SEC Filings

10-Q
MEDTRONIC PLC filed this Form 10-Q on 12/04/2017
Entire Document
 
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)


The acquisition date fair values of the assets and liabilities acquired were as follows:
(in millions)
HeartWare International, Inc.
 
All Other
Other current assets
$
351

 
$
2

Property, plant, and equipment
14

 
6

Other intangible assets
625

 
68

Goodwill
481

 
15

Other assets
84

 

Total assets acquired
1,555

 
91

 
 
 
 
Current liabilities
143

 
1

Deferred tax liabilities
6

 

Long-term debt
245

 

Other liabilities
89

 

Total liabilities assumed
483

 
1

Net assets acquired
$
1,072

 
$
90

For additional information on the Company's fiscal year 2017 acquisitions, refer to Note 2 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended April 28, 2017.
Acquisition-Related Items
Acquisition-related items includes expenses incurred in connection with the integration of Covidien, our $50.0 billion acquisition completed in the fourth quarter of fiscal year 2015, expenses incurred in connection with business acquisitions, and changes in fair value of contingent consideration. During the three and six months ended October 27, 2017, the Company recognized acquisition-related items expense of $18 million and $71 million, respectively, including $11 million and $20 million, respectively, recognized within cost of products sold in the consolidated statements of income. For the three and six months ended October 27, 2017, acquisition-related items expense includes $44 million and $90 million, respectively, of costs associated with the integration of Covidien manufacturing, distribution, and administrative facilities as well as IT system implementation, partially offset by changes in fair value of contingent consideration as a result of revised revenue forecasts and the timing of anticipated regulatory payments.
During the three and six months ended October 28, 2016, the Company recognized acquisition-related items expense of $28 million and $80 million, respectively. For the three and six months ended October 28, 2016, acquisition-related items expense includes $59 million and $102 million, respectively, of costs associated with the integration of Covidien manufacturing, distribution, and administrative facilities as well as IT system implementation and benefits harmonization, and $9 million and $16 million, respectively, of accelerated and incremental stock compensation expense, partially offset by changes in fair value of contingent consideration as a result of revised revenue forecasts and the timing of anticipated regulatory payments.
Contingent Consideration

Certain of the Company’s business combinations involve potential payments of future consideration that is contingent upon the achievement of product development milestones and/or contingent on the acquired business reaching performance milestones. A liability is recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration is remeasured at each reporting period using Level 3 inputs, and the change in fair value is recognized within acquisition-related items in the consolidated statements of income. Contingent consideration payments related to the acquisition date fair value are reported as financing activities in the consolidated statements of cash flows. Amounts paid in excess of the original acquisition date fair value are reported as operating activities in the consolidated statements of cash flows.

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