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Acquisitions | 12 Months Ended
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Dec. 31, 2017
Business Combinations [Abstract] |
Acquisitions | ACQUISITIONS On October 2, 2017 we acquired a custom procedure pack business located in Melbourne, Australia from ITL Healthcare Pty Ltd. ("ITL"), for an aggregate purchase price of $11.3 million. We accounted for this acquisition as a business combination. The following table summarizes the aggregate purchase price allocated to the assets acquired from ITL (in thousands):
| Assets Acquired |
| Trade receivables | $ | 1,287 |
| Other receivables | 56 |
| Inventories | 1,808 |
| Prepaid expenses and other assets | 65 |
| Property and equipment | 1,053 |
| Intangibles |
| Customer lists | 5,940 |
| Goodwill | 3,740 |
| Total assets acquired | 13,949 |
| Liabilities Assumed |
| Trade payables | (216 | )
| Accrued expenses | (542 | )
| Deferred tax liabilities | (1,901 | )
| Total liabilities assumed | (2,659 | )
| Total net assets acquired | $ | 11,290 |
We are amortizing the customer list on an accelerated basis over seven years. Acquisition-related costs associated with the ITL acquisition, which are included in selling, general and administrative expenses in the accompanying consolidated statements of income, were not material. The results of operations related to this acquisition have been included in our cardiovascular segment since the acquisition date. During the year ended December 31, 2017, our net sales of ITL products were approximately $3.3 million. It is not practical to separately report the earnings related to the ITL acquisition, as we cannot split out sales costs related solely to the products we acquired from ITL, principally because our sales representatives sell multiple products (including the products we acquired from ITL) in our cardiovascular business segment. On September 1, 2017, we acquired intellectual property rights associated with a steerable guidewire system from IntelliMedical Technologies Pty. Ltd. ("IntelliMedical"). We made an initial payment of approximately $11.9 million in September 2017, and we are obligated to pay up to an additional A$15.0 million (Australian dollars) if certain milestones set forth in the share purchase agreement with IntelliMedical are achieved. We are also required to pay royalties equal to 6% of net sales, commencing upon the first commercial sale of the product and throughout the term of the applicable patents. We accounted for this transaction as an asset purchase. The initial payment has been included in the accompanying consolidated statements of income as acquired in-process research and development expense for the year ended December 31, 2017, because both technological feasibility of the underlying research and development project had not yet been reached and such technology had no identified future alternative use as of the date of acquisition. On August 4, 2017 we acquired from Laurane Medical S.A.S. ("Laurane") and its shareholders inventories and the intellectual property rights associated with certain manual bone biopsy devices, manual bone marrow needles and muscle biopsy kits for an aggregate purchase price of $16.5 million. We also recorded a contingent consideration liability of $5.5 million related to royalties potentially payable to Laurane's shareholders pursuant to the terms of an intellectual property purchase agreement. We accounted for this acquisition as a business combination. The following table summarizes the aggregate purchase price (including contingent royalty payment liabilities) allocated to the assets acquired from Laurane (in thousands):
| Net Assets Acquired |
| Inventories | $ | 594 |
| Intangibles |
| Developed technology | 14,920 |
| Customer list | 120 |
| Goodwill | 6,366 |
| Total net assets acquired | $ | 22,000 |
We are amortizing the developed technology intangible asset over 12 years and the customer list on an accelerated basis over one year. The total weighted-average amortization period for these acquired intangible assets is 11.9 years. The sales and results of operations related to the acquisition have been included in our cardiovascular segment since the acquisition date and were not material. Acquisition-related costs associated with the Laurane acquisition, which are included in selling, general and administrative expenses in the accompanying consolidated statements of income, were not material. On July 3, 2017, we acquired from Osseon LLC (“Osseon”) substantially all the assets related to Osseon’s vertebral augmentation products. We accounted for this acquisition as a business combination. The purchase price for the assets was approximately $6.8 million. Acquisition-related costs associated with the Osseon acquisition, which are included in selling, general and administrative expenses in the accompanying consolidated statements of income, were not material. The results of operations related to this acquisition have been included in our cardiovascular segment since the acquisition date. During the year ended December 31, 2017, our net sales of Osseon products were approximately $942,000. It is not practical to separately report the earnings related to the Osseon acquisition, as we cannot split out sales costs related solely to the products we acquired from Osseon, principally because our sales representatives sell multiple products (including the products we acquired from Osseon) in our cardiovascular business segment. The following table summarizes the preliminary purchase price allocated to the net assets acquired (in thousands):
