BALANCE SHEET DETAILS AND OTHER FINANCIAL INFORMATION

Balance Sheet Details

The following tables provide details of selected balance sheet items (in millions):



	As of
Inventory	March 31, 2019		December 31, 2018
Raw materials	$	188.0	$	164.1
Work-in-process	48.5		40.0
Finished goods	231.8		204.9
Total inventory	$	468.3	$	409.0



	As of
Other accrued liabilities—short-term	March 31, 2019		December 31, 2018
Taxes payable	$	20.0	$	39.1
Litigation related accruals	12.5		55.0
Other accrued liabilities	153.6		137.7
Total other accrued liabilities—short-term	$	186.1	$	231.8



	As of
Other long-term liabilities	March 31, 2019		December 31, 2018
Income taxes—long-term	$	272.4	$	270.2
Deferred revenue—long-term	30.8		33.0
Other long-term liabilities	151.1		35.4
Total other long-term liabilities	$	454.3	$	338.6

Goodwill and Intangible Assets

The increases in goodwill and intangible assets from December 31, 2018, to March 31, 2019, primarily relate to the Company’s majority-owned Joint Venture with Fosun Pharma acquiring certain assets from Chindex and its affiliates, a subsidiary of Fosun Pharma, including distribution rights, customer relationships, and certain personnel on January 5, 2019, which collectively met the definition of a business. Chindex was the Company’s distributor of da Vinci products and services in China. The transaction enhances the Company’s ability to serve patients, surgeons, and hospitals in China.

The total purchase consideration of $66.0 million, as of the acquisition date, included contingent consideration liability of $64.7 million and an upfront cash payment of $1.3 million. The amount and timing of the future contingent consideration payments are based upon achieving certain commercial milestones in 2019 and 2020. The estimated total undiscounted contingent consideration is approximately $81 million. The contingent consideration liability was measured at estimated fair value using a discounted cash flow model, which require significant inputs not observable in the market, and thus represents a Level 3 measurement. Key assumptions include (1) the probability and timing of milestone achievement based on projected future revenues in 2019 and 2020, and (2) the discount rate used to calculate the present value of the milestone payments. On each reporting period until the contingent consideration is settled, the Company will re-measure the contingent consideration liability and record changes in fair value as an adjustment to earnings. Changes to contingent consideration liabilities can result from adjustments to discount rates, accretion due to the passage of time, or changes in estimates of the likelihood or timing of achieving the commercial milestones. The assumptions related to determining the fair value of contingent consideration include a significant amount of judgment, and any changes in the underlying estimates could have a material impact on the amount of contingent consideration adjustment recorded in any given period.

The Company preliminarily recorded $1.7 million of net tangible assets, $58.6 million of intangible assets, and $5.7 million of residual goodwill. Intangible assets included distribution rights of $48.2 million and customer relationships of $10.4 million, which are being amortized over a weighted average period of 2.9 years. The goodwill is not amortizable for income tax purposes.

The Company has included the results of the acquired business since the acquisition date in its Financial Statements, which have not been material to date. Pro forma results of operations related to the acquisition have not been presented because the operating results of the acquired business is not material to the Financial Statements.

Supplemental Cash Flow Information

The following table provides supplemental non-cash investing and financing activities (in millions):



	Three Months Ended March 31,
	2019		2018
Equipment transfers, including operating lease assets, from inventory to property, plant, and equipment	$	41.9	$	26.5
Deferred payments and contingent consideration related to business combinations	$	64.7	$	—