Pfizer Reports Second-Quarter 2007 Results, Reconfirms Full-Year 2007 and 2008 Financial Guidance and Updates Progress on Immediate Business Priorities

NEW YORK--(BUSINESS WIRE)--Jul 18, 2007 - Pfizer: -0-
($ millions, except per-share amounts)


                             Second Quarter          Year to Date

                         ---------------------- ----------------------

                           2007    2006  Change   2007    2006  Change

                         ------- ------- ------ ------- ------- ------

Revenues                 $11,084 $11,741   (6%) $23,558 $23,488     --

Reported Net Income      $ 1,267 $ 2,415  (48%) $ 4,659 $ 6,526  (29%)

Reported Diluted EPS     $  0.18 $  0.33  (45%) $  0.66 $  0.89  (26%)

Adjusted Income(1)       $ 2,944 $ 3,663  (20%) $ 7,748 $ 8,013   (3%)

Adjusted Diluted EPS(1)  $  0.42 $  0.50  (16%) $  1.10 $  1.09     1%


(1) See end of text prior to table for notes.

Pfizer Inc today reported second-quarter 2007 results, reconfirmed its previously announced full-year financial guidance for 2007 and 2008 revenue and adjusted diluted EPS(1), and detailed progress on its immediate business priorities announced in January 2007. The company said it is building on that progress by developing longer-range plans for the rapidly changing healthcare marketplace.

"While there's no question that we faced difficult challenges in the second quarter of 2007 -- including the impact of the loss of U.S. exclusivity for Zoloft and Norvasc, the timing of some expenses and Lipitor's performance in the U.S. -- we're still on track to meet our previously announced 2007 and 2008 revenue and adjusted diluted EPS(1) goals. This underscores our ability to meet our goals despite a highly competitive and complex environment," said Jeffrey Kindler, Pfizer Chairman and Chief Executive Officer.

"Notwithstanding the second quarter, our year-to-date 2007 revenues were comparable to the same period in 2006 and our adjusted diluted EPS(1) increased 1% despite the substantial impact of Zoloft and Norvasc loss of U.S. exclusivity. In particular, Chantix, Sutent and Lyrica, all innovative medicines gaining wider acceptance in their markets, performed well and delivered better-than-expected results. And I am encouraged by the progress we are making on the immediate priorities we outlined last January to strengthen our near and long-term performance."

Kindler continued, "The decline in second-quarter 2007 adjusted earnings was due to two main factors: a difficult comparison to the year-ago period, given the Zoloft and Norvasc loss of U.S. exclusivity since that time, as well as our payments to Bristol-Myers Squibb in connection with our collaboration to develop and commercialize apixaban, an important opportunity in cardiovascular medicine where we have a strong presence.

"In addition, Lipitor, our most prescribed product, did not meet our expectations for the quarter. Worldwide Lipitor sales declined 13% in the second quarter of 2007 as compared to the same quarter last year, as a 5% growth in the international markets was more than offset by a 25% decline in the U.S. Our U.S. Lipitor performance in the second quarter was negatively impacted by two factors we had highlighted in the first quarter of 2007 as positively impacting the brand. These two factors, changes in the U.S. wholesaler inventory levels and differences in reconciliation of internal and external data that are normally seen each quarter to varying degrees, accounted for approximately 50% of the revenue decline in the U.S. second-quarter 2007 results and are not expected to have a negative impact on U.S. performance over the second half of the year. Other contributing factors to the second quarter's performance include the decreased level of prescriptions as well as increased rebates associated with our more flexible contracting activity.

"Lipitor worldwide sales in the first half of 2007 were down 2% as compared to the same period last year. As it relates to our current forecast of full-year global Lipitor revenues, we have incorporated a moderation in the level of decline of prescriptions in the U.S. market relative to the second quarter, reflecting extensive promotional and contracting efforts. In addition, we have incorporated an increase in the level of contracting rebates consistent with our current, more flexible contracting policy. With all of these factors taken together, we now expect full-year 2007 global Lipitor revenues of flat to a 5% decline relative to the prior year. We will continue to drive Lipitor's value and its differentiation with newly approved indications, an effective TV, radio and print campaign featuring Dr. Robert Jarvik, field force execution and our focus on optimizing Tier 2 access." -0-

 Company Reports Progress on Immediate Priorities and Development of

             Longer-Range Plans for Changing Marketplace

"In January 2007, we were clear with all of our stakeholders about the scope and substance of our significant challenges and opportunities," Kindler said. "We said we would get leaner and quicker, and do it with a sense of urgency and intensity. We acknowledged that the healthcare industry is changing and we are committed to changing with it, starting with five immediate priorities - maximizing our near- and long-term revenues; establishing a lower and more flexible cost base; creating smaller, more focused and more accountable operating units; engaging more productively with customers, patients, physicians and other collaborators; and making Pfizer a great place to work.

"I am encouraged by the progress we have made in the last six months. Many of the initiatives are resulting in overall cost reductions and improved operational efficiency, which are a major ongoing focus of the organization as part of our previously declared goal to reduce the total expense pre-tax component of adjusted income(1) by at least $1.5 billion to $2.0 billion in 2008 as compared to 2006."

-- We completed our field force reorganization, including a 20% reduction in our U.S. field force, and are taking similar measures in the international markets. The restructured U.S. field force was operational starting in April 2007 and productivity per sales representative has returned to the levels before the reorganization, retaining our competitiveness and share of voice. Globally, we have reduced our workforce by approximately 8% so far this year. Additional savings are being generated from de-layering, eliminating duplicative work, and strategically re-aligning various functions.

-- We continue to outsource where it makes sense. For instance, we recently partnered with a single strategic service provider for certain information technology activities which are now performed by Pfizer and contractors. By consolidating 11 third-party providers and reducing labor cost, we expect to generate considerable annual savings and higher quality services.

-- We continue to transform our global manufacturing network to improve efficiency and reduce overall cost. We have reduced our network of plants to 60 from 93 four years ago. We have also announced significant additional closures and divestitures. The cumulative impact will be a more focused, streamlined and competitive manufacturing operation, with less than 50% of our plants and a reduction of 35% of our manufacturing employees compared to 2003. Further, we currently outsource the manufacture of approximately 17% of our products on a cost basis and plan to increase this substantially by 2010.

