[1]

Amounts may not add due to rounding.

[2]

Medivation’s and Anacor’s commercial operations are included in our condensed consolidated statements of income, commencing from their respective acquisition dates of September 28, 2016 and June 24, 2016. Therefore, our results of operations for the first quarter of 2016 do not include financial results from Medivation or Anacor. On February 3, 2017, we completed the sale of our global infusion therapy net assets, HIS, to ICU Medical. The commercial operations of HIS are included in our condensed consolidated statements of income through February 2, 2017 and, therefore, our financial results for the first quarter of 2017 reflect approximately one month of legacy HIS domestic operations and approximately two months of legacy HIS international operations, while financial results in our condensed consolidated statements of income for the first quarter of 2016 reflect three months of legacy HIS global operations.

[3]

Income from continuing operations before provision for taxes on income.

[4]

For a description, see the “Other Costs and Business Activities” section above.

[5]

Other business activities includes the costs managed by our WRD and GPD organizations. Effective in the first quarter of 2017, Medical, previously reported as part of Other Business Activities, was reclassified to Corporate. We have reclassified approximately $27 million of costs from Other Business Activities to Corporate in the first quarter of 2016 to conform to the current period presentation.

[6]

Certain significant items are substantive and/or unusual, and in some cases recurring, items (such as restructuring or legal charges) that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis.

For Earnings in the first quarter of 2017, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $78 million, (ii) charges for certain legal matters of $8 million, (iii) an incremental charge to amounts previously recorded to write down the HIS net assets to fair value less costs to sell of $37 million, (iv) charges for business and legal entity alignment of $21 million and (v) other charges of $13 million. For additional information, see Note 2B, Note 3 and Note 4.

For Earnings in the first quarter of 2016, certain significant items includes: (i) restructuring charges and implementation costs associated with our cost-reduction initiatives that are not associated with an acquisition of $137 million, (ii) charges for certain legal matters of $286 million, (iii) certain asset impairment charges of $131 million, (iv) charges for business and legal entity alignment of $51 million and (v) other charges of $34 million. For additional information, see Note 3 and Note 4.

[7]

Medivation’s and Anacor’s commercial operations are included in IH’s operating results in our condensed consolidated statements of income, commencing from their respective acquisition dates of September 28, 2016 and June 24, 2016. Therefore, our results of operations, and IH’s operating results, for the first quarter of 2016 do not include financial results from Medivation or Anacor. In connection with the formation in early 2016 of the GPD organization, beginning in the second quarter of 2016, certain development-related functions transferred from IH to GPD. We have reclassified approximately $76 million of costs from IH to GPD in the first quarter of 2016.

[8]

On February 3, 2017, we completed the sale of our global infusion therapy net assets, HIS, to ICU Medical. The operating results of HIS are included in EH’s operating results through February 2, 2017 and, therefore, financial results for EH for the first quarter of 2017 reflect approximately one month of legacy HIS domestic operations and approximately two months of legacy HIS international operations, while financial results for EH for the first quarter of 2016 reflect three months of legacy HIS global operations. The financial results of AstraZeneca’s small molecule anti-infectives business, which is primarily outside the U.S., are included in our condensed consolidated financial statements commencing from the acquisition date of December 22, 2016, which falls in the first fiscal quarter of 2017 for our international operations. Therefore, in accordance with our international reporting period, our condensed consolidated statement of income and EH’s operating results for the first quarter of 2017 reflect approximately two months of legacy AstraZeneca small molecule anti-infectives business international operations, which were immaterial.