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	Financial Review (Section 4 of 5) Pfizer Inc and Subsidiary Companies
	On This Page: | Summary of Cash Flows | Cash Dividends Paid Per Common Share | Dividend Growth | Banking Operation |
	Summary of Cash Flows Operations in 1997 provided significant cash inflows. Commercial paper and short-term borrowings supplement operating cash flows.  (millions of dollars) 1997 1996 1995  Cash provided by/(used in):   Operating activities $  1,629  $2,067  $  1,821     Investing activities (1,022) (937) (2,343)    Financing activities (848) (382) (519)  Effect of exchange rate changes on   cash and cash equivalents (32) (1) (14)  Net increase/(decrease) in cash   and cash equivalents $   (273) $   747 $(1,055)  Cash flows from operating activities decreased in 1997 as the growth in net income was offset by an increase in accounts receivable and inventories. Cash flows from operating activities increased in 1996 primarily due to growth in net income generated by the continued rollout of new pharmaceutical products and additional uses for existing products. Net cash used in investing activities changed in 1997 largely due to the: • increase in property, plant and equipment which, in part, reflects facility enhancements to our manufacturing locations • decrease in proceeds from the sale of businesses • absence of business acquisitions in 1997 In 1998, additions to property, plant and equipment are expected to be similar to 1997 additions. Net cash used in investing activities decreased in 1996 as compared to 1995 primarily due to a decrease in business acquisitions and an increase in proceeds from the sale of a business. Net cash used in financing activities changed in 1997 largely due to: • the increase in common stock repurchases at a higher average price • higher dividend payments to our shareholders • higher cash received from employee stock option exercises Net cash used in financing activities decreased in 1996 as compared to 1995 primarily due to higher levels of short-term borrowings to fund working capital needs, as well as certain investment opportunities, partially offset by net repayments of long-term debt. In September 1996, we announced a program to purchase up to $2 billion of our common stock over the ensuing 18 to 24 months in the open market or in privately negotiated transactions. Under this program, approximately 11.4 million shares were repurchased in 1997 and .6 million shares in 1996. These shares were purchased in the open market at a cost of approximately $586 million in 1997 and $27 million in 1996. Purchased shares are available for general corporate purposes. We have available lines of credit and revolving-credit agreements with a select group of banks and other financial intermediaries. Major unused lines of credit totaled approximately $1.3 billion at December 31, 1997. Our short-term debt has been rated A1 by Moody’s Investors Services (Moody’s) and P1 by Standard and Poor’s (S&P). Also, our long-term debt has been rated Aaa by Moody’s and AAA by S&P for the past 12 years. Moody’s and S&P are the major corporate debt-rating organizations and these are their highest ratings. Cash Dividends Paid Per Common Share (dollars) Dividend Growth Cash dividends paid per common share divided by diluted earnings per common share amounted to 40.0% in 1997, 40.0% in 1996 and 41.6% in 1995. In January 1998, the Board of Directors declared a first-quarter 1998 dividend of $.19, an increase of 12% over the $.17 per share dividend declared in each quarter of 1997. This marked the 31st consecutive year of quarterly dividend increases. Banking Operation Our international banking operation, Pfizer International Bank Europe (PIBE), operates under a full banking license from the Central Bank of Ireland. The results of its operation are included in “Other deductions—net” in the Statement of Income. PIBE extends credit to financially strong borrowers, largely through U.S. dollar loans made primarily for short and medium terms, with floating interest rates. Generally, loans are made on an unsecured basis. When deemed appropriate, guarantees and certain covenants may be obtained as a condition to the extension of credit. To reduce credit risk, PIBE has established credit approval guidelines, borrowing limits and monitoring procedures. Credit risk is further reduced through an active policy of diversification with respect to borrower, industry and geographic location. PIBE continues to have S&P’s highest short-term rating of A1+. The net income of PIBE is affected by changes in market interest rates because of repricing and maturity mismatches between its interest-sensitive assets and liabilities. PIBE is currently asset sensitive (more assets than liabilities repricing in a given period) and therefore, we expect that net income would benefit in a period of increasing interest rates. PIBE’s asset and liability management reflects its liquidity, interest-rate outlook and general market conditions. For additional details regarding our banking operation, see note 3, “Financial Subsidiaries.”

	Advisory Information for Investors
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