially offset by a decline in revenues for pain management products in the U.S., primarily due to increased competition resulting from the return to the market of certain competing analgesic brands.
    • Oncology: Revenues increased 29% operationally, driven by the continued solid uptake of new products, most notably Inlyta and Xalkori in several major markets. Inlyta’s market share is stable in the U.S. and continues to increase in international developed markets as physician and patient feedback remains positive both in terms of efficacy and tolerability, and as pricing and reimbursement are being granted in additional developed Europe markets. Revenues were negatively impacted by the performance of Sutent due to increased competitive pressures in certain international developed markets as well as government cost-containment measures in certain European markets.
  • Adjusted cost of sales, adjusted SI&A expenses and adjusted R&D expenses(2) in the aggregate were flat operationally. Overall, they decreased $291 million, or 3%, primarily reflecting the favorable impact of foreign exchange and the benefits of cost-reduction and productivity initiatives, partially offset by higher adjusted cost of sales(2) on an operational basis due to an unfavorable shift in product mix and adjusted SI&A expenses(2) to support several new product launches.
  • The effective tax rate on adjusted income(2) declined 2.0 percentage points to 27.7% from 29.7%. This decline was primarily due to an increase in tax benefits compared to fourth-quarter 2012 related to audit settlements with foreign jurisdictions for multiple years and the extension of the U.S. research and development tax credit that was signed into law in January 2013, partially offset by a change in the jurisdictional mix of earnings.
  • The diluted weighted-average shares outstanding declined by approximately 862 million shares, due to the company’s ongoing share repurchase program and the impact of the Zoetis(3) exchange offer, which was completed on June 24, 2013.
  • In addition to the aforementioned factors, fourth-quarter 2013 reported earnings were significantly unfavorably impacted by the non-recurrence of income from discontinued operations attributable to the company’s Animal Health and Nutrition businesses, including the gain on the sale of the Nutrition business, in the year-ago quarter. Reported earnings were favorably impacted by a lower effective tax rate, lower charges related to asset impairments and legal matters, and lower acquisition-related expenses. The effective tax rate on reported income(1) decreased in fourth-quarter 2013 in comparison with the year-ago quarter primarily due to an increase in tax benefits related to an audit settlement with the U.S. Internal Revenue Service as well as audit settlements with foreign jurisdictions for multiple years.

FULL-YEAR FINANCIAL HIGHLIGHTS (Full-Year 2013 vs. Full-Year 2012)

  • Reported revenues(1) decreased $3.1 billion, or 6%, which reflects an operational decline of $1.9 billion, or 4%, and the unfavorable impact of foreign exchange of $1.2 billion, or 2%. In addition to the aforementioned factors that negatively impacted fourth-quarter 2013 revenues, full-year 2013 revenues were negatively impacted by erosion of branded Lipitor in the U.S. and decreased government purchases of Enbrel in certain emerging markets. Revenues were positively impacted by the operational growth of Lyrica, Celebrex, Inlyta and Xalkori globally, Eliquis and Xeljanz in the U.S., as well as the contribution from the collaboration with Mylan Inc. to market generic drugs in Japan. In addition, reported revenues(1) in full-year 2013 included $132 million from the transitional manufacturing and supply agreements with Zoetis(3).
  • Adjusted cost of sales, adjusted SI&A expenses and adjusted R&D expenses(2) in the aggregate decreased $1.5 billion, or 5%, primarily reflecting the benefits of cost-reduction and productivity initiatives, the non-recurrence of a $250 million payment included in adjusted R&D expenses(2) in third-quarter 2012 to obtain the exclusive global over-the-counter rights to Nexium, and the favorable impact of foreign exchange, partially offset by higher adjusted cost of sales(2) on an operational basis due to an unfavorable shift in product mix and adjusted SI&A expenses(2) to support several new product launches.
  • The effective tax rate on adjusted income(2) declined 1.2 percentage points to 27.5% from 28.7%. This decline was primarily due to an increase in tax benefits compared to 2012 related to audit settlements with foreign jurisdictions for multiple years and the extension of the U.S. research and development tax credit that was signed into law in January 2013.
  • The diluted weighted-average shares outstanding declined by approximately 613 million shares, due to the company’s ongoing share repurchase program and the partial-year impact of the Zoetis(3)exchange offer, which was completed on June 24, 2013.
  • In addition to the aforementioned factors, full-year 2013 reported earnings were impacted by the following:

Favorable impacts:

  • the gain associated with the full disposition of Zoetis(3) in second-quarter 2013;
  • income from a litigation settlement in second-quarter 2013 with Teva Pharmaceuticals Industries Ltd. and Sun Pharmaceutical Industries Ltd. for patent-infringement damages resulting from their “at-risk” launches of generic Protonix in the U.S.;
  • the gain associated with the transfer of certain product rights to Pfizer’s joint venture with Zhejiang Hisun Pharmaceuticals (Hisun) in China in first-quarter 2013; and
  • lower charges related to other legal matters, lower acquisition-related costs and lower expenses related to cost-reduction and productivity initiatives.

Unfavorable impacts:

  • the non-recurrence in full-year 2013 of the income from discontinued operations attributable to the company’s Nutrition business in 2012, including the gain on the sale of the Nutrition business in fourth-quarter 2012;
  • the non-recurrence after June 24, 2013 of the income from discontinued operations attributable to the company’s Animal Health business in 2012;
  • higher asset impairments and related charges; and
  • a higher effective tax rate. The effective tax rate on reported income(1) increased primarily due to a decrease in tax benefits related to certain audit settlements in multiple jurisdictions covering various periods and a change in the jurisdictional mix of earnings.

