Pfizer 2012 Annual Report Download - page 37

Financial Review
Pfizer Inc. and Subsidiary Companies
36
2012 Financial Report
we no longer sell. While not all-inclusive, examples of items that could be included as certain significant items would be a major non-
acquisition-related restructuring charge and associated implementation costs for a program that is specific in nature with a defined term, such
as those related to our non-acquisition-related cost-reduction and productivity initiatives; amounts related to certain disposals of businesses,
products or facilities that do not qualify as discontinued operations under U.S. GAAP; amounts associated with transition service agreements
in support of discontinued operations after sale; certain intangible asset impairments; adjustments related to the resolution of certain tax
positions; the impact of adopting certain significant, event-driven tax legislation; or charges related to certain legal matters, such as certain of
those discussed in Notes to Consolidated Financial Statements—Note 17. Commitments and Contingencies 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 of
and accruals for legal matters made in the normal course of our business would not be considered certain significant items.
Reconciliation
The following table provides a reconciliation of Net income attributable to Pfizer Inc., as reported under U.S. GAAP, and Non-GAAP Adjusted
income:
Year Ended December 31, % Change
(MILLIONS OF DOLLARS) 2012 2011 2010 12/11 11/10
GAAP Reported net income attributable to Pfizer Inc. $14,570 $10,009 $8,257 46 21
Purchase accounting adjustments—net of tax 3,598 5,000 6,011 (28)(17)
Acquisition-related costs—net of tax 756 1,457 2,844 (48)(49)
Discontinued operations—net of tax (5,080)(1,654) 30 (207)*
Certain significant items—net of tax 2,632 3,027 420 (13)*
Non-GAAP Adjusted income(a) $16,476 $17,839 $17,562 (8) 2
(a) The effective tax rate on Non-GAAP Adjusted income was 29.3% in 2012, 29.6% in 2011 and 29.9% in 2010. The effective tax rate for 2012 compared with the
prior-year reflects the impact of the change in the jurisdictional mix of earnings and the expiration of the U.S. research and development tax credit, and the favorable
impact of the resolution of certain prior-period tax positions in 2012 with various foreign tax authorities, and from the expiration of certain statutes of limitations.
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments.
The following table provides a reconciliation of Reported diluted EPS, as reported under U.S. GAAP, and Non-GAAP Adjusted diluted EPS:
Year Ended December 31, % Change
2012 2011 2010 12/11 11/10
Earnings per common share—diluted(a)
GAAP Reported income from continuing operations
attributable to Pfizer Inc. common shareholders $1.26 $1.06 $1.03 19 3
Income from discontinued operations—net of tax 0.68 0.21 —224 *
GAAP Reported net income attributable to Pfizer Inc.
common shareholders 1.94 1.27 1.02 53 25
Purchase accounting adjustments—net of tax 0.48 0.64 0.74 (25)(14)
Acquisition-related costs—net of tax 0.10 0.19 0.35 (47)(46)
Discontinued operations—net of tax (0.68)(0.21)—
(224)*
Certain significant items—net of tax 0.35 0.38 0.05 (8) *
Non-GAAP Adjusted income attributable to Pfizer Inc.
common shareholders(b) $2.19 $2.27 $2.18 (4) 4
(a) EPS amounts may not add due to rounding.
(b) Reported and Adjusted diluted earnings per share in 2012 and 2011 were significantly impacted by the decrease in the number of shares outstanding, primarily
due to the Company's ongoing share repurchase program.
* Calculation not meaningful.
Certain amounts and percentages may reflect rounding adjustments.