McKesson 2010 Annual Report Download - page 73

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
67
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the
acquisition date:
(In millions)
Accounts receivable $ 308
Inventory 87
Goodwill 240
Intangible assets 128
Deferred tax assets 62
Other assets 36
Accounts payable and other liabilities (342)
Net assets acquired, less cash and cash equivalents $ 519
Approximately $240 million of the purchase price allocation has been assigned to goodwill, which primarily
reflects the expected future benefits from synergies upon integrating the business. Included in the purchase price
allocation are acquired identifiable intangibles of $115 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 $10 million with a weighted-average life of 5 years.
During the last three years, we also completed a number of other smaller acquisitions and investments within
both of our operating segments. Financial results for our business acquisitions have been included in our
consolidated financial statements since their respective acquisition dates. Purchase prices for our business
acquisitions have been allocated based on estimated fair values at the date of acquisition and for certain recent
acquisitions may be subject to change as we continue to evaluate and implement various restructuring initiatives.
Goodwill recognized for our business acquisitions is generally not expected to be deductible for tax purposes. Pro
forma results of operations for our business acquisitions have not been presented because the effects were not
material to the consolidated financial statements on either an individual or an aggregate basis.
3. Share-Based Compensation
We provide share-based compensation for our employees, officers and non-employee directors, including stock
options, an employee stock purchase plan, restricted stock (“RS”), restricted stock units (“RSUs”) and performance-
based restricted stock units (“PeRSUs”) (collectively, “share-based awards.”) Most of our share-based awards are
granted in the first quarter of each fiscal year.
Compensation expense for the share-based awards is recognized for the portion of the awards that is ultimately
expected to vest. We develop an estimate of the number of share-based awards, which will ultimately vest primarily
based on historical experience. The estimated forfeiture rate established upon grant is re-assessed throughout the
requisite service period. As required, the forfeiture estimates are adjusted to reflect actual forfeitures when an award
vests. The actual forfeitures in future reporting periods could be higher or lower than current estimates. The
weighted-average forfeiture rate is approximately 7% at March 31, 2010.
The compensation expense recognized has been classified in the consolidated statements of operations or
capitalized on the consolidated balance sheets in the same manner as cash compensation paid to our employees.
There was no material share-based compensation expense capitalized as part of the cost of an asset in 2010, 2009
and 2008.