FORM 10-Q

For the Quarter Ended
June 29, 2003

Table of Contents

 

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

 

		Three Months Ended					Six Months Ended
(millions of dollars, except per common share data)		June 29,  2003		June 30,   2002			June 29,  2003		June 30,  2002
Revenues	$	9,993	$	7,296		$	18,518	$	15,044
Costs and expenses:
Cost of sales		2,027		902			3,093		1,842
Selling, informational and administrative expenses		3,773		2,662			6,518		5,207
Research and development expenses		1,717		1,239			2,935		2,420
Merger-related in-process research and development charge		5,130		--			5,130		--
Merger-related costs		285		164			377		273
Other (income)/deductions-net		466		(44)			647		(131)
Income/(loss) from continuing operations before provision for taxes on income, minority interests and cumulative effect of change in accounting principles		(3,405)		2,373			(182)		5,433
Provision for taxes on income		270		480			1,035		1,228
Minority interests		(1)		--			(2)		--
Income/(loss) from continuing operations before cumulative effect of change in accounting principles		(3,674)		1,893			(1,215)		4,205
Discontinued operations:
Income from operations of discontinued businesses/product lines-net of tax		--		64			33		125
Gains on sales of discontinued businesses/product lines-net of tax		83		--			2,285		--
Discontinued operations-net of tax		83		64			2,318		125
Income/(loss) before cumulative effect of change in accounting principles		(3,591)		1,957			1,103		4,330
Cumulative effect of change in accounting principles-net of tax		--		--			(30)		(410)
Net income/(loss)	$	(3,591)	$	1,957		$	1,073	$	3,920
Earnings/(loss) per common share - Basic:
Income/(loss) from continuing operations before cumulative effect of change in accounting principles	$	(.49)	$	.30		$	(.18)	$	.68
Discontinued operations:
Income from operations of discontinued businesses/product lines-net of tax		--		.01			--		.02
Gains on sales of discontinued businesses/product lines-net of tax		.01		--			.34		--
Discontinued operations-net of tax		.01		.01			.34		.02
Income/(loss) before cumulative effect of change in accounting principles		(.48)		.31			.16		.70
Cumulative effect of change in accounting principles-net of tax		--		--			--		(.07)
Net income/(loss)	$	(.48)	$	.31		$	.16	$	.63
Earnings/(loss) per common share - Diluted:
Income/(loss) from continuing operations before cumulative effect of change in accounting principles	$	(.49)	$	.30		$	(.18)	$	.67
Discontinued operations:
Income from operations of discontinued businesses/product lines-net of tax		--		.01			--		.02
Gains on sales of discontinued businesses/product lines-net of tax		.01		--			.34		--
Discontinued operations-net of tax		.01		.01			.34		.02
Income/(loss) before cumulative effect of change in accounting principles		(.48)		.31			.16		.69
Cumulative effect of change in accounting principles-net of tax		--		--			--		(.07)
Net income/(loss)	$	(.48)	$	.31		$	.16	$	.62
Weighted average shares used to calculate earnings/(loss) per common share:
Basic		7,453.4		6,185.1			6,777.4		6,195.3
Diluted		7,453.4		6,271.3			6,777.4		6,291.2
Cash dividends paid per common share	$	.15	$	.13		$	.30	$	.26

See accompanying Notes to Condensed Consolidated Financial Statements.

PFIZER INC. AND SUBISIDARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

 

(in millions)		June 29,  2003*		Dec. 31,  2002**
ASSETS
Current Assets
Cash and cash equivalents	$	2,190	$	1,878
Short-term investments		13,767		10,673
Accounts receivable, less allowance for doubtful accounts: $198 and $122		8,808		5,785
Short-term loans		234		399
Inventories
Finished goods		1,741		1,133
Work in process		2,992		1,142
Raw materials and supplies		2,000		403
Total inventories		6,733		2,678
Prepaid expenses and taxes		3,012		1,797
Assets of discontinued businesses held for sale		--		1,571
Total current assets		34,744		24,781
Long-term loans and investments		6,086		5,161
Property, plant and equipment, less accumulated depreciation: $6,243 and $5,431		18,279		10,712
Goodwill		22,724		1,200
Identifiable intangible assets, net		36,813		921
Other assets, deferred taxes and deferred charges		5,612		3,581
Total assets	$	124,258	$	46,356
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings, including current portion of long-term debt: $123 and $256	$	8,214	$	8,669
Accounts payable		2,121		1,620
Dividends payable		1,207		926
Income taxes payable		3,862		2,231
Accrued compensation and related items		1,420		1,084
Other current liabilities		5,333		3,448
Liabilities of discontinued businesses held for sale		--		577
Total current liabilities		22,157		18,555
Long-term debt		6,710		3,140
Postretirement benefit obligation other than pension plans		1,356		623
Deferred taxes on income		15,933		364
Other noncurrent liabilities		7,820		3,724
Total liabilities		53,976		26,406
Shareholders' Equity
Preferred stock		239		--
Common stock		434		341
Additional paid-in capital		65,885		9,368
Retained earnings		28,923		30,243
Accumulated other comprehensive expense		(616)		(1,875)
Employee benefit trust		(1,862)		(1,786)
Treasury stock, at cost		(22,721)		(16,341)
Total shareholders' equity		70,282		19,950
Total liabilities and shareholders' equity	$	124,258	$	46,356

*    Unaudited.

**  Condensed from audited financial statements.

See accompanying Notes to Condensed Financial Statements.

