McKesson 2011 Annual Report Download - page 73

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
67
(In millions)
Distribution
Solutions
Corporate &
Interest
Expense
Total
Operating expenses:
Transaction closing expenses
$
22
$
—
$
22
Severance and relocation
9
—
9
Other integration expenses
10
2
12
Total operating expenses
41
2
43
Other income: reimbursement of post-acquisition interest
expense from former shareholders
—
(16)
(16)
Interest expense: bridge loan fees
—
25
25
Total acquisition-related expenses
$
41
$
11
$
52
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)
Goodwill
$
126
Intangible assets
67
Other assets
89
Accounts payable and other liabilities
(92)
Net assets acquired, less cash and cash equivalents
$
190
During the first quarter of 2010, the fair value measurements of assets acquired and liabilities assumed as of the
acquisition date were completed. The excess of the purchase price over the net tangible and intangible assets of
approximately $126 million was recorded as goodwill, which primarily reflected the expected future benefits from
synergies to be realized upon integrating the business. Included in the purchase price allocation were acquired
identifiable intangibles of $61 million primarily 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.
During the last three years, we also completed a number of other smaller acquisitions 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.
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 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.