Johnson and Johnson 2012 Annual Report Download - page 61

The operating results of Synthes were reported in the Company’s financial statements beginning on June 14, 2012. Total
sales and net earnings for Synthes for the fiscal year ended December 30, 2012 were $2,159 million and $324 million,
respectively.
The following table provides pro forma results of operations for the fiscal year ended December 30, 2012 and January 1,
2012, as if Synthes, Inc. had been acquired as of January 3, 2011. The pro forma results include the effect of divestitures
and certain purchase accounting adjustments such as the estimated changes in depreciation and amortization expense on
the acquired tangible and intangible assets. However, pro forma results do not include any anticipated cost savings or
other effects of the integration of Synthes, Inc. Accordingly, such amounts are not necessarily indicative of the results if the
acquisition had occurred on the dates indicated or which may occur in the future.
(Dollars in Millions Except Per Share Amounts)
Unaudited Pro forma
consolidated results
2012 2011
Net Sales $68,894 68,741
Net Earnings attributable to Johnson & Johnson $11,564 9,427
Diluted Net Earnings per share attributable to Johnson & Johnson $4.11 3.40
In 2012, the Company recorded acquisition related costs of $1,028 million before tax, which were recorded in Cost of
products sold and Other (income) expense.
In connection with the Synthes acquisition, DePuy Orthopaedics, Inc. agreed to divest certain rights and assets related to
its trauma business to Biomet, Inc. and completed the initial closing for this transaction in the fiscal second quarter of
2012, including those countries that represented the majority of sales. As of December 30, 2012, the transaction had
closed worldwide.
Certain businesses were acquired for $2,797 million in cash and $228 million of liabilities assumed during 2011. These
acquisitions were accounted for by the purchase method and, accordingly, results of operations have been included in the
financial statements from their respective dates of acquisition.
The 2011 acquisitions included: Crucell N.V., a global biopharmaceutical company focused on the research &
development, production and marketing of vaccines and antibodies against infectious disease worldwide; the over-the-
counter brands of J.B. Chemicals & Pharmaceuticals Limited, including RINZA®, Russia’s leading multi-symptom cough
and cold brand, and DOKTOR MOM®, Russia’s number two selling cough brand, as well as several other brands; full
ownership of the Johnson & Johnson-Merck Consumer Pharmaceuticals Co. joint venture in the U.S. from Merck Sharp &
Dohme Corp; and SterilMed, Inc., a leader in the reprocessing and remanufacturing of medical devices in the U.S.
The excess of purchase price over the estimated fair value of tangible assets acquired amounted to $2,657 million and has
been assigned to identifiable intangible assets, with any residual recorded to goodwill. Of this amount, approximately $982
million has been identified as the value of IPR&D associated with the acquisition of Crucell N.V.
The IPR&D related to the acquisition of Crucell N.V. of $982 million is associated with vaccines and antibodies that
prevent and/or treat infectious diseases. The value of the IPR&D was calculated using cash flow projections discounted
for the risk inherent in such projects. Probability of success factors ranging from 14 – 81% were used to reflect inherent
clinical and regulatory risk. The discount rate applied was 16%. During the fiscal second quarter of 2012, the Company
recorded a charge of $0.5 billion for the intangible asset write-down and $0.4 billion for the impairment of the in-process
research and development related to the Crucell business.
Certain businesses were acquired for $1,269 million in cash and $52 million of liabilities assumed during 2010. These
acquisitions were accounted for by the purchase method and, accordingly, results of operations have been included in the
financial statements from their respective dates of acquisition.
The 2010 acquisitions included: Acclarent, Inc., a privately held medical technology company dedicated to designing,
developing and commercializing devices that address conditions affecting the ear, nose and throat (ENT); RespiVert Ltd., a
privately held drug discovery company focused on developing small-molecule, inhaled therapies for the treatment of
pulmonary diseases; and Micrus Endovascular LLC, a global developer and manufacturer of minimally invasive devices for
hemorrhagic and ischemic stroke.
The excess of purchase price over the estimated fair value of tangible assets acquired amounted to $1,185 million and has
been assigned to identifiable intangible assets, with any residual recorded to goodwill. Of this amount, approximately $213
million has been identified as the value of IPR&D associated with the acquisitions of Acclarent, Inc., RespiVert Ltd. and
Micrus Endovascular LLC.
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