Pfizer 2015 Annual Report Download - page 103

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
102
2015 Financial Report
B. Goodwill
The following table provides the components of and changes in the carrying amount of Goodwill:
(MILLIONS OF DOLLARS) GIP VOC GEP Total
Balance, January 1, 2014 $ 13,210 $11,559 $17,750 $42,519
Additions(a) ——
125 125
Other(b) (178)(161)(236)(575)
Balance, December 31, 2014 13,032 11,398 17,639 42,069
Additions(c) —39
7,284 7,323
Other(b) (343)(317)(489)(1,149)
Balance, December 31, 2015 $ 12,689 $11,120 $24,433 $48,242
(a) Reflects the acquisition of InnoPharma. For additional information, see Note 2A.
(b) Primarily reflects the impact of foreign exchange.
(c) GEP additions relate to our acquisition of Hospira and are subject to change until we complete the recording of the assets acquired and liabilities assumed from
Hospira. For additional information, see Note 2A.
Note 11. Pension and Postretirement Benefit Plans and Defined Contribution Plans
The majority of our employees worldwide are covered by defined benefit pension plans, defined contribution plans or both. In the U.S., we
have both Internal Revenue Code-qualified and supplemental (non-qualified) defined benefit plans and contribution plans. A qualified plan
meets the requirements of certain sections of the Internal Revenue Code, and, generally, contributions to qualified plans are tax deductible. A
qualified plan typically provides benefits to a broad group of employees with restrictions on discriminating in favor of highly compensated
employees with regard to coverage, benefits and contributions. A supplemental (non-qualified) plan provides additional benefits to certain
employees. In addition, we provide medical insurance benefits to certain retirees and their eligible dependents through our postretirement
plans. During 2015, we recorded net pension and postretirement benefit obligations of approximately $115 million as a result of the acquisition
of Hospira and an additional $122 million for the decision to terminate Hospira’s U.S. qualified pension plan.
A. Components of Net Periodic Benefit Costs and Changes in Other Comprehensive Income/(Loss)
The following table provides the annual cost (including, for 2013, costs reported as part of discontinued operations) and changes in Other
comprehensive income/(loss) for our benefit plans:
Year Ended December 31,
Pension Plans
U.S.
Qualified(a)
U.S.
Supplemental
(Non-Qualified)(b) International(c) Postretirement Plans(d)
(MILLIONS OF DOLLARS) 2015 2014 2013 2015 2014 2013 2015 2014 2013 2015 2014 2013
Service cost $ 287 $ 253 $ 301 $22 $20 $ 26 $ 186 $ 199 $ 216 $55 $55 $ 61
Interest cost 676 697 666 54 57 67 307 394 378 117 169 166
Expected return on plan
assets (1,089) (1,043) (999)———(418) (459) (407) (53) (63) (55)
Amortization of:
Actuarial losses 346 63 355 44 29 51 122 97 129 38 646
Prior service credits (5) (7) (7)(2)(2) (2) (7) (7) (5) (146) (57) (44)
Curtailments 32————5—(20)(31) (7) (11)
Settlements 556 52 113 34 28 40 81 22 22 ———
Special termination benefits ——————184———
Net periodic benefit costs
reported in Income 773 16 429 153 132 182 277 254 317 (21) 102 163
(Income)/cost reported in
Other comprehensive
income/(loss)(e) (396) 2,768 (3,044) (143)163 (255) (542) 260 (569) (540) (174) (736)
(Income)/cost recognized in
Comprehensive income $ 378 $2,784 $(2, 6 1 5 ) $10 $ 294 $ (73) $ (265) $ 514 $ (252) $(560) $ (72) $ (573)
(a) 2015 v. 2014––The increase in net periodic benefit costs for our U.S. qualified pension plans was primarily driven by (i) higher settlement activity related to
participants accepting the lump-sum option made in an offer to certain plan participants to elect a lump-sum payment to settle Pfizer’s pension obligation with
those participants, or to elect an early annuity, and (ii) the increase in the amounts amortized for actuarial losses resulting from the decrease, in 2014, in the
discount rate used to determine the benefit obligation (which increased the amount of deferred actuarial losses), and, to a lesser extent, a 2014 change in
mortality assumptions (reflecting a longer life expectancy for plan participants). The aforementioned increases were partially offset by (i) a greater expected
return on plan assets resulting from an increased plan asset base due to a voluntary contribution of $1.0 billion made at the beginning of January 2015, which in
turn was partially offset by a decrease in the expected rate of return on plan assets from 8.5% to 8.3% and (ii) lower interest costs resulting from the decrease,
in 2014, in the discount rate used to determine the benefit obligation.