Note 3 — Acquisitions

The Company made the following acquisitions during 2013, all of which were accounted for as business combinations:

·	On December 2, 2013, the Company acquired Vidacare Corporation, a provider of intraosseous, or inside the bone, access devices. This acquisition complements the vascular access and specialty product portfolio in the Company’s Critical Care product group.

·	On June 11, 2013, the Company acquired the assets of Ultimate Medical Pty. Ltd. and its affiliates (“Ultimate”), a supplier of airway management devices with a related portfolio of patented products. This acquisition complements the anesthesia products in the Company’s Critical Care product group.

On June 6, 2013, the Company acquired Eon Surgical, Ltd. (“Eon”), a developer of a minimally invasive microlaparoscopy surgical platform technology designed to enhance a surgeon’s ability to perform scarless surgery while producing better patient outcomes. This technology complements the product portfolio of the Company’s Surgical Care product group.

The total fair value of consideration for the 2013 acquisitions is estimated at $307.0 million. Transaction expenses associated with these acquisitions, which are included in selling, general and administrative expenses on the consolidated statements of income (loss) were $3.8 million for the twelve months ended December 31, 2013. For the twelve month period ended December 31, 2013, the Company has recorded revenue and operating profit of $9.7 million and $2.8 million, respectively related to the businesses acquired in 2013. The results of operations of the acquired businesses and assets are included in the consolidated statements of income (loss) from their respective acquisition dates. Pro forma information is not presented as the operations of the acquired businesses are not significant to the overall operations of the Company.

In connection with the Ultimate and Eon acquisitions, during the second quarter 2013, the Company recorded a liability and related restructuring and impairment charge of $2.8 million related to post-closing obligations associated with the acquired businesses. In the fourth quarter 2013, the Company reversed approximately $0.8 million of this liability in conjunction with the settlement of this obligation, which was paid in the first quarter 2014.

The following table presents the preliminary fair values determination of the assets acquired and liabilities assumed in the acquisitions that occurred during 2013:

	(Dollars in millions)
Assets
Current assets	$	21.0
Property, plant and equipment		1.4
Intangible assets:
Intellectual property		159.5
Tradenames		26.5
In-process research and development		19.9
Customer lists		49.6
Goodwill		123.3
Total assets acquired		401.2
Less:
Current liabilities		5.4
Deferred tax liabilities		88.8
Liabilities assumed		94.2
Net assets acquired	$	307.0

The Company is continuing to evaluate the 2013 acquisitions. Further adjustments may be necessary as a result of the Company’s assessment of additional information related to the fair values of assets acquired and liabilities assumed, primarily related to deferred tax assets and liabilities and goodwill.

Among the acquired assets, intellectual property has useful lives ranging from 10 to 18 years, customer lists have useful lives ranging from 16 to 27 years and finite tradenames have useful lives ranging from 1 to 30 years. IPR&D has an indefinite life and is not amortized until development of the related project is completed, at which time the IPR&D becomes an amortizable asset. If the related project is not completed in a timely manner, the Company may incur an impairment charge related to the IPR&D, calculated as the excess of the asset’s carrying value over its fair value. The goodwill resulting from the acquisitions primarily reflects the expected revenue growth attributable to anticipated increased market penetration from acquired and future products and customers. Goodwill and the step-up in basis of the intangible assets in connection with stock acquisitions are not deductible for tax purposes.

The Company made the following acquisitions during 2012, all of which were accounted for as business combinations:

On October 23, 2012, the Company acquired substantially all of the assets of LMA International N.V. (“LMA”), a global provider of laryngeal masks whose products are used in anesthesia and emergency care. On October 23, 2012, in a separate transaction, the Company also acquired the LMA branded laryngeal mask supraglottic airway business and certain other products in the United Kingdom, Ireland and Channel Islands from the shareholders of Intravent Direct Limited and affiliates. These acquisitions complement the anesthesia product portfolio in the Company’s Critical Care product group.

·	On June 22, 2012, the Company acquired Hotspur Technologies Inc., a developer of catheter-based technologies designed to restore blood flow in patients with obstructed vessels. The acquired business complements the dialysis access product line in the Company’s Cardiac Care product group.

On May 22, 2012, the Company acquired Semprus BioSciences Corp., a biomedical company that developed a long-lasting, covalently bonded, non-leaching polymer designed to reduce infections and thrombus related complications. While the Company will explore opportunities to apply this technology to a broad array of its product offerings, the initial focus for the technology is on vascular devices within the Company’s Critical Care product group. During 2013, the Company experienced unexpected difficulties with respect to the development of the Semprus technology, which the Company is currently attempting to resolve through further research and testing. Failure to resolve these issues may result in a reduction of the expected future cash flows related to the Semprus technology and could result in recognition of impairment charges with respect to the related assets, which could be material. As of December 31, 2013, the Company has recorded net assets in the amount of approximately $42 million related to this investment.

On May 3, 2012, the Company acquired substantially all of the assets of Axiom Technology Partners, LLC (“Axiom”), constituting its EFx laparoscopic fascial closure system, which is designed for the closure of abdominal trocar defects through which access ports and instruments were used during laparoscopic surgeries. The acquired business complements the surgical closure product line in the Company’s Surgical Care product group.

·	On April 5, 2012, the Company acquired the EZ-Blocker product line, a single-use catheter used to perform lung isolation and one-lung ventilation. The acquisition of this product line complements the anesthesia product portfolio in the Company’s Critical Care product group.

In connection with the acquisitions, the Company agreed to pay contingent consideration based on the achievement of specified objectives, including the receipt of regulatory approvals and achievement of sales targets. The aggregate fair value of consideration for the 2012 acquisitions, based on the estimated fair values at the respective acquisition dates, was estimated at $422.2 million, which included the initial payments of $367.9 million in cash and the estimated fair value of the contingent consideration of $55.8 million, partially offset by a $1.5 million favorable working capital adjustment. The Company recorded $227.5 million of intangible assets and $153.0 million of goodwill related to these acquisitions. As of December 31, 2013, the Company has made aggregate contingent consideration payments of $27 million related to these acquisitions. The range of remaining undiscounted contingent consideration the Company could be required to pay is zero to $62 million. For further information on contingent consideration, see Note 10 to the consolidated financial statements.