-- In R&D, we are actively balancing the actions required to achieve our cost savings targets with those required to ensure enhanced R&D productivity. In January, we announced plans to close five R&D sites as part of our efforts to rationalize our facilities footprint. To date, approximately two-thirds of the portfolio projects that are moving between sites have been transferred and are being actively pursued in their new site. The remainder of the early-stage portfolio projects will be transferred by the end of the third quarter of 2007; and the late-stage project transfers will be complete by the end of 2007, with minimal interruption in the progress of development. Further, the vast majority of colleagues in scientific and technical roles from sites that are closing or in therapeutic areas that are consolidating who have been offered the opportunity to transfer to another site have agreed to relocate.

-- We recently received FDA approval for Lyrica for the management of fibromyalgia, one of the most common chronic pain conditions. Within weeks of approval, we launched the new indication with our specialty field force and a nationwide public service announcement in collaboration with the National Fibromyalgia Association, the leading national organization for fibromyalgia patient education and advocacy. This fast-to-market approach reflects how our new U.S. business structure is giving us more speed and agility in the marketplace.

-- We are delivering on our goal to secure external sources of revenue and innovative alliances to supplement our pipeline. In addition to the collaboration with Bristol-Myers Squibb to develop and commercialize apixaban, we have expanded our efforts in securing early-stage product candidates and technology, particularly with the establishment of the Pfizer Incubator in La Jolla, California, and the signing of an agreement with Fabrus LLC to be the first tenant in the Incubator. During the two-year term, Fabrus will work to develop novel antibody libraries and ways to screen them against biological targets.

-- We are demonstrating our capacity to successfully collaborate with our customers, payers, regulators and the larger medical community. Our recent agreement with Express Scripts, Inc. that adds Lipitor to the U.S. pharmacy benefits manager's preferred drug list will increase patient access to this leading medicine. With the expertise and knowledge we have in marketing Chantix, one of the most successful new-product launches, we have partnered with regulators and independent medical organizations to support a smoke-free environment and to support the expansion of coverage to include uninsured patients.

"As we continue to put our foundation for the future in place, the entire management team is working tirelessly to identify ways to improve the performance and outlook for Pfizer," said Kindler. "We're examining a whole range of possibilities that will shape the company over the next five to 10 years as accelerating change drives the worldwide healthcare market in new and important ways. Here are some of the strategic elements that build on our immediate priorities while providing a framework for our longer-term opportunities.

"First, we're revitalizing our internal R&D productivity. We've focused R&D to improve productivity and give discovery and development teams more flexibility and clearer goals. We are committing considerable resources to promising therapeutic areas including oncology, diabetes, and neurological disorders, among others. And we're working hard to identify the next scientific leader for our R&D organization, which is one of the world's exceptional medical research organizations.

"The second is focused business development. We've undergone a thorough assessment of every therapeutic area and prioritized them. We are now in the process of looking at the gaps we've identified and accelerating programs we already have. We intend to be opportunistic on the best products, product candidates and technologies, as you've seen with apixaban, our collaboration with the Scripps Institute and the Pfizer Incubator - among other recent actions.

"Third is building a major presence in biotherapeutics. The majority of our drugs will continue to consist of small molecules; this has always been a core strength of our company. But large molecules must also be a very important part of our future -- they involve some of the most promising R&D technology and cutting-edge science in medical research. We are looking to integrate our investments, R&D and existing internal capabilities with disciplined business development.

"The fourth is driving innovation in product life cycle management. We're challenging our business model and examining it from all angles. We see opportunities to better manage our products' growth and development through their entire time on the market, and to innovate our "go to market" promotional and commercial strategies. We also see ways to further enhance the value of mature products as well as those close to losing their exclusivity, and to create product line extensions. And we are also looking at new ways to accelerate our high-quality, low cost manufacturing initiatives.

"Fifth is stepping up our focus and investments in emerging markets, especially in Eastern Europe and Asia, where changing demographics and economics will drive growing demand for high-quality healthcare and offer a great deal of potential for our products.

"And finally, we see complementary opportunities in products and technologies that have the potential to add value to our core pharmaceutical offerings. There are many possible ways for us to take our new pharmaceutical products and enhance them with the medical technologies of the future, so that we help advance the practice of medicine and increase the value of our products for patients." -0-

                 Worldwide Pharmaceutical Highlights

-0-
($ in millions, except percentages)


                          Second Quarter            Year to Date

                     ------------------------ ------------------------

                       2007     2006   Change   2007     2006   Change

                     -------- -------- ------ -------- -------- ------

In-Line Products(2)    $8,522   $8,718  (2%)   $18,175  $17,541    4%

New Products(3)           814      333 144%      1,527      565  170%

                     -------- --------        -------- --------


Total In-Line and New

 Products(4)            9,336    9,051   3%     19,702   18,106    9%


Loss of Exclusivity

 Products(5)              769    1,864 (59%)     1,984    3,826  (48%)

                     -------- --------        -------- --------


Total Pharmaceutical   10,105   10,915  (7%)    21,686   21,932   (1%)


Animal Health             632      583   9%      1,218    1,094   11%

Other(6)                  347      243  43%        654      462   42%

                     -------- --------        -------- --------


Total Revenues        $11,084  $11,741  (6%)   $23,558  $23,488   --

                     ======== ========        ======== ========


(2) (3) (4) (5) (6) See end of text prior to table for notes.

Worldwide pharmaceutical revenues for the second quarter of 2007 were $10.1 billion, a decrease of 7% from a year ago, while revenues for the first half of 2007 were $21.7 billion, a decrease of 1% from last year. Excluding the revenues of Zoloft and Norvasc, worldwide pharmaceutical revenues grew 3%(4) in the second quarter of 2007 and 9%(4) in the first half of 2007 from the same periods last year. Contributing to this growth were revenues for the following products for the second quarter 2007 compared with the second quarter 2006 as well as the first half of 2007 compared to the first half of 2006, respectively: Celebrex, 1% and 12%; Lyrica, 49% and 73%; Detrol/Detrol LA, 5% and 11%; Zyvox, 21% and 30%; Geodon/Zeldox, 8% and 14%; Caduet, 50% and 69%; Vfend, 23% and 25%; and Aromasin, 22% and 27%. Additionally, Chantix/Champix and Sutent, two key new products, delivered strong revenues.

Worldwide sales of Lipitor totaled $2.7 billion for the second quarter of 2007, a decline of 13% compared to the second quarter of 2006. The revenue growth of 5% in the international markets resulting primarily from the favorable impact of foreign exchange was more than offset by a 25% decline in the U.S. The statin market is intensely competitive, with increased payer pressure and competition from branded and generic products. For the first half of the year, Lipitor sales were $6.1 billion worldwide, a decrease of 2%, reflecting international growth of 6% more than offset by an 8% decline in the U.S. Lipitor's performance reflects a complex interplay of prescription trends, market-growth dynamics, branded and generic competition dynamics and payer pressures.

