Medtronic 2015 Annual Report Download - page 95

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Medtronic plc
Notes to Consolidated Financial Statements (Continued)
Fiscal Year 2014
The fair values of the assets acquired and liabilities assumed during fiscal year 2014 are as follows:
(in millions) TYRX, Inc.
Cardiocom,
LLC
Current assets $6$14
Property, plant, and equipment 1 7
Intangible assets 94 61
Goodwill 132 123
Total assets acquired 233 205
Current liabilities 412
Long-term deferred tax liabilities, net 7 —
Total liabilities assumed 11 12
Net assets acquired $ 222 $ 193
TYRX, Inc.
On December 30, 2013, the Company acquired TYRX, Inc. (TYRX), a privately-held developer of antibiotic drug and
implanted medical device combinations. TYRX’s products include those designed to reduce surgical site infections associated
with implantable pacemakers, defibrillators, and spinal cord neurostimulators. Under the terms of the agreement, the transaction
included an initial up-front payment of $159 million, representing a purchase price amount that was net of acquired cash,
including the assumption and settlement of existing TYRX debt and direct acquisition costs. Total consideration for the
transaction was approximately $222 million, which included estimated fair values for product development-based and revenue-
based contingent consideration of $25 million and $35 million, respectively. The product development-based contingent
consideration includes a future potential payment of $40 million upon achieving certain milestones, and the revenue-based
contingent consideration payments equal TYRX’s actual annual revenue growth for the Company’s fiscal years 2015 and 2016.
Based upon the acquisition valuation, the Company acquired $94 million of technology-based intangible assets with an
estimated useful life of 14 years and $132 million of goodwill. The acquired goodwill is not deductible for tax purposes.
Cardiocom, LLC
On August 7, 2013, the Company acquired Cardiocom, LLC (Cardiocom), a privately-held developer and provider of integrated
solutions for the management of chronic diseases such as heart failure, diabetes, and hypertension. Cardiocom’s products and
services include remote monitoring and patient-centered software to enable efficient care coordination and specialized telehealth
nurse support. Total consideration for the transaction was approximately $193 million. Based upon the acquisition valuation, the
Company acquired $61 million of customer-related intangible assets with an estimated useful life of 7 years and $123 million of
goodwill. The acquired goodwill is deductible for tax purposes.
The Company accounted for the acquisitions of TYRX and Cardiocom as business combinations using the acquisition method
of accounting.
Acquisition-Related Items
During fiscal year 2014, the Company recorded net charges from acquisition-related items of $117 million, primarily including
IPR&D and long-lived asset impairment charges of $236 million related to the Ardian, Inc. (Ardian) acquisition recorded in the
third quarter of fiscal year 2014. The impairment charges were partially offset by income of $138 million related to the change
in fair value of contingent consideration associated with acquisitions subsequent to April 29, 2009. These amounts are included
within acquisition-related items in the consolidated statements of income.
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