| Net Assets Acquired |
| Inventories | $ | 979 |
| Property and equipment | 58 |
| Intangibles |
| Developed technology | 5,400 |
| Customer list | 200 |
| Goodwill | 203 |
| Total net assets acquired | $ | 6,840 |
We are amortizing the developed technology intangible asset over nine years and customer lists on an accelerated basis over eight years. The total weighted-average amortization period for these acquired intangible assets is approximately 9.0 years. On July 1, 2017, we entered into an exclusive license agreement with Pleuratech ApS ("Pleuratech") to acquire the rights to manufacture and sell the KatGuide TM chest tube insertion tool. As of December 31, 2017, we had paid $2.0 million in connection with this agreement. We are obligated to pay an additional $5.0 million if certain milestones set forth in the license agreement are met. We are also required to pay royalties equal to 6% of net sales throughout the term of the license agreement. We accounted for this transaction as an asset purchase. We recorded the amount paid upon closing as a license agreement intangible asset, which we intend to amortize over 15 years. On June 16, 2017, we acquired from Lazarus Medical Technologies, LLC the patent rights and other intellectual property related to the Repositionable Chest Tube TM and related devices. As of December 31, 2017, we had paid $570,000 in connection with this agreement. We are also obligated to pay an additional $750,000 if certain milestones set forth in the purchase agreement are met. We are also required to pay royalties equal to 6% of net sales throughout the term of the purchase agreement. We accounted for this transaction as an asset purchase. We recorded the amount paid upon closing as a license agreement intangible asset, which we intend to amortize over 15 years. On May 23, 2017, we paid $2.5 million to acquire 182,000 shares of preferred stock of Fusion Medical, Inc. ("Fusion"), a developer of medical devices designed primarily for clot removal. The shares of preferred stock we acquired, which represent an ownership interest of approximately 19.5%, have been accounted for as an equity method investment of $2.5 million reflected within other assets in the accompanying consolidated balance sheets because we may be deemed to exercise significant influence over the operations of Fusion. On May 19, 2017, we terminated our distribution agreement with Sheen Man Co., Ltd. and Sugan Co, Ltd., ("Sugan"), a Japanese medical device distributor and entered into a business purchase agreement, distribution agreement and a supply agreement with Sugan. Pursuant to these agreements, we acquired the customer list Sugan used in the distribution of our products in Japan. The purchase price is recorded as a customer list intangible asset of approximately $1.2 million. We intend to amortize the customer list intangible asset on an accelerated basis over five years. In addition, we granted to Sugan the right to continue to distribute a limited number of our products, related to fluid administration, through December 31, 2021 and to manufacture and sell to Sugan certain contrast injector products during a term of four years, subject to extensions. On May 1, 2017, we entered into an agreement and plan of merger with Vascular Access Technologies, Inc. ("VAT"), pursuant to which we acquired the SAFECVAD™ device. We accounted for this acquisition as a business combination. The purchase price for the business was $5.0 million. We also recorded $4.9 million of contingent consideration related to royalties potentially payable to VAT pursuant to the merger agreement. The following table summarizes the preliminary purchase price allocated to the net assets acquired and liabilities assumed (in thousands):
|  | Preliminary Allocation |  | Adjustments (1) |  | Revised Allocation
| Net Assets Acquired |  |  |  |  |
| Intangibles |  |  |  |  |
| Developed technology | $ | 7,800 |  |  | $ | — |  |  | $ | 7,800 |
| In-process technology | 850 |  |  | 70 |  |  | 920 |
| Goodwill | 4,323 |  |  | (42 | ) |  | 4,281 |
| Deferred tax liabilities | (3,073 | ) |  | (28 | ) |  | (3,101 | )
| Total net assets acquired | $ | 9,900 |  |  | $ | — |  |  | $ | 9,900 |
(1) | Under U.S. GAAP, measurement period adjustments are recognized on a prospective basis in the period of change, instead of restating prior periods. There was no impact to reported earnings in connection with these measurement period adjustments for the periods presented. Amounts represent adjustments to the preliminary purchase price allocation first presented in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 resulting from our ongoing activities, including reassessment of the assets acquired and liabilities assumed, with respect to finalizing our purchase price allocation for this acquisition.
