McKesson 2008 Annual Report Download - page 77

Download and view the complete annual report

Please find page 77 of the 2008 McKesson annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 119

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
70
2. Acquisitions and Investments
In 2008, we made the following acquisition:
−On October 29, 2007, we acquired all of the outstanding shares of Oncology Therapeutics Network (“OTN”) of
San Francisco, California for approximately $531 million, including the assumption of debt and net of $31
million of cash acquired from OTN. OTN is a U.S. distributor of specialty pharmaceuticals. The acquisition of
OTN expanded our existing specialty pharmaceutical distribution business. The acquisition was funded with
cash on hand. Financial results of OTN are included within our Distribution Solutions segment.
The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities
assumed in the acquisition as of March 31, 2008:
(In millions)
Accounts receivable $ 321
Inventory 93
Goodwill 257
Intangible assets 129
Deferred tax asset 43
Accounts payable (318)
Other, net 6
Net assets acquired, less cash and cash equivalents $ 531
Approximately $257 million of the preliminary purchase price allocation has been assigned to goodwill.
Included in the purchase price allocation are acquired identifiable intangibles of $119 million representing
customer relationships with a weighted-average life of 9 years, developed technology of $3 million with a
weighted-average life of 4 years and trademarks and trade names of $7 million with a weighted-average life of 5
years.
In 2007, we made the following acquisitions and investment:
−On January 26, 2007, we acquired all of the outstanding shares of Per-Se Technologies, Inc. (“Per-Se”) of
Alpharetta, Georgia for $28.00 per share in cash plus the assumption of Per-Se’ s debt, or approximately $1.8
billion in aggregate, including cash acquired of $76 million. Per-Se is a leading provider of financial and
administrative healthcare solutions for hospitals, physicians and retail pharmacies. The acquisition of Per-Se is
consistent with the Company’ s strategy of providing products that help solve clinical, financial and business
processes within the healthcare industry. The acquisition was initially funded with cash on hand and through
the use of an interim credit facility. In March 2007, we issued $1 billion of long-term debt, with such net
proceeds after offering expenses from the issuance, together with cash on hand, being used to fully repay
borrowings outstanding under the interim credit facility (refer to Financial Note 10, “Long-Term Debt and
Other Financing”). Financial results for Per-Se are primarily included within our Technology Solutions
segment.