Pfizer 2010 Annual Report Download - page 41

Financial Review
Pfizer Inc. and Subsidiary Companies
driven tax legislation; net interest expense incurred through the consummation date of the acquisition of Wyeth on acquisition-
related borrowings made prior to that date; or possible charges related to legal matters, such as certain of those discussed in Notes
to Consolidated Financial Statements—Note 19. Legal Proceedings and Contingencies, in Legal Proceedings in our 2010 Annual
Report on Form 10-K and in Part II––Other Information; Item 1. Legal Proceedings in our Quarterly Reports on Form 10-Q filings.
Normal, ongoing defense costs of the Company or settlements and accruals on legal matters made in the normal course of our
business would not be considered certain significant items.
Reconciliation
A reconciliation of Net income attributable to Pfizer Inc., as reported under U.S. GAAP to Adjusted income follows:
YEAR ENDED DECEMBER 31, % CHANGE
(MILLIONS OF DOLLARS) 2010 2009 2008 10/09 09/08
Reported net income attributable to Pfizer Inc. $ 8,257 $ 8,635 $ 8,104 (4) 7
Purchase accounting adjustments—net of tax 6,109 2,633 2,439 132 8
Acquisition-related costs—net of tax 2,909 2,859 39 2*
Discontinued operations—net of tax 9(14) (78) *82
Certain significant items—net of tax 699 89 5,862 *(98)
Adjusted income(a) $17,983 $14,202 $16,366 27 (13)
(a) The effective tax rate on Adjusted income was 29.8% in 2010, 29.5% in 2009 and 22.0% in 2008. The higher tax rate on Adjusted income in 2010 is
primarily due to, the change in the jurisdictional mix of earnings and the write-off of the deferred tax asset of approximately $270 million related to
the Medicare Part D subsidy for retiree prescription drug coverage resulting from changes in the U.S. Healthcare Legislation concerning the tax
treatment of that subsidy effective for tax years beginning after December 31, 2012, partially offset by the extension of the U.S. research and
development credit and $460 million in tax benefits for the resolution of certain tax positions pertaining to prior years with various foreign tax
authorities.
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments.
A reconciliation of Reported diluted EPS as reported under U.S. GAAP to Adjusted diluted EPS follows:
YEAR ENDED DECEMBER 31, % CHANGE
2010 2009 2008 10/09 09/08
Earnings per common share––diluted:
Reported income from continuing operations attributable to Pfizer Inc.
common shareholders(a) $ 1.02 $1.23 $ 1.19 (17) 3
Income from discontinued operations––net of tax —— 0.01 —(100)
Reported net income attributable to Pfizer Inc. common shareholders 1.02 1.23 1.20 (17) 3
Purchase accounting adjustments—net of tax 0.76 0.38 0.36 100 6
Acquisition-related costs—net of tax 0.36 0.40 — (10) *
Discontinued operations—net of tax —— (0.01) —100
Certain significant items—net of tax 0.09 0.01 0.87 *(99)
Adjusted Net income attributable to Pfizer Inc. common
shareholders(a) $ 2.23 $2.02 $ 2.42 10 (17)
(a) Reported and Adjusted diluted earnings per share in 2010 and 2009 were impacted by the increased number of shares outstanding in comparison
with 2008, resulting primarily from shares issued to partially fund the Wyeth acquisition.
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments.
2010 Financial Report 39