PFIZER INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

 

		Six Months Ended
(in millions)		June 29,   2003		June 30,  2002
Operating Activities:
Net income	$	1,073	$	3,920
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Cumulative effect of change in accounting principles		30		410
Income from operations of discontinued businesses		(33)		(125)
Depreciation and amortization		1,222		486
Merger-related in-process research and development charge		5,130		--
Charge for fair value mark-up of acquired inventory		408		--
Charges to write-down investments		8		--
Gains on sales of discontinued businesses and product lines		(2,285)		--
Gains on sales of products		(76)		(20)
Other		38		(44)
Changes in assets and liabilities (net of business acquired)		(1,059)		(636)
Net cash provided by continuing operating activities		4,456		3,991
Investing Activities
Purchases of property, plant and equipment		(1,204)		(801)
Purchases of short-term investments		(8,323)		(7,161)
Proceeds from redemptions of short-term investments		6,805		4,704
Purchases of long-term investments		(843)		(1,338)
Proceeds from redemptions of long-term investments		--		1,800
Purchases of other assets		(308)		(310)
Proceeds from sales of other assets		189		124
Proceeds from the sales of businesses and product lines		5,587		5
Cash acquired through acquisition of Pharmacia		1,789		--
Other investment activities		141		74
Net cash provided by/(used in) investing activities		3,833		(2,903)
Financing Activities:
Increase in short-term borrowings		189		2,090
Principle payments on short-term borrowings		(718)		(441)
Proceeds from issuances of long-term borrowings		621		599
Principle payments on long-term debt		(274)		(6)
Proceeds from common stock issuances		55		35
Purchases of common stock		(6,422)		(1,996)
Cash dividends paid		(2,089)		(1,594)
Stock option transactions and other		670		297
Net cash used in financing activities		(7,968)		(1,016)
Net cash provided by discontinued operations		14		87
Effect of exchange-rate changes on cash and cash equivalents		(23)		1
Net increase in cash and cash equivalents		312		160
Cash and cash equivalents at beginning of period		1,878		1,036
Cash and cash equivalents at end of period	$	2,190	$	1,196
Supplemental Cash Flow Information:
Cash paid during the period for:
Income taxes	$	1,115	$	609
Interest		184		122
Non-cash transactions:
Issuance of common stock, preferred stock and stock options related to acquisition of Pharmacia, net of transaction costs	$	55,872	$	--

See accompanying Notes to Condensed Financial Statements.

PFIZER INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDTED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1:  Basis of Presentation

We prepared the condensed consolidated financial statements following the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America (GAAP) can be condensed or omitted. Balance sheet amounts and operating results for subsidiaries operating outside the U.S. are as of and for the three-month and six-month periods ended May 25, 2003 and May 26, 2002. We made certain reclassifications to the 2002 condensed consolidated financial statements to conform to the 2003 presentation.

We are responsible for the unaudited financial statements included in this document. The financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our financial position and operating results.

On April 16, 2003, we completed our acquisition of Pharmacia Corporation (Pharmacia) in a stock for stock transaction accounted for under the purchase method of accounting - see note 2, "Pharmacia Acquisition". As of the date of acquisition, April 16, 2003, the Pharmacia assets acquired and liabilities assumed, as well as results of Pharmacia's operations as of and for the three- and six-month periods ended June 29, 2003, are included in our condensed consolidated financial statements. About 1 1/2 months of results of operations of Pharmacia's international operations and about 2 1/2 months of results of operations of Pharmacia's U.S. operations are included in our condensed consolidated financial statements for the three and six-month periods ended June 29, 2003.

Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with:

• consolidated financial statements and accompanying notes included in Pfizer's Annual Report on Form 10-K for the year ended December 31, 2002;
• consolidated financial statements and accompanying notes included in Pharmacia's Annual Report on Form 10-K for the year ended December 31, 2002; and
• unaudited pro forma condensed combined financial statements and accompanying notes as of and for the year ended December 31, 2002 included in Pfizer's Current Report on Form 8-K/A dated June 30, 2003.

In accordance with Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, we elected to account for our stock-based compensation under Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees. The exercise price of stock options granted equals the market price on the date of grant. There is no recorded expense related to grants of stock options.

The weighted-average fair value per stock option granted was $7.77 for the three months ended June 29, 2003, $12.58 for the three months ended June 30, 2002, $7.35 for the six months ended June 29, 2003 and $12.58 for the six months ended June 30, 2002. We estimated the fair values, as required under GAAP, using the Black-Scholes option-pricing model, modified for dividends and using the assumptions below. The Black-Scholes model is a trading option-pricing model that neither considers the non-traded nature of employee stock options, nor the restrictions on trading, the lack of transferability or the ability of employees to forfeit the options prior to expiry. If the model adequately permitted considerations of the unique characteristics of employee stock options, the resulting estimate of the fair value of the stock options could be different.

 

	Three Months Ended			Six Months Ended
	June 29,  2003	June 30,  2002		June 29, 2003		June 30, 2002
Expected dividend yield	3.23%	1.90%		3.15%		1.90%
Risk-free interest rate	2.86%	4.35%		2.75%		4.35%
Expected stock price volatility	33.41%	32.41%		33.05%		32.41%
Expected term until exercise (years)	5.74	5.30		5.58		5.30

 

The following table summarizes our results for the three months and six months ended June 29, 2003 and June 30, 2002 as if we had recorded compensation expense for the options grants:

 

			Three Months Ended					Six Months Ended
(millions of dollars, except per common share data)			June 29,  2003		June 30,  2002			June 29,  2003		June  30,  2002
Net income/(loss) available to common shareholders used in the calculation of basic earnings/(loss) per common share:
As reported under GAAP*		$	(3,593)	$	1,957		$	1,071	$	3,920
Compensation expense			(139)		(128)			(251)		(220)
Pro forma		$	(3,732)	$	1,829		$	820	$	3,700
Basic earnings/(loss) per common share:
As reported under GAAP*		$	(.48)	$	.31		$	.16	$	.63
Compensation expense			(.02)		(.01)			(.04)		(.03)
Pro forma		$	(.50)	$	.30		$	.12	$	.60
Net income/(loss) available to common shareholders used in the calculation of diluted earnings/(loss) per common share:
As reported under GAAP*		$	(3,592)	$	1,957		$	1,072	$	3,920
Compensation expense			(139)		(128)			(251)		(220)
Pro forma		$	(3,731)	$	1,829		$	821	$	3,700
Diluted earnings/(loss) per common share:
As reported under GAAP*		$	(.48)	$	.31		$	.16	$	.62
Compensation expense			(.02)		(.02)			(.04)		(.03)
Pro forma		$	(.50)	$	.29		$	.12	$	.59
*	Includes stock based compensation expense, net of related tax effects, of $29 million for the six months ended June 29, 2003 ($20 million for the three months ended June 29, 2003) and $15 million for the six months ended June 30, 2002 ($2 million income for the three months ended June 30, 2002).

