Acquisitions and Strategic Investments (Tables)

12 Months Ended

Dec. 31, 2016

The aggregate carrying amount of our strategic investments as of December 31, 2016 and December 31, 2015, were comprised of the following categories:



	As of
	December 31, 2016		December 31, 2015
Equity method investments	$	265	$	173
Cost method investments	20		45
Available-for-sale securities	20		—
Notes receivable	42		30
	$	347	$	248

The components of the aggregate purchase price for our 2014 acquisitions are as follows (in millions):



Cash, net of cash acquired	$	479
Fair value of prior interests	31
	$	510

The components of the aggregate preliminary purchase price are as follows (in millions):



Cash, net of cash acquired	$	366
Fair value of contingent consideration	50
Fair value of debt repaid	43
	$	459

The components of the aggregate purchase prices are as follows (in millions):



Cash, net of cash acquired	$	1,735
Fair value of contingent consideration	63
	$	1,798

We allocated a portion of the preliminary purchase price to specific intangible asset categories as follows:



	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Range of Risk- Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	176	9-13	11% - 20%
Customer relationships	51		9-13	11% - 12%
Other intangible assets	1		4	11%
	$	228

The following summarizes the preliminary purchase price allocation for our 2016 acquisitions as of December 31, 2016, (in millions):



Goodwill	$	208
Amortizable intangible assets	228
Inventory	11
Property, plant and equipment	6
Other net liabilities	(2		)
Deferred income taxes	8
	$	459

The following summarizes the aggregate purchase price allocation for the 2015 acquisitions as of December 31, 2015 (in millions):



Goodwill	$	573
Amortizable intangible assets	1,074
Indefinite-lived intangible assets	6
Inventory	103
Property, plant and equipment	43
Other net assets	42
Deferred income taxes	(43		)
	$	1,798

The following summarizes the aggregate purchase price allocation for our 2014 acquisitions as of December 31, 2014:



Goodwill	$	210
Amortizable intangible assets	263
Inventory	23
Property, plant and equipment	17
Prepaid Transaction Service Agreement	5
Other net assets	(1		)
Deferred income taxes	(7		)
	$	510

The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs:



Contingent Consideration Liability	Fair Value as of December 31, 2016	Valuation Technique	Unobservable Input	Range
R&D and Commercialization-based Milestone	$46 million	Discounted Cash Flow	Discount Rate	2% - 3%
R&D and Commercialization-based Milestone	$46 million	Discounted Cash Flow	Projected Year of Payment	2017 - 2021
Revenue-based Payments	$60 million	Discounted Cash Flow	Discount Rate	11% - 15%
	$60 million	Discounted Cash Flow	Projected Year of Payment	2017 - 2026
	$98 million	Monte Carlo	Revenue Volatility	25%
			Risk Free Rate	LIBOR Term and Cost of Debt Structure
			Projected Year of Payment	2017 - 2022

The nonrecurring Level 3 fair value measurements of our intangible asset impairment analysis included the following significant unobservable inputs:



Intangible Asset	Valuation Date	Fair Value	Valuation Technique	Unobservable Input	Rate
Technology-related (amortizable)	September 30, 2015	$8 million	Income Approach -Excess Earnings Method	Discount Rate	10%
In-Process R&D	June 30, 2015	$6 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
In-Process R&D	September 30, 2014	$16 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
In-Process R&D	June 30, 2014	$83 million	Income Approach - Excess Earnings Method	Discount Rate	16.5 - 20%
Technology-related (amortizable)	June 30, 2014	$8 million	Income Approach - Excess Earnings Method	Discount Rate	15%
In-Process R&D	March 31, 2014	$6 million	Income Approach - Excess Earnings Method	Discount Rate	20%
Technology-related (amortizable)	March 31, 2014	$64 million	Income Approach - Excess Earnings Method	Discount Rate	15%

Changes in the fair value of our contingent consideration liabilities were as follows (in millions):



Balance as of December 31, 2014	$	274
Amounts recorded related to new acquisitions	63
Other amounts recorded related to prior acquisitions	(1		)
Fair value adjustment	123
Contingent payments related to prior period acquisition	(213		)
Balance as of December 31, 2015	$	246
Amounts recorded related to new acquisitions	50
Other amounts recorded related to prior acquisitions	1
Fair value adjustment	29
Contingent payments related to prior period acquisition	(122		)
Balance as of December 31, 2016	$	204

We allocated a portion of the purchase price to specific intangible asset categories as follows:



	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Range of Risk- Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	233	10 - 14	14 - 18 %
Customer relationships	29		10	18%
Other intangible assets	1		2	14%
	$	263

We allocated a portion of the purchase price to specific intangible asset categories as follows:



	Amount Assigned (in millions)		Weighted Average Amortization Period (in years)	Range of Risk- Adjusted Discount Rates used in Purchase Price Allocation
Amortizable intangible assets:
Technology-related	$	431	11-13	14% - 23%
Customer relationships	625		12-13	14% - 15%
Other intangible assets	18		13	14%
Indefinite-lived intangible assets:
In-process research & development	$	6	N/A	17%
	$	1,080