Medtronic 2014 Annual Report Download - page 20

consideration of $25 million and $35 million, respectively. The product development-based contingent consideration includes a
future potential payment of $40 million upon achieving certain milestones, and the revenue-based contingent consideration
payments equal TYRX’s actual annual revenue growth for the Company’s fiscal years 2015 and 2016.
On August 7, 2013, the Company acquired Cardiocom, LLC (Cardiocom), a privately-held developer and provider of integrated
solutions for the management of chronic diseases such as heart failure, diabetes, and hypertension. Cardiocom’s products and
services include remote monitoring and patient-centered software to enable efficient care coordination and specialized telehealth
nurse support. Total consideration for the transaction was approximately $193 million.
Fiscal Year 2013
On November 1, 2012, we acquired Kanghui. Kanghui is a Chinese manufacturer and distributor of orthopedic products in
trauma, spine, and joint reconstruction. Total consideration for the transaction was approximately $816 million. The total value
of the transaction, net of Kanghui’s cash, was approximately $797 million.
Fiscal Year 2012
On August 31, 2011, we acquired Salient Surgical Technologies, Inc. (Salient). Salient develops and markets devices for
haemostatic sealing of soft tissue and bone incorporating advanced energy technology. Salient’s devices are used in a variety of
surgical procedures including orthopedic surgery, spine, open abdominal, and thoracic procedures. Total consideration for the
transaction was approximately $497 million. We had previously invested in Salient and held an 8.9 percent ownership position
in the company. In connection with the acquisition of Salient, we recognized a gain on our previously-held investment of
$32 million, which was recorded within acquisition-related items in the consolidated statements of earnings in fiscal year 2012.
Net of this ownership position, the transaction value was approximately $452 million.
On August 31, 2011, we acquired PEAK Surgical, Inc. (PEAK). PEAK develops and markets tissue dissection devices
incorporating advanced energy technology. Total consideration for the transaction was approximately $113 million. We had
previously invested in PEAK and held an 18.9 percent ownership position in the company. In connection with the acquisition of
PEAK, we recognized a gain on our previously-held investment of $6 million, which was recorded within acquisition-related
items in the consolidated statements of earnings in fiscal year 2012. Net of this ownership position, the transaction value was
approximately $96 million.
Patents and Licenses
We rely on a combination of patents, trademarks, copyrights, trade secrets, and non-disclosure and non-competition agreements
to establish and protect our proprietary technology. We have filed and obtained numerous patents in the U.S. and abroad, and
regularly file patent applications worldwide in our continuing effort to establish and protect our proprietary technology. U.S.
patents typically have a 20-year term from the application date while patent protection outside the U.S. varies from country to
country. In addition, we have entered into exclusive and non-exclusive licenses relating to a wide array of third-party
technologies. We have also obtained certain trademarks and tradenames for our products to distinguish our genuine products
from our competitors’ products, and we maintain certain details about our processes, products, and strategies as trade secrets. In
the aggregate, these intellectual property assets and licenses are of material importance to our business; however, we believe
that no single patent, technology, trademark, intellectual property asset or license is material in relation to any segment of our
business as a whole. Our efforts to protect our intellectual property and avoid disputes over proprietary rights have included
ongoing review of third-party patents and patent applications. For additional information see “Item 1A. Risk Factors” and
Note 18 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual
Report on Form 10-K.
Markets and Distribution Methods
We sell most of our medical devices through direct sales representatives in the U.S. and a combination of direct sales
representatives and independent distributors in markets outside the U.S. The three largest markets for our medical devices are
the U.S., Western Europe, and Japan. Emerging markets are an area of increasing focus and opportunity as we believe they
remain underpenetrated.
Our marketing and sales strategy is focused on rapid, cost-effective delivery of high-quality products to a diverse group of
customers worldwide - including physicians, hospitals, other medical institutions, and group purchasing organizations. To
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