We continue to focus customer-by-customer to secure unrestricted access to Lipitor. Our agreement with Express Scripts, Inc. represents an important example of our commitment to improving patient access and to meaningful engagement with our customers. We have also launched an adherence program that operates in partnership with large pharmacy chains which we expect to support patient utilization.

Worldwide sales of Celebrex totaled $478 million for the second quarter of 2007 and $1.1 billion for the first half of 2007, representing growth of 1% and 12%, respectively, from the comparable periods in the prior year. In the U.S., revenues declined in the second quarter 2007 compared to the second quarter 2006 driven by a modest decline in volume. The direct-to-consumer TV ad campaign launched in April 2007 in the U.S. is helping to stimulate patient interest and initiate a productive dialogue between physicians and patients. The number of weekly visits to the Celebrex website has doubled and the number of calls to the patient 800 phone number has increased since the introduction of the ad. We are also starting to see an increase in new prescription share coming from new-to-market and switch patients. Coupled with our renewed field force, we expect to see an impact later this year.

Worldwide sales of Lyrica totaled $405 million for the second quarter of 2007 and $800 million for the first half of 2007, representing growth of 49% and 73%, respectively, over the comparable periods last year. Lyrica growth continues to be fueled by strong efficacy as well as high physician and patient satisfaction. In June 2007, Lyrica was approved in the U.S. for the management of fibromyalgia, one of the most common chronic, widespread pain conditions. This approval represents a breakthrough for the more than six million Americans who suffer from this debilitating condition who previously had no FDA-approved treatment.

Chantix continues its strong performance, with nearly 2.5 million U.S. patients having filled a prescription as of June 15, 2007, representing slightly more than 5% of adult smokers in the U.S. We continue to focus on increasing adherence and have introduced tools to physicians that provide data behind the benefit of a full 12-week course of therapy. In addition, we are conducting several pilot programs to reach patients in their first month of therapy through pharmacy programs as well as through our GetQuit behavior modification program.

Sales of Exubera continue to be disappointing, with $4 million of worldwide revenues in the second quarter of 2007. We are continuing to execute on our 2007 action plan, including the efforts of diabetes educators who have been engaging in clinical discussions with physicians and office personnel. We began direct-to-consumer advertising in print ads in mid-June 2007. TV ads will start in July 2007. -0-

                  Update on New Product Candidates

In collaboration with Bristol-Myers Squibb, apixaban is under development for the prevention and treatment of a broad range of venous and arterial thrombotic conditions. The recently announced Phase 2 findings with apixaban and the Phase 3 findings with another company's Factor Xa inhibitor in development provides support for the mechanism of action of these agents, namely inhibition of Factor Xa for the prevention and treatment of thrombosis. Our Phase 3 trials in venous thromboembolism prevention in patients undergoing total knee replacement surgery will seek to demonstrate superiority to enoxaparin. In addition, the profile of apixaban, characterized by lower peak-trough ratio, less dependency upon renal excretion and absence of food effects, makes for a potentially best in class compound. Late stage clinical trials are underway and Bristol-Myers Squibb expects to file for approval of the first indication in the U.S. in the second half of 2009.

In June 2007, the FDA issued an approvable letter for maraviroc, which is under review as a therapy for treatment-experienced patients infected with CCR5-tropic HIV-1. We are continuing our discussions with the FDA to address outstanding questions and to finalize the product labeling as soon as possible. Pfizer has established an expanded access program in 30 countries prior to approval to provide maraviroc to patients who have limited treatment options.

Also in June 2007, we re-submitted our registration filing for dalbavancin, our cell wall synthesis inhibitor to treat skin and skin structure infections. We anticipate FDA approval by year-end 2007. -0-

                         Pfizer Animal Health

Pfizer Animal Health's second quarter revenue grew 9% to $632 million in the second quarter of 2007, and 11% to $1.2 billion in the first half of 2007 compared to the year-ago periods, bolstered by new companion animal product launches. The new products included Convenia, a first-in-class single treatment antibiotic for dogs and cats; Slentrol, a weight-management drug for dogs; and Cerenia, a first-in-class product for the treatment and prevention of vomiting in dogs. In addition to a strong performance by its in-line products, foreign exchange also favorably impacted the second quarter results. -0-

                           Financial Results

In the second quarter 2007, cost of sales (as a pre-tax component of adjusted income(1)), as a percentage of revenues was 17% compared to 14% for the second quarter of 2006, reflecting unfavorable product and geographic mix changes in our portfolio as well as the impact of efforts to reduce the cost of new products. For the full-year of 2007, we continue to forecast the cost of sales pre-tax component of adjusted income(1) at about 15% of revenues, reflecting an improvement in this measure over the balance of the year, in part driven by the impact of our ongoing cost-reduction initiatives.

Selling, Informational and Administrative (SI&A) expenses, as a pre-tax component of adjusted income(1), were $3.7 billion, a decrease of 2%, compared to the second quarter of 2006. Absent the impact of foreign exchange, we continue to target -- and are on track to achieve --a year over year absolute reduction of more than $500 million in SI&A expenses associated with our efforts to restructure our cost base. However, the impact of foreign exchange, while favorable at the top line, has had an adverse impact on our expenses, and the strengthening of the euro and other currencies relative to the dollar is mitigating the reported impact of these cost reduction efforts. At current exchange rates(7), we anticipate that the SI&A pre-tax component of adjusted income(1) will approximate $15.2 billion this year.

Research and development expenses, as a pre-tax component of adjusted income (1), were $2.0 billion, an increase of 20% compared to the second quarter of 2006 principally due to the timing of our payments to Bristol-Myers Squibb in connection with our collaboration to develop and commercialize apixaban. We continue to project the full-year 2007 R&D pre-tax component of adjusted income(1) at approximately $7.5 billion.

Restructuring charges and acquisition-related costs were $1.1 billion, a significant increase compared to the second quarter of 2006, reflecting our commitment to numerous cost reduction initiatives, including the reduction in our global sales force as well as the rationalization of our manufacturing network, administrative functions, and our R&D infrastructure.

