Full Press Release Details
Pfizer Infusion Systems
(A Business Unit of Pfizer Inc.)
Combined Statements of Income (Loss) and Comprehensive
Income (Loss), Business Unit Equity, and Cash Flows for the
years ended December 31, 2016 and 2015 with Independent
Auditors Report Thereon
Pfizer Infusion Systems
(A Business Unit of Pfizer Inc.)
| Pages | ||||
| INDEPENDENT AUDITORS REPORT | 3 | |||
| COMBINED FINANCIAL STATEMENTS | ||||
| Combined Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended December 31, 2016 and 2015 | 4 | |||
| Combined Statement of Business Unit Equity for the years ended December 31, 2016 and 2015 | 4 | |||
| Combined Statements of Cash Flows for the years ended December 31, 2016 and 2015 | 5 | |||
| Notes to Combined Financial Statements | 6-26 |
Independent Auditors Report
The Board of Directors
Report on the Combined Financial Statements
audited the accompanying combined statements of income (loss) and comprehensive income (loss), business unit equity, and cash flows of Pfizer Infusion Systems ( the Company ) for the years ended December 31, 2016 and 2015, and the
related notes ( the combined financial statements ).
Management s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these combined financial statements in accordance with U.S. generally accepted
accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the combined financial statements that are free from material misstatement, whether due to
Auditors Responsibility
Our responsibility is to express an opinion on these combined financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined
financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the combined financial statements referred to above present fairly, in all material respects, the results of the Company s operations and
its cash flows for the years ended December 31, 2016 and 2015 in accordance with U.S. generally accepted accounting principles.
Pfizer Infusion Systems
(A Business Unit of Pfizer Inc.)
Combined Statements of Income (Loss) and Comprehensive Income (Loss)
(dollars in millions)
| Years Ended December 31, | ||||||||
| 2016 | 2015 | |||||||
| Combined Statements of Income (Loss): | ||||||||
| Net Sales | $ | 1,156.8 | $ | 1,237.7 | ||||
| Cost of products sold | 788.8 | 1,003.3 | ||||||
| Restructuring and impairment charges, net | 1.1 | 9.0 | ||||||
| Research and development | 75.1 | 87.5 | ||||||
| Selling, general and administrative | 202.9 | 242.8 | ||||||
| Total operating costs and expenses | 1,067.9 | 1,342.6 | ||||||
| Income (Loss) From Operations | 88.9 | (104.9 | ) | |||||
| Income tax expense | 3.2 | 2.6 | ||||||
| Net Income (Loss) | $ | 85.7 | $ | (107.5 | ) | |||
| Combined Statements of Comprehensive Income (Loss): | ||||||||
| Foreign currency translation adjustments, net of taxes of $0.0 for all periods | $ | (3.4 | ) | $ | (27.4 | ) | ||
| Pension liability adjustments, net of taxes of $0.0 for all periods | (0.1 | ) | (0.2 | ) | ||||
| Other Comprehensive Income (Loss) | (3.5 | ) | (27.6 | ) | ||||
| Net Income (Loss) | 85.7 | (107.5 | ) | |||||
| Comprehensive Income (Loss) | $ | 82.2 | $ | (135.1 | ) |
The accompanying notes are an integral part of these combined financial statements.
Pfizer Infusion Systems
(A Business Unit of Pfizer Inc.)
Combined Statements of Business Unit Equity
(dollars in millions)
| Business Unit Equity | Accumulated Other Comprehensive Loss | Total | ||||||||||
| Balances at January 1, 2015 | $ | 514.9 | $ | (38.7 | ) | $ | 476.2 | |||||
| Net Income (Loss) | (107.5 | ) | (107.5 | ) | ||||||||
| Other Comprehensive Income (Loss) | (27.6 | ) | (27.6 | ) | ||||||||
| Net Transfers - Parent | 285.6 | 285.6 | ||||||||||
| Balances at December 31, 2015 | 693.0 | (66.3 | ) | 626.7 | ||||||||
| Net Income (Loss) | 85.7 | 85.7 | ||||||||||
| Other Comprehensive Income (Loss) | (3.5 | ) | (3.5 | ) | ||||||||
| Net Transfers - Parent | 52.4 | 52.4 | ||||||||||
| Balances at December 31, 2016 | $ | 831.1 | $ | (69.8 | ) | $ | 761.3 |
The accompanying notes are an integral part of these combined financial statements.
