Cardinal Health 2008 Annual Report Download - page 101

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The preliminary valuation of the acquired assets and liabilities resulted in goodwill of approximately
$1.0 billion and identifiable intangible assets of $442.0 million as reported at June 30, 2007. The final valuation,
completed in fiscal 2008, resulted in an $81.5 million reclassification from goodwill to identifiable intangible
assets. The Company identified and valued intangible assets related to trade names and trademarks, developed
technology and customer relationships. The detail by category is as follows:
Category
Amount
(in millions)
Average
Life (Years)
Trade names and trademarks ..................................... $171.6 Indefinite
Developed technology .......................................... 65.1 10
Customer relationships .......................................... 286.8 15
Total intangible assets acquired ................................... $523.5
During fiscal 2007, the Company recorded a charge of $83.9 million related to the write-off of estimated
IPR&D costs associated with the Viasys acquisition. This charge was based on the Company’s preliminary
estimate of the fair value of IPR&D. During fiscal 2008, the Company completed the valuation of IPR&D and
recorded a $25.0 million adjustment to reduce the total write-off of IPR&D associated with the Viasys
acquisition to $58.9 million. The portion of the purchase price allocated to IPR&D represents the estimated fair
value of the research and development projects in-process at the time of the acquisition. These projects had not
yet reached technological feasibility, were deemed to have no alternative use and, accordingly, were charged to
special items expense in accordance with FIN No. 4.
In addition, during fiscal 2007 the Company completed other acquisitions that individually were not
significant. The aggregate purchase price of these acquisitions, which was paid in cash, was approximately
$173.8 million with potential maximum contingent payments of $52.3 million. Assumed liabilities of these
acquired businesses were approximately $22.4 million. The consolidated financial statements include the results
of operations from each of these business combinations from the date of acquisition. Had the transactions
occurred at the beginning of fiscal 2006, consolidated results of operations would not have differed materially
from reported results.
Fiscal 2006. During fiscal 2006, the Company completed acquisitions that individually were not significant.
The aggregate purchase price of these acquisitions, which was paid in cash, was approximately $364.0 million.
Assumed liabilities of these acquired businesses were approximately $149.0 million. The consolidated financial
statements include the results of operations from each of these business combinations from the date of
acquisition. Had the transactions occurred at the beginning of fiscal 2005, consolidated results of operations
would not have differed materially from reported results.
Purchase Accounting Accruals
In connection with restructuring and integration plans related to its acquisition of Enturia, the Company
accrued, as part of its acquisition adjustments, a liability of $20.1 million related to closing of certain facilities
and $3.8 million related to employee termination costs. No payments were made during fiscal 2008 for these
items.
In connection with restructuring and integration plans related to its acquisition of Viasys, the Company
accrued, as part of its acquisition adjustments, a liability of $17.4 million for legal and recall charges,
$11.3 million related to employee termination and relocation costs, $10.9 million related to closing of certain
facilities and $2.0 million for other restructuring charges. As of June 30, 2008, the Company had paid $3.0
million of legal and recall related costs, $6.5 million of employee-related costs and $8.3 million associated with
the facility closures.
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