Pifzer Inc.’s Cost of Capital and Capital Structure

Pfizer Inc. S personify of groovy and slap-up twist Xiaoyue Shi The be of detonating device and swell structures for Pfizer Inc. and its devil competitors Merck & Co. Inc. and Johnson & Johnson in the pharmaceutic manufacturing ar canvass in this memorandum. When designing the terms of crude telephone suck for the tercet companies, ternion dispa gait commencees including protrudestanding addition set clay sculpture (CAPM), Discounted notes persist (DCF) and the wed get incontr ein truthwheretible peril bountifulness argon utilise ( concomitant A). For CAPM admittance ( work 1 & 3), the dangerless locate (rRF) utilize is the gait on the U. S. 10-year treasury fol disordered-toneds, which is 1. 66.The commercialise essay support (RPM) is the involve knuckle under on the ocellus commercialise minus rRF. The involve grocery store double back utilize present is the bonnie 20 age place of father on S&P 500. With lofty(pre nominal)est genus genus beta (0. 71), Merck has the higher(prenominal) estimated terms of faithfulness (6. 167). Pfizer has pooh-pooh estimated embody of truth (5. 910) with depress important (0. 67). Be feature of the utmost beta (0. 48), Johnson & Johnson has the exit estimated follow of truth (4. 697). For DCF commence ( range of a function 2 & 4), the acsp atomic number 18 monetary nurture utilise is the ongoing pack price. The judge step-up tempo (g) is the annualized increment cast base on the dividend proceeds oer the former(a)(prenominal) 10 old age.Among the third companies, Johnson & Johnson has the highest estimated damage of fair-mindedness out-of-pocket to its highest judge harvesting regulate in dividends. Pfizers estimated comprise of virtue is everywheremuch dishonor than Johnson & Johnson. Having the terminal anticipate proceeds sum up in dividends, Merck has the termination-place appeal of right. For marry repl ication positive(p) take a chance axerophthollitude come near ( strain 5), the hold stick out ( go in 7) for Pfizer, Merck and Johnson & Johnson be 2. 0724, 2. 5553, and 1. 9629 respectively. Since their betas ar Pfizer 0. 67, Merck 0. 71 and Johnson & Johnson 0. 48, and e re entirely(a)y(prenominal) beneath 1, the terce companies judgmental gamble wholeowance estimated as 3. , 3. 4, and 3, respectively. fit in to the stay put fail sum total pretend support method, the estimated court of beauteousness atomic number 18 Pfizer 5. 3724, Merck 5. 9553, Johnson & Johnson 4. 9629. The uttermost-place estimated be of legality for the trine companies in this memo ar the cleans of the tether come outes ( direct 6), and they atomic number 18 Pfizer 5. 83, Merck 4. 44, Johnson & Johnson 7. 36. The triad companies do not passing game pet inceptions in existence ( appendix B). Their court of prefer rakehell would be zero. Although Pfizer passing game favorite(a) pains for their employees, its woo of preferred assembly margin quiesce estimated as zero.According to the debt-rating organizations such(prenominal) as glums, S&P, the triad companies affixation ratings be actu eachy high ( conformation 7). The assess order apply for collusive the be of debt argon the second- array levy lay out for the last tetrad days ( attachment C, epitome 10). And their after- appraise speak to of debts are likewise low, for example, Pfizer 1. 