Pfizer 2013 Annual Report Download - page 74

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
2013 Financial Report 73
• In 2013, we recorded a loss of $223 million related to the net call/put option and an impairment loss of $32 million related to our equity
method investment, both of which were recorded in Other (income)/deductions––net.
• In 2012, we made a performance-based milestone payment to Teuto of $91.5 million, which was recorded as an additional investment in
Teuto.
Note 3. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-
Reduction/Productivity Initiatives
We incur significant costs in connection with acquiring, integrating and restructuring businesses and in connection with our global cost-
reduction/productivity initiatives. For example:
• In connection with acquisition activity, we typically incur costs associated with executing the transactions, integrating the acquired
operations (which may include expenditures for consulting and the integration of systems and processes), and restructuring the
combined company (which may include charges related to employees, assets and activities that will not continue in the combined
company); and
• In connection with our cost-reduction/productivity initiatives, we typically incur costs and charges associated with site closings and other
facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems.
All of our businesses and functions may be impacted by these actions, including sales and marketing, manufacturing and research and
development, as well as groups such as information technology, shared services and corporate operations. Since the acquisition of Wyeth on
October 15, 2009, our cost-reduction initiatives announced on January 26, 2009, but not completed as of December 31, 2009, were
incorporated into a comprehensive plan to integrate Wyeth’s operations to generate cost savings and to capture synergies across the
combined company. In addition, among our cost reduction/productivity initiatives, on February 1, 2011, we announced a new productivity
initiative to accelerate our strategies to improve innovation and productivity in R&D.
The following table provides the components of costs associated with acquisitions and cost-reduction/productivity initiatives:
Year Ended December 31,
(MILLIONS OF DOLLARS) 2013 2012 2011
Restructuring charges(a):
Employee terminations $805 $953 $1,741
Asset impairments 165 325 255
Exit costs 68 150 122
Total restructuring charges 1,038 1,428 2,118
Transaction costs(b) —130
Integration costs(c) 144 381 693
Restructuring charges and certain acquisition-related costs 1,182 1,810 2,841
Additional depreciation––asset restructuring recorded in our
consolidated statements of income as follows(d):
Cost of sales 178 257 550
Selling, informational and administrative expenses 19 20 72
Research and development expenses 94 296 606
Total additional depreciation––asset restructuring 291 573 1,228
Implementation costs recorded in our consolidated
statements of income as follows(e):
Cost of sales 53 31 250
Selling, informational and administrative expenses 145 130 25
Research and development expenses 33 231 71
Total implementation costs 231 392 346
Total costs associated with acquisitions and cost-reduction/productivity initiatives $1,704 $2,775 $4,415
(a) From the beginning of our cost-reduction/productivity initiatives in 2005 through December 31, 2013, Employee terminations represent the expected reduction
of the workforce by approximately 65,100 employees, mainly in manufacturing, sales and research, of which approximately 56,500 employees have been
terminated as of December 31, 2013. In 2013, substantially all employee termination costs represent additional costs with respect to approximately 2,900
employees.
The restructuring charges in 2013 are associated with the following:
• Primary Care operating segment ($255 million), Specialty Care and Oncology operating segment ($138 million), Established Products and Emerging
Markets operating segment ($98 million), Consumer Healthcare operating segment ($5 million), research and development operations ($13 million),
manufacturing operations ($356 million) and Corporate ($173 million).