RECENT NOTABLE DEVELOPMENTS

Product Developments

  • Viagra -- Pfizer settled its litigation against Teva Pharmaceuticals, USA Inc. (Teva) relating to Pfizer’s patent covering the use of Viagra to treat erectile dysfunction, which expires in April 2020 (including pediatric exclusivity). As a result of the settlement, Teva will be allowed to launch a generic version of Viagra in the U.S. on December 11, 2017, or earlier under certain circumstances. Teva will pay Pfizer a royalty for a license to produce its generic version. The terms of the settlement agreement are otherwise confidential.
  • Xalkori -- The U.S. Food and Drug Administration (FDA) granted regular approval for the treatment of patients with metastatic ALK-positive non-small cell lung cancer (NSCLC) as detected by an FDA-approved test. Xalkori was previously granted accelerated approval in August 2011 due to the critical need for new agents for people living with ALK-positive NSCLC.
  • Xeljanz
    • The FDA approved a supplemental New Drug Application (sNDA) to include additional patient-reported outcomes data in the label for adults with moderately to severely active rheumatoid arthritis. These additional data show improvement in patients receiving Xeljanz based on health-related outcome measures reported by patients.
    • The top-line results were announced from the first two (OPT Compare and OPT Retreatment) of five Phase 3 clinical trials in adults with moderate-to-severe chronic plaque psoriasis. In OPT Compare, Xeljanz met the primary endpoint of non-inferiority to high-dose Enbrel at the 10 mg twice-daily (BID) dose, but did not at the 5 mg BID dose. In OPT Retreatment, Xeljanz met the primary efficacy endpoints at the 5 and 10 mg BID doses by demonstrating that a greater proportion of patients continuing Xeljanz treatment maintained their response during the treatment-withdrawal phase compared to patients who switched to placebo. Additionally, among patients who lost an adequate response, many were able to recapture their response upon retreatment with Xeljanz. No new safety signals were observed in these two studies.
  • Eliquis -- The FDA accepted for review an sNDA for Eliquis for the treatment of deep vein thrombosis (DVT) and pulmonary embolism (PE), and for the reduction in the risk of recurrent DVT and PE. The Prescription Drug User Fee Act (PDUFA) goal date for a decision by the FDA is August 25, 2014. Additionally, the European Medicines Agency accepted for review an application for Eliquis for the treatment of DVT and PE, and prevention of recurrent DVT and PE.
  • Duavee -- The FDA approved Duavee (0.45 mg/20 mg tablets), a novel therapy for women with a uterus, for the treatment of moderate-to-severe vasomotor symptoms associated with menopause and the prevention of postmenopausal osteoporosis. Duavee is expected to be available in the U.S. in February 2014.
  • Embeda -- The FDA approved a Prior Approval Supplement for Embeda Extended Release Capsules CII. The Prior Approval Supplement included an update to the Embeda manufacturing process that addressed the pre-specified stability requirement that led to the voluntary recall of Embeda from the market in March 2011. Pfizer anticipates product availability beginning in the second quarter of 2014.
  • Remoxy -- Pfizer will continue the development program for Remoxy Extended-Release Capsules CII. Having achieved technical milestones related to manufacturing and following guidance received from the FDA in 2013, Pfizer is proceeding with the additional clinical studies and other actions required to address the Complete Response Letter received in June 2011. As previously disclosed, the complete response submission is not expected to occur prior to mid-2015.
  • Lipitor Over-the-Counter (OTC) -- A Phase 3 "actual use" trial intended to simulate the OTC use of atorvastatin calcium 10 mg began enrolling patients.

Pipeline Developments

  • Palbociclib
    • A Phase 3 trial (PENELOPE-B) in early-stage breast cancer began enrolling patients. This is a randomized global study that will evaluate palbociclib in combination with endocrine therapy versus placebo plus endocrine therapy in prolonging investigator-assessed, invasive disease-free survival in women with hormone receptor positive (HR+), human epidermal growth factor receptor 2 negative (HER2-) early-stage breast cancer with high risk of relapse after neoadjuvant chemotherapy. This trial is sponsored by the German Breast Group, a leading cooperative group with extensive experience conducting clinical trials in breast cancer, in collaboration with Pfizer.
    • Pfizer entered into an agreement with GSK to explore the anti-cancer efficacy and the safety of GSK’s trametinib (GSK1120212) combined with palbociclib in a Phase I/II study in patients with advanced/metastatic melanoma. The two companies will collaborate on the study, which GSK will conduct.
  • Dacomitinib -- Pfizer announced top-line results from two Phase 3 studies of dacomitinib in patients with previously treated advanced NSCLC. Neither study met its primary endpoint. In the ARCHER 1009 trial, dacomitinib did not demonstrate statistically significant improvement in progression-free survival (PFS) when compared with erlotinib and in the BR.26 trial, dacomitinib did not prolong overall survival versus placebo. A third Phase 3 trial, ARCHER 1050, is ongoing and evaluating PFS of dacomitinib in treatment-naïve patients with EGFR-mutant advanced NSCLC; results are expected in 2015.
  • ALO-02 -- Pfizer announced top-line results from a Phase 3 study of ALO-02 (oxycodone hydrochloride and naltrexone hydrochloride extended-release capsules) in patients with moderate-to-severe chronic low back pain. In this study, ALO-02 met the primary efficacy endpoint, demonstrating a statistically significant difference from placebo in the mean change in the daily average pain numerical rating scale scores from baseline to the final two weeks of the double-blind treatment period.
  • Tafamidis -- Pfizer initiated a global Phase 3 program for tafamidis in transthyretin cardiomyopathy (TTR-CM), the first study of its kind in this rare, progressive and universally fatal disease. Tafamidis is approved for the treatment of transthyretin familial amyloid polyneuropathy (TTR-FAP) in the European Union and Japan under the trade name Vyndaqel.
  • Bococizumab (RN316) -- The Phase 3 program was initiated for this PCSK9 monoclonal antibody to lower LDL cholesterol. This is a global program expected to involve more than 22,000 patients, which includes multiple lipid-lowering studies as well as two cardiovascular outcomes studies. This program includes the broadest range of high-risk patients including a focus on patients in greatest need of LDL-lowering.
  • Ertugliflozin -- Pfizer in collaboration with Merck initiated a Phase 3 program for this SGLT2 inhibitor for the treatment of type 2 diabetes.
  • Tanezumab -- Pfizer entered into a collaboration agreement with Eli Lilly & Company (Lilly) to jointly develop and globally commercialize tanezumab, which provides that Pfizer and Lilly will equally share product-development expenses as well as potential revenues and certain product-related costs. The tanezumab program currently is subject to a partial clinical hold by the FDA pending submission of nonclinical data to the FDA. Pfizer now anticipates submitting that data by the end of 2014.

Other Developments

  • Pfizer successfully implemented its previously announced plans to internally separate its commercial operations into three businesses at the start of the 2014 fiscal year. The company remains on track to provide greater financial transparency for each of these businesses beginning with first-quarter 2014 financial results.

For additional details, see the attached financial schedules, product revenue tables and disclosure notice.

(1)   “Reported Revenues” is defined as revenues in accordance with U.S. generally accepted accounting principles (GAAP). “Reported Net Income” is defined as net income attributable to Pfizer Inc. in accordance with U.S. GAAP. “Reported Diluted EPS” is defined as reported diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.
 
(2)  

“Adjusted Income” and its components and “Adjusted Diluted Earnings Per Share (EPS)” are defined as reported U.S. GAAP net income(1) and its components and reported diluted EPS(1) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. Adjusted Revenues, Adjusted Cost of Sales, Adjusted Selling, Informational and Administrative (SI&A) expenses, Adjusted Research and Development (R&D) expenses and Adjusted Other (Income)/Deductions are income statement line items prepared on the same basis, and, therefore, components of the overall adjusted income measure. As described under Adjusted Income in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of Pfizer’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 29, 2013, 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. See the accompanying reconciliations of certain GAAP reported to non-GAAP adjusted information for the fourth quarter and twelve months ended 2013 and 2012, as well as reconciliations of full-year 2014 guidance for adjusted income and adjusted diluted EPS to full-year 2014 guidance for reported net income(1) and reported diluted EPS(1). The adjusted income and its components and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS.

 
(3)  

On June 24, 2013, we completed the full disposition of Zoetis, Inc. (Zoetis) and recognized a gain of approximately $10.3 billion, net of tax, in Discontinued operations––net of tax for the twelve months ended December 31, 2013. The financial results of our Animal Health business are reported as Discontinued operations––net of tax through June 24, 2013, the date of disposal.

 
(4)   For a description of the revenues in each business unit, see Note 13 to Pfizer’s condensed consolidated financial statements included in Pfizer’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 29, 2013.
 
(5)   Other represents revenues generated from Pfizer CentreSource, Pfizer’s contract manufacturing and bulk pharmaceutical chemical sales organization, and includes, in 2013, revenues related to our transitional manufacturing and supply agreements with Zoetis(3).
 