Quarterly revenue patterns are subject to a degree of variability in light of the timing of loss of U.S. exclusivity on key product lines (among other factors) and are especially apparent in the U.S., where loss of exclusivity generally results in a rapid decline in revenues with the advent of competition from lower-priced generic agents. We expect this to mitigate over the second half of the year, given the timing of Zoloft's loss of exclusivity in the U.S. mid-last year. Quarterly expense patterns will also exhibit a degree of variability this year, reflecting, among other factors, the timing of payments associated with business development activities, the impact on cost of sales from mix changes in our product sales, the timing of investments in promotional and R&D programs during the second half of the year relative to the first half, and the timing of savings realized as part of our overall productivity initiatives.

Through the first half of 2007, we have purchased $5.0 billion of stock, and we plan to purchase up to an additional $5.0 billion in stock in the second half of the year. Additionally, we have declared a third quarter dividend of $0.29, a 21% increase over the third quarter of last year.

We reaffirm the following additional elements of our financial guidance for 2007 at current exchange rates(7):

-- Revenues of between $47 billion and $48 billion

-- Effective tax rate on adjusted income(1) of 22%

-- Reported diluted EPS of $1.30 to $1.41

-- Adjusted diluted EPS(1) of $2.08 to $2.15

-- Cash flow from operations of $12 billion to $13 billion

We also reaffirm the following financial guidance for 2008 at current exchange rates(7):

-- Revenues of between $46.5 billion to $48.5 billion

-- Total expense pre-tax component of adjusted income(1) at least $1.5 to $2 billion lower than 2006

-- Effective tax rate on adjusted income(1) of 22% to 22.5%

-- Reported diluted EPS of $1.75 to $1.93

-- Adjusted diluted EPS(1) of $2.31 to $2.45

-- Cash flow from operations of $18 billion to $19 billion

"We will continue to focus on our immediate priorities with a high level of intensity while we also identify a broad range of opportunities for pharmaceutical products and technologies that will advance the practice of medicine and the value we bring to patients," said Kindler.

For additional details, please see the attached financial schedules, product revenue tables, supplemental financial information, and Disclosure Notice. -0-

(1)  "Adjusted income" and "adjusted diluted earnings per share (EPS)"

      are defined as reported net income and reported diluted EPS

      excluding purchase-accounting adjustments, acquisition-related

      costs, discontinued operations and certain significant items. As

      described under Adjusted Income in the Management's Discussion

      and Analysis of Financial Condition and Results of Operations

      section of Pfizer's Form 10-Q for the quarterly period ended

      April 1, 2007, management uses adjusted income, among other

      factors, to set performance goals and to measure the performance

      of the overall company. We believe that investors' understanding

      of our performance is enhanced by disclosing this measure.

      Reconciliations of second-quarter and six-month 2007 and 2006,

      and forecasted full-year 2007 and 2008, adjusted income and

      adjusted diluted EPS to reported net income and reported diluted

      EPS are provided in the materials accompanying this report. The

      adjusted income and adjusted diluted EPS measures are not, and

      should not be viewed as, substitutes for U.S. GAAP net income

      and diluted EPS.


(2)  Represents worldwide revenues for all pharmaceutical products,

      excluding revenues included in notes (3) and (5).


(3)  Represents worldwide revenues for pharmaceutical products

      launched in the U.S. since 2005: Chantix, Eraxis, Exubera,

      Lyrica, Macugen, Revatio, Sutent and Zmax.


(4)  Total worldwide pharmaceutical revenues excluding the revenues of

      major products that have lost exclusivity in the U.S. in 2006

      and 2007 as described in note (5). See the table accompanying

      this report.


(5)  Represents worldwide revenues for pharmaceutical products that

      have lost exclusivity in the U.S. in 2006 and 2007: Zoloft and

      Norvasc.


(6)  Includes Consumer Healthcare business transition activity,

      Capsugel and Pfizer Centersource.


(7)  Current exchange rates approximate rates at the end of our second

      quarter for international operations (May 2007).

-0-
                 PFIZER INC AND SUBSIDIARY COMPANIES

                  CONSOLIDATED STATEMENTS OF INCOME

                             (UNAUDITED)



(millions of dollars, except per common share data)


                   Second Quarter   % Incr.     Six Months     % Incr.

                 ------------------    /    ------------------    /

                   2007     2006    (Decr.)   2007     2006    (Decr.)

                 --------- -------- ------- --------- -------- -------

Revenues         $11,084   $11,741     (6)  $23,558   $23,488       -

Costs and

 expenses:

 Cost of sales (a) 2,109     1,790     18     3,996     3,461      15

 Selling,

  informational

  and

  administrative

  expenses (a)     3,844     3,881     (1)    7,205     7,276      (1)

 Research and

  development

  expenses (a)     2,165     1,742     24     3,830     3,285      17

 Amortization of

  intangible

  assets             783       823     (5)    1,598     1,648      (3)

 Acquisition-

  related in-

  process

  research and

  development

  charges              -       513    *         283       513     (45)

 Restructuring

  charges and

  acquisition-

  related costs    1,051       268    292     1,863       567     229

 Other (income)/

  deductions--net   (487)     (359)    36      (889)     (615)     45

                 --------  --------         --------  --------

Income from

 continuing

 operations

 before provision

 for taxes on

 income and

 minority

 interests         1,619     3,083    (47)    5,672     7,353     (23)

Provision for

 taxes on income     272       790    (66)      961     1,052      (9)

Minority

 interests             2         3    (45)        5         5     (15)

                 --------  --------         --------  --------

Income from

 continuing

 operations        1,345     2,290    (41)    4,706     6,296     (25)

                 --------  --------         --------  --------

Discontinued

 operations:

 Income from

  discontinued

  operations--net

  of tax               -       108    *           -       210     *

 Gains/(losses)

  on sales of

  discontinued

  operations--net

  of tax             (78)       17    *         (47)       20     *

                 --------  --------         --------  --------

Discontinued

 operations--net

 of tax              (78)      125    *         (47)      230     *

                 --------  --------         --------  --------

Net income       $ 1,267   $ 2,415    (48)  $ 4,659   $ 6,526     (29)

                 ========  ========         ========  ========

Earnings per

 common share -

 basic:

 Income from

  continuing

  operations     $  0.19   $  0.31    (39)  $  0.67   $  0.86     (22)

 Discontinued

  operations--net

  of tax           (0.01)     0.02    *       (0.01)     0.03     *

                 --------  --------         --------  --------

 Net income      $  0.18   $  0.33    (45)  $  0.66   $  0.89     (26)

                 ========  ========         ========  ========

Earnings per

 common share -

 diluted:

 Income from

  continuing

  operations     $  0.19   $  0.31    (39)  $  0.67   $  0.86     (22)

 Discontinued

  operations--net

  of tax           (0.01)     0.02    *       (0.01)     0.03     *

                 --------  --------         --------  --------

 Net income      $  0.18   $  0.33    (45)  $  0.66   $  0.89     (26)

                 ========  ========         ========  ========

Weighted-average

 shares used to

 calculate

 earnings per

 common share:

 Basic             6,966     7,282            7,009     7,298

                 ========  ========         ========  ========

 Diluted           6,990     7,305            7,033     7,330

                 ========  ========         ========  ========

-0-
(a) Exclusive of amortization of intangible assets, except as

     discussed in footnote 4 below.


