U.S. regulators want to know why Pfizer's ($PFE) domestic results amounted to a $2.2 billion loss last year--while, overseas, the company managed to rack up $15 billion in pre-tax profits. And this, the Securities and Exchange Commission points out, happened as Pfizer's domestic sales hit $26.9 billion, while international revenues were $40.5 billion.
Something does not compute, the SEC said in a May letter to the U.S.-based drugmaker, made public on Friday. "These operating results appear to be inconsistent with your domestic and international revenues," the agency's senior assistant chief accountant Jim Rosenberg said in his letter.
As Bloomberg reports, Pfizer has been quite aggressive about reporting its income in countries with lower tax rates, as a way of cutting its effective tax rate overall. The company had kept $63 billion in profit overseas, according to securities filings in March, the news service figures. That's second only to General Electric ($GE), Bloomberg says.
Responding to the SEC, Pfizer said that the split in domestic and international profits isn't necessarily directly related to the split in domestic and international sales. "The geographical mix of revenues is not a good indicator of the split between domestic and international pretax earnings for the purposes of financial statement presentation," Controller Loretta V. Cangialosi wrote to the SEC.
The company says it has paid all taxes it's legally obligated to pay. "At all times and wherever we operate, Pfizer complies with the appropriate tax law," Spokeswoman Joan Campion told Bloomberg.
- read the Bloomberg piece