The
following table sets forth details related to amounts recorded in
Other
deductions––net:
| |
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
(millions of dollars)
|
|
July
3,
2011
|
|
|
July
4,
2010
|
|
|
July
3,
2011
|
|
|
July
4,
2010
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income(a)
|
|
$ |
(117 |
) |
|
$ |
(85 |
) |
|
$ |
(222 |
) |
|
$ |
(197 |
) |
|
Interest
expense(a)
|
|
|
404 |
|
|
|
389 |
|
|
|
862 |
|
|
|
911 |
|
|
Net
interest expense
|
|
|
287 |
|
|
|
304 |
|
|
|
640 |
|
|
|
714 |
|
|
Royalty-related
income
|
|
|
(141 |
) |
|
|
(95 |
) |
|
|
(312 |
) |
|
|
(237 |
) |
|
Net
gain on asset disposals
|
|
|
(14 |
) |
|
|
(185 |
) |
|
|
(26 |
) |
|
|
(230 |
) |
|
Certain
legal matters, net(b)
|
|
|
(14 |
) |
|
|
37 |
|
|
|
487 |
|
|
|
174 |
|
|
Certain
asset impairment charges(c)
|
|
|
320 |
|
|
|
196 |
|
|
|
480 |
|
|
|
232 |
|
|
Other,
net
|
|
|
(25 |
) |
|
|
18 |
|
|
|
(29 |
) |
|
|
34 |
|
|
Other
deductions––net
|
|
$ |
413 |
|
|
$ |
275 |
|
|
$ |
1,240 |
|
|
$ |
687 |
|
|
(a)
|
Interest
income increased in both periods of 2011 due to higher cash
balances and higher interest rates earned on investments. Interest
expense increased in the second quarter of 2011 due to lower
amortization of deferred gains on terminated interest rate swaps.
Interest expense decreased in the first six months of 2011 due to
lower long- and short-term debt balances and the conversion of some
fixed-rate liabilities to floating-rate liabilities.
|
|
(b)
|
In
the first six months of 2011, primarily relates to charges for
hormone-replacement therapy litigation (see Note 14. Legal Proceedings
and Contingencies).
|
|
(c)
|
Substantially
all of these asset impairment charges are related to intangible
assets, including IPR&D assets, that were acquired as part of
our acquisition of Wyeth. In the second quarter of 2011, impairment
charges included approximately $200 million of IPR&D assets,
primarily related to a single compound for the treatment of certain
autoimmune and inflammatory diseases, and approximately $120
million of developed technology rights. In the first six
months of 2011, impairment charges included approximately $360
million of IPR&D assets, primarily related to two compounds for
the treatment of certain autoimmune and inflammatory diseases, and
approximately $120 million of developed technology rights. In the
second quarter and first six months of 2010, impairment charges of
approximately $200 million related to certain IPR&D assets. The
impairment charges are determined by comparing the estimated fair
value of the assets as of the date of the impairment to their
carrying values as of the same date. The impairment charges for all
periods reflect, among other things, the impact of new scientific
findings and updated commercial forecasts.
|
|