ADP 2011 Annual Report Download - page 45

In fiscal 2010, the Company concluded it had the intent to sell certain securities for which unrealized losses of $14.4 million were
previously recorded in accumulated other comprehensive income on the Consolidated Balance Sheets. As such, the Company
realized impairment losses of $14.4 million in other income, net on the Statements of Consolidated Earnings during fiscal 2010. The
Company subsequently sold all securities that the Company previously concluded it had the intent to sell.
During fiscal years 2011, 2010, and 2009, the Company sold buildings that were previously classified as Assets Held for Sale on the
Consolidated Balance Sheets and, as a result, recorded net gains/(losses) of $1.8 million, ($2.3) million, and $2.2 million, respectively,
in other income, net on the Statements of Consolidated Earnings. During fiscal 2011, the Company reclassified assets related to two
buildings as Assets Held for Sale on the Consolidated Balance Sheets. As the carrying amount of the assets held for sale exceeded
their fair value less costs to sell, the Company recorded impairment losses of $11.7 million. Refer to Note 9 for more information
related to Assets Held for Sale.
The Company has an outsourcing agreement with Broadridge Financial Solutions, Inc. (“Broadridge”
) pursuant to which the
Company provides data center outsourcing services, which principally consist of information technology services and service
delivery network services. As a result of this agreement, the Company recognized income of $113.0 million and $104.8 million in fiscal
2011 and fiscal 2010, respectively, which is offset by expenses associated with providing such services of $110.8 million and $102.6
million, respectively, both of which were recorded in other income, net on the Statements of Consolidated Earnings. The Company
had a receivable on the Consolidated Balance Sheets from Broadridge for the services under this agreement of $9.5 million and $8.9
million on June 30, 2011 and 2010, respectively. In fiscal 2010, Broadridge notified the Company that it would not extend the
outsourcing agreement beyond its current expiration date of June 30, 2012. The Company continues to assess the impact on results
of operations, if any, that this will have and does not currently anticipate this will have a material impact.
NOTE 3. ACQUISITIONS
Assets acquired and liabilities assumed in business combinations were recorded on the Company
’ s Consolidated Balance Sheets as
of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of businesses
acquired by the Company have been included in the Statements of Consolidated Earnings since their respective dates of acquisition.
The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed was
allocated to goodwill. In certain circumstances, the allocations of the excess purchase price are based upon preliminary estimates and
assumptions. Accordingly, the allocations are subject to revision when the Company receives final information, including appraisals
and other analyses, which typically occurs within one year from the date of acquisition.
On August 16, 2010, the Company acquired 100% of the outstanding shares of Cobalt, a leading provider of digital marketing
solutions for the auto industry that aligns with Dealer Services
’ global layered applications strategy and strongly supports Dealer
Services
’ long - term growth strategy, for approximately $405.4 million in cash, net of cash acquired.
The purchase price allocation for Cobalt is as follows:
The Company determined the purchase price allocations for this acquisition based on estimates of the fair value of tangible and
intangible assets acquired and liabilities assumed, utilizing recognized valuation techniques, including the income and market
approaches. Goodwill for Cobalt, which is not deductible for tax purposes, resulted from the expected impact to Dealer Services
’
long - term growth strategy. Intangible assets for Cobalt, which totaled $111.6 million, included customer contracts and lists, software
and trademarks that are being amortized over a weighted average life of approximately 11 years. There is no contingent consideration
relating to the Cobalt acquisition.
45
Accounts receivable, net
$
42.5
Goodwill
311.7
Identifiable intangible assets
111.6
Other assets
57.4
Total assets acquired
$
523.2
Total liabilities acquired
$
96.1