Amgen 2012 Annual Report Download - page 110

F-11
Reclassifications
Certain prior-period amounts shown within Cash flows from operating activities in our Consolidated Statements of Cash
Flows and Note 4, Income taxes have been reclassified to conform to the current-period presentation.
Recent accounting pronouncements
In January 2012, we adopted a new accounting standard that requires additional disclosures for comprehensive income. As
permitted under the standard, we have elected to present comprehensive income in two separate but consecutive financial statements,
consisting of a statement of income followed by a separate statement of comprehensive income. The standard was required to be
applied retrospectively beginning January 1, 2012.
In February 2013, a new accounting standard was issued that requires increased disclosure requirements regarding amounts
that are reclassified out of accumulated other comprehensive income. The standard is required to be adopted prospectively beginning
on January 1, 2013.
2. Business combinations
deCODE Genetics
On December 10, 2012, we acquired all of the outstanding stock of deCODE Genetics (deCODE), a privately held company
that is a global leader in human genetics, for total consideration of $401 million in cash. The transaction, which was accounted
for as a business combination, provides us with an opportunity to enhance our efforts to identify and validate human disease targets.
deCODE's operations have been included in our consolidated financial statements commencing on the acquisition date.
We allocated the consideration to acquire deCODE to finite-lived intangible assets of $401 million comprised of databases
and other proprietary information with an estimated useful life of 10 years, $93 million to goodwill which is not deductible for
tax purposes, deferred tax liabilities of $80 million and other net liabilities of $13 million.
Our accounting for the acquisition is preliminary and will be finalized upon completion of our analysis to determine the
acquisition date fair values of certain assets acquired, liabilities assumed and tax-related items.
KAI Pharmaceuticals
On July 5, 2012, we acquired all of the outstanding stock of KAI Pharmaceuticals (KAI), a privately held biotechnology
company that is developing AMG 416 (formerly referred to as KAI-4169), its lead product candidate, which is in phase 2 clinical
development for the treatment of secondary hyperparathyroidism in patients with chronic kidney disease who are on dialysis. The
transaction, which was accounted for as a business combination, provides us with an opportunity to further expand our nephrology
pipeline. KAI's operations have been included in our consolidated financial statements commencing on the acquisition date.
The consideration to acquire KAI totaled $332 million in cash which was allocated to the acquisition date fair values of
assets acquired and liabilities assumed as follows (in millions):
Indefinite-lived intangible assets - IPR&D $ 240
Goodwill 125
Deferred tax assets (liabilities), net (59)
Other assets (liabilities), net 26
Total consideration $ 332
The estimated fair value of acquired IPR&D is related to AMG 416. The estimated fair value was determined using a
probability-weighted income approach, which discounts expected future cash flows to present value by using a discount rate that
represents the estimated rate that market participants would use to value this intangible asset. The projected cash flows from AMG
416 were based on certain assumptions, including estimates of future revenues and expenses, the time and resources needed to
complete development and the probabilities of obtaining marketing approval from the U.S. Food and Drug Administration (FDA)
and other regulatory agencies.
The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed
of $125 million was recorded as goodwill, which is not deductible for tax purposes. Goodwill is attributable primarily to expected