STRATEGY FIRST
Drug distributors AmeriSource Health Corp. and Bergen Brunswig Corp. have certainly embraced the standards warmly, though, making their pending merger contingent on FASB's rules being adopted. "We've had our respective accounting advisers, Deloitte & Touche and Ernst & Young, review all the exposure drafts," says Bergen CFO Neil Dimick.
"When we were in negotiations, the different accounting treatments, purchase and pooling, were discussed," he says. And "the prospect of the new accounting rule being implemented before our deal closed gave us the opportunity to utilize the best aspects of both accounting treatments" for the $7 billion deal. In other words, Dimick says, "we could get the flexibility of purchase accounting coupled with the income-enhancing aspects of pooling."
Polycom Inc. CFO Michael Kourey doesn't see the impairment test "being any more challenging than anything else we have to comply with," as the conferencing-equipment maker moves ahead with its $362 million proposed acquisition of PictureTel Corp. Kourey's accounting staff is reviewing the proposal with PricewaterhouseCoopers LLP. "Impairment has to be adequately recorded," he says, "but that's a process we have to go through for our own internal analysis."
Kourey strongly believes that any accounting issue must be a secondary element compared with the strategic fit of an acquisition. The use of purchase accounting "was beneficial to us" in several ways, he claims. "From the standpoint of various employee agreements, to the extent you would want to modify stock options or vesting, you get that flexibility with a purchase deal."
Still, such basics should be all in a day's work for a CFO, says Kourey. "It's the job of the finance group to determine the accounting treatment," he says, "but not let that get in the way of closing a favorable transaction."
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