Net income/(loss) available to common shareholders used in the calculation of basic earnings/(loss) per common share represents net income/(loss) reduced by preferred stock dividends-net of tax. Net income/(loss) available to common shareholders used in the calculation of diluted earnings/(loss) per common share represents net income/(loss) reduced by the incremental contribution to the Employee Stock Ownership Plan (ESOP), acquired as part of the Pharmacia acquisition.

Note 2:  Pharmacia Acquisition

On April 16, 2003, Pfizer acquired Pharmacia for a purchase price of approximately $56 billion, which includes Pfizer common stock valued at $54.2 billion, options on Pfizer common stock valued at $1.1 billion, Pfizer convertible perpetual preferred stock valued at $.5 billion, and vested share awards valued at $.1 billion, as well as transaction costs of $90 million.

The fair value of Pfizer common stock was derived using an average market price per share of Pfizer common stock of $29.81, which was based on Pfizer's average stock price for the period two days before through two days after the terms of the acquisition were agreed to and announced on July 15, 2002.

Under the terms of the merger agreement, each outstanding share of Pharmacia common stock was exchanged for 1.4 shares of Pfizer common stock in a tax-free transaction. Each share of Pharmacia Series C convertible perpetual preferred stock was exchanged for a newly created class of Pfizer Series A convertible perpetual preferred stock with rights substantially identical to the rights of the Pharmacia Series C convertible perpetual preferred stock.

The acquisition has been accounted for as a purchase business combination. Under the purchase method of accounting, the assets acquired and liabilities assumed from Pharmacia are recorded at the date of acquisition, at their respective fair values. Financial statements and reported results of operations of Pfizer issued after completion of the acquisition will reflect these values, but will not be restated retroactively to reflect the historical financial position or results of operations of Pharmacia.

The following is an estimate of the purchase price for Pharmacia, as of April 16, 2003:

 

Common Stock
Number of shares of Pharmacia common stock outstanding as of April 16, 2003 (in thousands)		1,298,157
Exchange ratio		1.4
		1,817,420
Multiplied by Pfizer's average stock price for the period two days before through two days after the July 15, 2002 announcement of the merger agreement	$	29.81		$	54,177 million
Preferred Stock
Number of shares of Pharmacia Series B preferred stock to be exchanged for substantially similar Pharmacia Series C preferred stock, outstanding and convertible into common stock as of April 16, 2003		6,028.931
Conversion feature		1,839.19
Number of shares of Pharmacia common stock issuable upon conversion (in thousands)		11,088.350
Exchange ratio		1.4
		15,523.690
Multiplied by Pfizer's average stock price for the period two days before through two days after the July 15, 2002 announcement of the merger agreement	$	29.81			463 million
Stock Options
Estimated fair value of 180,068 Pfizer stock options (in thousands) to be issued as of April 16, 2003 in exchange for 128,906 Pharmacia outstanding stock options (in thousands), calculated using the Black-Scholes option pricing model, modified for dividends, with model assumptions estimated as of April 16, 2003 and a Pfizer stock price of $29.81, which represented the average stock price for the period two days before through two days after the July 15, 2002 announcement of the merger agreement					1,102 million
Vested Share Award Programs
Share awards became fully vested in connection with the acquisition.  The fair value of unissued shares of fully vested awards is based on the same exchange ratio as the common stock and a Pfizer stock price of $29.81.  Awards can be settled in cash or shares, at the election of the program participant					130 million
Other transaction costs					90 million
Total estimated purchase price				$	55,962 million

 

The above purchase price has been preliminarily allocated based on an estimate of the fair value of assets acquired and liabilities assumed. The final valuation of net assets is expected to be completed as soon as possible, but no later than one year from the acquisition date in accordance with GAAP. To the extent that our estimates need to be adjusted, we will do so.

 

(in millions)
Estimated book value of net assets acquired		$	8,684
Adjusted for write-off of existing goodwill and other intangible assets			1,448
Adjusted estimated book value of net assets acquired			7,236
Remaining allocation:
Increase inventory to fair value (a)			1,608
Increase long-term investments to fair value (b)			40
Increase property, plant and equipment to fair value (c)			811
Record in-process research and development charge (d)			5,130
Record identifiable intangible assets (e)			36,506
Increase long-term debt to fair value			(370)
Increase benefit plan liabilities to fair value (f)			(1,509)
Increase other noncurrent liabilities to fair value (g)			(249)
Restructuring costs incurred through June 29, 2003 (h)			(767)
Deferred taxes (i)			(13,933)
Goodwill (j)			21,459
Estimated purchase price		$	55,962

^(a) Components of the increase to fair value for acquired inventory is as follows:

 

(in millions)
Finished goods	$		362
Work in process			977
Reversal of LIFO Reserve			269
Total	$		1,608

We will conform Pharmacia inventory valuation methods to Pfizer's methodology, and as such, will no longer use the LIFO method of inventory valuation for these inventories.

^(b) Primarily related to one publicly-traded, equity-method investment adjusted to fair value. The basis for the valuation was the quoted market price from the Stockholm Exchange.

^(c) Components of the increase to fair value for acquired property, plant and equipment is as follows:

 

(in millions)
Land	$	(29)
Buildings		814
Machinery and equipment		26
Total	$	811

^(d) As required by Financial Accounting Standards Board Interpretation No. 4, Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method (FIN 4), we recorded a charge of $5,130 million for the preliminary estimate of the portion of the purchase price allocated to acquired in-process research and development.

A project-by-project valuation using the guidance in SFAS No. 141, Business Combinations and the AICPA Practice Aid Assets Acquired in a Business Combination to be Used in Research and Development Activities: A Focus on Software, Electronic Devices and Pharmaceutical Industries (Practice Aid) is being performed by independent valuation specialists to determine the fair value of research and development projects of Pharmacia which were in-process, but not yet completed (In-Process Research and Development or IPR&D).

The fair value is determined using the income approach on a project-by-project basis. This method starts with a forecast of the expected future net cash flows.  These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the project's stage of completion and other risk factors. (These other risk factors can include the nature of the product, the scientific data associated with the technology, the current patent situation and market competition.) 

