Pfizer 2014 Annual Report Download - page 21

PFIZER ANNUAL REVIEW 2014 www.pzer.com/annual 21
ANNUAL REVIEW 2014
REPORTED DILUTED EPS5ADJUSTED DILUTED EPS2
2014 GUIDANCE3
$1.40 – $1.49
2015 GUIDANCE4
$1.37 – $1.52
2014 ACTUAL
$1.42
2014 GUIDANCE3
$2.23 – $2.27
2015 GUIDANCE4
$2.00 – $2.10
2014 ACTUAL
$2.26
CEO Letter > Performance
(1) Please refer to Pzer’s 2014 Annual Report on Form 10-K, including the sections captioned “Risk Factors” and “Forward-Looking Information That May Affect Future Results,” for a
description of the substantial risks and uncertainties related to the forward-looking statements, including our 2015 Financial Guidance, included in this Annual Review.
(2) “Adjusted Income” and its components and “Adjusted Diluted Earnings Per Share (EPS)” are dened as reported U.S. generally accepted accounting principles (U.S. GAAP) net
income(5) and its components and reported diluted EPS(5) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain signicant items.
Adjusted Revenues, Adjusted Cost of Sales, Adjusted Selling, Informational and Administrative (SI&A), 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 the
“Adjusted Income” section in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended
December 31, 2014, management uses adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. Reconciliations of
certain U.S. GAAP reported to Non-GAAP adjusted information for 2014, as well as reconciliations for full-year 2015 guidance for adjusted income and adjusted diluted EPS to full-year
2015 guidance for reported net income(5) and reported diluted EPS(5), are provided in the Management’s Discussion and Analysis of Financial Condition and Results of Operations
section of our Annual Report on Form 10-K for the year ended December 31, 2014. 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. Despite the importance of these measures to management in goal setting and
performance measurement, adjusted income and its components and adjusted diluted EPS are Non-GAAP nancial 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 denitions, adjusted income and its components and 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. Adjusted income and its components
and adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.
(3) At exchange rates that reected a blend of the actual exchange rates in effect through September 28, 2014 and the mid-October 2014 exchange rates for the remainder of the year. Our
2014 guidance did not assume the completion of any business development transactions not completed as of September 28, 2014, including any one-time upfront payments associated
with such transactions, and excluded the potential effects of the resolution of litigation-related matters not substantially resolved as of September 28, 2014. Revenues and cost of sales
from the transitional manufacturing and supply agreements with Zoetis were excluded from the applicable Adjusted components of the nancial guidance. Reported and Adjusted Diluted
EPS(2) guidance assumed diluted weighted-average shares outstanding of ~6.4 billion shares. Guidance for the effective tax rate on adjusted income(2) did not assume renewal of the
U.S. research and development tax credit. Reported Diluted EPS(5) guidance was updated from $1.50 - $1.59 to $1.40 - $1.49 to reect the upfront payment to Merck KGaA for the
collaboration announced on November 17, 2014.
(4) The 2015 nancial guidance reects the following:
• Our guidance for reported revenues(5) reects the anticipated negative impact of $3.5 billion due to recent and expected product losses of exclusivity, as well as $2.8 billion as a
result of recent adverse changes in essentially all foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2014, partially offset by anticipated
revenue growth from certain other products.
• Guidance for adjusted R&D expenses(2) reects the $295 million upfront payment made to OPKO Health, Inc. (OPKO) in February 2015.
• Our reported(5) and adjusted diluted EPS(2) guidance reects: (i) a $0.17 unfavorable impact as a result of adverse changes in foreign exchange rates from 2014; (ii) a $0.03 reduction
for the upfront payment associated with the transaction with OPKO; (iii) planned share repurchases totaling approximately $6 billion in 2015, including $1 billion of our shares
repurchased through February 27, 2015 and our $5 billion accelerated share repurchase program announced on February 9, 2015; and (iv) assumed diluted weighted-average
shares outstanding of approximately 6.2 billion shares, which is inclusive of these share repurchase transactions.
• Does not assume the completion of any business-development transactions not completed as of December 31, 2014, including any one-time upfront payments associated with such
transactions, except for the $295 million upfront payment made to OPKO in February 2015. Our 2015 nancial guidance does not reect any impact from our proposed acquisition of
Hospira, Inc. We expect that transaction to close during the second half of 2015.
• Excludes the potential effects of the resolution of litigation-related matters.
• Exchange rates assumed are as of mid-January 2015. Excludes the impact of a potential devaluation of the Venezuelan bolivar or any other currency.
• Guidance for the effective tax rate on adjusted income(2) does not assume renewal of the U.S. research and development (R&D) tax credit. The renewal of the U.S. R&D tax credit is
not anticipated to have a material impact on the effective tax rate on adjusted income.
(5) “Reported Net Income” in accordance with U.S. GAAP is dened as net income attributable to Pzer Inc. in accordance with U.S. GAAP and “Reported Diluted EPS” is dened as
reported diluted EPS attributable to Pzer Inc. common shareholders in accordance with U.S. GAAP.
PERFORMANCE