Abbott Laboratories 2014 Annual Report Download - page 45

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ABBOTT 2014 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Acquired intangible assets consist primarily of product
rights for currently marketed products and are amortized over
12 to 16years (average of 15 years). The goodwill is primarily
attributable to intangible assets that do not qualify for separate
recognition. The goodwill is identifiable to the Established
Pharmaceutical Products segment. The acquired tangible assets
consist primarily of cash and cash equivalents of approximately
$94million, trade accounts receivable of approximately $179mil‑
lion, inventory of approximately $177million, other current assets
of approximately $51million, property and equipment of approxi‑
mately $214million, and other long‑term assets of approximately
$138million. Assumed liabilities consist of borrowings of approxi‑
mately $570million, trade accounts payable and other current
liabilities of approximately $192million and other noncurrent
liabilities of approximately $15million.
Annualized net sales for CFR Pharmaceuticals are expected to
total approximately $800million. Had the acquisition of CFR
Pharmaceuticals taken place on January1, 2013, the consolidated
net sales and earnings of Abbott would not have been significantly
dierent from the reported amounts.
In December 2014, Abbott acquired control of Veropharm, a
leading Russian pharmaceutical company for approximately
$315million excluding assumed debt. Through this acquisition,
Abbott establishes a manufacturing footprint in Russia and
obtains a portfolio of medicines that is well aligned with Abbott’s
current pharmaceutical therapeutic areas of focus. Abbott
acquired control of Veropharm through its purchase of Limited
Liability Company Garden Hills, the holding company that owns
NOTE 5—ACCUMULATED OTHER COMPREHENSIVE INCOME
The components of the changes in accumulated other comprehen‑
sive income from continuing operations, net of income taxes, are
as follows:
(inmillions)
Cumulative
Foreign Currency
Translation
Adjustments
Net Actuarial
Losses and Prior
Service Costs and
Credits
Cumulative
Unrealized Gains
on Marketable
Equity Securities
Cumulative Gains
on Derivative
Instruments
Designated as
Cash Flow Hedges Total
Balance at December31, 2012 $÷÷«(79) $(3,596) $«31 $÷50 $(3,594)
Separation of AbbVie (400) 1,402 — 8 1,010
Other comprehensive income (loss) before
reclassifications (239) 771 22 (23) 531
Income (loss) amounts reclassified from accumulated
other comprehensive income (a) — 111 (40) (30) 41
Net current period comprehensive income (loss) (239) 882 (18) (53) 572
Balance at December31, 2013 (718) (1,312) 13 5 (2,012)
Other comprehensive income (loss) before
reclassifications (2,206) (970) 4 106 (3,066)
Income (loss) amounts reclassified from accumulated
other comprehensive income (a) — 53 (16) (12) 25
Net current period comprehensive income (loss) (2,206) (917) (12) 94 (3,041)
Balance at December31, 2014 $(2,924) $(2,229) $÷«1 $÷99 $(5,053)
(a) Reclassified amounts for foreign currency translation are recorded in the Consolidated Statement of Earnings as Net Foreign exchange loss (gain); gains on marketable equity securities are
recorded as Other (income) expense and gains/losses related to cash flow hedges are recorded as Cost of product sold. Net actuarial losses and prior service cost is included as a component
of net periodic benefit plan cost—see Note 13 for additional information.
NOTE 6—BUSINESS ACQUISITIONS
In September 2014, Abbott completed the acquisition of the
controlling interest in CFR Pharmaceuticals S.A. (CFR) for
approximately $2.9billion in cash ($2.8billion net of CFR cash
on hand at closing). Including the assumption of approximately
$570million of debt, the total cost of the acquisition was $3.4bil‑
lion. The acquisition of CFR more than doubles Abbott’s branded
generics pharmaceutical presence in Latin America and further
expands its presence in emerging markets. CFR’s financial results
are included in Abbott’s financial statements beginning on
September 26, 2014, the date that Abbott acquired control of this
business. The impact of the acquired operations on Abbott’s oper‑
ating results was not significant for 2014. Abbott owns 99.9% of
the outstanding ordinary shares of CFR. The fair value of the
non‑controlling interest at the acquisition date was approximately
$3million. The acquisition was funded with cash and cash equiva‑
lents and short‑term investments. The preliminary allocation of
the fair value of the acquisition is shown in the table below. The
allocation of the fair value of the acquisition will be finalized
when the valuation is completed.
(inbillions)
Acquired intangible assets, non‑deductible $«1.80
Goodwill, non‑deductible 1.59
Acquired net tangible assets 0.07
Deferred income taxes recorded at acquisition (0.54)
Total preliminary allocation of fair value $«2.92