The forecast of future cash flows required the following assumptions to be made:

• Revenue that is reasonably likely to result from specific in-process research and development projects, if they are successful, including the estimated number of units to be sold, estimated selling prices, estimated market penetration and estimated market share and year-over-year growth rates over the product life cycles.
• Cost of sales related to the potential products using historical data, industry data or other sources of market data.
• Sales and marketing expense using historical data, industry data or other sources of market data.
• General and administrative expenses.
• Research and development (R&D) expenses.

In addition, we considered:

• The project's stage of completion
• The costs incurred to date
• The projected costs to complete
• The contribution, if any, of Core Technology
• The projected launch date of the potential product
• The estimated life of the potential product.

To the extent that the IPR&D project is expected to utilize "Core Technology," the value of the in-process research and development project is reduced to reflect the contribution of this Core Technology associated with IPR&D.

Core Technology (associated with developed products and IPR&D) represents the technical processes, intellectual property, and institutional understanding that were acquired from Pharmacia with respect to products and/or processes that have been completed and that will aid in the development of future products or processes. Because this Core Technology will be used in current and future R&D projects, an estimate of their economic value has been capitalized. 

However, there is normally a high degree of uncertainty about the future benefits of individual R&D projects, even those that leverage the benefits of Core Technology. At least annually, we will evaluate the Core Technology assets associated with IPR&D for impairment by reference to their expected ongoing utility to our future R&D projects. If that evaluation suggests that any of the Core Technology assets associated with IPR&D no longer have future value or that the future value has declined, the specific asset would be considered impaired and a write-off would become necessary. Given the high failure rate of R&D projects in the pharmaceutical industry, it is possible that some or all of these Core Technology assets associated with IPR&D will become impaired and consequently result in one or more significant write-offs in the future.

The valuations of all of these intangible assets are based on the information that is currently available to the company, and the expectations and assumptions that have been deemed reasonable by the company's management.  No assurance can be given, however, that the underlying assumptions used to estimate expected project revenues, development costs or profitability, or the events associated with such projects, will occur as projected.  For these reasons, among others, the actual results may vary from the projected results.

The final valuation and associated purchase price allocation is expected to be completed as soon as possible, but no later than one year from the acquisition date. To the extent that our estimates need to be adjusted, we will do so.

^(e) Adjustment to record acquired intangible assets at fair value.  Intangible assets are included in Other assets, deferred taxes and deferred charges. A preliminary list of the acquired identifiable intangible assets is as follows:

a.        Completed technology

b.       Core technology including patents, patent applications and unpatented know-how/process

c.        Trademark/Brand names

d.       Customer lists/relationships

e.        Distribution agreements

f.         Supply agreements

The acquired identifiable intangible assets are attributable to the following categories:

 

		(in millions)		Useful Lives (years)
Product rights	$	24,563		3 - 13
Brands (finite-lived assets)		141		40
Brands (indefinite-lived assets)		9,780
Core technology		1,220		3 - 20
Other (finite-lived assets)		233		2 - 20
Other (indefinite-lived assets)		569
Total	$	36,506

^(f) Adjust benefit plan liabilities to fair value.  Adjustment is included in Postretirement benefit obligation other than pension plans - $292 million and Other noncurrent liabilities - $1,217 million for pension obligations.

^(g) Includes accruals for legal and environmental matters that we intend to resolve in a manner different from the manner Pharmacia had planned. Also includes accruals for unfavorable leases and for award programs which became fully vested in connection with the acquisition, as well as, the reversal of Pharmacia deferred income that no longer represents a performance obligation to third parties.

^(h) Included in Other noncurrent liabilities are restructuring costs that impact goodwill.  These exit costs are associated with Pharmacia employees, assets or activities and were recorded as a liability in conjunction with recording the initial purchase of Pharmacia.

⁽ⁱ⁾ Reflects the estimated tax effects of the acquisition, including a provision for taxes on unremitted earnings of international Pharmacia subsidiaries that are not expected to be permanently reinvested overseas.

^(j) In accordance with the requirements of SFAS No. 142, Goodwill and Other Intangible Assets, the goodwill and the acquired indefinite-lived intangibles associated with the merger will not be amortized. Goodwill resulting from this acquisition has been preliminarily allocated to the pharmaceutical segment ($19.9 billion) and the consumer healthcare segment ($1.5 billion).

The following unaudited pro forma financial information presents the combined results of operations of Pfizer and Pharmacia as if the acquisition had occurred as of the beginning of the periods presented. The unaudited pro forma financial information is not necessarily indicative of what our consolidated results of operations actually would have been had we completed the acquisition at the dates indicated.  In addition, the unaudited pro forma financial information does not purport to project the future results of operations of the combined company.

 

		Three Months Ended					Six Months Ended
		June 29, 2003		June 30, 2002			June 29, 2003		June 30, 2002
(in millions, except per common share amounts)		(unaudited)					(unaudited)
Revenues	$	10,592	$	10,502		$	22,224	$	21,122
Income from continuing operations before cumulative effect of change in accounting principles		1,628		2,247			3,931		4,402
Net income		1,712		2,336			6,141		3,314
Per share amounts:
Income from continuing operations before cumulative effect of change in accounting principles per common share-basic		.21		.28			.50		.55
Net income per common share-basic		.22		.29			.78		.41
Income from continuing operations before cumulative effect of change in accounting principles per common share-diluted		.21		.28			.50		.54
Net income per common share-diluted		.22		.29			.77		.41

The unaudited pro forma financial information above reflects the following pro forma adjustments:

1. To eliminate balances and transactions between Pfizer and Pharmacia, which upon completion of the merger would be considered intercompany balances and transactions.  The majority of these transactions occurred under the Celebrex and Bextra marketing agreements. The entries include:
• the elimination of certain sales, alliance revenue and certain co-promotion expenses; and
• the elimination of the impact of milestone payments made by Pfizer to Pharmacia;
2. To eliminate historical amortization expense recorded by legacy Pharmacia related to definite-lived intangible assets.
3. To record:
• the adjustment to decrease interest expense by $10 million and $19 million in the second quarter and first six months of 2003 and $10 million and $19 million in the second quarter and first six months of 2002 related to the estimated fair value adjustment of long-term debt from the purchase price allocation;
• amortization expense related to the estimated fair value of identifiable intangible assets from the purchase price allocation, which are being amortized over their estimated useful lives over a range of 2 to 40 years, of approximately $731 million and $1,463 million in the second quarter and first six months of 2003 and $731 million and $1,463 million in the second quarter and first six months of 2002; and
• additional depreciation expense related to the estimated fair value step-up of the property, plant and equipment from the purchase price allocation, which is being depreciated over its estimated useful life as described below, of approximately $19 million and $38 million in the second quarter and first six months of 2003 and $19 million and $38 million in the second quarter and first six months of 2002.

