Staples 2002 Annual Report Download - page 76

STAPLES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE B Business Acquisitions and Dispositions (Continued)
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of
acquisition (in thousands):
As of October 18, 2002
Current assets ............................................... $ 104,180
Property and equipment ....................................... 42,156
Other assets ................................................ 2,331
Intangible assets ............................................. 211,820
Goodwill ................................................... 640,604
Total assets acquired .......................................... 1,001,091
Current liabilities ............................................ 116,040
Long-term debt .............................................. 12,669
Deferred tax liability .......................................... 72,027
Other long-term liabilities ...................................... 7,423
Total liabilities assumed ........................................ 208,159
Net assets acquired ........................................... $ 792,932
Of the $211.8 million of acquired intangible assets, $138.2 million was assigned to registered trademarks and trade
names which have indefinite lives and are not subject to amortization and $73.6 million was assigned to customer-related
intangible assets and noncompetition agreements that will be amortized over their useful lives (ranging from 3 to
13 years).
Medical Arts Press:
On July 17, 2002, Staples acquired 100 percent of the outstanding shares of Medical Arts Press, Inc. (‘‘MAP’’) for an
aggregate purchase price of $383.2 million, net of cash acquired. The purchase price consisted entirely of cash and cash
equivalents. The results of MAP have been included in the consolidated financial statements since that date. MAP is an
operating division of Quill and is included in North American Delivery for segment reporting. MAP is a leading direct
marketer of specialized printed office products and practice-related supplies to medical offices. The acquisition of MAP
provides an opportunity to sell traditional office products to MAP’s customer base and expand Quill’s and Staples’
product offerings.
In connection with this acquisition, Staples recorded $350.0 million of goodwill and intangible assets, which were
assigned to our North American Delivery segment. Staples also recorded a provision for merger-related and integration
costs of approximately $7.0 million. As of February 1, 2003, approximately $1.2 million of payments have been charged
against this accrual and approximately $5.8 million remains accrued for these merger-related and integration costs.
In connection with the acquisition of MAP, the Company recorded $6.5 million of acquired intangible assets. Of this
total, $5.9 million was assigned to trade names which have indefinite lives and are not subject to amortization and
$0.6 million was assigned to customer-related intangible assets that will be amortized over 10 years.
Pro forma results of operations assuming the European mail order acquisition and the MAP acquisition occurred as
of the beginning of fiscal 2002 have not been presented, as the inclusion of the results of operations for the acquired
businesses would not have produced a material impact on the reported sales, net income or earnings per share of the
Company.
Staples Communications:
On February 26, 1999, Staples completed the acquisition of Claricom Holdings, Inc. and certain related entities,
referred to as Staples Communications, for a purchase price of approximately $138 million, net of cash acquired. The
acquisition had been accounted for using the purchase method of accounting, and accordingly, Staples recognized
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