(6)   The 2014 financial guidance reflects the following:
  • Does not assume the completion of any business development transactions not completed as of December 31, 2013, including any one-time upfront payments associated with such transactions.
  • Excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of December 31, 2013.
  • Exchange rates assumed are as of mid-January 2014.
  • Assumes diluted weighted-average shares outstanding of approximately 6.4 billion shares.
  • Revenues and cost of sales from the transitional manufacturing and supply agreements with Zoetis(3) have been excluded from the applicable Adjusted components of the financial guidance.
  • Reconciliation of the 2014 Adjusted Income(2) and Adjusted Diluted EPS(2) guidance to the 2014 Reported Net Income Attributable to Pfizer Inc. and Reported Diluted EPS Attributable to Pfizer Inc. common shareholders guidance:
                               
              ($ in billions, except per share amounts)                
              Income/(Expense)     Net Income       Diluted EPS  
              Adjusted income/diluted EPS(2) guidance     $14.1 - $14.8       $2.20 - $2.30  
              Purchase accounting impacts of transactions completed as of December 31, 2013     (2.8)       (0.43)  
              Restructuring and implementation costs     (1.0 - 1.3)       (0.15 - 0.20)  
              Reported net income attributable to Pfizer Inc./diluted EPS(1) guidance     $10.0 - $11.0       $1.57 - $1.72  
                               
PFIZER INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME(1)

(UNAUDITED)
(millions, except per common share data)
 
    Fourth-Quarter   % Incr. /   Full-Year   % Incr. /
    2013   2012   (Decr.)   2013   2012   (Decr.)
Revenues   $ 13,558     $ 13,891     (2)   $ 51,584     $ 54,657     (6)
Costs and expenses:                        
Cost of sales(2)   2,794     2,753     1   9,586     9,821     (2)
Selling, informational and administrative expenses(2)   4,152     4,337     (4)   14,355     15,171     (5)
Research and development expenses(2)   1,811     2,021     (10)   6,678     7,482     (11)
Amortization of intangible assets(3)   1,123     1,220     (8)   4,599     5,109     (10)
Restructuring charges and certain acquisition-related costs   635     725     (12)   1,182     1,810     (35)
Other (income)/deductions––net(4)   (18 )   758     *   (532 )   4,022     *
                         
Income from continuing operations before provision for taxes on income   3,061     2,077     47   15,716     11,242     40
Provision for taxes on income(5)   430     599     (28)   4,306     2,221     94
Income from continuing operations   2,631     1,478     78   11,410     9,021     26
Discontinued operations––net of tax   (57 )   4,843     *   10,662     5,577     91
Net income before allocation to noncontrolling interests   2,574     6,321     (59)   22,072     14,598     51
Less: Net income attributable to noncontrolling interests   6     6       69     28    

*

Net income attributable to Pfizer Inc.   $ 2,568     $ 6,315     (59)   $ 22,003     $ 14,570     51
                         
Earnings per common share––basic:                        
Income from continuing operations attributable to Pfizer Inc. common shareholders   $ 0.41     $ 0.20    

*

  $ 1.67     $ 1.21     38
Discontinued operations––net of tax   (0.01 )   0.66    

*

  1.56     0.75     *
Net income attributable to Pfizer Inc. common shareholders   $ 0.40     $ 0.86     (53)   $ 3.23     $ 1.96     65
                         
Earnings per common share––diluted:                        
Income from continuing operations attributable to Pfizer Inc. common shareholders   $ 0.40     $ 0.20     100   $ 1.65     $ 1.20     38
Discontinued operations––net of tax   (0.01 )   0.65     *   1.54     0.74     *
Net income attributable to Pfizer Inc. common shareholders   $ 0.39     $ 0.85     (54)   $ 3.19     $ 1.94     64
Weighted-average shares used to calculate earnings per common share:                        
Basic   6,443     7,319         6,813     7,442      
Diluted   6,533     7,395         6,895     7,508      
                                 
* Calculation not meaningful.
See next pages for notes (1) through (5).
Certain amounts and percentages may reflect rounding adjustments.
 
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
     
(1)  

The financial statements present the three and twelve months ended December 31, 2013 and 2012. Subsidiaries operating outside the United States are included for the three and twelve months ended November 30, 2013 and 2012.

 
   

On June 24, 2013, we completed the full disposition of our Animal Health business (Zoetis) and recognized a gain of approximately $10.3 billion, net of tax, in Discontinued operations––net of tax for the twelve months ended December 31, 2013. The operating results of this business are reported as Discontinued operations––net of tax through June 24, 2013, the date of disposal.

 
   

On November 30, 2012, we completed the sale of our Nutrition business and recognized a gain of approximately $4.8 billion, net of tax, in Discontinued operations––net of tax for the three and twelve months ended December 31, 2012. The operating results of this business are reported as Discontinued operations––net of tax through November 30, 2012, the date of disposal.

 
(2)   Exclusive of amortization of intangible assets, except as discussed in footnote (3) below.
 
(3)  

Amortization expense related to finite-lived acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to intangible assets that are associated with a single function is included in Cost of sales, Selling, informational and administrative expenses or Research and development expenses, as appropriate.

 
(4)  

Other (income)/deductions––net includes the following:

     
              Fourth-Quarter       Full-Year
        (millions of dollars)    

  2013  

   

  2012  

     

  2013  

   

  2012  

        Interest income(a)     $ (112 )     $ (107 )       $ (403 )     $ (382 )
        Interest expense(a)     347       373         1,414       1,522  
        Net interest expense     235       266         1,011       1,140  
        Royalty-related income(b)     (218 )     (108 )       (523 )     (451 )
        Patent litigation settlement income(c)                   (1,342 )      
        Other legal matters, net(d)     129       206         35       2,220  
        Gain associated with the transfer of certain product rights to an equity-method investment(e)                   (459 )      
        Net gains on asset disposals(f)     (220 )     (7 )       (320 )     (52 )
        Certain asset impairments and related charges(g)     133       366         1,101       890  
        Costs associated with the Zoetis IPO(h)           32         18       125  
        Other, net     (77 )     3         (53 )     150  
        Other (income)/deductions––net     $ (18 )     $ 758         $ (532 )     $ 4,022  
                                                   
        (a)   Interest income increased in fourth-quarter and full-year 2013 due to higher cash and investment balances. Interest expense decreased in fourth-quarter and full-year 2013 due to lower outstanding debt, refinancings and lower rates, and the benefit of the conversion of some fixed-rate liabilities to floating-rate liabilities.
             
        (b)   Royalty-related income increased in fourth-quarter and full-year 2013 due to royalties earned on sales of Enbrel in North America after October 31, 2013. On that date, our collaboration agreement for Enbrel in North America expired, and we became entitled to royalties for a 36-month period.
             
        (c)   Reflects income from a litigation settlement with Teva Pharmaceutical Industries Ltd. and Sun Pharmaceutical Industries Ltd. for patent-infringement damages resulting from their "at-risk" launches of generic Protonix in the U.S.
             
        (d)   In full-year 2012, primarily includes a $491 million charge related to the resolution of an investigation by the U.S. Department of Justice 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 for hormone-replacement therapy litigation and Chantix litigation.
             
        (e)   Represents the gain associated with the transfer of certain product rights to Pfizer's 49%-owned equity-method investment in China.
             
