Pfizer 2011 Annual Report Download - page 72

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Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
The restructuring charges in 2010 are associated with the following:
•Primary Care operating segment ($71 million), Specialty Care and Oncology operating segment ($197 million), Established
Products and Emerging Markets operating segment ($43 million), Animal Health and Consumer Healthcare operating segment
($46 million), Nutrition operating segment ($4 million), research and development operations ($292 million), manufacturing
operations ($1.1 billion) and Corporate ($455 million).
•The restructuring charges in 2009 are associated with the following:
•Our three biopharmaceutical operating segments ($1.3 billion), Animal Health and Consumer Healthcare operating segment
($250 million), Nutrition operating segment ($4 million income), research and development operations ($339 million),
manufacturing operations ($292 million) and Corporate ($781 million).
(d) Additional depreciation—asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring
actions.
(e) Implementation costs generally represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction and
productivity initiatives.
The components of restructuring charges follow:
COSTS
INCURRED
ACTIVITY
THROUGH
DECEMBER 31,
ACCRUAL
AS OF
DECEMBER 31,
(MILLIONS OF DOLLARS) 2005-2011 2011(a) 2011(b)
Employee termination costs $10,602 $ 8,167 $2,434
Asset impairments 2,564 2,564 —
Other 1,022 931 92
Total $14,188 $11,662 $2,526
(a) Includes adjustments for foreign currency translation.
(b) Included in Other current liabilities ($1.6 billion) and Other noncurrent liabilities ($928 million).
4. Other Deductions—Net
The components of Other deductions—net follow:
YEAR ENDED DECEMBER 31,
(MILLIONS OF DOLLARS) 2011 2010 2009
Interest income $ (458) $ (402) $ (747)
Interest expense 1,681 1,797 1,232
Net interest expense(a) 1,223 1,395 485
Royalty-related income (570) (579) (243)
Net gains on asset disposals(b) (1) (262) (188)
Certain legal matters, net(c) 790 1,737 234
Certain asset impairment charges(d) 863 2,175 417
Gain related to ViiV(e) —— (482)
Other, net 174 (130) 62
Other deductions—net $2,479 $4,336 $ 285
(a) 2011 vs. 2010 - Interest income increased due to higher cash balances and higher interest rates earned on investments. Interest expense
decreased due to lower long- and short-term debt balances and the conversion of some fixed-rate liabilities to floating rate liabilities. 2010 vs.
2009—Interest expense increased due to our issuance of $13.5 billion of senior unsecured notes on March 24, 2009 and approximately $10.5 billion
of senior unsecured notes on June 3, 2009, primarily related to the acquisition of Wyeth, as well as the addition of legacy Wyeth debt. Interest
income decreased due to lower interest rates, coupled with lower average cash balances. Capitalized interest expense totaled $50 million in 2011,
$36 million in 2010 and $34 million in 2009.
(b) In 2010 and 2009, represents gains on sales of certain investments and businesses. Net gains primarily include realized gains and losses on sales
of available-for-sale securities: in 2011, 2010 and 2009, gross realized gains were $79 million, $153 million and $186 million, respectively. Gross
realized losses were $73 million in 2011, $12 million in 2010 and $43 million in 2009. Proceeds, primarily from the sale of available-for-sale
securities, were $10.2 billion in 2011, $5.3 billion in 2010 and $27.0 billion in 2009.
(c) In 2011, primarily relates to charges for hormone-replacement therapy litigation. In 2010, includes a $1.3 billion charge for asbestos litigation related
to our wholly owned subsidiary, Quigley Company, Inc.
(d) The majority of the asset impairment charges for 2011 and 2010 are related to intangible assets, including in-process research and development
(IPR&D) assets, which were acquired as part of our acquisition of Wyeth.
In 2011, the impairment charges of $863 million include (i) approximately $475 million of IPR&D assets, primarily related to two
compounds for the treatment of certain autoimmune and inflammatory diseases; (ii) approximately $195 million related to our
biopharmaceutical indefinite-lived brand, Xanax; and (iii) approximately $185 million of Developed Technology Rights comprising
the impairments of five assets. These impairment charges reflect, among other things, the impact of new scientific findings and the
2011 Financial Report 71