Medtronic 2011 Annual Report Download - page 66

62 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
The Company has accounted for the acquisition of Osteotech
as a business combination. The purchase price has been allocated
as follows:
(in millions)
Current assets $ 34
Property, plant, and equipment 21
IPR&D 1
Other intangible assets 46
Goodwill 19
Inventory 41
Other long-term assets 3
Total assets acquire d 165
Current liabilities 19
Other long-term liabilities 15
Long-term deferred tax liabilities, net 8
Total liabilities assumed 42
Net assets acquired $ 123
ATS Medical, Inc. On August 12, 2010, the Company acquired ATS
Medical, Inc. (ATS Medical). ATS Medical is a leading developer,
manufacturer, and marketer of products and services focused on
cardiac surgery, including heart valves and surgical cryoablation
technology. Under the terms of the agreement, ATS Medical
shareholders received $4.00 per share in cash for each share of
ATS Medical common stock that they owned. Total consideration
for the transaction was $394 million, which includes $30 million
of ATS Medical debt and acquired contingent consideration of $10
million. In connection with the acquisition, the Company acquired
$101 million of technology-based intangible assets that had an
estimated useful life of 11 years at the time of acquisition, $6
million of IPR&D, $78 million of net tangible assets, and $209
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.
The Company has accounted for the acquisition of ATS Medical
as a business combination. The purchase price has been allocated
as follows:
(in millions)
Current assets $ 51
Property, plant, and equipment 7
IPR&D 6
Other intangible assets 101
Goodwill 209
Long-term deferred tax assets, net 34
Total assets acquire d 408
Current liabilities 14
Total liabilities assumed 14
Net assets acquired $ 394
Axon Surgical On June 2, 2010, the Company acquired substantially
all of the assets of Axon Surgical (Axon), a privately-held company.
Prior to the acquisition, the Company distributed a large portion
of Axon’s products. The agreement will allow the Company to
bring to market the next generation of surgeon-directed and
professionally supported spinal neuromonitoring technology and
expand the availability of this technology. Total consideration for
the transaction, net of cash acquired, was $62 million, which
includes the settlement of existing Axon debt. In connection with
the acquisition of Axon, the Company acquired $41 million of
technology-based intangible assets that had an estimated useful
life of 10 years at the time of acquisition, $5 million of tangible
assets, and $16 million of goodwill. The goodwill is deductible for
tax purposes. The Company has accounted for the acquisition of
Axon as a business combination.
Other Acquisitions and Acquisition-Related Items On September 14,
2010, the Company acquired a developer of vascular suturing
products used in connection with cardiovascular and vascular
procedures that require a puncture or incision to the artery. The
terms of the transaction included an up-front payment of $15
million and additional payments of up to $10 million contingent
upon achievement of certain milestones. Total consideration
for the transaction was valued at approximately $21 million,
which includes the estimated fair value of additional milestone-
based contingent consideration of $6 million. The Company has
accounted for this acquisition as a business combination.
During fiscal year 2011, the Company incurred a $15 million
IPR&D charge related to two asset purchases in the CardioVascular
and Surgical Technologies businesses. The Company also incurred
a $15 million IPR&D charge related to a milestone payment
under the existing terms of a royalty-bearing, non-exclusive
patent cross-licensing agreement with NeuroPace, Inc. Product
commercialization related to this technology had not yet been
achieved. As a result, in accordance with authoritative guidance,
the payments for these transactions were immediately expensed
as IPR&D since technological feasibility had not yet been reached
and such technology has no future alternative use. These amounts
are included within acquisition-related items in the consolidated
statement of earnings.
In connection with the Ardian acquisition, the Company
recognized a gain of $85 million on its previously held investment
and incurred approximately $10 million of certain acquisition-
related costs, which include banker fees and other professional
service fees, which were recorded within acquisition-related items
in the consolidated statement of earnings.