        (f)   In fourth-quarter and full-year 2013, includes a gain of $125 million on the sale of a portion of our in-licensed generic sterile injectibles portfolio.
             
        (g)   In full-year 2013, primarily includes impairment charges related to developed technology (for use in the development of bone and cartilage) acquired in connection with our acquisition of Wyeth, and in-process research and development (IPR&D) compounds. Full-year 2013 also includes a loss on an option to acquire the remaining interest in a 40%-owned generics company in Brazil (approximately $220 million). In fourth-quarter and full-year 2012, primarily includes impairment charges related to certain intangible assets acquired in connection with our acquisitions of Wyeth and King Pharmaceuticals Inc. (King), including IPR&D intangible assets.
             
        (h)   Costs incurred in connection with the initial public offering (IPO) of an approximate 19.8% ownership interest in Zoetis. Includes expenditures for banking, legal, accounting and similar services.
             
(5)  

The Provision for taxes on income for fourth-quarter and full-year 2013 was favorably impacted by U.S. tax benefits of approximately $430 million, representing tax and interest, resulting from a settlement with the U.S. Internal Revenue Service (IRS) with respect to audits of the Wyeth tax returns for the years 2006 through date of acquisition. Full-year 2013 was also favorably impacted by international tax benefits of approximately $470 million, most of which occurred in the fourth quarter, representing tax and interest, resulting from the resolution of certain tax positions pertaining to prior years with various foreign tax authorities and from the expiration of certain statutes of limitations, as well as the extension of the U.S. research and development tax credit that was signed into law in January 2013. The Provision for taxes on income for full-year 2012 was favorably impacted by a $1.1 billion settlement (representing tax and interest) with the IRS related to audits for multiple tax years, as well as approximately $300 million related to 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.

     
PFIZER INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars, except per common share data)
 
 
    Quarter Ended December 31, 2013
   

GAAP

Reported(1)

 

Purchase

Accounting

Adjustments

 

Acquisition-

Related

Costs(2)

 

Discontinued

Operations

 

Certain

Significant

Items(3)

 

Non-GAAP

Adjusted(4)

Revenues   $ 13,558     $     $     $     $ (65 )   $ 13,493  
Cost of sales(5)   2,794     7     (15 )       (114 )   2,672  
Selling, informational and administrative expenses(5)   4,152     3             (62 )   4,093  
Research and development expenses(5)   1,811     2             (23 )   1,790  
Amortization of intangible assets(6)   1,123     (1,086 )               37  
Restructuring charges and certain acquisition-related costs   635         (97 )       (538 )    
Other (income)/deductions––net   (18 )   17             (200 )   (201 )
Income from continuing operations before provision for taxes on income   3,061     1,057     112         872     5,102  
Provision for taxes on income   430     257     35         689     1,411  
Income from continuing operations   2,631     800     77         183     3,691  
Discontinued operations––net of tax   (57 )           57          
Net income attributable to noncontrolling interests   6             (1 )       5  
Net income attributable to Pfizer Inc.   2,568     800     77     58     183     3,686  
Earnings per common share attributable to Pfizer Inc.––diluted   0.39     0.12     0.01     0.01     0.03     0.56  
                                     
    Twelve Months Ended December 31, 2013
   

GAAP

Reported(1)

 

Purchase

Accounting

Adjustments

 

Acquisition-

Related

Costs(2)

 

Discontinued

Operations

 

Certain

Significant

Items(3)

 

Non-GAAP

Adjusted(4)

Revenues   $ 51,584     $     $     $     $ (132 )   $ 51,452
Cost of sales(5)   9,586     23     (116 )       (220 )   9,273
Selling, informational and administrative expenses(5)   14,355     8     (8 )       (183 )   14,172
Research and development expenses(5)   6,678     3             (127 )   6,554
Amortization of intangible assets(6)   4,599     (4,438 )               161
Restructuring charges and certain acquisition-related costs   1,182         (252 )       (930 )  
Other (income)/deductions––net   (532 )   60             636     164
Income from continuing operations before provision for taxes on income   15,716     4,344     376         692     21,128
Provision for taxes on income   4,306     1,198     (7 )       313     5,810
Income from continuing operations   11,410     3,146     383         379     15,318
Discontinued operations––net of tax   10,662             (10,662 )      
Net income attributable to noncontrolling interests   69             (39 )       30
Net income attributable to Pfizer Inc.   22,003     3,146     383     (10,623 )   379     15,288
Earnings per common share attributable to Pfizer Inc.––diluted   3.19     0.46     0.06     (1.54 )   0.05     2.22
                                   
See end of tables for notes (1) through (6).
Certain amounts may reflect rounding adjustments.
 
PFIZER INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars, except per common share data)
 
                         
    Quarter Ended December 31, 2012
   

GAAP

Reported(1)

 

Purchase

Accounting

Adjustments

 

Acquisition-

Related

Costs(2)

 

Discontinued

Operations

 

Certain

Significant

Items(3)

 

Non-GAAP

Adjusted(4)

Revenues   $ 13,891     $     $     $     $     $ 13,891
Cost of sales(5)   2,753     5     (53 )       (19 )   2,686
Selling, informational and administrative expenses(5)   4,337     8     (2 )       (67 )   4,276
Research and development expenses(5)   2,021     (1 )   (1 )       (135 )   1,884
Amortization of intangible assets(6)   1,220     (1,198 )               22
Restructuring charges and certain acquisition-related costs   725         (252 )       (473 )  
Other (income)/deductions––net   758     (6 )           (561 )   191
Income from continuing operations before provision for taxes on income   2,077     1,192     308         1,255     4,832
Provision for taxes on income   599     329     47         460     1,435
Income from continuing operations   1,478     863     261         795     3,397
Discontinued operations––net of tax   4,843             (4,843 )      
Net income attributable to noncontrolling interests   6                     6
Net income attributable to Pfizer Inc.   6,315     863     261     (4,843 )   795     3,391
Earnings per common share attributable to Pfizer Inc.––diluted   0.85     0.12     0.04     (0.65 )   0.11     0.46
                                   
    Twelve Months Ended December 31, 2012
   

GAAP

Reported(1)

 

Purchase

Accounting

Adjustments

 

Acquisition-

Related

Costs(2)

 

Discontinued

Operations

 

Certain

Significant

Items(3)

 

Non-GAAP

Adjusted(4)

Revenues   $ 54,657     $     $     $     $     $ 54,657
Cost of sales(5)   9,821     (1 )   (258 )       (70 )   9,492
Selling, informational and administrative expenses(5)   15,171     11     (9 )       (144 )   15,029
Research and development expenses(5)   7,482     3     (6 )       (521 )   6,958
Amortization of intangible assets(6)   5,109     (4,924 )               185
Restructuring charges and certain acquisition-related costs   1,810         (673 )       (1,137 )  
Other (income)/deductions––net   4,022     6             (3,167 )   861
Income from continuing operations before provision for taxes on income   11,242     4,905     946         5,039     22,132
Provision for taxes on income   2,221     1,343     203         2,588     6,355
Income from continuing operations   9,021     3,562     743         2,451     15,777
Discontinued operations––net of tax   5,577             (5,577 )      
Net income attributable to noncontrolling interests   28                     28
Net income attributable to Pfizer Inc.   14,570     3,562     743     (5,577 )   2,451     15,749
Earnings per common share attributable to Pfizer Inc.––diluted   1.94     0.47     0.10     (0.74 )   0.33     2.10
                                   
See end of tables for notes (1) through (6).
Certain amounts may reflect rounding adjustments.
EPS amounts may not add due to rounding.
 
PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
     
(1)   The financial statements present the three and twelve months ended December 31, 2013 and 2012. Subsidiaries operating outside the United States are included for the three and twelve months ended November 30, 2013 and 2012.
     
   

On June 24, 2013, we completed the full disposition of our Animal Health business (Zoetis) and recognized a gain of approximately $10.3 billion, net of tax, in Discontinued operations––net of tax for the twelve months ended December 31, 2013. The operating results of this business are reported as Discontinued operations––net of tax through June 24, 2013, the date of disposal.

     
   

On November 30, 2012, we completed the sale of our Nutrition business and recognized a gain of approximately $4.8 billion, net of tax, in Discontinued operations––net of tax for the three and twelve months ended December 31, 2012. The operating results of this business are reported as Discontinued operations––net of tax through November 30, 2012, the date of disposal.

     
(2)   Acquisition-related costs include the following:
     
              Fourth-Quarter       Full-Year
        (millions of dollars)    

  2013  

   

  2012  

     

  2013  

   

  2012  

        Restructuring charges(a)     $ 60       $ 149         $ 108       $ 291  
        Transaction costs(a)           1               1  
        Integration costs(a)     37       102         144       381  
        Additional depreciation––asset restructuring(b)     15       56         124       273  
        Total acquisition-related costs––pre-tax     112       308         376       946  
        Income taxes(c)     (35 )     (47 )       7       (203 )
        Total acquisition-related costs––net of tax     $ 77       $ 261         $ 383       $ 743  
                                                   
        (a)  

Restructuring charges include employee termination costs, asset impairments and other exit costs associated with business combinations. Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures for banking, legal, accounting and other similar services. Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes. All of these costs and charges are included in Restructuring charges and certain acquisition-related costs.

             
        (b)  

Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions related to acquisitions. Included in Cost of sales for the three months ended December 31, 2013. Included in Cost of sales ($116 million) and Selling, informational and administrative expenses ($8 million) for the twelve months ended December 31, 2013. Included in Cost of sales ($53 million), Selling, informational and administrative expenses ($2 million) and Research and development expenses ($1 million) for the three months ended December 31, 2012. Included in Cost of sales ($258 million),Selling, informational and administrative expenses ($9 million) and Research and development expenses ($6 million) for the twelve months ended December 31, 2012.

             
        (c)  

Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. The full-year 2013 also includes the unfavorable impact of the remeasurement of certain deferred tax liabilities resulting from plant network restructuring activities.

             
(3)   Certain significant items include the following:
     
              Fourth-Quarter       Full-Year
        (millions of dollars)    

  2013  

   

  2012  

     

  2013  

   

  2012  

        Restructuring charges(a)     $ 538       $ 473         $ 930       $ 1,137  
        Implementation costs and additional depreciation––asset restructuring(b)     128       207         398       692  
        Patent litigation settlement income(c)                   (1,342 )      
        Other legal matters, net(d)     120       210         21       2,191  
        Gain associated with the transfer of certain product rights to an equity-method investment(e)                   (459 )      
        Certain asset impairments and related charges(f)     130       369         1,059       875  
        Costs associated with the Zoetis IPO(g)           32         18       125  
        Income associated with the transitional manufacturing and supply agreements with Zoetis(h)     (6 )             (16 )      
        Other(i)     (38 )     (36 )       83       19  
        Total certain significant items––pre-tax     872       1,255         692       5,039  
        Income taxes(j)     (689 )     (460 )       (313 )     (2,588 )
        Total certain significant items––net of tax     $ 183       $ 795         $ 379       $ 2,451  
                                                   
        (a)  

Primarily related to our cost-reduction and productivity initiatives. Included in Restructuring charges and certain acquisition-related costs.

             
        (b)  

Primarily related to our cost-reduction and productivity initiatives. Included in Cost of sales ($55 million), Selling, informational and administrative expenses ($50 million) and Research and development expenses ($23 million) for the three months ended December 31, 2013. Included in Cost of sales ($115 million), Selling, informational and administrative expenses ($156 million) and Research and development expenses ($127 million) for the twelve months ended December 31, 2013. Included in Cost of sales ($8 million), Selling, informational and administrative expenses ($64 million) and Research and development expenses ($135 million) for the three months ended December 31, 2012. Included in Cost of sales ($30 million), Selling, informational and administrative expenses ($141 million) andResearch and development expenses ($521 million) for the twelve months ended December 31, 2012.

             
        (c)  

Included in Other (income)/deductions––net. Reflects income from a litigation settlement with Teva Pharmaceutical Industries Ltd. and Sun Pharmaceutical Industries Ltd. for patent-infringement damages resulting from their "at-risk" launches of generic Protonix in the U.S.

             
        (d)  

Primarily included in Other (income)/deductions––net. In full-year 2012, primarily includes a $491 million charge related to the resolution of an investigation by the U.S. Department of Justice 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 for hormone-replacement therapy litigation and Chantix litigation.

             
        (e)  

Included in Other (income)/deductions––net. Represents the gain associated with the transfer of certain product rights to Pfizer's 49%-owned equity-method investment in China.

             
        (f)  

Primarily included in Other (income)/deductions––net. In full-year 2013, primarily includes impairment charges related to developed technology (for use in the development of bone and cartilage) acquired in connection with our acquisition of Wyeth, and in-process research and development (IPR&D) compounds. Full-year 2013 also includes a loss on an option to acquire the remaining interest in a 40%-owned generics company in Brazil (approximately $220 million). In fourth-quarter and full-year 2012, primarily includes impairment charges related to certain intangible assets acquired in connection with our acquisitions of Wyeth and King, including IPR&D intangible assets.

             
        (g)  

Included in Other (income)/deductions––net. Costs incurred in connection with the initial public offering of an approximate 19.8% ownership interest in Zoetis. Includes expenditures for banking, legal, accounting and similar services.

             
        (h)  

Included in Revenues ($65 million) and Cost of sales ($59 million) for the three months ended December 31, 2013. Included in Revenues ($132 million) and Cost of sales ($116 million) for the twelve months ended December 31, 2013.

             
        (i)  

Primarily included in Other (income)/deductions––net.

             
        (j)  

Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. The fourth quarter of 2013 was favorably impacted by U.S. tax benefits of approximately $430 million, representing tax and interest, resulting from a settlement with the U.S. Internal Revenue Service (IRS) with respect to audits of the Wyeth tax returns for the years 2006 through date of acquisition. The full-year 2013 was unfavorably impacted by (i) the tax liability associated with the patent litigation settlement income, (ii) the non-deductibility of goodwill derecognized and the jurisdictional mix of the other intangible assets divested as part of the transfer of certain product rights to Pfizer's 49%-owned equity-method investment in China, and (iii) the non-deductibility of the loss on an option to acquire the remaining interest in a 40%-owned generics company in Brazil since we expect to retain the investment indefinitely, and was favorably impacted by the aforementioned fourth quarter tax settlement. In full-year 2012, includes a settlement with the IRS related to audits for multiple tax years that favorably impacted GAAP Reported net income by $1.1 billion, representing tax and interest.

