Business Combinations

12 Months Ended

Mar. 31, 2012

Business Combinations [Abstract]

Business Combinations

2. Business Combinations

     On December 30, 2010, we acquired all of the outstanding shares of US Oncology Holdings, Inc. ("US Oncology") for approximately $2.1 billion, consisting of cash consideration of $0.2 billion, net of cash acquired, and the assumption of liabilities with a fair value of $1.9 billion. The cash paid at acquisition was funded from cash on hand. As an integrated oncology company, US Oncology is affiliated with community-based oncologists, and works with patients, hospitals, payers and the medical industry across all phases of the cancer research and delivery continuum. The acquisition of US Oncology expands our existing specialty pharmaceutical distribution business and adds practice management services for oncologists. Financial results for US Oncology have been included in the results of operations within our Distribution Solutions segment beginning in the fourth quarter of 2011.

     During the third quarter of 2012, the fair value measurements of assets acquired and liabilities assumed as of the acquisition date were completed. The following table summarizes the final amounts of the fair values recognized for the assets acquired and liabilities assumed as of the acquisition date, as well as measurement period adjustments made in the first nine months of 2012 to the amounts initially recorded in 2011. The measurement period adjustments during the first nine months of 2012 did not have a material impact on our consolidated statements of operations, balance sheets or cash flows in any period, and, therefore, we have not retrospectively adjusted our financial statements.

		Amounts						Amounts
		Previously						Recognized as of
		Recognized as of			Measurement			Acquisition Date
		Acquisition Date			Period			(Final as
(In millions)		(Provisional) (1)			Adjustments			Adjusted)
Current assets, net of cash acquired	$	662		$	(13	)	$	649
Goodwill		808			20			828
Intangible assets		1,007			(14	)		993
Other long-term assets		354			(6	)		348
Current liabilities		(489	)		(1	)		(490	)
Current portion of long-term debt		(1,735	)		0			(1,735	)
Other long-term liabilities		(338	)		16			(322	)
Other stockholders' equity		(25	)		(2	)		(27	)
Net assets acquired, less cash and cash equivalents	$	244		$	0		$	244

(1) As previously reported in our Form 10-K for the year ended March 31, 2011.

     Included in the purchase price allocation are acquired identifiable intangibles of $993 million, the fair value of which was determined by using Level 3 inputs, which are estimated using significant unobservable inputs. Acquired intangible assets primarily consist of $721 million of service agreements and $185 million of customer lists. The estimated weighted average lives of the service agreements, customer lists and total acquired intangible assets are 18 years, 10 years and 16 years. The fair value of the debt acquired was determined primarily by using Level 3 inputs. Refer to Financial Note 12, "Debt and Financing Activities," for additional information on the assumption and funding of acquired debt. The excess of the purchase price over the net tangible and intangible assets was recorded as goodwill, which primarily reflects the expected future benefits to be realized upon integrating the business.

On March 25, 2012, we acquired substantially all of the assets of Drug Trading Company Limited, the independent banner business of the Katz Group Canada Inc. ("Katz Group"), and Medicine Shoppe Canada Inc., the franchise business of the Katz Group (collectively, "Katz Assets") for approximately $919 million, net of cash acquired. The total purchase price is subject to change due to working capital adjustments within 60 days of closing. The cash paid at acquisition was funded from cash on hand. The acquisition of the assets from the Drug Trading Company Limited consists of a marketing and purchasing arm of more than 850 independently owned pharmacies in Canada. The acquisition of Medicine Shoppe Canada Inc. consists of the franchise business of providing services to more than 160 independent pharmacies in Canada.

     The following table summarizes the preliminary recording of the fair values of the assets acquired and liabilities assumed as of the acquisition date:

		Amounts
		Recognized as of
		Acquisition Date
(In millions)		(Provisional)
Current assets, net of cash acquired	$	33
Goodwill		506
Intangible assets		441
Other long-term assets		15
Current liabilities		(37	)
Long-term deferred tax liabilities		(39	)
Net assets acquired, less cash and cash equivalents	$	919

Due to the recent timing of the acquisition, these amounts are subject to change within the measurement period as our fair value assessments are finalized.

Included in the purchase price allocation are acquired identifiable intangibles of $441 million, the fair value of which was determined by using Level 3 inputs, which are estimated using significant unobservable inputs. Acquired intangibles primarily consist of $317 million of service agreements and $114 million of trademarks and trade names. Service agreements, trademarks and trade names and total acquired intangibles assets each has an estimated weighted average life of 20 years. The excess of the purchase price over the net tangible and intangible assets of approximately $506 million was recorded as goodwill, which primarily reflects the expected future benefits to be realized upon integrating the business. The amount of goodwill expected to be deductible for tax purposes is $287 million.

     Financial results for the acquired Katz Assets were not included in the results of operations for 2012 as they were not material. These results will be included in the results of operations within our Canadian pharmaceutical distribution and services, which is part of our Distribution Solutions segment, beginning in the first quarter of 2013.

     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. However, if we acquire the assets of a company, the goodwill may be deductible for tax purposes. The pro forma results of operations for our business acquisitions and the results of operations for these acquisitions since the acquisition date have not been presented because the effects were not material to the consolidated financial statements on either an individual or an aggregate basis.