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Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
primarily represent asset impairment charges associated with certain materials used in our research and development activities that were no longer
considered recoverable. The 2008 amounts primarily represent charges related to impairment of certain equity investments and the exit of our
Exubera product.
7. Taxes on Income
A. Taxes on Income
Income from continuing operations before provision for taxes on income, and income attributable to noncontrolling interests consist
of the following:
YEAR ENDED DECEMBER 31,
(MILLIONS OF DOLLARS) 2010 2009 2008
United States $ (2,477) $ (3,632) $ (1,760)
International 11,899 14,459 11,454
Total income from continuing operations before provision for taxes on income $ 9,422 $10,827 $ 9,694
The decrease in domestic loss from continuing operations before taxes in 2010, compared to 2009, was due to revenues from
legacy Wyeth products and a reduction in domestic restructuring charges partially offset by increased amortization charges primarily
related to identifiable intangibles in connection with our acquisition of Wyeth and litigation charges primarily related to our wholly
owned subsidiary Quigley Company, Inc. The decrease in international income from continuing operations before taxes in 2010,
compared to 2009, was due primarily to an increase in international restructuring and amortization charges plus the non-recurrence
of the gain in 2009 in connection with the formation of ViiV, partially offset by revenues from legacy Wyeth products.
The increase in domestic loss from continuing operations before taxes in 2009, compared to 2008, was due primarily to an increase
in certain expenses incurred in connection with the Wyeth acquisition, which was partially offset by the non-recurrence of charges of
$2.3 billion recorded in 2008 resulting from an agreement-in-principle with the DOJ to resolve the previously reported investigations
regarding past off-label promotional practices concerning Bextra and certain other investigations, as well as other litigation-related
charges recorded in 2008 of approximately $900 million associated with the resolution of certain litigation involving our NSAID pain
medicines. The increase in international income from continuing operations before taxes in 2009, compared to 2008, was due
primarily to the gain in connection with the formation of ViiV, the decrease in international restructuring charges and the
non-recurrence of acquired IPR&D, partially offset by an increase in amortization expenses primarily related to identifiable
intangibles incurred in connection with the Wyeth acquisition. For additional information on all of these matters, see Note 3. Other
Significant Transactions and Events.
Provision for taxes on income consists of the following:
YEAR ENDED DECEMBER 31,
(MILLIONS OF DOLLARS) 2010 2009 2008
United States:
Current income taxes:
Federal $(2,774) $ 10,169 $ 707
State and local (313) 71 154
Deferred income taxes:
Federal 2,033 (10,002) 106
State and local (6) (93) (136)
Total U.S. tax (benefit)/provision(a), (b), (c), (d) $(1,060) $ 145 $ 831
International:
Current income taxes $ 2,258 $ 1,539 $ 2,115
Deferred income taxes (74) 513 (1,301)
Total international tax provision $ 2,184 $ 2,052 $ 814
Total provision for taxes on income(e) $ 1,124 $ 2,197 $ 1,645
(a) The Federal current income tax benefit in 2010 is primarily due to the tax benefit recorded in connection with our settlement with the U.S. Internal
Revenue Service. For a discussion of the settlement, see the “Tax Contingencies” section below.
(b) The Federal current income tax expense in 2009 was due to increased tax costs associated with certain business decisions executed to finance the
Wyeth acquisition.
(c) The Federal deferred income tax expense in 2010 is primarily due to certain business decisions in connection with our acquisition of Wyeth.
(d) The Federal deferred income tax benefit in 2009 was due to a reduction of deferred tax liabilities recorded in connection with our acquisition of
Wyeth.
(e) 2009 and 2010 excludes federal, state and international net tax liabilities assumed or established on the date of the acquisition of Wyeth (See Note
2. Acquisition of Wyeth for additional details) and $4 million in 2008 primarily related to the resolution of certain tax positions related to legacy
Pharmacia Corporation (Pharmacia), which were debited or credited to Goodwill, as appropriate.
On December 17, 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the
research and development tax credit from January 1, 2010, through December 31, 2011.
70 2010 Financial Report