             
(4)   Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.
     
(5)   Exclusive of amortization of intangible assets, except as discussed in footnote (6) below.
     
(6)  

Amortization expense related to finite-lived acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to intangible assets that are associated with a single function is included in Cost of sales, Selling, informational and administrative expenses or Research and development expenses, as appropriate.

     
PFIZER INC.

REVENUES

FOURTH QUARTER 2013 and 2012
(UNAUDITED)
(millions of dollars)
 
    WORLDWIDE   UNITED STATES   TOTAL INTERNATIONAL(a)
    2013   2012   % Change   2013   2012   % Change   2013   2012   % Change
        Total   Oper.       Total       Total   Oper.
TOTAL REVENUES   $ 13,558     $ 13,891     (2%)   1%   $ 5,084     $ 5,301     (4%)   $ 8,474     $ 8,590     (1%)   3%

REVENUES FROM

BIOPHARMACEUTICAL PRODUCTS:

  $ 12,480     $ 12,893     (3%)     $ 4,568     $ 4,809     (5%)   $ 7,912     $ 8,084     (2%)   3%
Lyrica   1,260     1,132     11%   14%   525     443     19%   735     689     7%   11%
Prevnar family   1,119     1,089     3%   4%   468     464     1%   651     625     4%   7%
Enbrel (Outside the U.S. and Canada)   1,005     957     5%   8%             1,005     957     5%   8%
Celebrex   798     750     6%   9%   524     479     9%   274     271     1%   9%
Lipitor   611     584     5%   8%   97     61     59%   514     523     (2%)   3%
Viagra   476     553     (14%)   (13%)   313     313       163     240     (32%)   (30%)
Zyvox   346     349     (1%)   1%   177     175     1%   169     174     (3%)   1%
Norvasc   312     348     (10%)   (3%)   8     10     (20%)   304     338     (10%)   (3%)
Sutent   312     323     (3%)   (2%)   90     82     10%   222     241     (8%)   (6%)
Premarin family   299     276     8%   9%   275     253     9%   24     23     4%   9%
BeneFIX   213     198     8%   8%   97     86     13%   116     112     4%   5%
Vfend   218     211     3%   7%   12     25     (52%)   206     186     11%   14%
Genotropin   202     213     (5%)     54     54       148     159     (7%)  
Pristiq   182     169     8%   10%   138     128     8%   44     41     7%   15%
Chantix/Champix   162     174     (7%)   (4%)   90     79     14%   72     95     (24%)   (18%)
Refacto AF/Xyntha   169     164     3%   2%   34     27     26%   135     137     (1%)   (3%)
Xalatan/Xalacom   155     189     (18%)   (12%)   7     8     (13%)   148     181     (18%)   (12%)
Detrol/Detrol LA   125     185     (32%)   (31%)   78     124     (37%)   47     61     (23%)   (19%)
Zoloft   128     143     (10%)     14     19     (26%)   114     124     (8%)   4%
Medrol   121     135     (10%)   (8%)   38     35     9%   83     100     (17%)   (13%)
Effexor   114     83     37%   40%   45     7     *   69     76     (9%)   (7%)
Zosyn/Tazocin   102     106     (4%)   (3%)   45     42     7%   57     64     (11%)   (10%)
Zithromax/Zmax   104     117     (11%)   (3%)   2     3     (33%)   102     114     (11%)   (2%)
Fragmin   96     98     (2%)   (2%)   2     6     (67%)   94     92     2%   4%
Relpax   96     102     (6%)   (4%)   57     59     (3%)   39     43     (9%)   (5%)
Tygacil   87     86     1%   3%   28     37     (24%)   59     49     20%   23%
Rapamune   89     87     2%   4%   49     45     9%   40     42     (5%)   1%
Inlyta   102     47     117%   126%   43     30     43%   59     17     *   *
Sulperazon   87     71     23%   24%             87     71     23%   24%
Revatio   82     120     (32%)   (30%)   15     62     (76%)   67     58     16%   20%
Cardura   75     84     (11%)   (4%)   1     1       74     83     (11%)   (4%)
Xalkori   89     45     98%   105%   41     24     71%   48     21     129%   147%
Xanax XR   72     71     1%   2%   13     12     8%   59     59       2%
Diflucan   78     74     5%   7%   1         *   77     74     4%   6%
Toviaz   62     57     9%   9%   31     31       31     26     19%   18%
Aricept(b)   62     77     (19%)   (16%)             62     77     (19%)   (16%)
Inspra   69     58     19%   22%   2     1     100%   67     57     18%   22%
Caduet   59     67     (12%)   (3%)   7     7       52     60     (13%)   (2%)
Somavert   58     55     5%   6%   14     13     8%   44     42     5%   6%
Neurontin   58     63     (8%)   (4%)   12     11     9%   46     52     (12%)   (5%)
Unasyn   54     63     (14%)               54     63     (14%)  
BMP2   51     71     (28%)   (28%)   51     71     (28%)            
Geodon   77     31     148%   149%   50         *   27     31     (13%)   (21%)
Depo-Provera   52     45     16%   18%   11     11       41     34     21%   24%
Aromasin   50     48     4%   7%   3     3       47     45     4%   9%
Xeljanz   46     6     *   *   45     6     *   1         *   *
Alliance revenues(c)   441     915     (52%)   (51%)   366     712     (49%)   75     203     (63%)   (61%)
All other biopharmaceutical products(d)   1,855     2,004     (7%)   (3%)   595     750     (21%)   1,260     1,254       8%
All other established products(d)   1,561     1,565       4%   532     532       1,029     1,033       5%

REVENUES FROM OTHER PRODUCTS:

                                           
CONSUMER HEALTHCARE   $ 943     $ 936     1%   2%   $ 469     $ 472     (1%)   $ 474     $ 464     2%   5%
OTHER(e)   $ 135     $ 62     *   *   $ 47     $ 20     *   $ 88     $ 42     *   *
 

*

  Indicates calculation not meaningful.
(a)   Total International represents Developed Europe region + Developed Rest of World region + Emerging Markets region. Details for these regions are located on the following page.
(b)   Represents direct sales under license agreement with Eisai Co., Ltd.
(c)   Includes Enbrel (in the U.S. and Canada through October 31, 2013), Spiriva, Rebif, Aricept and Eliquis.
(d)   All other established products is a subset of All other biopharmaceutical products.
(e)   Other represents revenues generated from Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales organization, and includes, in 2013, the revenues related to our transitional manufacturing and supply agreements with Zoetis.
Certain amounts and percentages may reflect rounding adjustments.
 
