Medtronic 2012 Annual Report Download - page 96

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Axon Systems, Inc.
On June 2, 2010, the Company acquired substantially all of the assets of Axon Systems, Inc. (Axon), a
privately-held company. Prior to the acquisition, the Company distributed a large portion of Axon’s products.
The acquisition has allowed the Company to bring to market the next generation of surgeon-directed and
professionally supported spinal and cranial neuromonitoring technologies and expand the availability of
these technologies. Total consideration for the transaction, net of cash acquired, was $62 million, which
included the settlement of existing Axon debt. In connection with the acquisition of Axon, the Company
acquired $41 million of technology-based intangible assets that had an estimated useful life of ten years at
the time of acquisition, $5 million of tangible assets, and $16 million of goodwill. The goodwill is deductible
for tax purposes. The Company accounted for the acquisition of Axon as a business combination and
recorded the identifiable assets acquired and liabilities assumed at fair value on the acquisition date.
Other Acquisitions and Acquisition-Related Items
During fiscal year 2011, the Company recorded $14 million of acquisition-related items including the
items discussed below and $14 million related to the change in fair value of contingent milestone payments
associated with acquisitions subsequent to April 24, 2009.
During fiscal year 2011, the Company incurred a $15 million IPR&D charge related to two asset
purchases in the CardioVascular and Surgical Technologies businesses. The Company also incurred a
$15 million IPR&D charge related to a milestone payment under the existing terms of a royalty-bearing,
non-exclusive patent cross-licensing agreement with NeuroPace, Inc. Product commercialization related to
this technology had not yet been achieved. As a result, in accordance with authoritative guidance, the
payments for these transactions were immediately expensed as IPR&D since technological feasibility had
not yet been reached and such technology has no future alternative use. These amounts are included within
acquisition-related items in the consolidated statements of earnings.
In connection with the Ardian acquisition, the Company recognized a gain of $85 million on its
previously-held investment and incurred approximately $10 million of certain acquisition-related costs,
including banker fees and other professional service fees, which were recorded within acquisition-related
items in the consolidated statements of earnings.
In connection with the Osteotech acquisition, 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 $21 million of certain acquisition-related costs, including legal fees and
severance costs, change in control costs, and contract termination, which were recorded within acquisition-
related items in the consolidated statements of earnings.
In connection with the ATS Medical acquisition, 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 $24 million of certain acquisition-related costs, including
acquisition-related legal fees and severance costs, change in control costs, and contract termination costs
which were recorded within acquisition-related items in the consolidated statements of earnings.
Fiscal Year 2010
In April 2010, the Company acquired privately-held Invatec S.p.A. (Invatec), a developer of innovative
medical technologies for the interventional treatment of cardiovascular disease, and two affiliated
companies. Invatec’s two affiliated companies are Fogazzi, which provides polymer technology to Invatec;
and Krauth Cardiovascular, which distributes Invatec products in Germany. Under the terms of the
agreement, the transaction included an initial up-front payment of $350 million, which included the
assumption and settlement of existing Invatec debt. The agreement also included potential additional
payments of up to $150 million contingent upon achievement of certain milestones. Total consideration for
the transaction was valued at approximately $468 million, which included the $350 million up-front payment
plus the estimated fair value of additional milestone-based contingent consideration of $118 million.
79
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)