Pfizer Infusion Systems
(A Business Unit of Pfizer Inc.)
Combined Statements of Cash Flows
(dollars in millions)
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| Cash Flow From Operating Activities: | ||||||||
| Net Income (Loss) | $ | 85.7 | $ | (107.5 | ) | |||
| Adjustments to reconcile Net Income (Loss) to net cash from operating activities | ||||||||
| Depreciation | 42.6 | 29.5 | ||||||
| Amortization of intangible assets | 4.4 | 7.0 | ||||||
| Stock-based compensation expense | 4.5 | 43.1 | ||||||
| Device strategy and other quality matters provisions | 4.7 | 53.1 | ||||||
| Deferred income taxes and other tax adjustments | 0.4 | 0.1 | ||||||
| Impairment charges | 1.2 | |||||||
| Loss of fixed asset retirements/disposals, net | 1.4 | 1.3 | ||||||
| Changes in assets and liabilities | ||||||||
| Trade receivables | 33.4 | 22.6 | ||||||
| Inventories | (44.7 | ) | (40.9 | ) | ||||
| Prepaid expenses and other assets | (32.4 | ) | (11.4 | ) | ||||
| Trade accounts payable | (12.5 | ) | 3.3 | |||||
| Other liabilities | (16.2 | ) | (44.8 | ) | ||||
| Device strategy and other quality matters payments | (58.0 | ) | (75.6 | ) | ||||
| Other, net | (4.6 | ) | 1.4 | |||||
| Net Cash Provided by (Used in) Operating Activities | 8.7 | (117.6 | ) | |||||
| Cash Flow From Investing Activities: | ||||||||
| Capital expenditures (including instruments placed with or leased to customers of $26.6 and $20.1, respectively) | (66.2 | ) | (74.7 | ) | ||||
| Purchases of intangibles and other investments | (12.6 | ) | (12.9 | ) | ||||
| Proceeds from disposition of businesses and assets | 8.6 | |||||||
| Net Cash Provided by (Used in) Investing Activities | (78.8 | ) | (79.0 | ) | ||||
| Cash Flow From Financing Activities: | ||||||||
| Net financing activities with Parent | 43.6 | 240.0 | ||||||
| Net Cash Provided by (Used in) Financing Activities | 43.6 | 240.0 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 0.4 | (0.4 | ) | |||||
| Net change in cash and cash equivalents | (26.1 | ) | 43.0 | |||||
| Cash and cash equivalents at beginning of year | 44.2 | 1.2 | ||||||
| Cash and cash equivalents at end of period | $ | 18.1 | $ | 44.2 | ||||
| Supplemental Cash Flow Information: | ||||||||
| Cash paid during the year | ||||||||
| Income taxes, net of refunds | $ | $ | (0.2 | ) | ||||
| Accrued capital expenditures | $ | 4.2 | $ | 5.1 |
The accompanying notes are an integral part of these combined financial statements.
Pfizer Infusion Systems
(A Business Unit of Pfizer Inc.)
Notes to Combined Financial Statements
December 31, 2016 and 2015
Pfizer Infusion Systems ( IS ) is a business unit of Pfizer Inc. ( Pfizer ). Prior to being acquired by Pfizer (as part of Pfizer s
September 3, 2015, acquisition of Hospira), IS was operated within Hospira, Inc. ( Hospira ) ( Parent refers to both Pfizer and Hospira as applicable to respective periods). IS is a leading provider of infusion technologies
and infusion therapy solutions, which it develops, manufactures, markets and distributes. IS comprises the assets, liabilities, operations and cash flows of approximately 50 Pfizer subsidiaries, in whole or in part.
IS is managed and operated as one business with a single management team that reports to the President of IS, except for Parent operated sites and corporate
On February 3, 2017 ( Closing Date ), ICU Medical Inc. (ICU Medical) acquired IS global net assets for up to
approximately $900 million, composed of cash and contingent cash consideration, ICU Medical Common stock and seller financing in accordance with the provisions in the Amended and Restated Stock and Asset Purchase Agreement ( Purchase
Agreement ) dated January 5, 2017 (as amended to date).