PFIZER INC.
INTERNATIONAL REVENUES BY GEOGRAPHIC REGION
FOURTH QUARTER 2013 and 2012
(UNAUDITED)
(millions of dollars)
 
    DEVELOPED EUROPE(a)   DEVELOPED REST OF WORLD(b)   EMERGING MARKETS(c)
    2013   2012   % Change   2013   2012   % Change   2013   2012   % Change
        Total   Oper.       Total   Oper.       Total   Oper.
TOTAL INTERNATIONAL REVENUES   $ 3,237     $ 3,128     3%     $ 2,207     $ 2,558     (14%)   1%   $ 3,030     $ 2,904     4%   9%

REVENUES FROM

BIOPHARMACEUTICAL PRODUCTS -

INTERNATIONAL:

  $ 3,073     $ 2,984     3%   (1%)   $ 2,090     $ 2,448     (15%)     $ 2,749     $ 2,652     4%   9%
Lyrica   413     364     13%   9%   183     217     (16%)   2%   139     108     29%   37%
Prevnar family   251     208     21%   16%   151     153     (1%)   11%   249     264     (6%)   (2%)
Enbrel (Outside Canada)   659     627     5%   2%   137     104     32%   56%   209     226     (8%)   3%
Celebrex   41     40     3%   (2%)   130     138     (6%)   8%   103     93     11%   14%
Lipitor   92     107     (14%)   (18%)   129     201     (36%)   (25%)   293     215     36%   39%
Viagra   37     103     (64%)   (65%)   39     49     (20%)   (14%)   87     88     (1%)   1%
Zyvox   87     78     12%   7%   35     39     (10%)   8%   47     57     (18%)   (12%)
Norvasc   28     28       (5%)   121     171     (29%)   (15%)   155     139     12%   13%
Sutent   109     114     (4%)   (8%)   37     48     (23%)   (9%)   76     79     (4%)  
Premarin family   2     3     (33%)   (2%)   11     9     22%   13%   11     11       7%
BeneFIX   71     66     8%   4%   38     39     (3%)   7%   7     7       18%
Vfend   83     78     6%   2%   44     44       16%   79     64     23%   28%
Genotropin   71     71       (3%)   50     58     (14%)   6%   27     30     (10%)   (5%)
Pristiq   1         *   *   31     28     11%   21%   12     13     (8%)   (7%)
Chantix/Champix   28     35     (20%)   (24%)   34     47     (28%)   (16%)   10     13     (23%)   (12%)
Refacto AF/Xyntha   108     99     9%   6%   18     20     (10%)   (1%)   9     18     (50%)   (50%)
Xalatan/Xalacom   44     55     (20%)   (23%)   60     79     (24%)   (7%)   44     47     (6%)   (6%)
Detrol/Detrol LA   12     22     (45%)   (50%)   23     28     (18%)   (7%)   12     11     9%   10%
Zoloft   16     15     7%   5%   58     71     (18%)   1%   40     38     5%   9%
Medrol   23     24     (4%)   (5%)   10     12     (17%)   (5%)   50     64     (22%)   (18%)
Effexor   26     26       (2%)   17     22     (23%)   (16%)   26     28     (7%)   (3%)
Zosyn/Tazocin   10     11     (9%)   (14%)   2     2       18%   45     51     (12%)   (10%)
Zithromax/Zmax   15     14     7%   8%   35     52     (33%)   (16%)   52     48     8%   11%
Fragmin   53     47     13%   9%   24     26     (8%)   8%   17     19     (11%)   (14%)
Relpax   19     20     (5%)   (9%)   14     17     (18%)   (1%)   6     6       (2%)
Tygacil   19     17     12%   7%   2     2       (14%)   38     30     27%   35%
Rapamune   14     15     (7%)   (8%)   4     5     (20%)   4%   22     22       6%
Inlyta   31     3     *   *   25     13     92%   123%   3     1     *   *
Sulperazon               8     9     (11%)   (5%)   79     62     27%   28%
Revatio   45     33     36%   33%   15     16     (6%)   16%   7     9     (22%)   (20%)
Cardura   22     25     (12%)   (17%)   24     32     (25%)   (6%)   28     26     8%   12%
Xalkori   24     8     *   *   12     8     50%   75%   12     5     140%   155%
Xanax XR   28     24     17%   12%   9     11     (18%)   (6%)   22     24     (8%)   (5%)
Diflucan   15     13     15%   5%   9     11     (18%)     53     50     6%   8%
Toviaz   24     22     9%   6%   4     1     *   *   3     3       18%
Aricept(d)   9     17     (47%)   (49%)   44     51     (14%)   (9%)   9     9       5%
Inspra   46     35     31%   28%   16     17     (6%)   14%   5     5       9%
Caduet   5     4     25%   3%   36     41     (12%)   5%   11     15     (27%)   (22%)
Somavert   36     34     6%   2%   4     5     (20%)   5%   4     3     33%   48%
Neurontin   16     13     23%   15%   9     14     (36%)   (17%)   21     25     (16%)   (10%)
Unasyn   11     12     (8%)   (18%)   17     21     (19%)   4%   26     30     (13%)   3%
BMP2                                    
Geodon   8     13     (38%)   (46%)   5     5       13%   14     13     8%   2%
Depo-Provera   7     8     (13%)     4     3     33%     30     23     30%   36%
Aromasin   15     16     (6%)   (12%)   8     13     (38%)   (20%)   24     16     50%   55%
Xeljanz                           1         *   *
Alliance revenues(e)   29     38     (24%)   (28%)   37     151     (75%)   (71%)   9     14     (36%)   (35%)
All other biopharmaceutical products(f)   370     379     (2%)   (6%)   367     345     6%   25%   523     530     (1%)   6%
All other established products(f)   289     281     3%   (1%)   284     265     7%   25%   456     487     (6%)   (2%)

REVENUES FROM OTHER

PRODUCTS - INTERNATIONAL

  $ 164     $ 144     14%   11%   $ 117     $ 110     6%   12%   $ 281     $ 252     12%   15%
                                                                         
*   Indicates calculation not meaningful.
(a)   Developed Europe region includes the following markets: Western Europe, Finland and the Scandinavian countries.
(b)   Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand and South Korea.
(c)   Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, the Middle East, Eastern Europe, Africa, Turkey and Central Europe.
(d)   Represents direct sales under license agreement with Eisai Co., Ltd.
(e)   Includes Enbrel (in Canada through October 31, 2013), Spiriva, Aricept and Eliquis.
(f)   All other established products is a subset of All other biopharmaceutical products.
Certain amounts and percentages may reflect rounding adjustments.
 
PFIZER INC.
REVENUES
TWELVE MONTHS 2013 and 2012
(UNAUDITED)
(millions of dollars)
 
    WORLDWIDE   UNITED STATES   TOTAL INTERNATIONAL(a)
    2013   2012   % Change   2013   2012   % Change   2013   2012   % Change
        Total   Oper.       Total       Total   Oper.
TOTAL REVENUES   $ 51,584     $ 54,657     (6%)   (4%)   $ 20,274     $ 21,313     (5%)   $ 31,310     $ 33,344     (6%)   (3%)

REVENUES FROM

BIOPHARMACEUTICAL PRODUCTS:

  $ 47,878     $ 51,214     (7%)   (4%)   $ 18,570     $ 19,708     (6%)   $ 29,308     $ 31,506     (7%)   (3%)
Lyrica   4,595     4,158     11%   13%   1,963     1,672     17%   2,632     2,486     6%   10%
Prevnar family   3,974     4,117     (3%)   (2%)   1,804     1,887     (4%)   2,170     2,230     (3%)  
Enbrel (Outside the U.S. and Canada)   3,774     3,737     1%   4%          

