Question-and-Answer Session
Operator
(Operator Instructions) Your first call comes from the line of Richard Silver with Barclays Capital. You may proceed.
Richard Silver - Barclays Capital
Hi, can you hear me?
Pat LePore
Yes.
Richard Silver - Barclays Capital
Can you just go through, maybe the tax rate on the adjusted earnings of $0.21 and also the adjustments in SG&A and R&D and cost of goods for the fourth quarter?
Veronica Lubatkin
Okay, so just addressing the effective tax rate of 38%, it’s really the federal rate plus the state rate. It’s a very straightforward 38%.
Richard Silver - Barclays Capital
Okay and the other adjustments to get to the $0.21?
Veronica Lubatkin
You’re saying the adjustments to get to the $0.21 per share of continuing operations? Okay, so included in the $0.21 per share for adjustments are the $15.4 million of restructuring costs.
Richard Silver - Barclays Capital
And that’s in SG&A?
Veronica Lubatkin
So if you look on the face of the P&L in the 10-K, it is actually a line in SG&A called restructuring costs, so the $15.4 million is right on the face of the P&L. You see that? Okay.
Richard Silver - Barclays Capital
Yes. Now we got that. Okay.
Veronica Lubatkin
Then we have in the settlement and contingencies you have the Pentech litigation, as well as the government pricing contingencies of $5 million that was recorded in the third quarter.
Richard Silver - Barclays Capital
It’s just the exclusions from SG&A and cost of goods and R&D that we’re looking for and just the tax rate as applied. We have what you’re giving us, we have that. So it’s the exclusions and it’s also the tax rate to get to the $0.21?
Veronica Lubatkin
Okay, so the tax rate is 38%, included in the cost of goods sold for the full year. Are you talking fourth quarter or full year?
Richard Silver - Barclays Capital
Fourth quarter.
Veronica Lubatkin
Fourth quarter. In the cost of goods sold, there’s $1 million of inventory write-off. In the R&D, there is roughly $1 million of accelerated depreciation, related to the resizing of the generic business. In the SG&A line there is $2.7 million of costs, plus $4 million of Pentech legal expenses.
On the settlements line, there’s $49 million which represents Pentech of about $45 million and $5 million of the VA, which was recorded in the third quarter and then of course, the gain on sale of product rights in the fourth quarter was $5 million from the sale of ANDAs. Did that answer your question?
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