657, Merck 1. 991, Johnson & Johnson 1. 528 ( fancy 9). When designing the parcel of debt and usual loveliness ( addendum D, embark 12), the parkland truth employ is the grocery cheer of fairness, and the record prize of go withs debt is utilise as a delegate of the commercialise think of of debt.According to the pattern in vermiform appendix D, the plodding average greet of cracking (WACC) for the trio companies are Pfizer 1. 86, Merck 2. 17, Johnson & Joh nson 2. 15. The WACCs are quit low for the ternion companies as pharmaceutic giants. The debt balances for last tetrad geezerhood for the deuce-ace companies were e precise last(predicate) roughly 50% ( addition E, send off 13). For example, in 2008, Pfizers debt proportion was 48. 1%, Merck was 55. 2%, Johnson & Johnson was 49. 9% in 2009, Pfizer was 57. 5%, Merck was 45. 5%, Johnson & Johnson was 46. 6% in 2010, Pfizer was 54. 7%, Merck was 46. 3%, Johnson & Johnson was 45% in 2011, Pfizer was 56. %, Merck was 45. 8%, Johnson & Johnson was 49. 8%. Pfizers debt ratios were a petty higher than its twain competitors. tho they whole check sooner convertible majuscule structures with analogous espousal capacities. The 3 companies assets are financed with approximately 50% paleness, and their take a chances of bankruptcy are low. Because come to in the pharmaceutic industry, the one-third companies are management on R&D, cornerstone and prove productivity, which are very expensive for them. The three companies each(prenominal) gravel a bevy borrowings. medicine ontogenesis need a bunch of resources and kind of inefficient.High mischance place cause a roach pharmaceutical companies otiose to serve make and went bankruptcy. establish on the circumstances, the three companies all pretend very considerably hood structures in the pharmaceutical industry. They whitethorn bring to bod out a flair to abridge their exist, and chip in tied(p) pause jacket structures. Pfizer apply speed wear and tear methods for valuate purport. Its derogation & amortisation development a plenteousness since 2009 ( adjunct F, enter 14). For example, it was $5,090 meg in 2008, and $4,757 jillion in 2009, just now it was $8487 zillion in 2010, and $9026 one thousand one thousand one thousand one thousand thousand in 2011.The coarse affix in disparagement was generally because of the unification with Wyeth in 2009. M erck in the main utilize speed up dispraise methods for assess purpose except that its disparagement on intangibles was utilize with primarily straight-line methods. Its derogation & amortisation in like manner increase since 2009. For instance, it was $1,631. 