Medtronic 2012 Annual Report Download - page 94

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acquisitions subsequent to April 29, 2009. Additionally, in connection with the acquisitions of Salient and
PEAK, the Company recognized gains of $32 million and $6 million, respectively, on its previously-held
investments. In connection with these acquisitions, the Company began to assess and formulate a plan for
the elimination of duplicative positions and the termination of certain contractual obligations. As a result,
the Company incurred approximately $5 million of certain acquisition-related costs, which included legal
fees, severance costs, change in control costs, and contract termination costs. These amounts are included
within acquisition-related items in the consolidated statement of earnings.
During fiscal year 2012, the Company reclassified $12 million of Physio-Control divestiture-related
costs previously recorded in acquisition-related items within continuing operations on the consolidated
statements of earnings in the first and second quarters of fiscal year 2012 to discontinued operations.
Fiscal Year 2011
Ardian, Inc.
On January 13, 2011, the Company acquired Ardian, Inc. (Ardian), a privately-held company. The
Company had previously invested in Ardian and held an 11.3 percent ownership position prior to the
acquisition. Ardian develops catheter-based therapies to treat uncontrolled hypertension and related
conditions. Total consideration for the transaction was $1.020 billion, which included the estimated fair value
of revenue-based contingent consideration of $212 million. The terms of the transaction included an up-front
cash payment of $717 million, excluding the Company’s pro-rata share in Ardian, plus potential future
commercial milestone payments equal to the annual revenue growth beginning in fiscal year 2012 through
the end of the Company’s fiscal year 2015. Based upon the acquisition valuation, the Company acquired
$55 million of technology-based intangible assets that had an estimated useful life of 12 years at the time
of acquisition, $191 million of IPR&D, $33 million of net tangible liabilities, and $807 million of goodwill.
The value attributable to IPR&D has been capitalized as an indefinite-lived intangible asset. The IPR&D
primarily relates to the future launch of Ardian’s Symplicity Catheter System into the U.S. and Japan markets.
Development costs needed to complete the project, estimated to be approximately $50 million, will be
expensed as incurred. The goodwill is not deductible for tax purposes.
The Company accounted for the acquisition of Ardian as a business combination. The Company
recorded the identifiable assets acquired and liabilities assumed at fair value on the acquisition date
as follows:
(in millions)
__________
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12
Property, plant, and equipment . . . . . . . . . . . . . . . . . . . . . 1
IPR&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 807
________
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,066
________
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Long-term deferred tax liabilities, net . . . . . . . . . . . . . . . 36
________
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
________
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,020
________
________
Osteotech, Inc.
On November 16, 2010, the Company acquired Osteotech, Inc. (Osteotech). Osteotech develops
innovative biologic products for regenerative medicine. Under the terms of the agreement, Osteotech
shareholders received $6.50 per share in cash for each share of Osteotech common stock that they owned.
Total consideration for the transaction was $123 million. Based upon the acquisition valuation, the Company
acquired $46 million of technology-based intangible assets that had an estimated useful life of nine years at
the time of acquisition, $1 million of IPR&D, $57 million of net tangible assets, and $19 million of goodwill.
77
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)