Pfizer 2009 Annual Report Download - page 10

Financial Review
Pfizer Inc. and Subsidiary Companies
Our 2010 financial guidance is subject to a number of factors and uncertainties—as described in the “Forward-Looking Information
and Factors That May Affect Future Results” and “Our Operating Environment, Strategy and Responses to Key Opportunities and
Challenges” sections of this Financial Review and in Part I, Item 1A, “Risk Factors”, of our 2009 Annual Report on Form 10-K.
Our Financial Targets for 2012
At exchange rates in effect in late January 2010, we are targeting 2012 revenues of $66.0 billion to $68.5 billion, Reported diluted
EPS between $1.58 and $1.73 and Adjusted diluted EPS between $2.25 and $2.35. For an understanding of Adjusted income, see
the “Adjusted Income” section of this Financial Review.
A reconciliation of 2012 Adjusted income and Adjusted diluted EPS targets to 2012 Reported Net income attributable to Pfizer Inc.
and Reported diluted EPS attributable to Pfizer Inc. common shareholders targets follows:
FULL-YEAR 2012 TARGETS
(BILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) NET INCOME(a) DILUTED EPS(a)
Adjusted income/diluted EPS(b) targets ~$18.3-$19.1 ~$2.25-$2.35
Purchase accounting impacts of transactions completed as of 12/31/09 (3.8) (0.47)
Acquisition-related costs (1.2-1.6) (0.15-0.20)
Reported Net income attributable to Pfizer Inc./diluted EPS targets ~$12.9-$14.1 ~$1.58-$1.73
(a) Amounts exclude the potential effects of the resolution of litigation-related matters not substantially resolved as of December 31, 2009. Given the
longer-term nature of these targets, they are subject to greater variability as a result of potential material impacts related to foreign exchange
fluctuations; macroeconomic activity, including inflation; and industry-specific challenges, including changes to government healthcare policy,
among others.
(b) For an understanding of Adjusted income, see the “Adjusted Income” section of this Financial Review.
We expect to generate gross cost reductions of approximately $7 billion, resulting in net cost reductions of approximately $4 billion
to $5 billion, by the end of 2012, at 2008 average foreign exchange rates, in comparison with the 2008 pro-forma combined adjusted
total costs of Pfizer and legacy Wyeth operations. For additional information, see the “Cost-Reduction Initiatives” section of this
Financial Review. For an understanding of Adjusted income, see the “Adjusted Income” section of this Financial Review.
Our 2012 financial targets are subject to a number of factors and uncertainties—as described in the “Forward-Looking Information
and Factors That May Affect Future Results” and “Our Operating Environment, Strategy and Responses to Key Opportunities and
Challenges” sections of this Financial Review and in Part I, Item 1A, “Risk Factors”, of our 2009 Annual Report on Form 10-K.
Accounting Policies
We consider the following accounting policies important in understanding our operating results and financial condition. For additional
accounting policies, see Notes to Consolidated Financial Statements—Note 1. Significant Accounting Policies.
Estimates and Assumptions
In preparing the consolidated financial statements, we use certain estimates and assumptions that affect reported amounts and
disclosures, including amounts recorded in connection with acquisitions, such as our acquisition of Wyeth on October 15, 2009.
These estimates and underlying assumptions can impact all elements of our financial statements. For example, in the consolidated
statements of income, estimates are used when accounting for deductions from revenues (such as rebates, chargebacks, sales
returns and sales allowances), determining cost of sales, allocating cost in the form of depreciation and amortization, and estimating
restructuring charges and the impact of contingencies. On the consolidated balance sheets, estimates are used in determining the
valuation and recoverability of assets, such as accounts receivable, investments, inventories, fixed assets and intangible assets
(including goodwill), and estimates are used in determining the reported amounts of liabilities, such as taxes payable, benefit
obligations, the impact of contingencies, rebates, chargebacks, sales returns and sales allowances, and restructuring reserves, all of
which also will impact the consolidated statements of income.
We regularly evaluate our estimates and assumptions, using historical experience and other factors, including the economic
environment. Our estimates often are based on complex judgments, probabilities and assumptions that we believe to be reasonable
but that are inherently uncertain and unpredictable.
As future events and their effects cannot be determined with precision, our estimates and assumptions may prove to be incomplete
or inaccurate, or unanticipated events and circumstances may occur that might cause us to change those estimates and
assumptions. Market conditions, such as illiquid credit markets, volatile equity markets, dramatic fluctuations in foreign currency
rates and economic downturns, can increase the uncertainty already inherent in our estimates and assumptions. We adjust our
estimates and assumptions when facts and circumstances indicate the need for change. Those changes will generally be reflected
in our financial statements on a prospective basis unless they are required to be treated retrospectively under the relevant
accounting standard. It is possible that other professionals, applying reasonable judgment to the same facts and circumstances,
could develop and support a range of alternative estimated amounts. We are also subject to other risks and uncertainties that may
cause actual results to differ from estimated amounts, such as changes in the healthcare environment, competition, litigation,
legislation and regulations. These and other risks and uncertainties are discussed throughout this Financial Review, particularly in
the sections “Our Operating Environment, Strategy and Response to Key Opportunities and Challenges” and “Forward-Looking
Information and Factors That May Affect Future Results”, and in Part I, Item 1A, “Risk Factors” of our 2009 Annual Report on Form
10-K.
8 2009 Financial Report