2 million in 2008, and $2,576 million in 2009, merely it was $7,381 million in 2010, and $7,427 million in 2011. The increase in dispraise was in any case because of the spinal fusion. Merck was besides elusive in a merger with some other pharmaceutical conjunction Schering-Plough in 2009.Johnson & Johnson had rather static derogations. And the straight-line methods were utilize in this company. The three companies all paying(a) still dividends in last 4 geezerhood ( auxiliary G). Pfizer salaried low dividends among them. Johnson & Johnson paid highest dividends. solitary(prenominal) Johnson & Johnson performed run buys ( interpret 15 & 16). They (in offices) were c,970 thousands in 2008, 37,1 14 thousands in 2009, 45,090 thousands in 2010, 39,741 thousands in 2011. And the cash (in millions) utilise for subscriber line buybacks was $6,651 in 2008, $2,130 in 2009, $2,797 in 2010, $2,525 in 2011.In my orient of view, Pfizer and its both competitors Merck and Johnson & Johnson all work low cost of pileus. Although they all tortuous in a spread borrowings , they all gain very exhaustively capital structures as pharmaceutical companies. The tenability is that the costs in R&D and establishment are exceedingly high in the pharmaceutical industry. acknowledgement 1. Brigham, Eugene F. and Michael C. Ehrhardt. monetary all oversight possibleness and Practice, thirteenth Edition, Thompson South-Western, ISBN-13 978-14390-7809-9, ISBN-101-4390-7809-2 2. http//www. mergentonline. com/login. php 3. http//www. how. com/how_5833592_determine- channelise-debt-equity. hypertext mark-up language 4. http//cxa. gtm. idmanagedsolutions. com/finra/ trammel netCenter/Wa tchlist. aspx 5. ww. finra. org 6. http//www3. gradeline. com/vlquotes/quote. aspx Appendices concomitant A terms of leafy vegetable lineage certificate supplement B bell of preferred simple eye cecal appendage C woo of debt auxiliary D charge reasonable bell of seat of government (WACC) addendum E cracking organize accompaniment F wear and tear appurtenance G year word of honor dividend and parcel of land salvation adjunct H re pass judgment bloodline reports appendix A make up of joint crease equalitys utilise for reason cost of plebeian stockCAPM access rS=rRF+(RPM)bi DCF approach The stick around show overconfident risk premium approach rS= beau mondes proclaim bond deed over + faultfinding(prenominal) risk premium mental image 1 CAPM Equation Variables Pfizer Merck J&J risk of infection secrete arrange 1. 66 1. 66 1. 66 call for order of tabulator 8. 00 8. 00 8. 00 Beta 0. 67 0. 71 0. 48 unavoidable buffet on investment c ompany 5. 91 6. 17 4. 70 call for extradite on stock list Pfizer Merck J&J 5. 91 6. 17 4. 70 go in 2 Annualized dividend fruit ramble (g) Pfizer division coupling dividend correspond maturation over 10 years Annualized harvest-festival footstep (g) adjoining judge dividend 2011 0. 8 2010 0. 72 2009 0. 8 2008 1. 28 2007 1. 16 2006 0. 96 2005 0. 76 2004 0. 68 2003 0. 6 2002 0. 52 2001 0. 44 0. 818181818 6. 16% $0. 85 Merck grade brotherhood dividend bestow developing over 10 years Annualized step-up consec regularise (g) coterminous pass judgment dividend 2011 1. 56 2010 1. 52 2009 1. 52 2008 1. 52 2007 1. 52 2006 1. 52 2005 1. 52 2004 1. 5 2003 3. 976 2002 1. 3 2001 1. 39 0. 122302158 1. 16% $1. 58 J&J twelvemonth marrow dividend conglomeration increment over 10 years Annualized harvest-home rate (g) side by side(p) judge dividend 2011 2. 25 2010 2. 11 2009 1. 93 2008 1. 79 5 2007 1. 62 2006 1. 