    * Calculation not meaningful.


    Certain amounts and percentages may reflect rounding adjustments.


1.  The above financial statements present the three-month and six-

     month periods ended July 1, 2007, and July 2, 2006. Subsidiaries

     operating outside the United States are included for the three-

     month and six-month periods ended May 27, 2007, and May 28, 2006.

2.  The financial results for the three-month and six-month periods

     ended July 1, 2007, are not necessarily indicative of the results

     which ultimately might be achieved for the current year.

3.  As required, the estimated value of Acquisition-related in-process

     research and development charges (IPR&D) is expensed at

     acquisition date. In 2007, we expensed $283 million of IPR&D,

     primarily related to our acquisitions of BioRexis Pharmaceutical

     Corp. and Embrex, Inc. in the first quarter. In 2006, we expensed

     $513 million of IPR&D, primarily related to our acquisition of

     Rinat Neuroscience Corp. in the second quarter.

4.  Amortization expense related to acquired intangible assets that

     contribute to our ability to sell, manufacture, research, market

     and distribute our products are included in Amortization of

     intangible assets as they benefit multiple business functions.

     Amortization expense related to acquired intangible assets that

     are associated with a single function are included in Cost of

     sales, Selling, informational and administrative expenses or

     Research and development expenses, as appropriate.

5.  Discontinued operations--net of tax is primarily related to our

     former Consumer Healthcare business, sold in December 2006 for

     approximately $16.6 billion.

6.  Provision for taxes on income in the first quarter of 2006

     includes one-time tax benefits associated with favorable tax

     legislation and the resolution of certain tax positions.

-0-
                 PFIZER INC AND SUBSIDIARY COMPANIES

RECONCILIATION FROM REPORTED NET INCOME AND REPORTED DILUTED EARNINGS

                               PER SHARE

      TO ADJUSTED INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE

                             (UNAUDITED)



(millions of dollars, except per common share data)


                       Second Quarter  % Incr.   Six Months    % Incr.

                       ---------------    /    ---------------    /

                        2007    2006   (Decr.)  2007    2006   (Decr.)

                       ------- ------- ------- ------- ------- -------

Reported net income    $1,267  $2,415    (48)  $4,659  $6,526     (29)

Purchase accounting

 adjustments--net of

 tax                      597   1,085    (45)   1,444   1,666     (13)

Acquisition-related

 costs--net of tax         10       2    303       23       5     327

Discontinued

 operations--net of tax    78    (125)   *         47    (230)    *

Certain significant

 items--net of tax        992     286    247    1,575      46      M+

                        ------  ------          ------  ------

Adjusted income        $2,944  $3,663    (20)  $7,748  $8,013      (3)

                        ======  ======          ======  ======


Reported diluted

 earnings per common

 share                 $ 0.18  $ 0.33    (45)  $ 0.66  $ 0.89     (26)

Purchase accounting

 adjustments--net of

 tax                     0.09    0.15    (40)    0.21    0.22      (5)

Acquisition-related

 costs--net of tax          -       -      -        -       -       -

Discontinued

 operations--net of tax  0.01   (0.02)   *       0.01   (0.03)    *

Certain significant

 items--net of tax       0.14    0.04    250     0.22    0.01      M+

                        ------  ------          ------  ------

Adjusted diluted

 earnings per common

 share                 $ 0.42  $ 0.50    (16)  $ 1.10  $ 1.09       1

                        ======  ======          ======  ======


* Calculation not meaningful.


M+ Change greater than one thousand percent.


Certain amounts and percentages may reflect rounding adjustments.


1.  The above reconciliation presents the three-month and six-month

     periods ended July 1, 2007, and July 2, 2006. Subsidiaries

     operating outside the United States are included for the three-

     month and six-month periods ended May 27, 2007, and May 28, 2006.


2.  Adjusted income and Adjusted diluted earnings per common share as

     shown above reflect the following items:


    (millions of

     dollars)          Second Quarter            Six Months

                       ---------------         ---------------

                        2007    2006            2007    2006

                       ------- -------         ------- -------

    Purchase accounting

     adjustments:

      Intangible

       amortization and

       other (a)       $  782  $  801          $1,607  $1,611

      In-process

       research and

       development

       charges (b)          -     513             283     513

                        ------  ------          ------  ------

      Total purchase

       accounting

       adjustments,

       pre-tax            782   1,314           1,890   2,124

      Income taxes       (185)   (229)           (446)   (458)

                        ------  ------          ------  ------

         Total purchase

          accounting

          adjustments--

          net of tax      597   1,085           1,444   1,666

                        ------  ------          ------  ------

    Acquisition-related

     costs:

      Integration costs

       (c)                 14       3              37       5

      Restructuring

       charges (c)          2       3              (4)      6

                        ------  ------          ------  ------

      Total

       acquisition-

       related costs,

       pre-tax             16       6              33      11

      Income taxes         (6)     (4)            (10)     (6)

                        ------  ------          ------  ------

         Total

          acquisition-

          related

          costs--net of

          tax              10       2              23       5

                        ------  ------          ------  ------

    Discontinued

     operations:

      (Income)/loss

       from

       discontinued

       operations (d)       -    (160)              -    (315)

      (Gains)/losses on

       sales of

       discontinued

       operations (d)      79     (26)             39     (31)

                        ------  ------          ------  ------

      Total

       discontinued

       operations, pre-

       tax                 79    (186)             39    (346)

      Income taxes         (1)     61               8     116

                        ------  ------          ------  ------

         Total

          discontinued

          operations--

          net of tax       78    (125)             47    (230)

                        ------  ------          ------  ------

    Certain significant

     items:

      Restructuring

       charges -

       Adapting to

       Scale (c)        1,035     262           1,830     556

      Implementation

       costs - Adapting

       to Scale (e)       317     180             491     365

      Consumer

       Healthcare

       business

       transition

       activity (f)        (7)      -             (16)      -

      Sanofi-aventis

       research and

       development

       milestone (g)        -       -               -    (118)

      Other (h)            25     (23)             25     (74)

                        ------  ------          ------  ------

      Total certain

       significant

       items, pre-tax   1,370     419           2,330     729

      Income taxes       (378)   (133)           (755)   (242)

      Resolution of

       certain tax

       positions (i)        -       -               -    (441)

                        ------  ------          ------  ------

         Total certain

          significant

          items--net of

          tax             992     286           1,575      46

                        ------  ------          ------  ------



    Total purchase

     accounting

     adjustments,

     acquisition-

     related costs,

     discontinued

     operations and

     certain

     significant items

     -- net of tax     $1,677  $1,248          $3,089  $1,487

                        ======  ======          ======  ======


  (a) Included primarily in Amortization of intangible assets.

