ICON plc
South County Business Park
Leopardstown, Dublin 18, Ireland
October 1, 2012
Jim B. Rosenberg
Senior Assistant Chief Accountant
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
VIA EDGAR
Re: ICON plc – Form 20-F for the Fiscal Year Ended December 31, 2011
Dear Mr. Rosenberg:
ICON plc (the “Company”) acknowledges your letter dated August 16, 2012 (the “Comment Letter”) setting forth the comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) relating to the Form 20-F for the fiscal year ended December 31, 2011 (File no. 333-08704) filed by the Company with the Commission (the “Annual Statement”) on March 2, 2012. On August 24, 2012, the Company submitted a response to the Comment Letter. The Company subsequently received a telephone call from Sasha Parikh on September 18, 2012 which outlined a follow up question to the response submitted by the Company on August 24, 2012. This question was confirmed on a subsequent telephone call with Gus Rodriguez on September 20, 2012.
The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosures in the Form 20-F and in its other filings under the Securities Exchange Act of 1934, as amended. The Company acknowledges that comments of the Staff regarding the Form 20-F or changes to disclosures in response to the Staff’s comments do not foreclose the Commission from taking any action with respect to such filings. The Company also acknowledges that the Staff’s comments may not be asserted by the Company as a defense in any proceeding initiated by the Commission or any person under the federal laws of the United States
For your convenience, we have reproduced the question put forward on the telephone call of September 18, 2012 (in bold) immediately before the Company’s response. Unless otherwise indicated, all references to page numbers in the Company’s responses below refer to page numbers in the Annual Statement, a copy of which was previously filed with the Commission.
1. This comment refers to your response 5 and 6 in which you indicate that you recorded a liability of $40.6 million and $12.4 million related to the fair value of the contingent consideration for your Firecrest Clinical and Oxford Outcomes acquisitions respectively. However in the revised tables provided in the response you do not separately show the contingent liability as a component of your net asset acquired. It appears that this amount is included in the goodwill balance which would not be appropriate under ASC805-30-30-7D. Please revise your proposed disclosure to separately present contingent liabilities from goodwill. In addition please revise your table reconciling the opening and closing balance of goodwill accordingly.
RESPONSE:
The Company proposes to include the following revised disclosure in future filings for the goodwill rollforward table:
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December 31, 2011
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December 31, 2010
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|||||||
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(in thousands)
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||||||||
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Opening goodwill
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175,860 | 173,568 | ||||||
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Current period acquisitions
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27,154 | 842 | ||||||
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Acquisition related contingent consideration (a)
|
56,502 | 2,663 | ||||||
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Prior period acquisitions
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- | 2,539 | ||||||
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Foreign exchange movement
|
(6,123 | ) | (3,752 | ) | ||||
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Closing goodwill
|
253,393 | 175,860 | ||||||
(a) 2011 represents contingent consideration from the Firecrest Clinical and Oxford Outcomes acquisitions, while 2010 represents contingent consideration from the Timaq Medical Imaging acquisition.
The Company proposes to include the following revised tables in future filings relating to the acquisitions of Firecrest Clinical and Oxford Outcomes:
The acquisition of Firecrest has been accounted for as a business combination in accordance with FASB ASC 805 Business Combinations. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed:
|
July 14
2011
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||||
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(in thousands)
|
||||
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Property, plant and equipment
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$ | 687 | ||
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Goodwill*
|
48,073 | |||
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Intangible asset – technology asset
|
11,169 | |||
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Intangible asset – customer relationships
|
5,243 | |||
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Intangible asset – order backlog
|
1,172 | |||
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Intangible asset - trade name
|
1,357 | |||
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Cash and cash equivalents
|
1,965 | |||
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Other current assets
|
3,713 | |||
|
Deferred tax liability
|
(2,367 | ) | ||
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Other liabilities
|
(2,521 | ) | ||
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Liability arising from contingent consideration arrangement
|
(44,028 | ) | ||
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Net assets acquired
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$ | 24,463 | ||
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Cash consideration
|
$ | 24,463 | ||
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Contingent consideration
|
44,028 | |||
|
Amount of total consideration
|
68,491 | |||
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Liabilities included in preliminary purchase price allocation
|
(44,028 | ) | ||
|
Net assets acquired
|
$ | 24,463 |
* Goodwill represents the cost of an established workforce with experience in the development of site performance and study management systems and process related efficiencies expected to be generated from the use of the Firecrest site performance management system and is not tax deductable.
2
The acquisition of Oxford Outcomes has been accounted for as a business combination in accordance with FASB ASC 805 Business Combinations. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed:
|
January 14
2011
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||||
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(in thousands)
|
||||
|
Property, plant and equipment
|
$ | 490 | ||
|
Goodwill*
|
35,583 | |||
|
Intangible asset – customer relationships
|
6,648 | |||
|
Intangible asset – order backlog
|
618 | |||
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Cash and cash equivalents
|
6,335 | |||
|
Other current assets
|
6,792 | |||
|
Deferred tax liability
|
(2,003 | ) | ||
|
Other liabilities
|
(2,128 | ) | ||
|
Liability arising from contingent consideration arrangement
|
(12,474 | ) | ||
|
Net assets acquired
|
$ | 39,861 | ||
|
Cash consideration
|
$ | 27,585 | ||
|
Working capital adjustment
|
6,383 | |||
|
Put and call option
|
5,893 | |||
|
Contingent consideration
|
12,474 | |||
|
Amount of total consideration
|
52,335 | |||
|
Liabilities included in preliminary purchase price allocation
|
(12,474 | ) | ||
|
Net assets acquired
|
$ | 39,861 |
* Goodwill represents the cost of an established workforce with experience in specialist services in the areas of patient reported outcomes (PRO), health economics, epidemiology and translation and linguistic validation and is not tax deductible.
We believe that we have fully responded to your comment. However, if you have any questions about our response to your comment or require further explanation, please do not hesitate to call me at (011)- 353-1-291-2000 or Brian Kelleher of Cahill Gordon at (212) 701-3447.
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Sincerely,
ICON plc
By: /s/ Brendan Brennan
Brendan Brennan
Chief Financial Officer
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Cc: William M. Hartnett
Brian Kelleher
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