Amgen 2013 Annual Report Download - page 88

by discounting probability-adjusted cash outflows to present value using a discount rate that represents the estimated rate that market participants would use.
The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $2.5 billion was
recorded as goodwill, which is not deductible for tax purposes and represents the future economic benefits arising from other assets acquired that could not be
individually identified and separately recognized and the expected synergies and other benefits that we believe will result from combining the operations of
Onyx with our operations.
Our accounting for this acquisition is preliminary. The fair value estimates for the assets acquired and liabilities assumed were based upon preliminary
calculations and valuations and our estimates and assumptions are subject to change as we obtain additional information for our estimates during the
measurement period (up to one year from the acquisition date). The primary areas of those preliminary estimates that are not yet finalized relate to certain
tangible assets and liabilities acquired, identifiable intangible assets and tax related items.
We incurred $36 million of transaction-related expense which was recorded in Selling, general, and administrative expenses in the Consolidated
Statement of Income for the year ended December 31, 2013.
The following table presents supplemental pro forma information for the year ended December 31, 2013 and 2012, as if the acquisition of Onyx had
occurred on January 1, 2012 (in millions, unaudited):


Pro forma net revenues $19,141
$17,616
Pro forma net income 4,848
3,700
The unaudited pro forma consolidated results include pro forma adjustments that assume the acquisition occurred on January 1, 2012. The primary
adjustments include: (i) the $197 million cash payment that was paid and recognized as compensation expense during the fourth quarter of 2013 related to the
accelerated vesting of the remaining Onyx equity awards was included in the net income attributable to Amgen for the year ended December 31, 2012, and (ii)
additional intangible amortization expense of $488 million and $412 million was included in the year ended December 31, 2013 and 2012, respectively. The
adjustments also include the impact of additional interest expense on debt issued in connection with the acquisition of Onyx assuming the debt was incurred
on January 1, 2012. The unaudited pro forma consolidated results are not necessarily indicative of what our consolidated results of operations actually would
have been had we completed the acquisition on January 1, 2012. In addition, the unaudited pro forma consolidated results do not purport to project the future
results of operations of the combined company nor do they reflect the expected realization of any cost savings associated with the acquisition.
deCODE Genetics
On December 10, 2012, we acquired for cash all of the outstanding stock of deCODE Genetics (deCODE), a privately held company that is a global
leader in human genetics. The transaction provides us with an opportunity to enhance our efforts to identify and validate human disease targets. Consideration
was allocated primarily to a finite-lived intangible asset of discovery capacity in the genetics of human diseases with an estimated useful life of 10 years.
KAI Pharmaceuticals
On July 5, 2012, we acquired for cash all of the outstanding stock of KAI Pharmaceuticals (KAI), a privately held biotechnology company that is
developing velcalcetide (formerly AMG 416), its lead product candidate, which is in phase 3 clinical development for the treatment of secondary
hyperparathyroidism in patients with chronic kidney disease (CKD) who are on dialysis. The transaction provides us with an opportunity to further expand
our nephrology pipeline. The acquired IPR&D is related to velcalcetide.
Goodwill is attributable primarily to expected synergies and other benefits from combining KAI with our nephrology development and commercialization
activities.
Mustafa Nevzat Pharmaceuticals
On June 12, 2012, we acquired for cash substantially all of the outstanding stock of Mustafa Nevzat Pharmaceuticals (MN), a privately held company
that is a leading supplier of pharmaceuticals to the hospital sector and a major supplier of injectable medicines in Turkey. The transaction provides us with
the opportunity to expand our presence in Turkey and the surrounding region.
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