235 East 42nd Street
New York, NY 10017-5755
Tel 212 573 3222 Fax 212 338 1815
Vice President and Controller
May 23, 2002
Mr. Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Subject: Release No. 33-8089, Acceleration of Periodic Report Filing Dates and Disclosure Concerning Website Access to Reports, File No. S7-08-02
Dear Mr. Katz:
Pfizer Inc appreciates the opportunity to express its views on the proposal to accelerate the filing of quarterly and annual reports, and to require disclosures concerning website access to reports.
Pfizer discovers, develops, manufactures, and markets leading prescription medicines for humans and animals, as well as many of the world's best-known consumer products. The Company had global revenues of approximately $32 billion in 2001.
We support the Commission's efforts to provide the investment community access, on a more timely basis, to financial reporting and disclosures of the highest degree of integrity, quality and transparency.
Currently, our annual report to shareholders is finalized within approximately 60 days of year-end. In order to complete the remainder of the Form 10-K and file it within 60 days of year-end, we will need to modify schedules, particularly in terms of review time, but we believe we should be able to comply with the Commission's 60-day proposal. However, we are concerned that the proposed accelerated filing deadline of 30 days after quarter-end could compromise the quality of the financial reporting review process.
As a large multinational corporation, our financial statements and related disclosures are complex and information must be gathered from approximately 400 entities worldwide, compiled and subjected to analysis. We have required most of the current 45-day filing period to ensure the accuracy of our quarterly reports and to allow for sufficient review time for management, independent auditors and our Board of Directors.
In support of the proposal to shorten reporting deadlines, the Commission indicated its belief that quarterly reviews were complete or substantially complete by the time an issuer publishes its earnings announcement. While it is true that the information included in our earnings announcements has been reviewed by management and our independent auditors, there is still a substantial amount of work required to complete the financial statements, footnotes and related management's discussion and analysis. At Pfizer, ongoing analysis of the balance sheet, collection and review of data for preparation of the cash flow statement and financial risk management update are time-consuming tasks, which generally occur after earnings are released. We are quite concerned that thirty days is not enough time to prepare an accurate, meaningful quarterly report, circulate it for review, allow time for evaluation and respond to comments. This will be even more true given the additional analyses required in the Commission's proposed rule, Disclosure in the Management's Discussion and Analysis about the Application of Critical Accounting Policies.
We believe it is in the best interests of reporting companies as well as the investing public for the Commission to consider extending the proposed deadline for filing quarterly reports from 30 days to 35 days after the end of a quarter. An extra five days can make a substantial difference in the quality of the quarterly report, particularly in terms of senior management and audit committee review, and still accomplish the goal of making information available to the investing public sooner than is generally the case today.
We do not think the reporting deadlines should be tied to a company's earnings announcement. We believe this would likely affect the timely release of earnings as most companies will delay their public announcements on earnings until they are comfortable with more expansive disclosures required in their quarterly/annual reports thereby diminishing the timeliness of information and negatively impacting the financial markets. Additionally, we do not support the idea of requiring only certain information in a quarterly/annual report to be filed on an accelerated basis as it may result in a disjointed and less comprehensible presentation.
We would strongly encourage the Commission to give special consideration to the transition period. We believe it is reasonable to expect the 2002 annual report on Form 10-K to be filed within 60 days of year-end. However, we suggest the shortened quarterly filing deadline be effective no earlier than the second fiscal quarter in 2003. Accelerating the quarterly data collection process for a company such as ours, with multiple subsidiaries in many foreign locations, will take time to reorganize our processes, data collection systems and review. Moreover, it would be extremely burdensome and provides an increased risk of error and lower quality to require companies to file, for the first time, their first quarter Form 10-Qs on an accelerated schedule while they continue to wrap up year-end matters such as preparing for the annual shareholder meeting and preparing subsidiary and benefit plan financial statements during this period.
In summary, we fully support the Commission's efforts to provide investors with timely information and to require companies to disclose in their annual reports where investors can obtain access to company filings. However, we request the Commission consider extending the proposed deadline for quarterly reporting to 35 days after the end of a quarter, effective no earlier than the second fiscal quarter in 2003.
Very truly yours,
Loretta V. Cangialosi
Vice President and Controller
David L. Shedlarz
Executive Vice President and Chief Financial Officer
Alan G. Levin
Vice President - Finance