We are amortizing the developed technology intangible asset over 15 years. The sales and results of operations related to the acquisition have been included in our cardiovascular segment since the acquisition date and were not material. Acquisition-related costs associated with the VAT acquisition, which are included in selling, general and administrative expenses in the accompanying consolidated statements of income, were not material. On January 31, 2017, we acquired Argon’s critical care division, including a manufacturing facility in Singapore, the related commercial operations in Europe and Japan, and certain inventories and intellectual property rights within the United States. We made an initial payment of approximately $10.9 million and received a subsequent reduction to the purchase price of approximately $797,000 related to a working capital adjustment according to the terms of the purchase agreement. We accounted for the acquisition as a business combination. Acquisition-related costs associated with the acquisition of the Argon critical care division during the year ended December 31, 2017, which are included in selling, general and administrative expenses in the accompanying consolidated statements of income, were approximately $2.6 million. The results of operations related to this acquisition have been included in our cardiovascular segment since the acquisition date. During the year ended December 31, 2017, our net sales of the Argon critical care products were approximately $41.2 million. It is not practical to separately report the earnings related to the Argon critical care acquisition, as we cannot split out sales costs related solely to the products we acquired from Argon, principally because our sales representatives sell multiple products (including the products we acquired from Argon) in our cardiovascular business segment. The assets and liabilities in the purchase price allocation for the Argon critical care acquisition are stated at fair value based on estimates of fair value using available information and making assumptions our management believes are reasonable. The following table summarizes the preliminary purchase price allocated to the net tangible and intangible assets acquired and liabilities assumed (in thousands), adjusted as of December 31, 2017:
|  | Preliminary Allocation |  | Adjustments (2) |  | Revised Allocation
| Assets Acquired |  |  |  |  |
| Cash and cash equivalents | $ | 1,436 |  |  | $ | — |  |  | $ | 1,436 |
| Trade receivables | 8,351 |  |  | — |  |  | 8,351 |
| Inventories | 12,217 |  |  | (995 | ) |  | 11,222 |
| Prepaid expenses and other assets | 1,275 |  |  | — |  |  | 1,275 |
| Income tax refund receivable | — |  |  | 165 |  |  | 165 |
| Property and equipment | 2,667 |  |  | (348 | ) |  | 2,319 |
| Deferred tax assets | 184 |  |  | 18 |  |  | 202 |
| Intangibles |  |  |  |  |
| Developed technology | 2,600 |  |  | (400 | ) |  | 2,200 |
| Customer lists | 1,300 |  |  | 200 |  |  | 1,500 |
| Trademarks | 1,500 |  |  | (600 | ) |  | 900 |
| Total assets acquired | 31,530 |  |  | (1,960 | ) |  | 29,570 |
| Liabilities Assumed |  |  |  |  |
| Trade payables | (2,306 | ) |  | (108 | ) |  | (2,414 | )
| Accrued expenses | (5,083 | ) |  | — |  |  | (5,083 | )
| Income taxes payable | (2 | ) |  | 2 |  |  | — |
| Deferred income tax liabilities | (999 | ) |  | 65 |  |  | (934 | )
| Total liabilities assumed | (8,390 | ) |  | (41 | ) |  | (8,431 | )
| Total net assets acquired | 23,140 |  |  | (2,001 | ) |  | 21,139 |
| Gain on bargain purchase (1) | (12,243 | ) |  | 1,204 |  |  | (11,039 | )
| Total purchase price | $ | 10,897 |  |  | $ | (797 | ) |  | $ | 10,100 |
(1) | The total fair value of the net assets acquired from Argon exceeded the purchase price, resulting in a gain on bargain purchase which was recorded within other income (expense) in our consolidated statements of income, and includes a negative adjustment of $1.2 million since the bargain purchase gain was first presented in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. We believe the reason for the gain on bargain purchase was a result of the divestiture of a non-strategic, slow-growth critical care business for Argon. It is our understanding that the divestiture allows Argon to focus on its higher growth interventional portfolio.
(2) | Under U.S. GAAP, measurement period adjustments are recognized on a prospective basis in the period of change, instead of restating prior periods. There was no impact to reported earnings in connection with these measurement period adjustments for the periods presented. Amounts represent adjustments to the preliminary purchase price allocation first presented in our March 31, 2017 Form 10-Q resulting from our ongoing activities, including reassessment of the assets acquired and liabilities assumed, with respect to finalizing our purchase price allocation for this acquisition.