  3,774     3,737     1%   4%
Celebrex   2,918     2,719     7%   9%   1,933     1,745     11%   985     974     1%   7%
Lipitor   2,315     3,948     (41%)   (40%)   432     932     (54%)   1,883     3,016     (38%)   (35%)
Viagra   1,881     2,051     (8%)   (8%)   1,132     1,135       749     916     (18%)   (17%)
Zyvox   1,353     1,345     1%   3%   688     665     3%   665     680     (2%)   2%
Norvasc   1,229     1,349     (9%)   (3%)   39     48     (19%)   1,190     1,301     (9%)   (2%)
Sutent   1,204     1,236     (3%)   (1%)   351     337     4%   853     899     (5%)   (3%)
Premarin family   1,092     1,073     2%   2%   1,001     977     2%   91     96     (5%)   (1%)
BeneFIX   832     775     7%   8%   395     358     10%   437     417     5%   7%
Vfend   775     754     3%   6%   61     89     (31%)   714     665     7%   11%
Genotropin   772     832     (7%)   (3%)   199     204     (2%)   573     628     (9%)   (3%)
Pristiq   698     630     11%   12%   540     493     10%   158     137     15%   20%
Chantix/Champix   648     670     (3%)   (1%)   343     313     10%   305     357     (15%)   (10%)
Refacto AF/Xyntha   602     584     3%   2%   123     106     16%   479     478    

  (1%)
Xalatan/Xalacom   589     806     (27%)   (22%)   30     38     (21%)   559     768     (27%)   (22%)
Detrol/Detrol LA   562     761     (26%)   (25%)   375     486     (23%)   187     275     (32%)   (29%)
Zoloft   469     541     (13%)   (5%)   44     68     (35%)   425     473     (10%)  
Medrol   464     523     (11%)   (9%)   148     140     6%   316     383     (17%)   (15%)
Effexor   440     425     4%   4%   173     109     59%   267     316     (16%)   (15%)
Zosyn/Tazocin   395     484     (18%)   (18%)   172     217     (21%)   223     267     (16%)   (16%)
Zithromax/Zmax   387     435     (11%)   (5%)   7     12     (42%)   380     423     (10%)   (4%)
Fragmin   359     381     (6%)   (6%)   23     42     (45%)   336     339     (1%)   (1%)
Relpax   359     368     (2%)   (1%)   218     219       141     149     (5%)   (2%)
Tygacil   358     335     7%   8%   150     152     (1%)   208     183     14%   16%
Rapamune   350     346     1%   2%   201     185     9%   149     161     (7%)   (4%)
Inlyta   319     100     *   *   155     82     89%   164     18     *   *
Sulperazon   309     262     18%   19%             309     262     18%   19%
Revatio   307     534     (43%)   (41%)   67     312     (79%)   240     222     8%   11%
Cardura   296     338     (12%)   (7%)   4     5     (20%)   292     333     (12%)   (7%)
Xalkori   282     123     129%   134%   139     80     74%   143     43     *   *
Xanax   276     274     1%   2%   49     50     (2%)   227     224     1%   3%
Diflucan   242     259     (7%)   (4%)   3     4     (25%)   239     255     (6%)   (4%)
Toviaz   236     207     14%   14%   120     113     6%   116     94     23%   24%
Aricept(b)   235     326     (28%)   (27%)             235     326     (28%)   (27%)
Inspra   233     214     9%   13%   6     5     20%   227     209     9%   13%
Caduet   223     258     (14%)   (7%)   23     33     (30%)   200     225     (11%)   (4%)
Somavert   217     197     10%   10%   52     46     13%   165     151     9%   9%
Neurontin   216     235     (8%)   (5%)   45     48     (6%)   171     187     (9%)   (5%)
Unasyn   212     228     (7%)   5%   1     2     (50%)   211     226     (7%)   5%
BMP2   209     263     (21%)   (21%)   209     263     (21%)            
Geodon   194     353     (45%)   (45%)   84     214     (61%)   110     139     (21%)   (20%)
Depo-Provera   191     148     29%   31%   57     33     73%   134     115     17%   19%
Aromasin   185     210     (12%)   (9%)   12     14     (14%)   173     196     (12%)   (10%)
Xeljanz   114     6     *   *   112     6     *   2         *   *
Alliance revenues(c)   2,628     3,492     (25%)   (24%)   2,267     2,620     (13%)   361     872     (59%)   (57%)
All other biopharmaceutical products(d)   7,360     7,804     (6%)   (2%)   2,620     3,149     (17%)   4,740     4,655     2%   8%
All other established products(d)   5,966     6,074     (2%)   1%   2,038     2,165     (6%)   3,928     3,909     1%   5%
REVENUES FROM OTHER PRODUCTS:                                            
CONSUMER HEALTHCARE   $ 3,342     $ 3,212     4%   5%   $ 1,580     $ 1,526     4%   $ 1,762     $ 1,686     5%   6%
OTHER(e)   $ 364     $ 231     58%   57%   $ 124     $ 79     57%   $ 240     $ 152     58%   57%
                                                                     
*   Indicates calculation not meaningful.
(a)   Total International represents Developed Europe region + Developed Rest of World region + Emerging Markets region. Details for these regions are located on the following page.
(b)   Represents direct sales under license agreement with Eisai Co., Ltd.
(c)   Includes Enbrel (in the U.S. and Canada through October 31, 2013), Spiriva, Rebif, Aricept and Eliquis.
(d)   All other established products is a subset of All other biopharmaceutical products.
(e)   Other represents revenues generated from Pfizer CentreSource, our contract manufacturing and bulk pharmaceutical chemical sales organization, and includes, in 2013, the revenues related to our transitional manufacturing and supply agreements with Zoetis.
Certain amounts and percentages may reflect rounding adjustments.
 
PFIZER INC.
INTERNATIONAL REVENUES BY GEOGRAPHIC REGION
TWELVE MONTHS 2013 and 2012
(UNAUDITED)
(millions of dollars)
 
    DEVELOPED EUROPE(a)   DEVELOPED REST OF WORLD(b)   EMERGING MARKETS(c)
    2013   2012   % Change   2013   2012   % Change   2013   2012   % Change
        Total   Oper.       Total   Oper.       Total   Oper.
TOTAL INTERNATIONAL REVENUES   $ 11,739     $ 12,545     (6%)   (8%)   $ 8,346     $ 9,956     (16%)   (5%)   $ 11,225     $ 10,843     4%   7%

REVENUES FROM

BIOPHARMACEUTICAL PRODUCTS -

INTERNATIONAL:

  $ 11,156     $ 12,010     (7%)   (9%)   $ 7,937     $ 9,536     (17%)   (6%)   $ 10,215     $ 9,960     3%   6%
Lyrica   1,458     1,319     11%   8%   680     743     (8%)   6%   494     424     17%   20%
Prevnar family   758     704     8%   5%   536     612     (12%)   (2%)   876     914     (4%)   (2%)
Enbrel (Outside Canada)   2,413     2,318     4%   2%   516     555     (7%)   7%   845     864     (2%)   6%
Celebrex   151     161     (6%)   (9%)   464     479     (3%)   8%   370     334     11%   12%
Lipitor   319     1,149     (72%)   (73%)   510     978     (48%)   (41%)   1,054     889     19%   20%
Viagra   265     370     (28%)   (29%)   152     201     (24%)   (19%)   332     345     (4%)   (3%)
Zyvox   325     302     8%   5%   136     154     (12%)   3%   204     224     (9%)   (3%)
Norvasc   108     119     (9%)   (12%)   485     659     (26%)   (14%)   597     523     14%   14%
Sutent   402     439     (8%)