Pfizer 2012 Annual Report Download - page 66

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
2012 Financial Report 65
King’s principal businesses consisted 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 following table provides the assets acquired and liabilities assumed from King:
(MILLIONS OF DOLLARS)
Amounts
Recognized as of
Acquisition Date
(Final)
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(a) 765
Net assets acquired/total consideration transferred $ 3,555
(a) Goodwill recorded as of the acquisition date totaled $720 million for our three biopharmaceutical operating segments and $45 million for our Animal Health
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 the 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 income 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 not able to provide the results of operations attributable to King in
2011 as those operations had been substantially integrated into the larger Pfizer operation shortly after the acquisition.
The following table provides supplemental pro forma information:
Unaudited Pro Forma
Consolidated Results(a)
Year Ended December 31,
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA) 2011 2010
Revenues $65,368 $66,540
Net income attributable to Pfizer Inc. 10,228 8,013
Diluted earnings per share attributable to Pfizer Inc. common shareholders 1.30 0.99
(a) The pro forma information for December 31, 2011 and 2010 assumes that the acquisition of King occurred on January 1, 2010.