The unaudited pro forma financial information above excludes the following material, non-recurring charges in the three and six month periods ended June 29, 2003:

• purchase accounting adjustments related to purchased IPR&D charges of $5,130 million and charges of $408 million reported in Cost of Sales for the workdown of purchased inventory that was written up to fair value.

Note 3:  Adoption of New Accounting Standards

Accounting for Asset Retirement Obligations

On January 1, 2003, we adopted the provisions of SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting requirements for retirement obligations associated with tangible long-lived assets. As a result of adopting SFAS No. 143, we recorded a non-cash pre-tax charge of $47 million ($30 million net of tax) in the first quarter of 2003 for the change in accounting for costs associated with the eventual retirement of certain manufacturing and research facilities. This charge is reported as a one-time cumulative effect of a change in accounting principle as of the beginning of 2003. Our asset retirement obligations primarily relate to remediation and land restoration requirements.

Accounting for Costs Associated with Exit or Disposal Activities

On January 1, 2003, we adopted the provisions of SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 applies to costs associated with an exit activity that is not related to an entity newly acquired in a business combination. SFAS No. 146 amends existing accounting rules for these costs by requiring that a liability be recorded at fair value when incurred. The liability is subject to adjustment for the passage of time, timing of payments and changes in the estimated payments. SFAS No. 146 also provides specific guidance for lease termination costs and one-time employee termination benefits when incurred as part of an exit or disposal activity. SFAS No. 146 changes the measurement and timing of costs associated with exit and disposal activities initiated after December 31, 2002.

Note 4:  Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the six months ended June 29, 2003, by segment, follow:

 

(in millions)		Pharmaceutical		Consumer Healthcare		Other		Total
Balance, December 31, 2002	$	362	$	829	$	9	$	1,200
Goodwill - Pharmacia acquisition (preliminary estimate)		19,936		1,523		--		21,459
Other changes during the period*		57		8		--		65
Balance, June 29, 2003	$	20,355	$	2,360	$	9	$	22,724

*Primarily reflects the impact of foreign exchange.

 

			Gross Carrying Amount					Accumulated Amortization
(in millions)			June 29,  2003		Dec. 31,  2002			June 29,  2003		Dec. 31,  2002
Amortized intangible assets:
Product rights acquired as part of the Pharmacia acquisition		$	24,563	$	--		$	(548)	$	--
Technology acquired as part of the Pharmacia acquisition			1,220		--			(23)		--
Trademarks			142		133			(80)		(72)
License agreements			53		42			(11)		(25)
Patents			34		33			(26)		(24)
Product rights*			543		526			(95)		(72)
Noncompete agreements			50		48			(43)		(39)
Customer contracts			233		--			(13)		--
Other			228		78			(38)		(31)
Total amortized intangible assets			27,066		860			(877)		(263)
Unamortized identifiable intangible assets:
Brands acquired as part of the Pharmacia acquisition			9,782		--			--		--
License agreements			512		--			--		--
Trademarks			239		240			--		--
Pension asset			11		60			--		--
Other			80		24			--		--
Total unamortized intangible assets			10,624		324			--		--
Total identifiable intangible assets*		$	37,690	$	1,184		$	(877)	$	(263)
*	Includes a post-approval milestone payment that we made during the first quarter of 2003 under our alliance agreement for Celebrex. Such payment was made prior to the completion of our acquisition of Pharmacia.

Total amortization expense for finite-lived intangible assets was $603.6 million for the three months ended June 29, 2003 and $621.2 million for the six months ended June 29, 2003. Amortization expense for finite-lived intangible assets is recorded in various expenses in the condensed consolidated statement of operations, including Cost of sales, Research and development expenses and Other (income)/deductions-net.

The annual amortization expense expected for the years 2003 through 2008 is as follows:

 

Note 5:  Financial Instruments

A.  Long-Term Debt

In February 2003, we issued:

• $300 million senior unsecured notes, due March 2009, which pay interest semi-annually, beginning on September 2, 2003, at a rate of 3.3%; and
• $300 million senior unsecured notes, due March 2018, which pay interest semi-annually, beginning on September 1, 2003, at a rate of 4.65%.

The notes were issued under a $5 billion debt shelf registration statement filed with the SEC in November 2002.

B.  Derivative Financial Instruments and Hedging Activities

During the first six months of 2003, we entered into the following incremental or new derivative and hedging activities:

Foreign Exchange Risk

These foreign exchange financial instruments serve to protect net income against the impact of the translation into U.S. dollars of certain foreign currency denominated transactions (in millions):

 

Financial Instrument		Hedge Type		Hedged or Offset Item		Notional Amount		Maturity Date
Forward contracts		--		Short-term foreign currency assets and liabilities		$2,903		Through 2003
Forward contracts		Cash flow		Euro available-for-sale instruments		974		Through 2003

 

Interest Rate Risk

The derivative financial instruments employed to manage interest rate risk follow (in millions):

 

Financial Instrument			Hedge Type		Hedged or Offset Item		Notional Amount		Maturity Date
Swaps			Fair value		U.S. dollar fixed rate debt (1)		$  375		2005
Swaps			Fair value		U.S. dollar fixed rate debt (1)		300		2009
Swaps			Fair value		U.S. dollar fixed rate debt (1)		300		2018
Swaps			Fair value		U.S. dollar fixed rate debt (1)		200		2008
(1)	Serves to reduce exposure to long-term U.S. dollar interest rates by effectively converting fixed rates associated with long-term debt obligations to floating rates.

There was no material ineffectiveness in any hedging relationship reported in earnings in the first six months of 2003.

