Pfizer Inc. (PFE) | Analysis of Investments

Investment Accounting Policy

Many, but not all, of Pfizer's financial instruments are carried at fair value. For example, substantially all of Pfizer's cash equivalents, short-term investments and long-term investments are classified as available-for-sale securities and are carried at fair value, with changes in unrealized gains and losses, net of tax, reported in Other comprehensive/(loss). Virtually all of Pfizer's valuation measurements for investments, loans and derivative financial instruments are based on the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable.

Realized gains or losses on sales of investments are determined by using the specific identification cost method.

Investments where Pfizer has significant influence over the financial and operating policies of the investee are accounted for under the equity method. Under the equity method, Pfizer records share of the investee's income and expenses in income statements. The excess of the cost of the investment over Pfizer's share in the equity of the investee on acquisition date is allocated to the identifiable assets of the investee, with any remainder allocated to goodwill. Such investments are initially recorded at cost, which typically does not include amounts of contingent consideration.

Source: Pfizer Inc., Annual Report

Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

Pfizer Inc., adjustment to Net Income Attributable To Pfizer Inc.

	12 months ended	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	Net income attributable to Pfizer Inc. (as reported)
	Add: Available-for-sale securities
	Net income attributable to Pfizer Inc. (adjusted)

Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)

Pfizer Inc., adjusted ratios

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	Net Profit Margin
	Reported net profit margin	%	%	%	%	%
	Adjusted net profit margin	%	%	%	%	%
	Return on Equity (ROE)
	Reported ROE	%	%	%	%	%
	Adjusted ROE	%	%	%	%	%
	Return on Assets (ROA)
	Reported ROA	%	%	%	%	%
	Adjusted ROA	%	%	%	%	%

Adjusted Net Profit Margin

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Net income attributable to Pfizer Inc. (USD $ in millions)
	Revenues (USD $ in millions)
	Net profit margin1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted net income attributable to Pfizer Inc. (USD $ in millions)
	Revenues (USD $ in millions)
	Adjusted net profit margin2	%	%	%	%	%

2011 Calculations

Adjusted Return On Equity (ROE)

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Net income attributable to Pfizer Inc. (USD $ in millions)
	Pfizer Inc. shareholders’ equity (USD $ in millions)
	ROE1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted net income attributable to Pfizer Inc. (USD $ in millions)
	Pfizer Inc. shareholders’ equity (USD $ in millions)
	Adjusted ROE2	%	%	%	%	%

2011 Calculations

Adjusted Return On Assets (ROA)

		Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007
	As Reported
	Net income attributable to Pfizer Inc. (USD $ in millions)
	Total assets (USD $ in millions)
	ROA1	%	%	%	%	%
	Adjusted: Mark to Market Available-for-sale Securities
	Adjusted net income attributable to Pfizer Inc. (USD $ in millions)
	Total assets (USD $ in millions)
	Adjusted ROA2	%	%	%	%	%

2011 Calculations