Business Acquisitions

6 Months Ended

Mar. 31, 2013

Business Combinations [Abstract]

Business Acquisitions

Business Acquisitions

Fiscal 2013 Acquisitions

During fiscal 2013, we acquired several businesses for total purchase consideration of $465.0 million. The most significant of these acquisitions was J.A. Thomas and Associates ("JA Thomas") in October 2012 for cash consideration totaling approximately $242.6 million together with a deferred payment of $25.0 million contingent on the continued employment of certain key executives. The deferred payment will be recorded as compensation expense over the requisite employment period, and included in acquisition-related costs, net in our consolidated statement of operations. JA Thomas provides Clinical Documentation Improvement solutions to hospitals, primarily in the U.S., and is included in our Healthcare segment. The remaining acquisitions are not material and were made in each of our segments. These acquisitions are treated as stock purchases for accounting purposes, and the goodwill resulting from these acquisitions is not expected to be deductible for tax purposes, except for JA Thomas where we may elect to treat this acquisition as a taxable merger under provisions contained in the Internal Revenue Service regulations. Should such an election be made in the future, the goodwill resulting from this acquisition would be deductible for tax purposes. The results of operations of these acquisitions have been included in our financial results from the applicable acquisition date. A summary of the preliminary allocation of the purchase consideration for our fiscal 2013 acquisitions is as follows (dollars in thousands):

	Fiscal 2013
Total purchase consideration:
Cash	$	465,043
Allocation of the purchase consideration:
Cash	$	21,299
Accounts receivable	23,717
Goodwill	281,510
Identifiable intangible assets (a)	157,052
Other assets	20,891
Total assets acquired	504,469
Current liabilities	(13,955		)
Deferred tax liability	(23,933		)
Other long term liabilities	(1,538		)
Total liabilities assumed	(39,426		)
Net assets acquired	$	465,043

(a) The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (dollars in thousands):

	Amount		Weighted Average Life (Years)
Core and completed technology	$	19,831	5.7
Customer relationships	132,558		11.5
Trade name	4,283		4.6
Non-Compete agreements	380		3.0
Total	$	157,052

The preliminary fair value estimates for the assets acquired and liabilities assumed for certain acquisitions completed during fiscal 2013 and 2012 were based upon preliminary calculations and valuations and our estimates and assumptions for each of these acquisitions are subject to change as we obtain additional information for our estimates during the respective measurement periods (up to one year from the respective acquisition dates). The primary areas of preliminary estimates that were not yet finalized related to certain receivables and liabilities acquired and identifiable intangible assets.

Fiscal 2012 Acquisitions

On June 1, 2012, we acquired all of the outstanding capital stock of Vlingo Corporation (“Vlingo”) for net cash consideration of $196.3 million, which excludes the amounts we received as a security holder of Vlingo, as described below. At the closing of the merger, $15.0 million of the merger consideration was deposited into an escrow account that will be held for twelve months after the closing date to satisfy any indemnification claims. Vlingo provides technology that turns spoken words into action by combining speech recognition and natural language processing technology to understand the user’s intent and take the appropriate action. The acquisition is treated as a stock purchase for accounting purposes, and the goodwill resulting from this acquisition is not expected to be deductible for tax purposes. The results of operations for Vlingo are included in our Mobile and Consumer Segment from the acquisition date.

On April 26, 2012, we acquired all of the outstanding capital stock of Transcend Services, Inc. (“Transcend”), a provider of medical transcription and editing services. The aggregate consideration payable to the former stockholders of Transcend was $332.3 million. The acquisition is treated as a stock purchase for accounting purposes, and the goodwill resulting from this acquisition is not expected to be deductible for tax purposes. The results of operations for Transcend are included in our Healthcare segment from the acquisition date.

Proforma Results

The following table shows unaudited pro forma results of operations as if we had acquired Vlingo and Transcend on October 1, 2011 (dollars in thousands, except per share amounts):

	Three Months Ended March 31,					Six Months Ended March 31,
	2013			2012		2013			2012
Revenue	$	450,999		$	425,855	$	913,267		$	820,698
Net (loss) income	(25,848		)	3,706		(47,944		)	19,835
Net (loss) income per share (diluted)	$	(0.08	)	$	0.01	$	(0.15	)	$	0.06

We have not furnished pro forma financial information related to our acquisitions during the current period because such information is not material, individually or in the aggregate, to our financial results. The unaudited pro forma results of operations are not necessarily indicative of the actual results that would have occurred had the transactions actually taken place at the beginning of the periods indicated.

Acquisition-Related Costs, net

Acquisition-related costs include costs related to business and other acquisitions, including potential acquisitions. These costs consist of (i) transition and integration costs, including retention payments, transitional employee costs and earn-out payments treated as compensation expense, as well as the costs of integration-related activities including services provided by third-parties; (ii) professional service fees, including third party costs related to the acquisition, and legal and other professional service fees associated with disputes and regulatory matters related to acquired entities; and (iii) adjustments to acquisition-related items that are required to be marked to fair value each reporting period, such as contingent consideration, and other items related to acquisitions for which the measurement period has ended.

The components of acquisition-related costs, net are as follows (dollars in thousands):

	Three Months Ended March 31,					Six Months Ended March 31,
	2013		2012			2013		2012
Transition and integration costs	$	11,636	$	2,844		$	17,899	$	6,213
Professional service fees	3,812		12,229			13,282		22,733
Acquisition-related adjustments	—		(87		)	—		651
Total	$	15,448	$	14,986		$	31,181	$	29,597