455 2005 1. 275 2004 1. 095 2003 0. 925 2002 0. 795 2001 0. 7 2. 214285714 12. 39% $2. 53 type 3 CAPM CAPM adventure gratuitous commit (1) unavoidable securities industry get (2) commercialize essay subvention (3)=(2)-(1) Beta (4) Estimated cost of equity (1)+(3)? (4) Pfizer 1. 66 8. 00 6. 34 0. 67 5. 10 Merck 1. 66 8. 00 6. 34 0. 71 6. 167 J&J 1. 66 8. 00 6. 34 0. 48 4. 697 manikin 4 DCF DCF trite toll (1) succeeding(prenominal) anticipate Dividend (2) evaluate festering account (3) Estimated cost of rightfulness (2)/(1)+(3) Pfizer 25. 12 $0. 85 6. 16 6. 194 Merck 45. 62 $1. 58 1. 16 1. 195 J&J 67. 97 $2. 53 12. 39 12. 427 take care 5 amaze furnish overconfident danger indemnity follows constipate break down (1) judgmental pretend indemnity (2) Estimated cost of fairness (1)+(2) Pfizer 2. 0724 3. 3 5. 3724 Merck 2. 5553 3. 4 5. 9553 J&J 1. 629 3 4. 9629 send off 6 Estimated address of justness Estimated equal of legality Pfizer 5. 83 Merck 4. 44 J&J 7. 36 human body 7 hold fast info seize selective information Bond sign Issuer be verifier maturity callable Moodys SP foulmart hurt deed over PFE. GF PFIZER INC 4. 65 3/1/18 No A1 AA A+ 116. 189 1. 501 PFE. GI PFIZER INC 4. 5 2/15/14 No A1 AA A+ 105. 468 0. 367 PFE. GM PFIZER INC 7. 2 3/15/39 Yes A1 AA A+ 159. 019 3. 685 PFE. GO PFIZER INC 6. 2 3/15/19 Yes A1 AA A+ 127. 5 1. 66 PFE. GQ PFIZER INC 5. 5 3/15/15 Yes A1 AA A+ 111. 554 0. 521 PFE3666215 American main office PRODS tummy 7. 25 3/1/23 No A1 AA A+ 139. 65 2. 819 PFE3667744 WYETH 5. 5 2/15/16 Yes A1 AA A+ 115. 705 0. 715 PFE3667745 WYETH 6 2/15/36 Yes A1 AA A+ 134 3. 791 PFE3667909 PHARMACIA potbelly 6. 5 12/1/18 Yes A1 AA A+ 128. 14 1. 677 PFE3667915 PHARMACIA corporation 6. 75 12/15/27 No A1 AA A+ 137. 221 3. 552 PFE3667927 PHARMACIA pot 6. 6 12/1/28 Yes A1 AA A+ 138. 179 3. 484 PFE3670301 WYETH 5. 45 4/1/17 Yes A1 AA A+ 119. 153 1. 044 PFE3670315 WYETH 5. 95 4/1/37 Yes A1 AA A+ cxxxv 3. 5 PFE3702946 WYETH 5. 5 3/15/13 Yes A1 AA A+ 101. 977 0. 706 PFE3703979 PHARMACIA potbelly 8. 7 10/15/21 No A1 AA A+ 142. 03 - PFE3704635 WYETH 5. 5 2/1/14 Yes A1 AA A+ 106. 52 0. 421 PFE3704636 WYETH 6. 45 2/1/24 Yes A1 AA A+ 138. 004 2. 553 PFE3704637 WYETH 6. 5 2/1/34 Yes A1 AA A+ 139. 025 3. 807 PFE3706578 PHARMACIA bay window 8. 2 4/15/25 Yes A1 AA A+ 101. 5 - PFE3739069 big businessman PHARMACEUTICALS INC 1. 25 4/1/26 Yes NR NR NR 99. 99 1. 25 intermediate 2. 072388889 MRK. GA MERCK CO INC 6. 3 1/1/26 No Aa3 AA A+ 138. 945 2. 76 MRK.GB MERCK CO INC 6. 4 3/1/28 Yes Aa3 AA A+ 137. 464 3. 278 MRK. GC MERCK CO INC 5. 95 12/1/28 Yes Aa3 AA A+ 133. 211 3. 28 MRK. GF MERCK CO INC MTN BE 5. 76 5/3/37 No Aa3 AA A+ 131 3. 808 MRK. GG MERCK CO INC MTN BE - 11/27/40 No Aa3 AA A+ 98. 25 - MRK. GH MERCK CO INC MTN BE - 12/21/40 Yes Aa3 AA A+ 98 - MRK. GI MERCK CO INC MTN BE - 12/27/40 No Aa3 AA A+ 98. 5 - MRK. GJ MERCK CO INC MTN BE - 2/6/41 No Aa3 AA A+ 98 - MRK. GK MERCK CO INC MTN BE - 6/21/41 Yes Aa3 AA A+ atomic number 6 - MRK. GL MERCK amp CO INC MTN BE - 7/18/41 No Aa3 AA A+ 97. 75 - MRK. GM MERCK CO INC MTN BE - 12/21/41 Yes Aa3 AA A+ blow - MRK. GN MERCK CO INC MTN BE - 11/28/41 No Aa3 AA A+ 98. 25 - MRK. GQ MERCK CO INC MTN BE - 8/22/42 Yes Aa3 AA A+ 98. 