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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
66
Accounting for Transfers of Financial Assets: In December 2009, the FASB issued amended standards on
accounting for transfers of financial assets, including securitization transactions, in which entities have continued
exposure to risks related to transferred financial assets. These amendments also expand the disclosure requirements
for such transactions. These amended standards will become effective for us on April 1, 2010. Based on our
existing accounts receivable sales facility agreement, we anticipate that accounts receivable transactions from April
1, 2010, forward may, for U.S. GAAP purposes, be accounted for as secured borrowings rather than asset sales.
Consolidations: In December 2009, the FASB issued amended standards for consolidation of VIEs primarily
related to the determination of the primary beneficiary of the VIE. These amended standards will become effective
for us on April 1, 2010. Based on our existing relationships with VIEs, we do not anticipate that these amended
standards will have a material affect on our consolidated financial statements upon adoption. However, these
amended standards may have an effect on accounting for any changes to the existing relationships or future
investments.
2. Business Combinations and Investments
In 2009, we made the following acquisition:
On May 21, 2008, we acquired McQueary Brothers Drug Company (“McQueary Brothers”) of Springfield,
Missouri for approximately $190 million. McQueary Brothers is a regional distributor of pharmaceutical, health and
beauty products to independent and regional chain pharmacies in the Midwestern U.S. This acquisition expanded
our existing U.S. pharmaceutical distribution business. The acquisition was funded with cash on hand. Financial
results for McQueary Brothers have been included within our Distribution Solutions segment since the date of
acquisition.
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the
acquisition date:
(In millions)
Accounts receivable $ 37
Inventory 41
Goodwill 126
Intangible assets 67
Other assets 11
Accounts payable and other liabilities (60)
Deferred tax liability (32)
Net assets acquired, less cash and cash equivalents $ 190
During the first quarter of 2010, the acquisition accounting was completed. Approximately $126 million of the
purchase price allocation has been assigned to goodwill, which primarily reflects the expected future benefits from
synergies to be realized upon integrating the business. Included in the purchase price allocation are acquired
identifiable intangibles of $61 million representing a customer relationship with a useful life of 7 years, a trade name
of $2 million with a useful life of less than one year and a not-to-compete agreement of $4 million with a useful life
of 4 years.
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 $519 million, including the assumption of debt and net of $31 million
of cash and cash equivalents acquired from OTN. During the third quarter of 2009, the acquisition accounting was
completed. 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 for
OTN have been included within our Distribution Solutions segment since the date of acquisition.