Medtronic 2013 Annual Report Download - page 91

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75732me_10K.indd 76 6/25/13 6:39 PM
Table of Contents
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
and contract termination costs. These amounts are included within acquisition-related items in the consolidated statements of
earnings.
Fiscal Year 2011
Ardian, Inc.
On January 13, 2011, the Company acquired Ardian, a privately-held company. The Company had previously invested in Ardian
and held an 11.3 percent ownership position prior to the acquisition. Ardian develops catheter-based therapies to treat uncontrolled
hypertension and related conditions. Total consideration for the transaction was $1.020 billion, which included the estimated fair
value of revenue-based contingent consideration of $212 million. The terms of the transaction included an up-front cash payment
of $717 million, excluding the Company’s pro-rata share in Ardian, plus potential future commercial milestone payments equal
to the annual revenue growth beginning in fiscal year 2012 through the end of the Company’s fiscal year 2015. Based upon the
acquisition valuation, the Company acquired $55 million of technology-based intangible assets that had an estimated useful life
of 12 years at the time of acquisition, $191 million of IPR&D, $33 million of net tangible liabilities, and $807 million of goodwill.
The value attributable to IPR&D has been capitalized as an indefinite-lived intangible asset. The IPR&D primarily relates to the
future launch of Ardian’s Symplicity Catheter System into the U.S. and Japan markets. Development costs needed to complete
the project, estimated to be approximately $50 million, will be expensed as incurred. The goodwill is not deductible for tax purposes.
The Company accounted for the acquisition of Ardian as a business combination. The Company recorded the identifiable assets
acquired and liabilities assumed at fair value on the acquisition date as follows:
(in millions)
Current assets $ 12
Property, plant, and equipment 1
IPR&D 191
Other intangible assets 55
Goodwill 807
Total assets acquired 1,066
Current liabilities 10
Long-term deferred tax liabilities, net 36
Total liabilities assumed 46
Net assets acquired $ 1,020
Osteotech, Inc.
On November 16, 2010, the Company acquired Osteotech, Inc. (Osteotech). Osteotech develops innovative biologic products for
regenerative medicine. Under the terms of the agreement, Osteotech shareholders received $6.50 per share in cash for each share
of Osteotech common stock that they owned. Total consideration for the transaction was $123 million. Based upon the acquisition
valuation, the Company acquired $46 million of technology-based intangible assets that had an estimated useful life of nine years
at the time of acquisition, $1 million of IPR&D, $57 million of net tangible assets, and $19 million of goodwill. The value
attributable to IPR&D has been capitalized as an indefinite-lived intangible asset. The goodwill is not deductible for tax purposes.
73