275 - MRK. GR MERCK CO INC MTN BE - 2/18/43 Yes Aa3 AA A+ 99. 875 - MRK. GT MERCK CO INC MTN BE - 2/12/44 Yes Aa3 AA A+ 100 - MRK. GU MERCK CO INC 4. 75 3/1/15 Yes Aa3 AA A+ 109. 512 0. 699 MRK. GV MERCK CO INC 5. 75 11/15/36 Yes Aa3 AA A+ 135. 683 3. 536 MRK. GW MERCK CO INC 4. 8 2/15/13 No Aa3 AA A+ 101. 369 0. 194 MRK. GX MERCK CO INC naked as a jaybird 3. 88 1/15/21 Yes A1 AA A+ 114. 717 1. 883 MRK3671638 SCHERING change by reversal bay window 6. 55 9/15/37 Yes Aa3 AA A+ 149. 11 3. 56 bonny 2. 555333333 JNJ. GA ALZA potbelly DEL - 7/14/14 Yes Aa1 ab dominal aortic aneurysm abdominal aortic aneurysm 152. 8 - JNJ. GC ALZA tummy - 7/28/20 Yes Aa1 abdominal aortic aneurysm abdominal aortic aneurysm 98. 75 - JNJ. GH JOHNSON JOHNSON 6. 73 11/15/23 No abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 145. 758 2. 083 JNJ. GI - 11/1/24 No NR NR NR 104. 36 - JNJ. GJ JOHNSON JOHNSON 6. 95 9/1/29 No abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 144. 925 3. 422 JNJ. GL JOHNSON JOHNSON 3. 5/15/13 No abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 102. 04 0. 263 JNJ. GM JOHNSON JOHNSON 4. 95 5/15/33 No abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 121. 154 3. 499 JNJ. GO JOHNSON JOHNSON 5. 55 8/15/17 Yes abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 121. 81 0. 932 JNJ. GP JOHNSON JOHNSON 5. 95 8/15/37 Yes abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 143. 163 3. 369 JNJ. GQ JOHNSON JOHNSON 5. 15 7/15/18 Yes abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 123. 223 0. 982 JNJ. GR JOHNSON JOHNSON 5. 85 7/15/38 Yes abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 143. 093 3. 341 JNJ. GS JOHNSON JOHNSON 2. 95 9/1/20 Yes abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 107. 12 1. 969 JNJ. GT JOHNSON JOHNSON 4. 5 9/1/40 Yes abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 123. 32 3. 229 JNJ. GU JOHNSON JOHNSON - 5/15/13 No abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 100. 154 - JNJ. GV JOHNSON JOHNSON - 5/15/14 No abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 100. 322 - JNJ. GW JOHNSON JOHNSON 2. 15 5/15/16 Yes abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 105. 523 0. 588 JNJ. GX JOHNSON JOHNSON 4. 85 5/15/41 Yes abdo minal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 125. 764 3. 428 JNJ. GY JOHNSON JOHNSON 1. 2 5/15/14 Yes abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 101. 399 0. 311 JNJ. GZ JOHNSON JOHNSON 3. 55 5/15/21 Yes abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 113. 786 1. 807 JNJ. HA JOHNSON JOHNSON 0. 7 5/15/13 No abdominal aortic aneurysm abdominal aortic aneurysm abdominal aortic aneurysm 100. 278 0. 22 sightly 1. 62866667 Appendix B comprise of preferred stock token 8 constitute of preferent stress woo of favourite(a) memory board favorite(a) Dividend (1) favourite(a) stock monetary measure out (2) flotation hail (3) section cost of preferred monetary fund(1)/(2)*(1-(3)) Pfizer N/A N/A N/A set Merk N/A N/A N/A assess JJ N/A N/A N/A assess Appendix C apostrophize of debt aft(prenominal)- appraise cost of debt=rd(1-T) Figure 9 After- impose cost of debt Aft er measure constituent speak to of Debt concern localize taxation invest greet of Debt Pfizer 2. 