Pfizer 2012 Annual Report Download - page 77

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Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
76
2012 Financial Report
2011, these amounts were included in Income taxes payable ($120 million), Taxes and other current assets ($2 million) and Other taxes
payable ($829 million). Accrued penalties are not significant. See also Note 5A. Tax Matters: Taxes on Income from Continuing Operations.
Status of Tax Audits and Potential Impact on Accruals for Uncertain Tax Positions
The United States is one of our major tax jurisdictions and we are regularly audited by the IRS:
• With respect to Pfizer Inc., tax years 2009-2010 are currently under audit. Tax years 2011-2012 are not under audit. All other tax years
are closed.
• With respect to Wyeth, tax years 2006 through the Wyeth acquisition date (October 15, 2009) are currently under audit. All other tax
years are closed.
• With respect to King, the audit for tax year 2008 has been effectively settled, and for Alpharma Inc. (a subsidiary of King), tax years
2005-2007 have been effectively settled. For King, tax years 2009 through the date of acquisition (January 31, 2011) are open, but not
under audit. All other tax years are closed. The open tax years and audits for King and its subsidiaries are not material to Pfizer Inc.
In addition to the open audit years in the U.S., we have open audit years in other major tax jurisdictions, such as Canada (2001-2012), Japan
(2007-2012), Europe (2007-2012, primarily reflecting Ireland, the United Kingdom, France, Italy, Spain and Germany), Latin America
(1998-2012, primarily reflecting Brazil and Mexico) and Puerto Rico (2007-2012).
Any settlements or statutes of limitations expirations could result in a significant decrease in our uncertain tax positions. We estimate that it is
reasonably possible that within the next twelve months, our gross unrecognized tax benefits, exclusive of interest, could decrease by as much
as $150 million, as a result of settlements with taxing authorities or the expiration of the statutes of limitations. Our assessments are based on
estimates and assumptions that have been deemed reasonable by management, but our estimates of unrecognized tax benefits and potential
tax benefits may not be representative of actual outcomes, and variation from such estimates could materially affect our financial statements in
the period of settlement or when the statutes of limitations expire, as we treat these events as discrete items in the period of resolution.
Finalizing audits with the relevant taxing authorities can include formal administrative and legal proceedings, and, as a result, it is difficult to
estimate the timing and range of possible changes related to our uncertain tax positions, and such changes could be significant.
E. Taxes on Items of Other Comprehensive Income/(Loss)
The following table provides the components of tax benefit on Other comprehensive loss:
Year Ended December 31,
(MILLIONS OF DOLLARS) 2012 2011 2010
Foreign currency translation adjustments(a) $110 $(61)$ (165)
Unrealized holding gains/(losses) on derivative financial instruments 246 (207)(342)
Reclassification adjustments for realized (gains)/losses (98)97 215
148 (110)(127)
Unrealized holding gains/(losses) on available-for-sale securities 20 (17)(4)
Reclassification adjustments for realized (gains)/losses 1—(18)
21 (17)(22)
Benefit plans: Actuarial losses, net (721)(993)(504)
Reclassification adjustments related to amortization 171 99 94
Reclassification adjustments related to curtailments and settlements, net 105 118 98
Other 15 29 82
(430)(747)(230)
Benefit plans: Prior service credits and other 741 210
Reclassification adjustments related to amortization (27)(27)(18)
Reclassification adjustments related to curtailments and settlements, net (51)(35)(19)
Other (3) (3) (4)
(74)(24)169
Tax benefit on other comprehensive loss $(225)$(959)$ (375)
(a) Taxes are not provided for foreign currency translation adjustments relating to investments in international subsidiaries that will be held indefinitely.