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Operating revenue $3,344.5 $3,380.5 $3,284.7 $3,057.9 $2,675.3
Earnings from continuing operations
before cumulative effect of accounting
changes(a) 489.1 396.4 527.0 521.5 435.9
Earnings per share from continuing
operations before cumulative effect of
accounting changes(a) 2.75 2.20 2.92 2.87 2.36
Dividends declared per share 1.48 1.48 1.42 1.26 1.04
Total assets 5,162.5 4,811.9 4,513.1 4,053.9 3,578.8
Long-term debt 521.0 526.8 402.9 295.5 274.6

(a) Relating to January 1, 1993 accounting changes resulting in a net charge of $18.9 or $.11 per share and to January 1, 1992
accounting changes resulting in a net charge of $222.9 or $1.26 per share.
638 Mergers and Acquisitions




15-42
Mergers and Acquisitions




EXHIBIT 2
Abridged Merger Prospectus

UNAUDITED CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited condensed pro forma com- for purposes of this presentation (see Note 1 of the
bined balance sheet as of June 30, 1995, and the Notes to unaudited condensed pro forma combined
unaudited condensed pro forma combined state- ¬nancial statements.) Swedish GAAP differs in cer-
ments of earnings for the years ended tain signi¬cant respects from U.S. GAAP A reconcili-
.




The Uphohn Company
December 31, 1994, 1993, and 1992 and the six- ation of net income and shareholders™ equity of
month periods ended June 30, 1995 and 1994 Pharmacia from Swedish GAAP to U.S. GAAP is pre-
have been prepared to illustrate the estimated sented in Note 25 to the Consolidated Financial
effects of the proposed combination of Pharmacia Statements of Pharmacia.
and Upjohn in accordance with U.S. GAAP under
The unaudited condensed pro forma combined
the “pooling of interrests” method of accounting. A
¬nancial statements do not give effect to certain
condition in order to account for the merger as a
restructuring and rationalization costs expected to
“pooling of interests” under U.S. GAAP is that there
be incurred following the Combination. The man-
must at a minimum be an exchange of at least 90%
agement of the company presently is considering
of the outstanding common stock of each of Upjohn
the nature and extent of the charges to be so
and Pharmacia. The Combination will occur
incurred. Such costs presently cannot be reasonably
through the formation of the company which will
predicted in a manner suf¬cient to quantify the
issue an assumed 503,722,558 shares of New
amount and timing of such charges under U.S.
Common Stock and an assumed 7,263 shares of
GAAP Upon ¬nal determination, a substantial
.
New Preferred Stock, which will be exchanged for all
charge or charges will be recorded during 1995
of the outstanding Pharmacia Securities and shares
and/or 1996 and be re¬‚ected in the company™s
of Upjohn Common Stock and Upjohn Preferred
statement of earnings as a non-recurring charge or
Stock. The Unaudited Condensed Pro Forma Com-
charges to operations in accordance with the U.S.
bined Balance Sheet as of June 30, 1995 was pre-
GAAP The actual payments to implement the
.
pared as if the Combination was consummated at
restructuring and rationalization are expected to be
June 30, 1995. The Unaudited Condensed Pro
made over a two- to three-year period. In addition,
Forma Combined Statements of Earnings for the
although the company expects to realize cost reduc-
years ended December 31, 1994, 1993 and 1992
tions from the Combination and the restructuring
and the six-month periods ended June 30, 1995
and rationalization, no effect has been given in the
and 1994 were prepared as if the Combination was
company™s unaudited condensed pro forma com-
consummated as of January 1, 1992. The unau-
bined ¬nancial statements to any such bene¬ts.
dited condensed pro forma combined ¬nancial
statements are based on the historical consolidated
The unaudited condensed pro forma combined
¬nancial statements of Pharmacia and Upjohn giv-
¬nancial statements are provided for illustrative pur-
ing effect to the Combination under the assumptions
poses only and do not purport to represent what the
and adjustments outlined in the accompanying
¬nancial position or results of operations of the
Notes to Unaudited Condensed Pro Forma Com-
company would actually have been if the Combina-
bined Financial Statements.
tion had in fact occurred on the dates indicated or to
The unaudited condensed pro forma combined project the ¬nancial position or results of operations
¬nancial statements have been prepared in accor- for any future date or period. The unaudited pro
dance with U.S. GAAP The ¬nancial statements of
. forma combined ¬nancial statements should be
Pharmacia have been converted from Swedish read in conjunction with the notes thereto and the
GAAP to U.S. GAAP and translated into U.S. dollars consolidated ¬nancial statements of Pharmacia and
639
Mergers and Acquisitions