Note 6:  Merger-Related Costs

We incurred the following merger-related costs in connection with our merger with Warner-Lambert Company (Warner-Lambert) which was completed on June 19, 2000 and our acquisition of Pharmacia which was completed on April 16, 2003:

 

		Three Months Ended					Six Months Ended
(in millions)		June 29,  2003		June 30,  2002			June 29,  2003		June 30,  2002
Integration costs - Warner-Lambert	$	11	$	107		$	20	$	179
Integration costs - Pharmacia		221		--			301		--
Restructuring charges - Warner-Lambert		1		57			4		94
Restructuring charges - Pharmacia		52		--			52		--
Total merger-related costs	$	285	$	164		$	377	$	273

Integration costs represent external, incremental costs directly related to our merger with Warner-Lambert and acquisition of Pharmacia, including expenditures for consulting and systems integration.

Restructuring Charges - Warner-Lambert

The components of the restructuring charges associated with the merger of the Warner-Lambert operations follow:

 

	Provisions
(in millions)	Year 2000		Year 2001		Year 2002		Six Months Ended June 29, 2003		Total		Utilization  Through  June 29,  2003		Reserve* June 29, 2003
Employee termination costs	$850		$249		$170		$4		$1,273		$(1,261)		$12
Property, plant and equipment	46		84		4		--		134		(134)		--
Other	21		30		13		--		64		(64)		--
	$917		$363		$187		$4		$1,471		$(1,459)		$12

*Included in Other current liabilities.

Through June 29, 2003, the charges for employee termination costs represent the approved reduction of our work force of our continuing businesses by 8,356 people, mainly in administrative functions for corporate, manufacturing, distribution, sales and research. We notified affected individuals and as of June 29, 2003, 7,845 employees were terminated. Employee termination costs include accrued severance benefits and costs associated with change-in-control provisions of certain Warner-Lambert employment contracts. Under the terms of Warner-Lambert employment contracts, certain terminated employees may elect to defer receipt of severance benefits. Severance benefits deferred for future payments were $218 million at June 29, 2003 and December 31, 2002. The deferred severance benefits are considered utilized charges and are included in Other noncurrent liabilities in the condensed balance sheet.

Restructuring Charges - Pharmacia

During the second quarter of 2003, in connection with the acquisition of Pharmacia, Pfizer management approved and initiated plans to restructure the operations of both legacy Pfizer and legacy Pharmacia to eliminate duplicative facilities and reduce costs.

We recorded $52 million of restructuring costs associated primarily with exiting certain activities of legacy Pfizer, including severance, costs of vacating duplicative facilities and contract termination costs. These costs have been recorded as a charge to the results of operations for the three and six month periods ended June 29, 2003 and are included in Merger-related costs. The components of the restructuring charges associated with the acquisition of Pharmacia which were expensed in 2003 follow:

 

		Provisions
(in millions)		Three and Six Months Ended June 29, 2003		Total		Utilization  Through  June 29,  2003		Reserve* June 29, 2003
Employee termination costs	$	43	$	43	$	(11)	$	32
Asset impairments		2		2		(2)		--
Other		7		7		(1)		6
	$	52	$	52	$	(14)	$	38

*Included in Other current liabilities.

Through June 29, 2003, the charges for employee termination costs represent the approved reduction of the legacy Pfizer work force by 573 people, mainly in administrative functions for corporate, manufacturing, distribution, sales and research. We notified affected individuals and as of June 29, 2003, 463 employees were terminated. Asset impairments primarily include charges to write-down property, plant and equipment. Other primarily includes costs to exit certain activities of legacy Pfizer.

Pharmacia Acquisition-Related Restructuring Costs Capitalized in 2003 as a Cost of the Acquisition

We recorded approximately $767 million of similar restructuring costs associated primarily with exiting certain activities of legacy Pharmacia.  These costs are accounted for under Emerging Issues Task Force (EITF) Issue No. 95-3, Recognition of Liabilities in Connection with Purchase Business Combinations, and were recognized as a liability assumed in the purchase business combination. Accordingly, these costs were included in the allocation of the cost to acquire Pharmacia and have been recorded as an increase to goodwill. In accordance with EITF 95-3, these restructuring costs also include costs associated with relocation. The restructuring liabilities are included in Other noncurrent liabilities. The components of the restructuring costs capitalized in 2003 as a cost of the acquisition of Pharmacia follow:

 

		Costs Incurred
(in millions)		Three and Six Months Ended June 29, 2003		Total		Utilization  Through  June 29,  2003		Reserve* June 29, 2003
Employee termination costs	$	669	$	669	$	(160)	$	509
Asset impairments		6		6		(6)		--
Relocation costs		50		50		(4)		46
Other		42		42		(22)		20
	$	767	$	767	$	(192)	$	575

*Included in Other current liabilities.

Through June 29, 2003, the employee termination costs represent the approved reduction of the legacy Pharmacia work force by 6,050 people, mainly in corporate, manufacturing, distribution, sales and research. We notified affected individuals and as of June 29, 2003, 4,640 employees were terminated.  Employee termination costs include accrued severance benefits and costs associated with change in control provisions of certain Pharmacia employment contracts. Asset impairments primarily include charges to write-down property, plant and equipment. Other includes costs to exit certain activities of legacy Pharmacia.

Changes to the estimates of completing the currently approved restructuring plans or costs related to new restructuring initiatives will be recorded in results of operations for legacy Pfizer and will be recorded in goodwill for legacy Pharmacia for one year following the acquisition date of April 16, 2003.

