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CVS Caremark Corporation (CVS)
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CVS » Topics » Estimated Assets Acquired and Liabilities Assumed as of March 22, 2007

This excerpt taken from the CVS 10-Q filed Nov 1, 2007.

Estimated Assets Acquired and Liabilities Assumed as of March 22, 2007

 

(In millions)

Cash and cash equivalents

    $ 1,293.4

Short-term investments

      27.5

Accounts receivable

      2,472.7

Inventories

      442.3

Deferred tax asset

      123.0

Other current assets

      33.6
      

Total current assets

      4,392.5

Property and equipment

      210.6

Goodwill

      20,210.3

Intangible assets (1)

      10,237.0

Other assets

      68.0
      

Total assets acquired

      35,118.4
      

Accounts payable

      960.8

Claims and discounts payable

      2,430.1

Accrued expenses (2)

      939.1
      

Total current liabilities

      4,330.0

Deferred tax liability

      3,841.0

Other long-term liabilities

      96.8
      

Total liabilities

      8,267.8
      

Net assets acquired

    $ 26,850.6
(1) Intangible assets include customer contracts and relationships ($3,670.0 million) with an estimated weighted average life of 15.6 years, proprietary technology ($134.8 million) with an estimated weighted average life of five years, favorable leaseholds ($24.2 million) with an estimated weighted average life of 11.5 years, covenants not to compete ($10.0 million) with an estimated average life of 5 years and trade names ($6,398.0 million), which are indefinitely lived. These values and estimated lives are preliminary and are subject to change based on the results of the final valuation.

 

(2) Accrued expenses currently include $38.6 million for estimated severance, benefits and outplacement costs for approximately 245 Caremark employees that have been or will be terminated. The amount accrued and the number of employees affected will continue to increase as exit plans are finalized and communicated. As of September 29, 2007, $4.4 million of the liability has been settled with cash payments. The remaining liability will require future cash payments through 2008.

 

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Table of Contents

Part I

 

   

Item 1

 

 

CVS Caremark Corporation

(formerly CVS Corporation)

Notes to Consolidated Condensed Financial Statements

(Unaudited)

On June 2, 2006, CVS acquired certain assets and assumed certain liabilities from Albertson’s, Inc. (“Albertsons”) for $4.0 billion. The assets acquired and the liabilities assumed included approximately 700 standalone drugstores and a distribution center (collectively the “Standalone Drug Business”).

In conjunction with the acquisition of the Standalone Drug Business, during fiscal 2006, the Company recorded a $52.2 million liability for the estimated costs associated with the non-cancelable lease obligations of 94 acquired stores that the Company does not intend to operate. As of September 29, 2007, 80 of these locations have been closed and $1.4 million of this liability has been settled with cash payments. The $52.3 million remaining liability, which includes $2.6 million of interest accretion, will require future cash payments through 2033, unless settled prior thereto. The Company believes the remaining liability is adequate to cover the remaining costs associated with the related activities.

This excerpt taken from the CVS 10-Q filed Aug 8, 2007.

Estimated Assets Acquired and Liabilities Assumed as of March 22, 2007

 

(In millions)

Cash and cash equivalents

    $ 1,293.4

Short-term investments

      27.5

Accounts receivable

      2,472.7

Inventories

      442.3

Deferred tax asset

      112.9

Other current assets

      32.5
      

Total current assets

      4,381.3

Property and equipment

      214.7

Goodwill

      20,238.1

Intangible assets (1)

      10,237.0

Other assets

      68.0
      

Total assets acquired

      35,139.1
      

Accounts payable

      1,000.1

Claims and discounts payable

      2,430.1

Accrued expenses (2)

      933.5
      

Total current liabilities

      4,363.7

Deferred tax liability

      3,828.0

Other long-term liabilities

      96.8
      

Total liabilities

      8,288.5
      

Net assets acquired

      26,850.6
(1) Intangible assets include customer contracts and relationships ($3,670.0 million) with an estimated weighted average life of 15.6 years, proprietary technology ($134.8 million) with an estimated weighted average life of five years, favorable leaseholds ($24.2 million) with an estimated weighted average life of 11.5 years, covenants not to compete ($10.0 million) with an estimated average life of 5 years and trade names ($6,398.0 million), which are indefinitely lived. These values and estimated lives are preliminary and are subject to change based on the results of the final valuation.

 

(2) Accrued expenses currently include $35.3 million for estimated severance, benefits and outplacement costs for approximately 209 Caremark employees that have been or will be terminated. The amount accrued and the number of employees affected will continue to increase as exit plans are finalized and communicated. As of June 30, 2007, $0.7 million of the liability has been settled with cash payments. The remaining liability will require future cash payments through 2008.

 

9

Table of Contents

Part I

 

   

Item 1

 

 

CVS Caremark Corporation

(formerly CVS Corporation)

Notes to Consolidated Condensed Financial Statements

(Unaudited – See accompanying review report of KPMG LLP)

On June 2, 2006, CVS acquired certain assets and assumed certain liabilities from Albertson’s, Inc. (“Albertsons”) for $4.0 billion. The assets acquired and the liabilities assumed included approximately 700 standalone drugstores and a distribution center (collectively the “Standalone Drug Business”).

In conjunction with the acquisition of the Standalone Drug Business, during fiscal 2006, the Company recorded a $55.0 million liability for the estimated costs associated with the non-cancelable lease obligations of 94 acquired stores that the Company does not intend to operate. As of June 30, 2007, 77 of these locations have been closed and $1.3 million of this liability has been settled with cash payments. The $55.2 million remaining liability, which includes $2.1 million of interest accretion, will require future cash payments through 2033, unless settled prior thereto. The Company believes the remaining liability is adequate to cover the remaining costs associated with the related activities.

EXCERPTS ON THIS PAGE:

10-Q
Nov 1, 2007
10-Q
Aug 8, 2007

RELATED TOPICS for CVS:

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