Medtronic 2015 Annual Report Download - page 90

Medtronic plc
Notes to Consolidated Financial Statements (Continued)
In May 2014, the FASB issued amended revenue recognition guidance to clarify the principles for recognizing revenue from
contracts with customers. The guidance requires an entity to recognize revenue in an amount that reflects the consideration to
which an entity expects to be entitled in exchange for the transfer of goods or services. The guidance also requires expanded
disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with
customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments
and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance is
effective for the Company beginning in the first quarter of fiscal year 2018 using one of two prescribed retrospective methods.
However, the FASB has recently proposed a one-year deferral of the effective date, which is currently subject to approval. The
Company is evaluating the impact of the amended revenue recognition guidance on the Company’s consolidated financial
statements.
2. Acquisitions and Acquisition-Related Items
The Company had various acquisitions and other acquisition-related activity during fiscal years 2015, 2014, and 2013. Certain
acquisitions were accounted for as business combinations as noted below. In accordance with authoritative guidance on business
combination accounting, the assets and liabilities of the companies acquired were recorded as of the acquisition date, at their
respective fair values, and consolidated. With the exception of the Covidien acquisition and unless otherwise disclosed, the pro
forma impact of these acquisitions was not significant, either individually or in the aggregate, to the results of the Company for
the fiscal years ended April 24, 2015, April 25, 2014, or April 26, 2013. The results of operations related to each company
acquired have been included in the Company’s consolidated statements of income since the date each company was acquired.
Fiscal Year 2015
Covidien public limited company
On January 26, 2015, pursuant to the transaction agreement, dated as of June 15, 2014 (the Transaction Agreement), by and
among Medtronic, Inc., Covidien, Medtronic plc (formerly known as Medtronic Limited, Medtronic Holdings Limited and
Kalani I Limited), Makani II Limited, a private limited company organized under the laws of Ireland and a wholly-owned
subsidiary of Medtronic (IrSub), Aviation Acquisition Co., Inc., a Minnesota corporation (U.S. AcquisitionCo), and Aviation
Merger Sub, LLC, a Minnesota limited liability company and a wholly-owned subsidiary of U.S. AcquisitionCo (MergerSub),
(i) Medtronic and IrSub acquired Covidien (the Acquisition) pursuant to the Irish Scheme of Arrangement under Section 201
(the Arrangement), and a capital reduction under Sections 72 and 74, of the Irish Companies Act of 1963 and (ii) MergerSub
merged with and into Medtronic Inc., with Medtronic Inc. as the surviving corporation in the merger (the Merger and, together
with the Acquisition, the Transactions). Following the consummation of the Transactions on January 26, 2015, Medtronic Inc.
and Covidien became subsidiaries of Medtronic. In connection with the consummation of the Transactions, Medtronic re-
registered as a public limited company organized under the laws of Ireland.
On January 26, 2015, (a) each Covidien ordinary share was converted into the right to receive $35.19 in cash and 0.956 of a
newly issued Medtronic plc share (the Arrangement Consideration) in exchange for each Covidien share held by such
shareholders, and (b) each share of Medtronic, Inc. common stock was converted into the right to receive one Medtronic plc
ordinary share. Based on the number of outstanding shares of Medtronic, Inc. and Covidien as of January 23, 2015 (the last
business day prior to the close of the transaction), former Medtronic, Inc. and Covidien shareholders held approximately 69
percent and 31 percent, respectively, of the Company’s ordinary shares after giving effect to the acquisition.
Covidien is a global leader in the development, manufacture, and sale of healthcare products for use in clinical and home
settings. The operating results for Covidien are included in the Minimally Invasive Therapies Group, Cardiac and Vascular
Group and Restorative Therapies Group segments.
The acquisition of Covidien continues the Company’s mission to create a medical technology and services company with a
comprehensive product portfolio and a broad global reach that is better able to improve healthcare outcomes. Medtronic’s
management believes the acquisition of Covidien will provide substantial synergies including, but not limited to, enhanced
operational cost efficiencies, incremental revenue opportunities, acceleration of long-term growth potential through broader
geographic reach, and increased earnings and cash flow.
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