Note 7:  Comprehensive Income/(Loss)

 

		Three Months Ended						Six Months Ended
(in millions)		June 29,  2003			June 30,  2002			June 29,  2003			June 30,  2002
Net income/(loss)	$	(3,591)		$	1,957		$	1,073		$	3,920
Other comprehensive income/(expense):
Holding loss on investment securities arising during period-net of tax		(119)			(37)			(145)			(71)
Reclassification adjustment-net of tax		5			--			5			--
Net loss on investment securities		(114)			(37)			(140)			(71)
Currency translation adjustment and hedges		740			(8)			1,399			(136)
Total other comprehensive income/(expense)		626			(45)			1,259			(207)
Total comprehensive income/(loss)	$	(2,965)		$	1,912		$	2,332		$	3,713

The change in currency translation adjustment and hedges included in Accumulated other comprehensive expense for the first six months of 2003 was:

 

(in millions)		2003
Opening balance	$	(1,438)
Translation adjustments and hedges		1,399
Ending balance	$	(39)

 

Note 8:   Earnings Per Common Share

Basic and diluted earnings per common share (EPS) were computed using the following common share data:

 

		Three Months Ended					Six Months Ended
(in millions)		June 29, 2003		June 30, 2002			June 29, 2003		June 30, 2002
EPS Numerator - Basic:
Income/(loss) from continuing operations before cumulative effect of change in accounting principles	$	(3,674)	$	1,893		$	(1,215)	$	4,205
Less:  Preferred stock dividends - net of tax		2		--			2		--
Income/(loss) available to common shareholders from continuing operations before cumulative effect of change in accounting principles		(3,676)		1,893			(1,217)		4,205
Discontinued operations:
Income from operations of discontinued businesses/product lines-net of tax		--		64			33		125
Gains on sales of discontinued businesses/product lines-net of tax		83		--			2,285		--
Discontinued operations-net of tax		83		64			2,318		125
Income/(loss) available to common shareholders before cumulative effect of change in accounting principles		(3,593)		1,957			1,101		4,330
Cumulative effect of change in accounting principles-net of tax		--		--			(30)		(410)
Net income/(loss) available to common shareholders	$	(3,593)	$	1,957		$	1,071	$	3,920
EPS Denominator - Basic:
Weighted average number of common shares outstanding		7,453.4		6,185.1			6,777.4		6,195.3
EPS Numerator - Diluted:
Income/(loss) from continuing operations before cumulative effect of change in accounting principles	$	(3,674)	$	1,893		$	(1,215)	$	4,205
Less:  ESOP contribution - net of tax		1		--			1		--
Income/(loss) available to common shareholders from continuing operations before cumulative effect of change in accounting principles		(3,675)		1,893			(1,216)		4,205
Discontinued operations:
Income from operations of discontinued businesses/product lines-net of tax		--		64			33		125
Gains on sales of discontinued businesses/product lines-net of tax		83		--			2,285		--
Discontinued operations-net of tax		83		64			2,318		125
Income/(loss) available to common shareholders before cumulative effect of change in accounting principles		(3,592)		1,957			1,102		4,330
Cumulative effect of change in accounting principles-net of tax		--		--			(30)		(410)
Net income/(loss) available to common shareholders	$	(3,592)	$	1,957		$	1,072	$	3,920
EPS Denominator - Diluted:
Weighted average number of common shares outstanding		7,453.4		6,185.1			6,777.4		6,195.3
Common share equivalents--stock options, stock issuable under employee compensation plans and convertible preferred stock		--		86.2			--		95.9
Weighted average number of common shares outstanding and common share equivalents		7,453.4		6,271.3			6,777.4		6,291.2

Generally, diluted EPS is computed assuming the exercise of stock options, stock issued under employee compensation plans and conversion of preferred stock. Also in the diluted computation, income from continuing operations and net income are reduced by the incremental contribution to the ESOP, acquired as part of the Pharmacia acquisition. This contribution is the after-tax difference between the income that the ESOP would have received in preferred stock dividends and the dividend on the common shares assumed to have been outstanding. However, as a result of incurring a loss from continuing operations before cumulative effect of change in accounting principles during the three and six month periods ended June 29, 2003, stock options, stock issuable under employee compensation plans and convertible preferred stock  representing equivalents of approximately 687 million shares of common stock outstanding during the three and six month periods ended June 29, 2003 were excluded from the computation of diluted EPS for those periods because their inclusion would have had an antidilutive effect.

Stock options and stock issuable under employee compensation plans representing equivalents of 202 million shares of common stock during the three months and six months ended June 30, 2002 had exercise prices greater than the average market price of our common stock. These common stock equivalents were outstanding during the three months and six months ended June 30, 2002, but were excluded from the computation of diluted EPS for those periods because their inclusion would have had an antidilutive effect.

Under GAAP, quarterly EPS computations must stand on their own and therefore, the sum of EPS for each of the first two quarters of 2003 does not equal the EPS for the first six months of 2003. EPS for the second quarter of 2003 is computed using the weighted average number of common shares outstanding during the quarter while EPS for the first six months of 2003 is computed using the weighted average number of common shares outstanding during the first six months of 2003. The weighted average number of common shares outstanding is higher for the second quarter of 2003 than for the first six months of 2003 as a result of issuing approximately 1.8 billion common shares to complete the Pharmacia acquisition on April 16, 2003. The significant increase in the number of common shares outstanding from the first quarter of 2003 has resulted in our having different bases of shares outstanding and therefore, the EPS results are not additive.

Note 9:  Stock Option and Performance Unit Awards

In connection with the Pharmacia acquisition on April 16, 2003, we issued approximately 180 million Pfizer stock options in exchange for Pharmacia outstanding stock options. The following table summarizes the activity for our stock and incentive plans related to employees during the first six months of 2003:

 

	Under Option
(thousands of shares)	Shares			Weighted Average Exercise Price Per Share
Balance January 1, 2003	431,981			$31.45
Pharmacia Option Exchange	180,068			28.84
Granted	101,345			29.77
Exercised	(34,366)			19.82
Cancelled	(9,422)			36.35
Balance June 29, 2003	669,606			31.02

The tax benefits related to certain stock option transactions were $114 million during the six months ended June 29, 2003.

Note 10:  Segment Information

We operate in the following three business segments:

Pharmaceutical

• The Pharmaceutical segment includes treatments for cardiovascular and metabolic diseases, central nervous system disorders, arthritis and pain, infectious and respiratory diseases, urogenital conditions, cancer, eye disease, endocrine disorders and allergies.

Consumer Healthcare

• The Consumer Healthcare segment includes self medications for oral care, upper respiratory health, tobacco dependence, gastrointestinal health, skin care, eye care and hair growth.

Animal Health

• The Animal Health segment includes treatments for diseases in livestock and companion animals.

