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04 Pfizer - Analysis 1
110620

Reformulated Income Statement

Net sales Cost of sales Gross profit Alliance revenue Gross profit 14,133 2,528 11,605 2,071 13,676

Selling, informational and administrative expenses 6,351 Research and development expenses 2,776 Minority interests 5 Other deductions--net 101 - 236 + 301 166 Operating Income = 4,378 Interest Income 301 Earnings before Interest and Taxes 4,679 Interest Expense 236 Income before taxes 4,443 Taxes on Income 28.0% 1,244 Income from continuing operations 3,199

| | | | | | | | | OI EBIT | | | NI | | | | | | | | | OA | | | FA | |

Reformulated Balance Sheet Assets

Cash and cash equivalents 739 1,552 Accounts receivable, less allowance for doubtful accounts: 2,914 3,864 Total inventories 1,654 1,828 Prepaid expenses and taxes 958 1,110 Property, plant and equipment, less accumulated depreciation 5,343 4,415 Goodwill, less accumulated amortization: 763 813 Other assets, deferred taxes and deferred charges 1,556 1,387 14,877 14,019 Operating Assets Short-term investments Short-term loans Long-term loans and investments 3,703 273 1,721 5,697 20,574 2,377 150 1,756 4,283 18,302

Financial Assets
Total Assets $

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04 Pfizer - Analysis 2
971 285 1,162 614 1,431 359 197 1,217 6,236 2,729 527 3,256 210 5,506 11,439 (234) (4,200) (3,911) 8,810 18,302 | | | | | | | | | OL | | | | | | | | | | | | | |

Liabilities
Accounts payable 951 Dividends payable 349 Income taxes payable 869 Accrued compensation and related items 669 Other current liabilities 1,346 Postretirement benefit obligation other than pension plans 346 Deferred taxes on income 301 Other noncurrent liabilities 1,330 6,161 Operating liabilities Short-term borrowings, including current portion of long-term debt 5,001 Long-term debt 525 5,526 Debt Common stock, $.05 par value; 9,000 shares authorized; Additional paid-in capital Retained earnings Accumulated other comprehensive expense Employee benefit trusts Treasury stock, at cost 213 5,416 13,396 (399) (2,888) (6,851) 8,887 20,574

Equity Total liabilities and shareholders' equity Summary Balance Sheet 1999
Operating Assets Financial Assets Total Assets 14,877 5,697 20,574 6,161 5,526 8,887 14,413

1998
14,019 4,283 18,302 6,236 3,256 8,810 12,066

Average
14,448 4,990 19,438 6,199 4,391 8,849 13,240

Operating liabilities b Debt Equity a-b Total capital

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04 Pfizer - Analysis 3
| 2.1966 FLEV 0.4962 OLLev 0.4682 19.8263 ATO 0.8336 | | | 82.11% | 27.02% | 19.74% | 28.88% 17.33% 25.44% 36.15% |
e

Long-Term Debt and Solvency Analysis

Leverage Assets Equity = 19438 8849 Financial Leverage Debt Equity = 4391 8849 Op Liability Leverage Operating liabilities Total Capital = 6199 13240 Times Interest Earned EBIT Interest expense = 4679 236 Assets Turnover Sales Assets = 16204 19438

| | |

Profitability Analysis
Gross Margin % Operating Margin 11,605 Operating income 4,378 Net income Profit Margin 3,199 EBIT Margin before Interest & Taxes 4,679 ROA EBIT (1-tax) 4679 0.72 ROTC EBIT (1-tax) 4679 0.72 ROE Net Income 3,199 14,133 Sales 16,204 Sales 16,204 Sales 16,204 MBIT Assets 19,438 Total Capital 13,240 Equity 8,849

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04 Pfizer - Analysis 4
110620

Exhibit 4-12. Disaggregations of Pretax ROA and ROE

Interest on Assets
A. Return on Assets

236

14,448

1.63%

| | | |

MBIT 28.88%

x x

ATO 0.8336

= =

#REF! 24.07%

Interest on = Assets 1.63% = ROA [Post = interest x pretax]

Continued below

B. Return on Equity

| |

Leverage 2.197

= =

#REF! 49.29%

Continued from above

22.44%

Exhibit 4-14. Disaggregations of ROE (after tax) A. Three Component Disaggregation

Total Assets Turnover 0.834 Net Income / Total Assets 16.46%

| |

Profit Margin 19.74%

x x

= =

x x

Leverage = 2.197 =

ROE 36.15% | | |

B. Five Component Disaggregation

Net Income x EBT/ EBIT x / EBT 0.720 x x 0.9496 MBIT 28.88% = =

^ Profit Margin 19.74%

Continued above

Disaggregations of ROE and its relationship to ROTC and ROA (page 142)
Interest Rate After Tax Interest Rate ROA 17.33% ROTC 25.45% +[ +[ +[ +[ ROA 17.33% ROTC 25.45% 236 4,391 5.37% x 72.00% ]x ]x - Int Rate AT ] x 3.87% ]x OLLev 0.468 FLEV 0.496 = = =
=

5.37% 3.87% ROTC 25.45% ROE 36.15%

| | | |

Int Rate AT

=
=

Disaggregations of ROA into basic components (Exh 4-13)

MBIT 28.88% x x ATO 0.8336 x = 24.07%
x

(1-tax) 72.00%

=
=

ROA 17.33%

| | | | |

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04 Pfizer - Analysis 5
(599) 8,250 (65) |

Adjsut for financial Assets

Net Debt = Debt - Financial Assets = 4391 - 4990 = Total capital, Net = Equity + Net Debt = 8849 -599 = Net Interest Expense = Interest Expense - Interest Income = 236 - 301 = Information on minority interests is not given in the balance sheet in 10K of Pfizer. Financial Leverage, Net Net Debt Equity = -599 8849 Op Liability Leverage, Net Operating liabilities Total capital, Net = 6199 8250 Assets Turnover, Net Sales Opearting Assets = 16204 14448 Profit Margin before Interest & Taxes NOPAT NOPAT ROOA ROTC Net OI 4,378 OI 4,378 Net Income + Net Inter. Exp. 3,199 + (65) NOPAT 3,152 NOPAT 3,152 x x x x

FLev,Net (0.0677) OLLev,Net 0.7514 ATO, Net 1.1215 PM 27.02% | | | | | 21.82% 38.21% | |

Sales 16,204 (1-tax) 72.00% = 3,152 (1-tax) 72.00% = 3,152 Average Operating Assets 14,448 Total capital, Net 8,250 = = 10.85% 7.81%

Net Interest rate After Tax Net Interest Rate ROOA 21.82% +[ +[ ROOA 21.82% -

(65) (599) 10.85% x 72.00%

] x OLLev,Net = ROTC Net = 0.751 ]x 38.21% Int Rate 7.81% ] x FLev,Net = ] x (0.068) = x 30.30%
x

| | | | | |

ROTC Net + [ ROTC Net 38.21% + [ 38.21% PM 27.02% x x

ROE 36.15% ROOA 21.82%

ATO, Net 1.1215 =

(1-tax) 72.00%

=
=