Notes to the Financial Statements (Group)
2 Operating profit
Operating profit includes the following items:
Selling, general and administrative costs
AstraZeneca is defending its interests in various federal and state investigations and civil litigation matters relating to drug marketing and pricing practices and in respect of which the Company has made provisions in aggregate of $636m during 2009. $524m of this has been made in respect of the US Attorney's Office investigation into sales and marketing practices involving Seroquel and $112m relates to average wholesale price litigation. The current status of these matters is described in Note 25. These provisions constitute our best estimate at the time of losses expected for these matters.
Other operating income and expense
| 2009 $m |
2008 $m |
2007 $m |
|
|---|---|---|---|
| Royalties | |||
| Income | 255 | 288 | 236 |
| Amortisation | (79) | (84) | - |
| Impairment | (150) | (91) | - |
| Net gain on disposal of property, plant and equipment | 8 | 6 | 9 |
| Gains on disposal of product rights | 170 | - | - |
| Net gain/(loss) on disposal of other intangible assets | 1 | (17) | (1) |
| Gains on divestments of non-core products | 216 | 118 | 192 |
| Impairment of intangible assets relating to future licensing and contractual income | (115) | - | - |
| Other income | 265 | 304 | 310 |
| Other expense | (18) | - | (18) |
| Other operating income and expense | 553 | 524 | 728 |
Royalty amortisation relates to income streams acquired with MedImmune. The amortisation in 2007 ($53m) was posted to SG&A and not adjusted.
Restructuring and synergy costs
During 2009 the Group continued the restructuring and synergy programmes approved by the SET and announced in 2007 and 2008. In addition, the Group announced further programmes during the year. The tables below show the costs that have been charged in respect of these programmes by cost category and type. Severance provisions are detailed in Note 18.
| 2009 $m |
2008 $m |
2007 $m |
|
|---|---|---|---|
| Cost of sales | 188 | 405 | 415 |
| Research and development | 68 | 166 | 73 |
| Selling, general and administrative costs | 403 | 310 | 478 |
| Total charge | 659 | 881 | 966 |
| 2009 $m |
2008 $m |
2007 $m |
|
|---|---|---|---|
| Severance costs | 262 | 499 | 678 |
| Accelerated depreciation and impairment | 148 | 219 | 203 |
| Other | 249 | 163 | 85 |
| Total charge | 659 | 881 | 966 |