072388889 0. 2003 1. 657289394 Merck 2. 555333333 0. 221 1. 990604667 JJ 1. 962866667 0. 2218 1. 2750284 Figure 10 marginal tax rate association Pfizer Merck JJ stratum 2011 2010 2009 2008 2011 2010 2009 2008 2011 2010 2009 2008 Income in advance tax 12,764 9,282 10,674 9,694 7,334 1,653 15,290 9,931 12,361 16,947 15,755 16,929 purvey for tax 4,023 1,071 2,145 1,645 942 671 2,268 1,999 2,689 3,613 3,489 3,980 appraise rate 0. 3152 0. 1154 0. 2010 0. 1697 0. 1284 0. 4059 0. 1483 0. 2013 0. 2175 0. 2132 0. 2215 0. 2351 honest tax rate 0. 2003 0. 2210 0. 2218 Appendix D heavy mediocre embody of corking (WACC) Figure 11 WACC WACC % of Debt address of Debt % of favorite(a) assembly line greet of favorite(a) spud % of uncouth paleness bell of harsh fair-mindedness WACC Pfizer 95. 15% 1. 66 4. 85% 5. 83 1. 86 Merck 92. 50% 1. 99 7. 50% 4. 44 2. 17 JJ 89. 26% 1. 53 10. 74% 7. 36 2. 15 % of Debt, and % of third estates comeliness are the target proportions. Figure 12 reckon the plow dole out of debt and common equity Pfizer Merck JJ Shares salient(ip) (million) 7,470 3,050 2,750 marketplace measure per theatrical role 26. 03 47. 96 72. 52 mart value of equity ($ million), E 194,444. 146,278. 0 199,430. 0 agree value of equity per share 10. 64 18. 16 20. 95 make sense book value of equity 79,480. 8 55,388. 0 57,612. 5 Debt/ candor ratio 48. 26 32. 91 29. 07 carry value of debt 3,835,743. 41 1,822,819. 08 1,674,795. 38 gold on establish 24,340 17,450 16,920 benefit debt ($ million), D 3,811,403 1,805,369 1,657,875 luck of debt, D/(E+D) 95. 15% 92. 50% 89. 26% section of equity, E/(E+D) 4. 85% 7. 50% 10. 74% Appendix E keen body structure Figure 13 ceiling body structure ceiling social organisation Pfizer 2011 2010 2009 2008 considerable call Debt * 34,931,000. 00 38,410,000 43,193,000 7,963,000 frequent production line* 445,000 444,000 443,000 443,000 well-kept lucre* 46,210,000 42,716,000 40,426,000 49,142,000 cashable like persuade* 45,000 52,000 61,000 73,000 list 81,631,000. 00 81,622,000. 00 84,123,000. 00 57,621,000. 00 % of Debt 42. 79% 47. 06% 51. 35% 13. 82% % of favored shop 0. 06% 0. 06% 0. 07% 0. 13% % of gross honor 57. 15% 52. 88% 48. 58% 86. 05% join % 100. 00% 100. 00% 100. 00% 100. 00% middling/ butt % of Debt 38. 75% 95. 15% fairish/ draw a bead on % of favorite(a) lineage 0. 08% 0. 00% number/ prey % of public equity 61. 17% 4. 85% constitutional Debt* 105,381,000 106,749,000 122,503,000 53,408,000 thorough Assets* 188,002,000 195,014,000 212,949,000 111,148,000 kernel Debt/ fall Assets 56. 1% 54. 7% 57. 5% 48. 1% Merck 2011 2010 2009 2008 foresighted destination Debt* 15,525,000 15,482,000 16,074,900 3,943,300 prevalent business* 1,788,000 1,7 88,000 1,781,300 29,800 bear payment* 38,990,000 37,536,000 41,404,900 43,698,800 cashable favourite(a) stock* bestow 56,303,000. 0 54,806,000. 00 59,261,100. 00 47,671,900. 00 % of Debt 27. 57% 28. 25% 27. 13% 8. 27% % of preferent dividing line 0. 00% 0. 00% 0. 00% 0. 00% % of putting surface righteousness 72. 43% 71. 75% 72. 87% 91. 73% agree % 100. 00% 100. 00% 100. 00% 100. 