Pfizer 2011 Annual Report Download - page 67

Download and view the complete annual report

Please find page 67 of the 2011 Pfizer annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 117

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
B. Acquisition of King Pharmaceuticals, Inc.
Description of the Transaction
On January 31, 2011 (the acquisition date), we completed a tender offer for the outstanding shares of common stock of King at a
purchase price of $14.25 per share in cash and acquired approximately 92.5% of the outstanding shares. On February 28, 2011, we
acquired all of the remaining shares of King for $14.25 per share in cash. As a result, the total fair value of consideration transferred
for King was approximately $3.6 billion in cash ($3.2 billion, net of cash acquired).
King’s principal businesses consist of a prescription pharmaceutical business focused on delivering new formulations of pain
treatments designed to discourage common methods of misuse and abuse; the Meridian auto-injector business for emergency drug
delivery, which develops and manufactures the EpiPen; an established products portfolio; and an animal health business that offers
a variety of feed-additive products for a wide range of species.
Recording of Assets Acquired and Liabilities Assumed
The assets acquired and liabilities assumed from King follow:
(MILLIONS OF DOLLARS)
AMOUNTS
RECOGNIZED AS OF
ACQUISITION DATE
(FINAL)(a)
Working capital, excluding inventories $ 155
Inventories 340
Property, plant and equipment 412
Identifiable intangible assets, excluding in-process research and development 1,806
In-process research and development 303
Net tax accounts (328)
All other long-term assets and liabilities, net 102
Total identifiable net assets 2,790
Goodwill(b) 765
Net assets acquired/total consideration transferred $3,555
(a) Measurement period adjustments were not significant and did not have a significant impact on our earnings, balance sheets or cash flows in any
interim period in 2011 and, therefore, we did not retrospectively adjust our interim financial statements.
(b) Goodwill recorded as of the acquisition date totaled $720 million for our three biopharmaceutical operating segments and $45 million for our Animal
Health and Consumer Healthcare operating segment. (Since the acquisition of King, we have revised our operating segments. See Note 18A.
Segment, Geographic and Other Revenue Information: Segment Information.)
As of the acquisition date, the fair value of accounts receivable approximated book value acquired. The gross contractual amount
receivable was $200 million, virtually all of which was expected to be collected.
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future
economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically,
the goodwill recorded as part of the acquisition of King includes the following:
•the expected synergies and other benefits that we believed would result from combining the operations of King with the operations of
Pfizer;
•any intangible assets that did not qualify for separate recognition, as well as future, yet unidentified projects and products; and
•the value of the going-concern element of King’s existing businesses (the higher rate of return on the assembled collection of net assets
versus if Pfizer had acquired all of the net assets separately).
Goodwill is not amortized and is not deductible for tax purposes (see Note 10A. Goodwill and Other Intangible Assets: Goodwill for
additional information).
The assets and liabilities arising from contingencies recognized as of the acquisition date are not significant to Pfizer’s consolidated
financial statements.
Actual and Pro Forma Impact of Acquisition
Revenues from King are included in Pfizer’s consolidated statements of income from the acquisition date, January 31, 2011, through
Pfizer’s domestic and international year-ends and were $1.3 billion in 2011. We are no longer able to provide the results of
operations attributable to King as those operations have now been substantially integrated.
66 2011 Financial Report