Medtronic 2008 Annual Report Download - page 69

Company further drive the acceptance of iMRI guidance in neurosurgery.
The consideration for Odin was approximately $21, which included $6
in upfront cash and a $2 milestone payment made in the three months
ended October 27, 2006. The $8 in net cash paid resulted from the $21
in consideration less the value of the Company’s prior investment in
Odin and Odin’s existing cash balance. In connection with the
acquisition of Odin, the Company acquired $9 of technology-based
intangible assets that had an estimated useful life of 12 years at the time
of acquisition. Total goodwill was $12 and was deductible for tax
purposes. The results of operations related to Odin have been included
in the Company’s consolidated statements of earnings since the date
of the acquisition. The pro forma impact of Odin was not significant to
the results of the Company for the fiscal year ended April 27, 2007.
Fiscal Year 2006
On August 26, 2005, the Company acquired all the outstanding stock
of Image-Guided Neurologics, Inc. (IGN), a privately held company. Prior
to the acquisition, the Company had an equity investment in IGN, which
was accounted for under the cost method of accounting. IGN specialized
in precision navigation and delivery technologies for brain surgery. The
IGN product line includes the NexFrame disposable, “frameless”
sterotactic head frame, which is used in conjunction with image-guided
surgery systems during deep brain stimulation. This acquisition
complements the Company’s position in deep brain stimulation by
offering instruments that simplify the procedure for surgeons and
improve patient comfort during surgery. The total consideration for IGN
was approximately $65, which includes $58 in net cash paid. The $58 in
net cash paid results from the $65 in consideration less the value of the
Company’s prior investment in IGN and IGN’s existing cash balance. As
a result of the acquisition of IGN, the Company acquired $22 of
technology-based intangible assets that had an estimated useful life of
12 years at the time of acquisition. Goodwill of $41 was not deductible
for tax purposes.
The following table summarizes the allocation of the purchase price to
the estimated fair values of the assets acquired and liabilities assumed:
Current assets $ 3
Property, plant and equipment 1
Other intangible assets 22
Goodwill 41
Total assets acquired 67
Current liabilities 1
Deferred tax liability — long term 1
Total liabilities assumed 2
Net assets acquired
$ 65
On July 1, 2005, the Company acquired all of the outstanding stock
of TNI, a privately held company. Prior to the acquisition, the Company
had an equity investment in TNI, which was accounted for under the
cost method of accounting. TNI focused on the development of an
implantable gastric stimulator to treat obesity. This acquisition was
expected to complement the Company’s strategy to deliver therapeutic
solutions for the worldwide challenges of obesity. The consideration for
TNI was approximately $269, which included $227 in net cash paid. The
$227 in net cash paid resulted from the $269 in consideration less the
value of the Company’s prior investment in TNI and TNI’s existing cash
balance. The purchase price is subject to increases triggered by the
achievement of certain milestones. As a result of the acquisition of TNI,
the Company acquired $55 of intangible assets of which $54 were
technology-based intangible assets that had an estimated useful life of
15 years at the time of acquisition and $169 of IPR&D that was expensed
on the date of acquisition related to a product being developed for the
treatment of obesity by stimulation of the stomach that had not yet
reached technological feasibility and for which no future alternative use
had been identified. Goodwill of $51 was not deductible for tax
purposes. In fiscal year 2007, the Company recognized an impairment
charge related to the intangible assets acquired from TNI. See discussion
in Note 2 for further information.
The following table summarizes the allocation of the purchase price to
the estimated fair values of the assets acquired and liabilities assumed:
Current assets $ 13
Other intangible assets 55
IPR&D 169
Goodwill 51
Total assets acquired 288
Current liabilities 14
Deferred tax liability — long term 5
Total liabilities assumed 19
Net assets acquired
$ 269
The pro forma impact of the IGN and TNI acquisitions was not
significant, individually or in the aggregate, to the results of the
Company for fiscal year 2006. The results of operations related to each
company have been included in the Company’s consolidated
statements of earnings since the date each company was acquired.
On May 18, 2005, the Company acquired substantially all of the
spine-related intellectual property and related contracts, rights and
tangible materials owned by Gary Michelson, M.D. and Karlin Technology,
Inc. (Michelson) and settled all outstanding litigation and disputes
between Michelson and the Company. The acquired patents pertain to
65Medtronic, Inc.