  (b) Included in Acquisition-related in-process research and

       development charges, primarily related to our acquisitions of

       BioRexis Pharmaceutical Corp. and Embrex, Inc. in 2007 and

       Rinat Neuroscience Corp. in 2006.

  (c) Included in Restructuring charges and acquisition-related costs.

  (d) Discontinued operations--net of tax is primarily related to our

       former Consumer Healthcare business.

  (e) Included in Cost of sales ($170 million), Selling, informational

       and administrative expenses ($79 million), Research and

       development expenses ($131 million), and in Other

       (income)/deductions - net ($63 million income) for the three

       months ended July 1, 2007, and included in Cost of sales ($264

       million), Selling, informational and administrative expenses

       ($128 million), Research and development expenses ($162

       million) and in Other (income)/deductions - net ($63 million

       income) for the six months ended July 1, 2007. Included in Cost

       of sales ($104 million), Selling, informational and

       administrative expenses ($58 million), Research and development

       expenses ($40 million), and Other (income)/deductions - net

       ($22 million income) for the three months ended July 2, 2006,

       and included in Cost of sales ($228 million), Selling,

       informational and administrative expenses ($97 million),

       Research and development expenses ($62 million) and in Other

       (income)/deductions - net ($22 million income) for the six

       months ended July 2, 2006.

  (f) Included in Revenues ($50 million), Cost of sales ($45 million),

       Selling, informational and administrative expenses ($5 million)

       and Other (income)/deductions - net ($7 million income) for the

       three months ended July 1, 2007, and included in Revenues ($94

       million), Cost of sales ($80 million), Selling, informational

       and administrative expenses ($7 million) and Other

       (income)/deductions - net ($9 million income) for the six

       months ended July 1, 2007.

  (g) Included in Research and development expenses.

  (h) Included in Other (income)/deductions - net.

  (i) Included in Provision for taxes on income.

-0-
                              PFIZER INC

                       SEGMENT/PRODUCT REVENUES

                         SECOND QUARTER 2007

                             (UNAUDITED)

                        (millions of dollars)



                                 QUARTER-TO-DATE

            ----------------------------------------------------------

                 WORLDWIDE              U.S.          INTERNATIONAL

            -------------------- ------------------ ------------------

                            %                  %                  %

             2007   2006  Change 2007  2006  Change 2007  2006  Change

======================================================================

TOTAL

 REVENUES   11,084 11,741    (6) 4,841 6,093   (21) 6,243 5,648    11

======================================================================


----------------------------------------------------------------------

PHARMA-

CEUTICAL    10,105 10,915    (7) 4,467 5,756   (22) 5,638 5,159     9

----------------------------------------------------------------------

- CARDIO-

 VASCULAR

 AND

 METABOLIC

 DISEASES    4,083  4,769   (14) 1,740 2,557   (32) 2,343 2,212     6

LIPITOR      2,719  3,123   (13) 1,384 1,856   (25) 1,335 1,267     5

NORVASC        642  1,158   (45)    18   560   (97)   624   598     4

CHANTIX /

 CHAMPIX       200      -   *      168     -   *       32     -   *

CADUET         119     80    50    109    73    49     10     7    60

CARDURA        125    139   (10)     -     2   *      125   137    (9)

- CENTRAL

 NERVOUS

 SYSTEM

 DISORDERS   1,174  1,643   (29)   496 1,051   (53)   678   592    15

LYRICA         405    271    49    218   172    26    187    99    91

GEODON /

 ZELDOX        178    165     8    142   136     5     36    29    22

ZOLOFT         127    706   (82)    33   620   (95)    94    86     9

NEURONTIN      105    123   (15)    13    16   (17)    92   107   (15)

ARICEPT**      100     88    13      -     -   *      100    88    13

XANAX / XR      79     79     1     13    16   (21)    66    63     6

RELPAX          66     67    (2)    39    42    (8)    27    25     7

- ARTHRITIS

 AND PAIN      626    627     -    373   394    (5)   253   233     9

 CELEBREX      478    471     1    341   355    (4)   137   116    18

- INFECTIOUS

 AND

 RESPIRATORY

 DISEASES      837    835     -    231   271   (15)   606   564     7

ZYVOX          202    167    21    118   110     8     84    57    44

VFEND          145    118    23     42    37    14    103    81    27

ZITHROMAX /

 ZMAX          108    166   (35)     5    60   (92)   103   106    (3)

DIFLUCAN       104    110    (6)     3    (4)  *      101   114   (12)

- UROLOGY      663    660     -    323   358   (10)   340   302    12

VIAGRA         382    394    (3)   142   178   (21)   240   216    12

DETROL /

 DETROL LA     269    255     5    178   176     2     91    79    13

- ONCOLOGY     652    540    21    239   211    13    413   329    26

CAMPTOSAR      241    238     1    130   130     1    111   108     2

SUTENT         146     36   311     61    33    85     85     3    M+

AROMASIN        92     75    22     28    25    10     64    50    28

- OPHTHAL-

MOLOGY         400    352    14    123   109    13    277   243    14

XALATAN /

 XALACOM       389    351    11    123   109    13    266   242    10

- ENDOCRINE

 DISORDERS     253    232     9     57    53     9    196   179    10

GENOTROPIN     202    191     6     53    49     7    149   142     6

- ALL OTHER  1,025    933    10    665   563    18    360   370    (3)

ZYRTEC /

 ZYRTEC D      385    377     2    385   377     2      -     -   *

- ALLIANCE

 REVENUE

 (Aricept,

 Exforge,

 Macugen,

 Mirapex,

 Olmetec,

 Rebif and

 Spiriva)      392    324    21    220   189    16    172   135    28

----------------------------------------------------------------------

ANIMAL

 HEALTH        632    583     9    254   262    (3)   378   321    18

----------------------------------------------------------------------

OTHER ***      347    243    43    120    75    60    227   168    35

----------------------------------------------------------------------


* - Calculation not meaningful.


