Medtronic 2013 Annual Report Download - page 89

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75732me_10K.indd 74 6/25/13 6:39 PM
Table of Contents
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
The Company accounted for the acquisition of Kanghui as a business combination. During the fourth quarter of fiscal year 2013,
the Company recorded minor adjustments to current assets, goodwill, other assets, current liabilities, and long-term deferred tax
liabilities, net as a result of finalizing the purchase accounting. The Company recorded the identifiable assets acquired and liabilities
assumed at fair value as follows:
(in millions)
Current assets $ 106
Property, plant, and equipment 56
Intangible assets 341
Goodwill 404
Other assets 11
Total assets acquired 918
Current liabilities 29
Long-term deferred tax liabilities, net 72
Other long-term liabilities 1
Total liabilities assumed 102
Net assets acquired $ 816
Other Acquisitions and Acquisition-Related Items
During fiscal year 2013, the Company recorded net income from acquisition-related items of $49 million, including income of
$62 million related to the change in fair value of contingent milestone payments associated with acquisitions subsequent to April
29, 2009. The change in fair value of contingent milestone payments is primarily related to adjustments in Ardian, Inc. (Ardian)
contingent commercial milestone payments, which are based on annual revenue growth through 2015, due to current slower
commercial ramp in Europe. Additionally, during fiscal year 2013, the Company incurred transaction costs of $13 million in
connection with the acquisition of Kanghui, an IPR&D impairment charge of $5 million related to a technology recently acquired
by the Structural Heart business, and $5 million of transaction costs related to the divestiture of the Physio-Control business, and
recognized $10 million of income related to the reversal of an acquired contingent liability from ATS Medical, Inc. (ATS Medical).
These amounts are included within acquisition-related items in the consolidated statements of earnings.
Fiscal Year 2012
Salient Surgical Technologies, Inc.
On August 31, 2011, the Company acquired Salient Surgical Technologies, Inc. (Salient). Salient develops and markets devices
for haemostatic sealing of soft tissue and bone incorporating advanced energy technology. Salient’s devices are used in a variety
of surgical procedures including orthopedic surgery, spine, open abdominal, and thoracic procedures. Total consideration for the
transaction was approximately $497 million. Medtronic had previously invested in Salient and held an 8.9 percent ownership
position in the company. Net of this ownership position, the transaction value was approximately $452 million. Based upon the
acquisition valuation, the Company acquired $154 million of technology-based intangible assets that had an estimated useful life
of 12 years at the time of acquisition, $44 million of IPR&D, $49 million of net tangible liabilities, and $348 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 Salient’s concentric wire product. Acquired goodwill is not deductible for tax purposes.
71