Pfizer 2005 Annual Report Download - page 27

26 2005 Financial Report
Financial Review
Pfizer Inc and Subsidiary Companies
Adjusted income as shown above excludes the following items:
YEAR ENDED DEC. 31,
_______________________________________________________________
(MILLIONS OF DOLLARS) 2005 2004 2003
Purchase accounting adjustments, pre-tax:
In-process research and development charges(a) $1,652 $1,071 $ 5,052
Intangible amortization and other(b) 3,295 3,285 2,336
Sale of acquired inventory written up to fair value(c) 440 2,747
Total purchase accounting adjustments, pre-tax 4,951 4,396 10,135
Income taxes (978) (1,007) (1,469)
Total purchase accounting adjustments—net of tax 3,973 3,389 8,666
Merger-related costs, pre-tax:
Integration costs(d) 550 496 871
Restructuring costs(d) 393 697 187
Total merger-related costs, pre-tax 943 1,193 1,058
Income taxes (319) (407) (399)
Total merger-related costs—net of tax 624 786 659
Discontinued operations, pre-tax:
Loss/(income) from discontinued operations(e) 33 39 (43)
Gains on sales of discontinued operations(e) (77) (75) (3,885)
Total discontinued operations, pre-tax (44) (36) (3,928)
Income taxes 28 71,617
Total discontinued operations—net of tax (16) (29) (2,311)
Cumulative effect of a change in accounting principles—net of tax 25 —30
Certain significant items, pre-tax:
Asset impairment charges(f) 1,240 702 —
Restructuring charges—Adapting to Scale(d) 450 ——
Implementation costs—Adapting to Scale(g) 330 ——
Gain on disposals of investments(h) (134) ——
Litigation-related charges(h) —369 1,402
Contingent income earned from the prior year sale of a product-in-development(h) —(100) —
Operating results of divested legacy Pharmacia research facility(i) —64 —
Total certain significant items, pre-tax 1,886 1,035 1,402
Income taxes (654) (406) (44)
Resolution of certain tax positions(j) (586) ——
Tax impact of the repatriation of foreign earnings(j) 1,664 ——
Total certain significant items—net of tax 2,310 629 1,358
Total purchase accounting adjustments, merger-related costs, discontinued
operations, cumulative effect of a change in
accounting principles and certain significant items—net of tax $6,916 $4,775 $ 8,402
(a) Included in Merger-related in-process research and development charges. (See Notes to Consolidated Financial Statements—Note 2,
Acquisitions.)
(b) Included primarily in Amortization of intangible assets. (See Notes to Consolidated Financial Statements—Note 12, Goodwill and Other
Intangible Assets.)
(c) Included in Cost of sales. (See Notes to Consolidated Financial Statements—Note 2, Acquisitions.)
(d) Included in Restructuring charges and merger-related costs. (See Notes to Consolidated Financial Statements—Note 4, Adapting to Scale
Initiative and Note 5, Merger-Related Costs.)
(e) Included in Discontinued operations—net of tax. (See Notes to Consolidated Financial Statements—Note 3, Dispositions.)
(f) In 2005, primarily Cost of sales ($73 million), Selling, informational and administrative expenses ($8 million) and Other (income)/deductions—
net ($1.2 billion) related to the suspension of sales of Bextra. In 2004, primarily Other (income)/deductions—net related to an impairment
charge related to the Depo-Provera brand. (See Notes to Consolidated Financial Statements—Note 12B, Goodwill and Other Intangible Assets:
Other Intangible Assets.)
(g) Included in Cost of Sales ($124 million), Selling, informational and administrative expenses ($156 million), and Research and development
expenses ($50 million) for 2005. (See Notes to Consolidated Financial Statements—Note 4, Adapting to Scale Initiative.)
(h) Included in Other (income)/deductions—net. (See Notes to Consolidated Financial Statements—Note 6, Other (Income)/Deductions—Net.)
(i) Included in Research and development expenses.
(j) Included in Provision for taxes on income. (See Notes to Consolidated Financial Statements—Note 7, Taxes on Income.)