Medco 2014 Annual Report Download - page 70
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Please find page 70 of the 2014 Medco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Express Scripts 2014 Annual Report
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TheMergerwasaccountedforundertheacquisitionmethodofaccountingwithESItreatedastheacquirerfor
accountingpurposes.Thepurchasepricewasallocatedbasedontheestimatedfairvalueofnetassetsacquiredandliabilities
assumedatthedateoftheacquisition.
DuringthequarterendedMarch31,2013,theCompanymaderefinementstoitspreliminaryallocationofpurchase
pricerelatedtoaccruedliabilitiesduetothefinalizationofassumptionsutilizedtovaluetheliabilitiesacquired.These
adjustmentshadtheeffectofincreasingcurrentassetsandothernoncurrentliabilitiesanddecreasinggoodwill,deferredtax
liabilitiesandcurrentliabilities.
ExpressScriptsfinalizedthepurchasepriceallocationandpushdownaccountingasofMarch31,2013.Following
isasummaryofExpressScripts’estimatesofthefairvaluesoftheassetsacquiredandliabilitiesassumedintheMerger:
(in millions)
Amounts Recognized
as of
Acquisition Date
Currentassets $6,934.9
Propertyandequipment 1,390.6
Goodwill 23,965.6
Acquiredintangibleassets 16,216.7
Othernoncurrentassets 48.3
Currentliabilities (8,966.4)
Long-termdebt (3,008.3)
Deferredincometaxes (5,875.2)
Othernoncurrentliabilities (551.8)
Total $30,154.4
Aportionoftheexcessofpurchasepriceovertangiblenetassetsacquiredwasallocatedtointangibleassets
consistingofcustomercontractsintheamountof$15,935.0millionwithanestimatedweighted-averageamortizationperiodof
16years.Additionalintangibleassetsconsistoftradenamesintheamountof$273.0millionwithanestimatedweighted-
averageamortizationperiodof10yearsandmiscellaneousintangibleassetsof$8.7millionwithanestimatedweighted-
averageamortizationperiodof5years.Theacquiredintangibleassetshavebeenvaluedusinganincomeapproachandare
beingamortizedonabasisthatapproximatesthepatternofbenefit.
Theexcessofpurchasepriceovertangiblenetassetsandidentifiedintangibleassetsacquiredwasallocatedto
goodwillintheamountof$23,965.6million.ThemajorityofthegoodwillrecognizedaspartoftheMergerisreportedunder
ourPBMsegmentandreflectsourexpectedsynergiesfromcombiningoperations,suchasimprovedeconomiesofscaleand
costsavings.Goodwillrecognizedisnotexpectedtobedeductibleforincometaxpurposesandisnotamortized.
ESIandMedcoeachretainaone-sixthownershipinSurescripts,resultinginacombinedone-thirdownershipin
Surescripts.WeaccountfortheinvestmentinSurescriptsusingtheequitymethodandhaverecordedequityincomeof$18.7
million,$32.8million,$14.9millionandfortheyearsendedDecember31,2014,2013and2012,respectively.Ourinvestment
inSurescripts(approximately$40.3millionand$30.2millionasofDecember31,2014and2013,respectively)isrecordedin
otherassetsinourconsolidatedbalancesheet.
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