** - Represents direct sales under license agreement with Eisai Co.,

 Ltd.


*** - Includes Consumer Healthcare business transition activity,

 Capsugel and Pfizer Centersource.


M+ - Change greater than one thousand percent.


Certain amounts and percentages may reflect rounding adjustments.


Certain prior year data have been reclassified to conform to the

 current year presentation.

-0-
                              PFIZER INC

                       SEGMENT/PRODUCT REVENUES

                           SIX MONTHS 2007

                             (UNAUDITED)

                        (millions of dollars)



                                        YEAR-TO-DATE

           -----------------------------------------------------------

               WORLDWIDE             U.S.            INTERNATIONAL

           -----------------------------------------------------------

                          %                   %                   %

            2007   2006 Change 2007   2006  Change 2007   2006  Change

======================================================================

TOTAL

 REVENUES  23,558 23,488   -  11,691 12,710   (8) 11,867 10,778    10

======================================================================


----------------------------------------------------------------------

PHARMA-

CEUTICAL   21,686 21,932  (1) 10,935 12,068   (9) 10,751  9,864     9

----------------------------------------------------------------------

- CARDIO-

 VASCULAR

 AND

 METABOLIC

 DISEASES   9,238  9,517  (3)  4,764  5,308  (10)  4,474  4,209     6

LIPITOR     6,077  6,230  (2)  3,521  3,830   (8)  2,556  2,400     6

NORVASC     1,711  2,341 (27)    529  1,186  (55)  1,182  1,155     2

CHANTIX /

 CHAMPIX      362      -  *      313      -   *       49      -   *

CADUET        265    157  69     244    146   67      21     11    93

CARDURA       259    265  (2)      2      4  (40)    257    261    (2)

- CENTRAL

 NERVOUS

 SYSTEM

 DISORDERS  2,419  3,287 (26)  1,133  2,138  (47)  1,286  1,149    12

LYRICA        800    463  73     459    286   60     341    177    93

GEODON /

 ZELDOX       394    347  14     324    286   14      70     61    13

ZOLOFT        273  1,485 (82)    101  1,303  (92)    172    182    (5)

NEURONTIN     215    250 (14)     36     42  (15)    179    208   (14)

ARICEPT**     185    170   8       -      -   *      185    170     8

XANAX / XR    154    161  (4)     28     39  (28)    126    122     4

RELPAX        149    133  12      96     86   11      53     47    12

- ARTHRITIS

 AND PAIN   1,375  1,268   8     896    830    8     479    438     9

CELEBREX    1,076    962  12     817    746   10     259    216    20

- INFECTIOUS

 AND

 RESPIRATORY

 DISEASES   1,750  1,772  (1)    566    681  (17)  1,184  1,091     8

ZYVOX         460    353  30     301    247   22     159    106    48

VFEND         293    235  25     101     83   21     192    152    26

ZITHROMAX /

 ZMAX         239    425 (44)     18    194  (91)    221    231    (4)

DIFLUCAN      215    217  (1)      6     (1)  *      209    218    (4)

- UROLOGY   1,414  1,323   7     776    745    4     638    578    10

VIAGRA        816    784   4     366    375   (2)    450    409    10

DETROL /

 DETROL LA    572    515  11     401    361   11     171    154    10

- ONCOLOGY  1,247  1,010  24     483    390   24     764    620    23

CAMPTOSAR     470    450   4     260    242    8     210    208     1

SUTENT        248     52 380     114     49  133     134      3    M+

AROMASIN      185    145  27      63     53   19     122     92    32

- OPHTHAL-

MOLOGY        766    689  11     249    232    7     517    457    13

XALATAN /

 XALACOM      749    688   9     249    232    7     500    456    10

- ENDOCRINE

 DISORDERS    498    478   4     121    130   (7)    377    348     9

GENOTROPIN    403    388   4     113    113    -     290    275     6

- ALL OTHER 2,189  1,940  13   1,484  1,217   22     705    723    (2)

ZYRTEC /

 ZYRTEC D     846    798   6     846    798    6       -      -   *

- ALLIANCE

 REVENUE

 (Aricept,

 Exforge,

 Macugen,

 Mirapex,

 Olmetec,

 Rebif and

 Spiriva)     790    648  22     463    397   17     327    251    30

----------------------------------------------------------------------

ANIMAL

 HEALTH     1,218  1,094  11     518    491    6     700    603    16

----------------------------------------------------------------------

OTHER ***     654    462  42     238    151   58     416    311    34

----------------------------------------------------------------------


* - Calculation not meaningful.


** - Represents direct sales under license agreement with Eisai Co.,

 Ltd.


*** - Includes Consumer Healthcare business transition activity,

 Capsugel and Pfizer Centersource.


M+ - Change greater than one thousand percent.


Certain amounts and percentages may reflect rounding adjustments.


Certain prior year data have been reclassified to conform to the

 current year presentation.

-0-
                 PFIZER INC AND SUBSIDIARY COMPANIES

RECONCILIATION FROM PHARMACEUTICAL REPORTED REVENUES TO PHARMACEUTICAL

                           ADJUSTED REVENUES

                             (UNAUDITED)

                        (millions of dollars)



                                       Worldwide

                 -----------------------------------------------------

                  Second Quarter   % Incr.     Six Months     % Incr.

                 -----------------    /     -----------------    /

                   2007     2006   (Decr.)    2007     2006   (Decr.)

                 -------- -------- -------- -------- -------- --------

Total

 Pharmaceutical

 revenues        $ 10,105 $ 10,915    (7)   $ 21,686 $ 21,932    (1)

Norvasc               642    1,158   (45)      1,711    2,341   (27)

Zoloft                127      706   (82)        273    1,485   (82)

                  -------  -------           -------  -------

Pharmaceutical

 adjusted

 revenues        $  9,336 $  9,051     3    $ 19,702 $ 18,106     9

                  =======  =======           =======  =======


                                         U.S.

                 -----------------------------------------------------

                  Second Quarter   % Incr.     Six Months     % Incr.

                 -----------------    /     -----------------    /

                   2007     2006   (Decr.)    2007     2006   (Decr.)