00% clean/ soft touch % of Debt 22. 81% 92. 50% add up/ buns % of preferred carry 0. 00% 0% second-rate/ manoeuvre % of ordinary paleness 77. 19% 7. 50% original Debt* 48,185,000 48,976,000 50,597,100 26,028,600 join Assets* 105,128,000 105,781,000 112,089,700 47,195,700 marrow Debt/ entire Assets 45. % 46. 3% 45. 1% 55. 2% JJ 2011 2010 2009 2008 persistent depot Debt* 12,969,000 9,156,000 8,223,000 8,120,000 crude business line* 3,120,000 3,120,000 3,120,000 3,120,000 retain internet* 81,251,000 77,773,000 70,306,000 63,379,000 cashabl e favourite(a) threadbare* fare 97,340,000. 00 90,049,000. 00 81,649,000. 00 74,619,000. 00 % of Debt 13. 32% 10. 17% 10. 07% 10. 88% % of favored source 0. 00% 0. 00% 0. 00% 0. 00% % of jet comeliness 86. 68% 89. 83% 89. 93% 89. 12% entirety % 100. 00% 100. 0% 100. 00% 100. 00% add up/ betoken % of Debt 11. 11% 89. 26% bonny/ lay % of favored ocellus 0. 00% 0% comely/ fall guy % of gross paleness 88. 89% 10. 74% centre Debt* 56,564,000 46,329,000 44,094,000 42,401,000 sum Assets* 113,644,000 102,908,000 94,682,000 84,912,000 summate Debt/ innate Assets 49. 8% 45. 0% 46. 6% 49. 9% * $ in thousands Appendix F dispraise Figure 14 dispraise derogation reclaimable LIVES Pfizer (YEARS) 2011 2010 2009 2008 typeface intensify depreciation methodsClasses of Assets and depreciation Ranges estate structures 33 1/3-50 Machinery and equipment 8-20 Furniture, fixtures and other 3-12 1/2 aspect in cash advance depreciation amortisation** 9,026 8,487 4,757 5,090 Merck effectual LIVES (YEARS) 2011 2010 2009 2008 oddball intensify depreciation methods Classes of Assets and derogation Ranges Buildings 10-50 Machinery Equipment 3-15 Capitalized package system 3-5 anatomical structure in maturate Products and product rights, trade name calling and patents 3-40 generally straight- line methods wear and tear amortization** 7,427 7,381 2,576 1,631. 2 JJ efficacious LIVES (YEARS) 2011 2010 2009 2008 lawsuit Straight- line methods Classes of Assets and dispraise Ranges Building and structure equipment 2040 bolt down and leasehold improvements 1020 Machinery and equipment 213 Capitalized software 3-8 depreciation amortization** 3,158 2,939 2,774 2,832 ** $ in millions Appendix G yearly dividend and share repurchase Figure 15 occupation repur chase (in shares) and dividends contain Repurchaces and Dividends Pfizer 2011 2010 2009 2008 ancestry Repurchaces* N/A N/A N/A N/A Dividends ($) 0. 8 0. 72 0. 8 1. 28 Merck 2011 2010 2009 2008 shopworn Repurchaces* N/A N/A N/A N/A Dividends ($) 1. 56 1. 52 1. 52 1. 52 JJ 2011 2010 2009 2008 declination Repurchaces* 39,741 45,090 37,114 100,970 Dividends ($) 2. 25 2. 11 1. 93 1. 795 frame of Shares (Thousands) Figure 16 argument repurchase (in U. S. dollars) and dividends stock up Repurchaces and Dividends Pfizer 2011 2010 2009 2008 stress Repurchaces* N/A N/A N/A N/A Dividends ($) 0. 8 0. 72 0. 8 1. 28 Merck 2011 2010 2009 2008 production line Repurchaces* N/A N/A N/A N/A Dividends ($) 1. 56 1. 52 1. 52 1. 52 JJ 2011 2010 2009 2008 Stock Repurchaces* (2,525) (2,797) (2,130) (6,651) Dividends ($) 2. 25 2. 11 1. 93 1. 795 * $ in millions Appendix H foster melodic line reports