Issue link: http://catalog.e-digitaleditions.com/i/647001
Purchase Price Allocation of Acquired Net Assets 2015 2014 Other SBi Berchtold PST Other Purchase price paid $ 138 $ 365 $ 184 $ 120 $ 216 Contingent consideration 9 — — — — Total consideration $ 147 $ 365 $ 184 $ 120 $ 216 Tangible assets acquired: Cash — — 12 — — Inventory 10 23 22 7 5 Other assets 17 6 44 19 25 Liabilities (5) (2) (45) (31) (29) Intangible assets: Customer relationship 12 20 11 33 5 Trade name 2 — 7 — — Developed technology and patents 51 73 32 26 115 Other 2 1 — — — IPRD — 1 — — 2 Goodwill 58 243 101 66 93 $ 147 $ 365 $ 184 $ 120 $ 216 Weighted average life of intangible assets 10 12 8 14 12 NOTE 7 - GOODWILL AND OTHER INTANGIBLE ASSETS We completed our annual impairment tests of goodwill in 2015 and 2014 and concluded in each year that no impairments exist. Summary of Other Intangible Assets Weighted Average Amortization Period (Years) Gross Carrying Amount Less Accumulated Amortization Net Carrying Amount Developed technologies 2015 13 $ 1,597 $ 563 $ 1,034 2014 13 1,468 466 1,002 Customer relationships 2015 15 $ 788 $ 290 $ 498 2014 15 801 239 562 Patents 2015 11 $ 309 $ 191 $ 118 2014 12 293 175 118 Trademarks 2015 10 $ 109 $ 41 $ 68 2014 14 112 37 75 In-process research and development 2015 $ 25 $ — $ 25 2014 201 — 201 Other 2015 13 $ 108 $ 57 $ 51 2014 12 111 51 60 Total 2015 13 $ 2,936 $ 1,142 $ 1,794 2014 13 $ 2,986 $ 968 $ 2,018 Changes in the Net Carrying Value of Goodwill by Segment Orthopaedics MedSurg Neurotechnology and Spine Total 2013 $ 2,227 $ 506 $ 1,111 $ 3,844 Additions and adjustments 186 231 23 440 Foreign exchange (27 ) (11 ) (60 ) (98 ) 2014 $ 2,386 $ 726 $ 1,074 $ 4,186 Additions and adjustments 20 46 — 66 Foreign exchange (62 ) 10 (64 ) (116 ) 2015 $ 2,344 $ 782 $ 1,010 $ 4,136 Amortization expense related to intangible assets was $210, $188 and $138 for 2015, 2014 and 2013. Estimated Amortization Expense 2016 2017 2018 2019 2020 $ 202 $ 183 $ 181 $ 165 $ 148 During 2015 we placed certain in process research and development assets into service as a result of the Food and Drug Administration's (FDA) clearance of our Mako total knee application. NOTE 8 - CONTINGENCIES AND COMMITMENTS We are involved in various ongoing proceedings, legal actions and claims arising in the normal course of business, including proceedings related to product, labor, intellectual property and other matters that are more fully described below. The outcomes of these matters will generally not be known for prolonged periods of time. In certain of the legal proceedings, the claimants seek damages as well as other compensatory and equitable relief that could result in the payment of significant claims and settlements and/or the imposition of injunctions or other equitable relief. For legal matters for which management has sufficient information to reasonably estimate our future obligations, a liability representing management's best estimate of the probable loss, or the minimum of the range of probable losses when a best estimate within the range is not known, is recorded. The estimates are based on consultation with legal counsel, previous settlement experience and settlement strategies. If actual outcomes are less favorable than those estimated by management, additional expense may be incurred, which could unfavorably affect future operating results. We are self-insured for product liability-related claims and expenses. The ultimate cost to us with respect to product liability claims could be materially different than the amount of the current estimates and accruals and could have a material adverse effect on our financial position, results of operations and cash flows. In June 2012 we voluntarily recalled our Rejuvenate and ABG II Modular-Neck hip stems and terminated global distribution of these hip products. Product liability lawsuits relating to this voluntary recall have been filed against us. On November 3, 2014 we announced that we had entered into a settlement agreement to compensate eligible United States patients who had revision surgery to replace their Rejuvenate and/or ABG II Modular-Neck hip stem prior to that date. We continue to offer support for recall-related care and reimburse patients who are not eligible to enroll in the settlement program for testing and treatment services, including any necessary revision surgeries. In addition, some lawsuits will remain and we will continue to defend against them. Based on the information that has been received, the actuarially determined range of probable loss to resolve this matter globally is estimated to be approximately $1,824 ($2,056 before $232 of third-party insurance recoveries) to $2,416. In 2015 we recorded additional charges to earnings of $295, net of insurance recoveries, representing the excess of the minimum of the range over the previously recorded reserves. In 2015 we made recall-related payments totaling $1,202 under the United States Rejuvenate and ABG II settlement agreement. The final outcome of this matter is dependent on many factors that are difficult to predict including the number of enrollees in the settlement program and the total awards to them, the number and costs of patients not eligible for the settlement program who seek testing and treatment services and require revision surgery and the number and actual costs to resolve the remaining lawsuits. Accordingly, the ultimate cost to resolve this entire matter globally may be materially different than the amount of the current estimate and accruals and could have a material adverse effect on our financial position, results of operations and cash flows. STRYKER CORPORATION 2015 Form 10-K 27 Dollar amounts in millions except per share amounts or as otherwise specified.