15-43 Part 3 Business Analysis and Valuation Applications




Upjohn and the related notes thereto contained
elsewhere herein.
The Combination Agreement provides that each
outstanding Pharmacia Class A Common Share,
Pharmacia Class B Common Share and ADS repre-
senting one Pharmacia Class A Common Share will
be exchanged for one share of New Common Stock
or SDS, each outstanding share of Upjohn Common
Stock will be exchanged for 1.45 shares of New
The Uphohn Company




Common Stock and each outstanding share of
Upjohn Preferred Stock will be exchanged for one
share of New Preferred Stock. The precise number
of outstanding shares cannot be determined until
the Effective Date. For purposes of the unaudited
condensed pro forma ¬nancial statements, the
actual number of shares of capital stock of Pharma-
cia and Upjohn issued and outstanding at June 30,
1995 has been used to calculate the issuance of
shares of New Common Stock and New Preferred
Stock pursuant to the Offer and the Merger.
640 Mergers and Acquisitions




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Mergers and Acquisitions




UNAUDITED CONDENSED PRO FORMA COMBINED BALANCE SHEET, JUNE 30, 1995

Historical
Pharmacia
(dollar amounts in thousands) (Note 1) Upjohn
Current assets:
Cash and cash equivalents $ 198,141 $ 303,914
Short-term investments 900,929 328,443




The Uphohn Company
Trade accounts receivable (net) 913,046 671,767
Inventories 500,379 502,172
Deferred income taxes and other 286,541 335,584
Total current assets 2,799,036 2,141,880
Investments 127,367 598,254
Property, plant and equipment, at cost 2,359,380 3,203,532
Less allowance for depreciation (1,035,456) (1,351,189)
Net property, plant and equipment 1,323,924 1,852,343
Other noncurrent assets 119,656 426,390
Intangibles (net) 1,592,702 224,719
Total assets $5,962,685 $5,243,586
Current liabilities:
Accounts payable, accrued liabilities and dividends payable $ 732,392 $ 297,119
Short-term borrowings, including current maturities of long-term
debt 700,034 60,285
Income taxes payable 180,103 226,702
Other 179,140 494,967
Total current liabilities 1,791,669 1,079,073
Long-term debt 85,508 515,005
Guaranteed of ESOP debt 267,200
Postretirement bene¬t cost 15,040 374,607
Deferred income taxes and other noncurrent liabilities 609,401 505,322
Shareholders™ equity:
Preferred stock ” 292,719
Common stock 880,413 190,590
Capital in excess of par value, statutory reserves and other 1,755,034 97,291
Retained earnings 825,620 2,891,048
ESOP deferred compensation and note receivable from
ESOP trust ” (273,430)
Treasury stock, at cost ” (695,839)
Total shareholders™ equity 3,461,067 2,502,379
Total liabilities and shareholders™ equity $5,962,685 $5,243,586
(continued)
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Mergers and Acquisitions




15-45 Part 3 Business Analysis and Valuation Applications




UNAUDITED CONDENSED PRO FORMA COMBINED BALANCE SHEET, JUNE 30, 1995 (cont.)

Pro Forma
(dollar amounts in thousands) Adjustments Combined
Current assets:
Cash and cash equivalents (Note 2) $ (69,000) $ 433,055
Short-term investments 1,229,372
Trade accounts receivable (net) 1,584,813
Inventories 1,002,551
The Uphohn Company




Deferred income taxes and other 622,125
Total current assets (69,000) 4,871,916
Investments 725,621
Property, plant and equipment, at cost 5,562,912
Less allowance for depreciation (2,386,645)
Net property, plant and equipment 3,176,267
Other noncurrent assets 546,046
Intangibles (net) 1,817,421
Total assets $(69,000) $11,137,271
Current liabilities:
Accounts payable, accrued liabilities and dividends payable $1,029,511
Short-term borrowings, including current maturities of long-term debt 760,319
Income taxes payable 406,805
Other 674,107
Total current liabilities 2,870,742
Long-term debt 600,513
Guaranteed of ESOP debt 267,200
Postretirement bene¬t cost 389,647
Deferred income taxes and other noncurrent liabilities 1,114,723
Shareholders™ equity:
Preferred stock (Note 3d) $(292,719) 292,719
(Note 3d) 292,719
Common stock (Note 3a) (880,413) 5,038
(Note 3a) 2,558
(Note 3b) (190,590)
(Note 3b) 2,480
Capital in excess of par value, statutory reserves and other
(Note 3a) 877,855 2,222,451
(Note 3b) 188,110
(Note 3c) (695,839)
Retained earnings (Note 2) (69,000) 3,647,668
ESOP deferred compensation and note receivable from ESOP trust (273,430)
Treasury stock, at cost (Note 3c) 695,839
Total shareholders™ equity (69,000) 5,894,446
Total liabilities and shareholders™ equity $(69,000) $11,137,271

The accompanying notes are an integral part of the unaudited condensed pro forma combined financial statements.
642 Mergers and Acquisitions




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