MERGER: SXC Health Solutions and Catalyst Health Solutions

Issue: How do I enter the SXC Health Solutions merger with Catalyst Health Solutions?

Cause: SXC Health Solutions completed its merger with Catalyst Health Solutions 7/2/2012 for cash and SXC Health Solutions stock. SXC Health Solutions then changed its name to Catamaran (CTRX)

The SEC filing for this merger can be found through the Catamaran web site at:

http://www.catamaranrx.com/investor-info/regulatory-filings.php

Choose the S-4/A filing of 6/1/2012

Resolution:

This merger is a cash plus stock reorganization. All the information below is from the information available from the S-4/A filed with the SEC.

First, if you have made any entries for this transaction in the Club Accounting software, you should delete them.

To record this merger will require multiple entries in the accounting software. The basic outline of these entries is given below:

Enter a large Return of capital transaction to have the program calculate the capital gain reportable for this merger.

Write down the capital gains, both long-term (LTCG) and short-term (STCG).

Delete the large Return of capital entry.

Enter capital gain distributions for the LTCG and STCG.

Enter a smaller Return of capital for the remainder of the cash received.

Enter the actual merger transaction

The capital gain realized is limited to the actual cash received so some clubs may need to adjust the capital gain amounts before entering the capital gain distributions. Instructions for doing this are included. The total merger consideration is $95.45 per Catalyst Health Solutions share. Your capital gain will be based on this total consideration with a limit that the total capital gain can not exceed the total cash received, excluding cash-in-lieu of fractional shares.

1. Calculate the capital gain.

The total merger consideration is $95.45 per Catalyst Health Solutions share. This is $28.00 in cash and $67.45 in SXC Health Solutions shares. Calculate the total value received for your Catalyst Health Solutions shares by multiplying 95.45 by the total shares of Catalyst Health Solutions owned.

Total Proceeds = [95.45 x (# of Catalyst Health Solutions shares owned)] – (Reorganization fee)

Enter the total proceeds amount in the dividend entry screen. Change the “type” to Return of capital. Date the transaction 7/1/2012. The security is Catalyst Health Solutions. Save the transaction.

The program will change some of the Return of capital, if appropriate, to LTCG and STCG.

Look at your transactions history and WRITE DOWN the amount for LTCG and STCG.

After you have recorded these amounts you can delete the Return of capital transaction. Although the LTCG and STCG entries were generated by the Return of capital entry you may need to delete them separately in the program.

Next you need to compare the sum of the capital gains to the total cash received, excluding cash for fractional shares.

The total cash received should be [28.00 x (# of Catalyst Health Solutions shares held)] – (Reorganization fee).

If your total capital gains are less than or equal to the total cash received skip to the next section, Accounting for Cash Received.

If your total capital gains are greater than the total cash received, continue in this section to adjust your capital gains so they are equal to your total merger cash received.

Since the structuring of this merger limits your capital gains to the cash received you need to adjust your gains to the total cash received. This will be done by calculating the per cent of the total capital gain that was LTCG and STCG. The percentage of each type of capital gain contributed to the total will then be multiplied by the maximum gain, the total merger cash. This will give the dollar amount each type of gain contributed to the total capital gain.

Total Merger Cash = 28 x (# of Catalyst shares owned)

Total Capital gain = Total CG = LTCG + STCG (From the large return of capital entry)

% LTCG = LTCG/ (LTCG + STCG)

% STCG = STCG/ (LTCG + STCG)

With these calculated you can calculate the final LTCG and final STCG.

Actual LTCG = %LTCG x (Total Merger cash)

Actual STCG = %STCG x (Total Merger cash)

If you have done the calculations correctly, (Final LTCG + Final STCG) = Total cash received.

If, (Final LTCG + Final STCG) = Total cash received, go to the next section, Accounting for Cash Received.

2. Accounting for Cash Received

All of the following entries use the cash dividend screen, in CA3 this is Transactions > Cash Dividend or Distribution, and online at Accounting > Cash Dividends.

Date these transactions 7/1/2012

The security should be Catalyst Health Solutions

Change the “type” field to Long-term capital gain.

Amount should be your LTCG as calculated above.

Next repeat the process for your short-term capital gain.

Change the “type” field to Short-term capital gain.

Amount should be your STCG as calculated above.

If you had to adjust you capital gain, the amount of LTCG and STCG in these entries will be the actual LTCG and actual STCG as adjusted above.

Finally, enter a return of capital entry.

Change the “type” field to Return of capital.

Amount should be: (Total Cash received) – (LTCG + STCG)

If your LTCG + STCG = Total Cash Received, no return of capital entry is needed.

Continue to step 3, The Merger.

3. The Merger

Go to Transactions > Merger or Accounting > Securities > Record merger of securities depending on the version of the software being used. If you are unfamiliar with merger transactions you can get help at this URL: http://www.iclub.com/support/kb/default.asp?page=normal_merger

Here is the information you need to complete the merger.

Date: 7/2/2012

Old Security or Merging Company: Catalyst Health Solutions (CHSI)

Price per share of old Security / Catalyst Health Solutions: Use the last valuation price

Cash received: See your broker statement for cash-in-lieu

New Security: Catamaran (CTRX) (SXCI changed its name and symbol)

Shares received: .6606 x (# of Catalyst Health Solutions shares owned)

(Remember to include fractional shares.)

Save the transaction and this is finally done.

A worksheet is provided below to record the items that need to be calculated.

A. Total Proceeds received.

95.45 x (# of Catalyst Health Solutions shares) = ­­­­­­­­­­­­­­­­­­­­­­­­____________________________

B. Total cash received.

[28.00 x (# of Catalyst Health Solutions shares)] – (Reorganization fee, if any) = ________________

Large Return of Capital (ROC) entry amount is equal to A.

C. LTCG = _____________________ (see transaction list after large ROC entry, record here)

D. STCG = ____________________ (see transaction list after large ROC entry, record here)

E. LTCG + STCG = __________________. Is this greater than B, Total cash received?

F. Return of Capital amount = (Total Cash Received) – (LTCG + STCG) = ______________

Use this if (LTCG + STCG) is less than Total Cash received.

Capital gain adjustment, if LTCG + STCG is greater than Total Cash received.

G. % LTCG = LTCG/ (LTCG + STCG)

= _________________

H. % STCG = (STCG)/ (LTCG + STCG) = _________________

I. Actual LTCG = %LTCG x (Total Merger cash) = ______________________.

Enter this amount if LTCG + STCG are greater than Total Merger Cash received.

J. Actual STCG = %STCG x (Total Merger cash) = ________________________.

Enter this amount if LTCG + STCG are greater than Total Merger Cash received.

K. Shares of Catamaran (formerly SXC Health Solutions) Received = .6606 x (# of Catalyst Health Solutions shares owned) = _________________. (For the merger transaction)