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Financial Review
Pfizer Inc. and Subsidiary Companies
2013 Financial Report
39
Adjusted income, as shown above, excludes the following items:
Year Ended December 31,
(MILLIONS OF DOLLARS) 2013 2012 2011
Purchase accounting adjustments
Amortization, depreciation and other(a) $4,367 $4,904 $5,475
Cost of sales(b) (23)1 1,197
Total purchase accounting adjustments—pre-tax 4,344 4,905 6,672
Income taxes(c) (1,198) (1,343) (1,726)
Total purchase accounting adjustments—net of tax 3,146 3,562 4,946
Acquisition-related costs
Restructuring charges(d) 108 291 577
Transaction costs(d) —130
Integration costs(d) 144 381 693
Additional depreciation—asset restructuring(e) 124 273 613
Total acquisition-related costs—pre-tax 376 946 1,913
Income taxes(f) 7(203)(498)
Total acquisition-related costs—net of tax 383 743 1,415
Discontinued operations
Discontinued operations—net of tax(g) (10,662) (5,577) (2,189)
Discontinued operations—net of tax, attributable to noncontrolling interests 39 ——
Total discontinued operations—net of tax, attributable to Pfizer Inc. (10,623) (5,577) (2,189)
Certain significant items
Restructuring charges(h) 930 1,137 1,541
Implementation costs and additional depreciation—asset restructuring(i) 398 692 961
Patent litigation settlement income(j) (1,342) ——
Other legal matters, net(k) 21 2,191 822
Gain associated with the transfer of certain product rights to an equity-method
investment(k) (459)——
Certain asset impairments and related charges(l) 1,059 875 827
Costs associated with the Zoetis IPO(m) 18 125 35
Income associated with the transitional manufacturing and supply agreements
with Zoetis(n) (16)——
Other(l) 83 19 69
Total certain significant items—pre-tax 692 5,039 4,255
Income taxes(o) (313)(2,588) (1,291)
Total certain significant items—net of tax 379 2,451 2,964
Total purchase accounting adjustments, acquisition-related costs, discontinued
operations and certain significant items—net of tax, attributable to Pfizer Inc. $ (6,715) $1,179 $7,136
(a) Included primarily in Amortization of intangible assets (see Notes to Consolidated Financial Statements—Note 10. Goodwill and Other Intangible Assets).
(b) For 2011, primarily related to fair value adjustments of acquired inventory.
(c) Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional
location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate.
(d) Included in Restructuring charges and certain acquisition-related costs (see Notes to Consolidated Financial Statements—Note 3. Restructuring Charges and
Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives).
(e) Represents the impact of changes in estimated useful lives of assets involved in restructuring actions related to acquisitions. For 2013, included in Cost of
sales ($116 million) and Selling informational and administrative expenses ($8 million). For 2012, included in Cost of sales ($258 million), Selling informational
and administrative expenses ($9 million) and Research and development expenses ($6 million). For 2011, included in Cost of sales ($549 million), Selling,
informational and administrative expenses ($42 million) and Research and development expenses ($22 million).
(f) Included in Provision for taxes on income. Income taxes includes the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional
location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. The amount in 2013 also includes the unfavorable impact of the
remeasurement of certain deferred tax liabilities resulting from plant network restructuring activities.
(g) Included in Discontinued operations––net of tax and relates to Zoetis, our former Animal Health business, through June 24, 2013, the date of disposal, to our
former Nutrition business through November 30, 2012, the date of disposal, and to our former Capsugel business through August 1, 2011, the date of disposal
(see Notes to Consolidated Financial Statements—Note 2B. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments:
Divestitures).