Pfizer 2015 Annual Report Download - page 41

Financial Review
Pfizer Inc. and Subsidiary Companies
40
2015 Financial Report
Details of Income Statement Items Included in GAAP Reported but Excluded from Non-GAAP Adjusted Income
Adjusted income, as shown above, excludes the following items:
Year Ended December 31,
(MILLIONS OF DOLLARS) 2015 2014 2013
Purchase accounting adjustments
Amortization, depreciation and other(a) $3,540 $3,742 $4,367
Cost of sales 413 (101)(23)
Total purchase accounting adjustments—pre-tax 3,953 3,641 4,344
Income taxes(b) (1,110) (1,085) (1,198)
Total purchase accounting adjustments—net of tax 2,843 2,556 3,146
Acquisition-related costs
Restructuring charges(c) 479 50 108
Transaction costs(c) 123 ——
Integration costs(c) 218 80 144
Additional depreciation—asset restructuring(d) 75 53 124
Total acquisition-related costs—pre-tax 894 183 376
Income taxes(e) (303)(76)7
Total acquisition-related costs—net of tax 591 107 383
Discontinued operations
Discontinued operations—net of tax(f) (11)(48) (10,662)
Discontinued operations—net of tax, attributable to noncontrolling interests ——39
Total discontinued operations—net of tax, attributable to Pfizer Inc. (11)(48) (10,623)
Certain significant items
Restructuring charges(g) 333 121 930
Implementation costs and additional depreciation—asset restructuring(h) 251 478 398
Foreign currency loss and inventory impairment related to Venezuela(i) 878 ——
Charge related to pension settlement(j) 491 ——
Upfront fee associated with collaborative arrangement(k) —1,163 —
Additional year of Branded Prescription Drug Fee(l) —215 —
Patent litigation settlement income(m) ——(1,342)
Certain other legal matters, net(n) 968 999 21
Gain associated with the transfer of certain product rights(n) ——(459)
Certain asset impairments(n) 787 440 836
Business and legal entity alignment costs(o) 282 168 —
Costs associated with the Zoetis IPO(p) ——18
Other(q) 332 165 290
Total certain significant items—pre-tax 4,321 3,749 692
Income taxes(r) (949)(969)(313)
Total certain significant items—net of tax 3,372 2,780 379
Total purchase accounting adjustments, acquisition-related costs, discontinued
operations and certain significant items—net of tax, attributable to Pfizer Inc. $6,795 $5,394 $(6,715)
(a) Included primarily in Amortization of intangible assets.
(b) 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.
(c) 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). Restructuring charges include employee termination costs, asset
impairments and other exit costs associated with business combinations. Transaction costs represent external costs directly related to our pending combination
with Allergan plc and the acquisition of Hospira, and primarily include expenditures for banking, legal, accounting and other similar services. Integration costs
represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of
systems and processes. In 2015, restructuring charges and integration costs primarily relate to our acquisition of Hospira on September 3, 2015. All of these
costs and charges are included in Restructuring charges and certain acquisition-related costs.
(d) Represents the impact of changes in estimated useful lives of assets involved in restructuring actions related to acquisitions. For 2015 and 2014, included in
Cost of sales. For 2013, included in Cost of sales ($116 million) and Selling informational and administrative expenses ($8 million).