Through its broad, integrated portfolio, IS is uniquely positioned to improve patient and caregiver safety while reducing healthcare costs. IS s portfolio
includes medication management infusion technologies and infusion therapy solutions. Medication management infusion technologies include infusion pumps and related dedicated administration sets, gravity administration sets, services and IS s
Hospira MedNet safety software system, which is designed for hospitals to customize intravenous drug dosage limits and track drug delivery to prevent medication errors. Infusion pumps include:
IS offers infusion therapy solutions and related supplies, primarily in the U.S. and Canada markets that include I.V. solutions for general use, I.V.
nutrition products and solutions for washing and cleansing of wounds or surgical sites.
IS s broad portfolio of products is used by hospitals and
alternate site providers, such as clinics, home healthcare providers and long-term care facilities.
IS s revenues are generated in the U.S., Canada,
Europe, Asia Pacific and Latin America, with the U.S., IS s largest revenue-generating market, accounting for approximately 79% and 79% of revenues in 2016 and 2015, respectively. IS is headquartered in Lake Forest, Illinois; operates infusion
pump and dedicated set manufacturing plants in Costa Rica and Dominican Republic; operates infusion pump repair centers primarily in San Jose, California, Sligo, Ireland, Montreal, Canada and Botany, Australia; and has research and development
capabilities at sites located in Lake Forest, Illinois, San Diego, California and Chennai, India. Certain infusion therapy solutions products are manufactured by Parent operated manufacturing sites (not fully dedicated IS manufacturing sites) in
Austin, Texas and Rocky Mount, North Carolina.
Pfizer Infusion Systems
(A Business Unit of Pfizer Inc.)
Notes to Combined Financial Statements
December 31, 2016 and 2015
The combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( U.S.
GAAP ) and present the combined results of operations and cash flows for IS. All significant intra-IS transactions and balances have been eliminated. Balances due to or due from Parent are presented as a
component of business unit equity. These combined financial statements do not purport to reflect what the results of operations or cash flows would have been had IS operated as a stand-alone company.
The combined financial statements have been derived from Parent s accounting records for IS, on the basis of the accounting policies and procedures
prescribed by Hospira (see also Note 3 Summary of Significant Accounting Policies).
The combined statements of income (loss), for all periods, reflect:
The combined statements of income (loss), for all periods, exclude:
operating costs, includes:
Direct Costs includes cost solely dedicated to IS and includes costs such as cost of products sold, freight and distribution, repair service center among
others and direct personnel related costs.
IS operates as one of Pfizer s, and previously Hospira s, business units which shared Indirect Costs with other business units, such as distribution,
quality, medical and other administrative functions, among others. IS management routinely allocated to the combined financial statements all Indirect Costs that could be identified as directly attributable to IS. The allocations were generally
based on the proportionate percentage of IS revenues to the respective total Parent or applicable legal entities revenues. As a result of that process, approximately $108.9 million and $167.8 million of these Indirect Costs were allocated
to the combined statements of income (loss) in the years ended December 31, 2016 and 2015 ($75.5 million and $99.7 million in Cost of products sold, $26.2 million and $57.2 million in Selling, general and
administrative and $7.1 million and $10.9 million in Research and development), respectively.
Pfizer Infusion Systems
(A Business Unit of Pfizer Inc.)
Notes to Combined Financial Statements
December 31, 2016 and 2015
Recovered Costs includes costs incurred by Parent operated manufacturing and distribution facilities which shared costs with IS operations.
Costs include primarily materials, labor and overhead associated with manufacturing and distribution of Parent products. These costs are generally based on the throughput of Parent products through these facilities or based on the proportionate
percentage of Parent product revenues to the respective total Parent revenues. As a result of that process, approximately $96.4 million and $83.6 million of these Recovered Costs were included to the combined statements of income (loss) in
the years ended December 31, 2016 and 2015 ($93.2 million and $80.4 million in Cost of products sold, $3.2 million and $3.2 million in Selling, general and administrative), respectively. These Recovered Costs
are offset in full by recoveries from Parent in the same periods and financial statement line items listed.
Corporate Enabling Functions
Pfizer, and previously Hospira, centrally maintains Corporate Enabling Functions and does not routinely allocate the costs of these functions to any of its