McKesson 2012 Annual Report Download - page 70

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
66
During the third quarter of 2012, the fair value measurements of assets acquired and liabilities assumed as of the
acquisition date were completed. The following table summarizes the final amounts of the fair values recognized for
the assets acquired and liabilities assumed as of the acquisition date, as well as measurement period adjustments
made in the first nine months of 2012 to the amounts initially recorded in 2011. The measurement period
adjustments during the first nine months of 2012 did not have a material impact on our consolidated statements of
operations, balance sheets or cash flows in any period, and, therefore, we have not retrospectively adjusted our
financial statements.
(In millions)
Amounts
Previously
Recognized as of
Acquisition Date
(Provisional) (1)
Measurement
Period
Adjustments
Amounts
Recognized as of
Acquisition Date
(Final as
Adjusted)
Current assets, net of cash acquired $ 662 $ (13) $ 649
Goodwill
808 20 828
Intangible assets 1,007 (14) 993
Other long-term assets 354 (6) 348
Current liabilities (489) (1) (490)
Current portion of long-term debt (1,735) — (1,735)
Other long-term liabilities (338) 16 (322)
Other stockholders’ equity (25) (2) (27)
Net assets acquired, less cash and cash equivalents $ 244 $ —$ 244
(1) As previously reported in our Form 10-K for the year ended March 31, 2011.
Included in the purchase price allocation are acquired identifiable intangibles of $993 million, the fair value of
which was determined by using Level 3 inputs, which are estimated using significant unobservable inputs. Acquired
intangible assets primarily consist of $721 million of service agreements and $185 million of customer lists. The
estimated weighted average lives of the service agreements, customer lists and total acquired intangible assets are 18
years, 10 years and 16 years. The fair value of the debt acquired was determined primarily by using Level 3 inputs.
Refer to Financial Note 12, “Debt and Financing Activities,” for additional information on the assumption and
funding of acquired debt. The excess of the purchase price over the net tangible and intangible assets was recorded
as goodwill, which primarily reflects the expected future benefits to be realized upon integrating the business.
On March 25, 2012, we acquired substantially all of the assets of Drug Trading Company Limited, the
independent banner business of the Katz Group Canada Inc. (“Katz Group”), and Medicine Shoppe Canada Inc., the
franchise business of the Katz Group (collectively, “Katz Assets”) for approximately $919 million, net of cash
acquired. The total purchase price is subject to change due to working capital adjustments within 60 days of closing.
The cash paid at acquisition was funded from cash on hand. The acquisition of the assets from the Drug Trading
Company Limited consists of a marketing and purchasing arm of more than 850 independently owned pharmacies in
Canada. The acquisition of Medicine Shoppe Canada Inc. consists of the franchise business of providing services to
more than 160 independent pharmacies in Canada.