We operate several other businesses which include the manufacture of empty soft-gelatin capsules, contract manufacturing, bulk pharmaceutical chemicals and diagnostics. Due to the size of these businesses, they are grouped into the "Other" category.

Revenues and profits/(losses) by segment for the three months ended June 29, 2003 and June 30, 2002 were as follows:

 

(in millions)				Pharma- ceutical		Consumer Healthcare		Animal Health		Other*			Consolidated
Revenues	2003		$	8,640	$	741	$	383	$	229		$	9,993
	2002			6,266		647		274		109			7,296
Segment profit/(loss)	2003		$	(2,645)	$	37	$	(166)	$	(631)	**	$	(3,405)	***
	2002			2,545		137		24		(333)	**		2,373	***

Revenues and profits/(losses) by segment for the six months ended June 29, 2003 and June 30, 2002 were as follows:

 

(in millions)					Pharma- ceutical		Consumer Healthcare		Animal Health		Other*			Consolidated
Revenues		2003		$	16,188	$	1,336	$	652	$	342		$	18,518
		2002			13,035		1,288		513		208			15,044
Segment profit/(loss)		2003		$	753	$	175	$	(133)	$	(977)	**	$	(182)	***
		2002			5,758		299		39		(663)	**		5,433	***
*	Includes Capsugel, Pfizer CentreSource, Diagnostics and Corporate/Other.
**	Includes interest income/(expense), corporate expenses, other income/(expense) of our banking and insurance subsidiaries, certain performance-based compensation expenses not allocated to the operating segments and merger-related costs.
***	Equals income/(loss) from continuing operations before provision for taxes on income, minority interests and cumulative effect of change in accounting principles. In 2003, segment profit/(loss) includes the impact of purchase accounting for the Pharmacia acquisition.

 

Revenues for each group of similar products are as follows:

 

		Three Months Ended							Six Months Ended
(in millions)		June 29, 2003		June 30, 2002		% Change			June 29, 2003		June 30, 2002		% Change
PHARMACEUTICAL
Cardiovascular and metabolic diseases	$	3,594	$	3,080		17		$	7,152	$	6,332		13
Central nervous system disorders		1,579		1,188		33			3,189		2,645		21
Arthritis and pain		648		85		660			737		173		327
Infectious and respiratory diseases		902		712		27			1,989		1,643		21
Urology		525		385		36			999		807		24
Oncology		200		--		--			200		--		--
Ophthalmology		131		--		--			131		--		--
Endocrine disorders		108		--		--			108		--		--
All other		767		428		80			1,166		747		56
Alliance revenue		186		388		(52)			517		688		(25)
Total Pharmaceutical		8,640		6,266		38			16,188		13,035		24
CONSUMER HEALTHCARE		741		647		14			1,336		1,288		4
ANIMAL HEALTH
Companion animal products		161		134		20			285		245		17
Livestock products		222		140		58			367		268		37
Total Animal Health		383		274		40			652		513		27
OTHER
Capsugel		124		109		13			237		208		13
Pfizer CentreSource		75		--		--			75		--		--
Diagnostics		30		--		--			30		--		--
Total other		229		109		110			342		208		64
Total revenues	$	9,993	$	7,296		37		$	18,518	$	15,044		23

Note 11:  Discontinued Operations

We sold the following businesses and products that do not fit our strategic goals:

• In April 2003, we completed the sale of the hormone replacement therapy femhrt, formerly part of our Pharmaceutical segment, to Galen Holdings plc for $160 million in cash with a right to receive up to $69.6 million contingent on femhrt retaining market exclusivity until the expiration of its patent. We recognized a gain on the sale of this product of $139 million ($83 million net of tax) in the consolidated statement of operations for the second quarter and first six months of 2003.
• In March 2003, we sold the Adams confectionery products business, formerly part of our Consumer Healthcare segment, to Cadbury Schweppes plc for $4.2 billion in cash. We recognized a gain on the sale of this business of $3.091 billion ($1.824 billion net of tax) in the consolidated statement of operations for the first six months of 2003.
• In March 2003, we sold the Schick-Wilkinson Sword shaving products business, formerly part of our Consumer Healthcare segment, to Energizer Holdings, Inc., for $930 million in cash. We recognized a gain on the sale of this business of $462 million ($262 million net of tax) in the consolidated statement of operations for the first six months of 2003.
• In March 2003, we sold the oral contraceptives Estrostep and Loestrin, formerly part of our Pharmaceutical segment, to Galen Holdings plc for $197 million in cash with a right to receive up to $55.6 million contingent on Estrostep retaining market exclusivity until the expiration of its patent. We recognized a gain on the sale of these two products of $193 million ($116 million net of tax) in the consolidated statement of operations for the first six months of 2003.

These businesses and product lines are reflected as discontinued operations in all periods presented.

The following amounts related to the confectionery, shaving and fish-care product businesses, as well as the femhrt, Loestrin and Estrostep product lines, have been segregated from continuing operations and reflected as discontinued operations:

 

		Three Months Ended					Six Months Ended
(in millions)		June 29, 2003		June 30, 2002			June 29, 2003		June 30, 2002
Revenues	$	160	$	737		$	765	$	1,408
Pre-tax income	$	--	$	103		$	54	$	200
Provision for taxes on income		--		39			21		75
Income from operations of discontinued businesses/product lines-net of tax		--		64			33		125
Pre-tax gains on sales of discontinued businesses		139		--			3,885		--
Provision for taxes on gains		56		--			1,600		--
Gains on sales of discontinued businesses/product lines-net of tax		83		--			2,285		--
Discontinued operations-net of tax	$	83	$	64		$	2,318	$	125

Note 12:  Subsequent Events

On July 24, 2003, we announced that we are exploring strategic options for our surgical ophthalmology business, including its possible sale. The surgical ophthalmology business is included in our Pharmaceutical segment and became a part of Pfizer in April 2003 with our acquisition of Pharmacia.

On July 1, 2003, we announced that we are exploring strategic options for the Diagnostics business, including possible sale of the business. The Diagnostics business became a part of Pfizer in April 2003 with our acquisition of Pharmacia.

On June 26, 2003, our board of directors declared a $.15 per share third-quarter 2003 cash dividend on our common stock, payable on September 4, 2003 to shareholders of record on August 15, 2003.