                 -------- -------- -------- -------- -------- --------

Total

 Pharmaceutical

 revenues        $  4,467 $  5,756   (22)   $ 10,935 $ 12,068    (9)

Norvasc                18      560   (97)        529    1,186   (55)

Zoloft                 33      620   (95)        101    1,303   (92)

                  -------  -------           -------  -------

Pharmaceutical

 adjusted

 revenues        $  4,416 $  4,576    (3)   $ 10,305 $  9,579     8

                  =======  =======           =======  =======


                                     International

                 -----------------------------------------------------

                  Second Quarter   % Incr.     Six Months     % Incr.

                 -----------------    /     -----------------    /

                   2007     2006   (Decr.)    2007     2006   (Decr.)

                 -------- -------- -------- -------- -------- --------

Total

 Pharmaceutical

 revenues        $  5,638 $  5,159     9    $ 10,751 $  9,864     9

Norvasc               624      598     4       1,182    1,155     2

Zoloft                 94       86     9         172      182    (5)

                  -------  -------           -------  -------

Pharmaceutical

 adjusted

 revenues        $  4,920 $  4,475    10    $  9,397 $  8,527    10

                  =======  =======           =======  =======

-0-
Certain amounts and percentages may reflect rounding adjustments.




 (1) Pharmaceutical adjusted revenues, which excludes the revenues of

  major products which have lost exclusivity in the U.S. since the

  beginning of 2006, is an alternative view of our Pharmaceutical

  revenue and we believe that investors' understanding of

  Pharmaceutical revenue is enhanced by disclosing this performance

  measure. Zoloft lost its U.S. exclusivity at the end of June 2006

  and Norvasc lost its U.S. exclusivity in March 2007, and as is

  typical in the pharmaceutical industry, this has resulted in a

  dramatic decline in revenues due to generic competition. We believe

  that excluding the impact of these products assists the reader in

  understanding the underlying strength of the balance of our diverse

  Pharmaceutical product portfolio in 2007. Because of its non-

  standardized definition, this adjusted Pharmaceutical revenues

  measure has limitations as it may not be comparable with the

  calculation of similar measures of other companies. This additional

  revenue measure is not, and should not be viewed as, a substitute

  for the U.S. GAAP comparison of Pharmaceutical revenue.


 (2) Pharmaceutical International adjusted revenues reflect a

  favorable impact in the second quarter and first half of 2007 due to

  changes in foreign exchange rates.

-0-
                            PFIZER INC                      

                     SUPPLEMENTAL INFORMATION

1) Impact of Foreign Exchange on Revenues

The weakening of the U.S. dollar relative to other currencies, primarily the euro and British pound, favorably impacted our revenues by $284 million and $553 million in the second quarter and first six months of 2007, compared to the same periods in 2006, or 2.4% in both periods.

2) Change in Cost of Sales

Cost of sales increased 18% and 15% in the three months and six months ended July 1, 2007, compared to the same periods in 2006. These increases reflect unfavorable product mix, reflecting the loss of U.S. exclusivity on low manufacturing cost products, like Zoloft and Norvasc, as well as the impact of our efforts to reduce the costs of new products. Charges in cost of sales related to our Adapting to Scale (AtS) productivity initiative were $170 million and $264 million for the three months and six months ended July 1, 2007, and $104 million and $228 million for the three months and six months ended July 2, 2006.

Cost of sales also includes $45 million and $80 million for the three months and six months ended July 1, 2007, related to business transition activities associated with the sale of our Consumer Healthcare business, completed in December 2006. These expenses are transitional in nature and generally result from agreements that seek to facilitate the orderly transfer of operations of our former Consumer Healthcare business to the new owner.

Cost of sales as a percentage of revenues increased 3.8 percentage points to 19.0% in the second quarter, reflecting unfavorable product and geographic mix in our portfolio, the impact of efforts to reduce the costs of new products, and the impact of higher 2007 AtS implementation costs, compared to the same period in 2006.

3) Change in Selling, Informational & Administrative (SI&A) Expenses and Research & Development (R&D) Expenses

Reported SI&A expense decreased 1% in the three months and six months ended July 1, 2007, compared to the same periods in 2006, reflecting timing considerations associated with our annual investments in promotional programs and the savings impact of our AtS productivity initiatives, partially offset by the unfavorable impact of foreign exchange on expenses. Reported SI&A expense includes charges of $79 million and $128 million related to AtS implementation costs for the three months and six months ended July 1, 2007, and $58 million and $97 million for the three months and six months ended July 2, 2006.

Reported R&D expenses, excluding acquisition-related in-process research and development charges (IPR&D), grew 24% in the second quarter of 2007 and 17% in the first six months of 2007 versus the comparable prior-year periods. The second quarter increase is primarily related to collaboration payments made to Bristol-Myers Squibb Company (BMS) for the development and commercialization of apixaban. In addition to the second quarter payments made to BMS this year, the first-quarter 2006 includes a one-time R&D milestone of $118 million due to us from sanofi-aventis. Reported R&D expense include charges of $131 million and $162 million related to the AtS implementation costs for the three months and six months ended July 1, 2007, and $40 million and $62 million for the three months and six months ended July 2, 2006.

IPR&D charges of $283 million, primarily related to the acquisitions of BioRexis Pharmaceutical Corp. and Embrex, Inc., were recorded in the first quarter of 2007 and $513 million, primarily related to the acquisition of Rinat Neuroscience Corp., was recorded in the second quarter of 2006.

4) Other Income and Other Deductions -0-

($ millions)                        Second Quarter      Six Months

                                   ----------------- -----------------

                                    2007     2006*    2007     2006*

                                   -------- -------- -------- --------

Net Interest (Income)/Expense(a)     $(286)   $(106)   $(534)   $(158)

Royalty Income                         (40)    (102)    (133)    (184)

Net Gains on Asset Disposals           (72)     (84)     (79)    (168)

Other, Net                             (89)     (67)    (143)    (105)

                                   -------- -------- -------- --------

Other (Income)/Deductions-Net        $(487)   $(359)   $(889)   $(615)

                                   ======== ======== ======== ========

*Certain 2006 amounts were reclassified to conform to the 2007 presentation.

(a) Increases in net interest income in the second quarter and first six months of 2007 compared to the same periods in 2006 were due primarily to higher interest rates and an increase in our net financial assets, reflecting proceeds of $16.6 billion from the sale of our Consumer Healthcare business in late December 2006.

5) Effective Tax Rate

The effective tax rates on reported Income from continuing operations before provision for taxes on income and minority interest for the second quarter of 2007 is 16.8% compared to 25.6% in the second q

Posted: July 2007


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