Medtronic 2009 Annual Report Download - page 69

65
Medtronic, Inc.
and liabilities assumed. 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 109
Total assets acquired 277
Current liabilities 19
Long-term deferred tax liabilities 23
Total liabilities assumed 42
Net assets acquired $ 235
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 recognized, in total, $97 million and
$109 million for 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.
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 cryotherapy
products to treat cardiac arrhythmias. CryoCath’s Arctic Front
product is a minimally invasive cryo-balloon catheter designed
specifically to treat atrial fibrillation and is currently approved in
certain markets outside the U.S.
The Company has accounted for the acquisition of CryoCath as
a business combination. Under business combination accounting,
the assets and liabilities of CryoCath were recorded as of the
acquisition date, at their respective fair values, and consolidated
with the Company. The purchase price allocation is based on
estimates of the fair value of assets acquired and liabilities
assumed. The purchase price has been allocated as follows:
(in millions)
Current assets $ 24
Property, plant and equipment 2
IPR&D 72
Other intangible assets 57
Goodwill 179
Long-term deferred tax assets 61
Total assets acquired 395
Current liabilities 25
Long-term deferred tax liabilities 15
Total liabilities assumed 40
Net assets acquired $ 355
In connection with the acquisition of CryoCath, the Company
acquired $57 million of technology-based intangible assets with
an estimated useful life of 11 years. Also as part of the acquisition,
the Company recognized $72 million and $179 million for IPR&D
and goodwill, respectively. The IPR&D was expensed on the date
of acquisition and primarily relates to the future launch of Arctic
Front 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.
Restore Medical Acquisition In July 2008, the Company acquired
Restore Medical, Inc. (Restore). Restore’s Pillar Palatal Implant
System provides the Company with a minimally invasive,
implantable medical device used to treat the soft palate
component of sleep breathing disorders, including mild to
moderate obstructive sleep apnea and snoring. The Company
accounted for the acquisition as a business combination. Restore
shareholders received $1.60 per share in cash for each share of
Restore common stock they owned. Total consideration for the
transaction, net of cash acquired, was approximately $29 million.
In connection with the acquisition of Restore, the Company
acquired $17 million of technology-based intangible assets with
an estimated useful life of 10 years, $8 million of net tangible
assets and $5 million of goodwill. The goodwill is not deductible
for tax purposes.