Medtronic 2011 Annual Report Download - page 68

64 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
In connection with the acquisition of CoreValve, the Company
acquired $291 million of technology-based intangible assets with
an estimated useful life of 12 years. Also as part of the acquisition,
the Company recorded $123 million and $424 million of IPR&D
and goodwill, respectively. The IPR&D was expensed on the date
of acquisition and primarily relates to the future launch of
CoreValve’s catheter-based transfemoral aortic valve into the U.S.
market. For purposes of valuing the acquired IPR&D, the Company
estimated total costs to complete of approximately $80 million
at the time of acquisition. The establishment of goodwill was
primarily due to the expected revenue growth that is attributable
to increased market penetration from future products and
customers. The goodwill is not deductible for tax purposes.
The Company has accounted for the acquisition of CoreValve
as a business combination. The purchase price has been allocated
as follows:
(in millions)
Current assets $ 20
Property, plant, and equipment 7
IPR&D 123
Other intangible assets 291
Goodwill 424
Total assets acquired 865
Current liabilities 65
Long-term deferred tax liabilities 100
Total liabilities assumed 165
Net assets acquired $ 700
In connection with the acquisition, the Company began to
assess and formulate a plan for the elimination of duplicative
positions and the termination of certain contractual obligations.
The purchase accounting liabilities recorded in connection with
these activities was approximately $39 million. As of April 30,
2010, these purchase accounting liabilities have been fully utilized.
Ablation Frontiers, Inc. In February 2009, the Company acquired
Ablation Frontiers, Inc. (Ablation Frontiers), a privately-held
company. Under the terms of the agreement announced in
January 2009, the transaction included an initial up-front payment
of $225 million plus potential additional payments contingent
upon achievement of certain clinical and revenue milestones.
Total consideration for the transaction was approximately $235
million including the assumption and settlement of existing
Ablation Frontiers debt and payment of direct acquisition costs.
Ablation Frontiers develops radio frequency (RF) ablation solutions
for treatment of atrial fibrillation. Ablation Frontiers’ system of
ablation catheters with a RF generator is currently approved in
certain markets outside the U.S.
In connection with the acquisition of Ablation Frontiers, the
Company acquired $63 million of technology-based intangible
assets with an estimated useful life of 11 years. Also as part of the
acquisition, the Company recorded $97 million and $107 million of
IPR&D and goodwill, respectively. The IPR&D was expensed on the
date of acquisition and primarily relates to the future launch of
Ablation Frontiers’ system of ablation catheters and RF generator
into the U.S. market. For purposes of valuing the acquired IPR&D,
the Company estimated total costs to complete of approximately
$3 million. The establishment of goodwill was primarily due to the
expected revenue growth that is attributable to increased market
penetration from future products and customers. The goodwill is
not deductible for tax purposes.
The Company has accounted for the acquisition of Ablation
Frontiers as a business combination. The purchase price has been
allocated as follows:
(in millions)
Current assets $ 7
Property, plant, and equipment 1
IPR&D 97
Other intangible assets 63
Goodwill 107
Total assets acquired 275
Current liabilities 19
Long-term deferred tax liabilities 21
Total liabilities assumed 40
Net assets acquired $ 235
CryoCath Technologies Inc. In November 2008, the Company
acquired all of the outstanding stock of CryoCath Technologies
Inc. (CryoCath). Under the terms of the agreement announced in
September 2008, CryoCath shareholders received $8.75 Canadian
dollars per share in cash for each share of CryoCath common
stock that they owned. Total consideration for the transaction, net
of cash acquired, was approximately $352 million U.S. dollars
including the purchase of outstanding CryoCath common stock,
the assumption and settlement of existing CryoCath debt,
and payment of direct acquisition costs. CryoCath develops