Abbott Laboratories 2014 Annual Report Download - page 46

ABBOTT 2014 ANNUAL REPORT
44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
acquired in-process research and development of approximately
$60million, which is accounted for as an indefinite‑lived
intangible asset until regulatory approval or discontinuation;
non‑deductible goodwill of approximately $130million, net
deferred tax liabilities of $49million and contingent consideration
of approximately $70million. The fair value of the contingent
consideration was determined based on an independent appraisal.
Acquired intangible assets consist primarily of developed technol‑
ogy that is being amortized over 18 years.
NOTE 7—GOODWILL AND INTANGIBLE ASSETS
In 2014, Abbott recorded goodwill of approximately $1.8billion
related to the acquisitions of CFR Pharmaceuticals, Veropharm
and Topera; recognized purchase price allocation adjustments
associated with other recent acquisitions decreased goodwill by
approximately $30million; and approximately $950million of
goodwill was moved to Non‑current assets held for disposition
due to the planned disposition of the developed markets branded
generics pharmaceuticals business. The goodwill related to
the acquisitions of CFR and Veropharm was allocated to the
Established Pharmaceuticals segment. Abbott recorded goodwill
of approximately $274million in 2013 related to the acquisitions
of IDEV Technologies and OptiMedica. Goodwill related to the
IDEV acquisition was allocated to the Vascular Products segment
and goodwill related to OptiMedica was allocated to a non‑report‑
able segment. Foreign currency translation and other adjustments
decreased goodwill in 2014 and 2013 by $566million and $168mil‑
lion, respectively, and increased goodwill in 2012 by $69million.
In addition, in connection with the separation of AbbVie on
January1, 2013, Abbott transferred approximately $6.1billion of
goodwill to AbbVie. The amount of goodwill related to reportable
segments at December31, 2014 was $3.3billion for the Established
Pharmaceutical Products segment, $286million for the
Nutritional Products segment, $445million for the Diagnostic
Products segment, and $2.9billion for the Vascular Products
segment. Other than the eects of the separation of AbbVie,
there were no reductions of goodwill relating to the disposal
of all or a portion of a business. There was no reduction of good-
will relating to impairments.
The gross amount of amortizable intangible assets, primarily
product rights and technology was $11.0billion and $12.2billion
as of December31, 2014 and 2013, respectively, and accumulated
amortization was $4.9billion and $6.8billion as of December31,
2014 and 2013, respectively. Indefinite‑lived intangible assets,
which relate to in‑process research and development acquired
in a business combination, were approximately $134million and
$265million at December31, 2014 and 2013, respectively. In 2014,
the acquisition of CFR Pharmaceuticals increased intangible
assets by approximately $1.8billion. Approximately $804million
of net intangible assets related to the developed markets branded
generics pharmaceuticals businesses was reclassified to Non‑
current assets held for disposition due to the planned disposition
of this business. Gross amortizable intangible assets, accumulated
amortization and indefinite‑lived intangible assets of $5.7billion,
$3.8billion and $417million, respectively, were transferred to
AbbVie as part of the separation on January1, 2013. In 2012,
Abbott recorded an impairment charge of $69million for certain
research and development assets due to changes in the projected
approximately 98percent of Veropharm. Including the assump‑
tion of approximately $90million of debt and a minority interest
with a fair value of $5million, the total value of the acquired busi‑
ness was approximately $410million. The preliminary allocation
of the fair value of the acquisition resulted in definite‑lived
non‑deductible intangible assets of approximately $120million,
non‑deductible goodwill of approximately $60million, and net
deferred tax liabilities of approximately $35million. Non‑deductible
goodwill is identifiable with the Established Pharmaceutical
Products segment. Additionally, Abbott acquired property, plant,
and equipment of approximately $185million, accounts receiv‑
able of approximately $45million, inventory of approximately
$25million, and other assets of approximately $10million.
Acquired intangible assets consist of developed technology and
are being amortized over 16years.
In December 2014, Abbott completed the acquisition of Topera,
Inc. for approximately $250million in cash, plus additional pay‑
ments up to $300million to be made upon completion of certain
regulatory and sales milestones. The acquisition of Topera pro‑
vides Abbott a foundational entry in the electrophysiology market.
The allocation of the fair value of the acquisition resulted in
non‑deductible acquired in‑process research and development
of approximately $20million, which is accounted for as an
indefinite‑lived intangible asset until regulatory approval or dis‑
continuation, non‑deductible definite‑lived intangibles assets of
approximately $325million, non‑deductible goodwill of approxi‑
mately $190million, net deferred tax liabilities of approximately
$120million, and contingent consideration of approximately
$165million. The fair value of the contingent consideration was
determined based on an independent appraisal. Acquired intangi‑
ble assets consist of developed technology and trademarks, and
are being amortized over 16 years.
The preliminary allocations of fair value of the above acquisitions
will be finalized when valuations are completed. Had the aggre‑
gate of the above acquisitions taken place on January1, 2013,
consolidated net sales and earnings would not have been signifi‑
cantly dierent from reported amounts.
In August 2013, Abbott acquired 100 percent of IDEV Technologies,
net of debt, for $310million, in cash. The acquisition of IDEV
Technologies expands Abbott’s endovascular portfolio. The final
allocation of the fair value of the acquisition resulted in non‑
deductible acquired in‑process research and development of
approximately $170million which is accounted for as an
indefinite‑lived intangible asset until regulatory approval or
discontinuation, non‑deductible definite‑lived intangible assets
of approximately $66million, non‑deductible goodwill of approxi‑
mately $112million and net deferred tax liabilities of $47million.
Acquired intangible assets consist of developed technology and
are being amortized over 11 years.
In August 2013, Abbott acquired 100 percent of OptiMedica for
$260million, in cash, plus additional payments up to $150million
to be made upon completion of certain development, regulatory
and sales milestones. The acquisition of OptiMedica provides
Abbott with an immediate entry point into the laser assisted
cataract surgery market. The final allocation of the fair value
of the acquisition resulted in non‑deductible definite‑lived
intangible assets of approximately $160million; non‑deductible