With respect to the Argon critical care assets, we are amortizing developed technology over seven years and customer lists on an accelerated basis over five years. While U.S. trademarks can be renewed indefinitely, we currently estimate that we will generate cash flow from the acquired trademarks for a period of five years from the acquisition date. The total weighted-average amortization period for these acquired intangible assets is 6.0 years. On January 31, 2017, we acquired substantially all the assets, including intellectual property covered by approximately 40 patents and pending applications, and assumed certain liabilities, of Catheter Connections, Inc. (“Catheter Connections”), in exchange for payment of $38.0 million. Catheter Connections, based in Salt Lake City, Utah, developed and marketed the DualCap® System, an innovative family of disinfecting products designed to protect patients from intravenous infections resulting from infusion therapy. We accounted for this acquisition as a business combination. Acquisition-related costs associated with the Catheter Connections acquisition during the year ended December 31, 2017, which are included in selling, general and administrative expenses in the accompanying consolidated statements of income, were approximately $482,000. The results of operations related to this acquisition have been included in our cardiovascular segment since the acquisition date. During the year ended December 31, 2017, our net sales of the products acquired from Catheter Connections were approximately $10.0 million. It is not practical to separately report the earnings related to the products acquired from Catheter Connections, as we cannot split out sales costs related solely to those products, principally because our sales representatives sell multiple products (including the DualCap System) in the cardiovascular business segment. The purchase price was preliminarily allocated as follows (in thousands):
|  | Preliminary Allocation |  | Adjustments (1) |  | Revised Allocation
| Assets Acquired |  |  |  |  |
| Trade receivables | $ | 952 |  |  | $ | 6 |  |  | $ | 958 |
| Inventories | 2,244 |  |  | (87 | ) |  | 2,157 |
| Prepaid expenses and other assets | 181 |  |  | (96 | ) |  | 85 |
| Property and equipment | 1,472 |  |  | — |  |  | 1,472 |
| Intangibles |  |  |  |  |
| Developed technology | 22,900 |  |  | (1,800 | ) |  | 21,100 |
| Customer lists | 100 |  |  | 600 |  |  | 700 |
| Trademarks | 2,900 |  |  | — |  |  | 2,900 |
| Goodwill | 7,612 |  |  | 1,377 |  |  | 8,989 |
| Total assets acquired | 38,361 |  |  | — |  |  | 38,361 |
| Liabilities Assumed |  |  |  |  |
| Trade payables | (338 | ) |  | — |  |  | (338 | )
| Accrued expenses | (23 | ) |  | — |  |  | (23 | )
| Total liabilities assumed | (361 | ) |  | — |  |  | (361 | )
| Net assets acquired | $ | 38,000 |  |  | $ | — |  |  | $ | 38,000 |
(1) | Under U.S. GAAP, measurement period adjustments are recognized on a prospective basis in the period of change, instead of restating prior periods. There was no impact to reported earnings in connection with these measurement period adjustments for the periods presented. Amounts represent adjustments to the preliminary purchase price first presented in our Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2017, resulting from activities with respect to finalizing our purchase price allocation for this acquisition. The larger adjustments primarily relate to the valuation of the acquired intangible assets.
We are amortizing the Catheter Connections developed technology asset over 12 years, the related trademarks over 10 years, and the associated customer list over eight years. We have estimated the weighted average life of the intangible Catheter Connections assets acquired to be approximately 11.7 years. On December 19, 2016, we paid $5.0 million for 1,251,878 shares of common stock and a distribution agreement with Bluegrass Vascular Technologies, Inc. ("Bluegrass"). The common stock, which represents an ownership interest of approximately 19.5%, has been accounted for as a cost method investment of $4.0 million reflected within other assets in the accompanying consolidated balance sheets because we are not able to exercise significant influence over the operations of Bluegrass. The distribution agreement intangible asset was valued at $1.0 million and will be amortized over a period of three years. On July 6, 2016, we acquired all of the issued and outstanding shares of DFINE Inc. ("DFINE"). The DFINE acquisition added a line of vertebral augmentation products for the treatment of vertebral compression fractures ("VCF") as well as medical devices used to treat metastatic spine tumors. We made an initial payment of $97.5 million to certain DFINE stockholders on July 6, 2016 and paid approximately $578,000 related to a net working capital adjustment subject to review by Merit and the preferred stockholders of DFINE. We accounted for the acquisition as a business combination. In the three-month period ended December 31, 2016, we negotiated the final net working capital adjustment resulting in a reduction to the purchase price of approximately $1.1 million. As a result, we recorded measurement period adjustments to reduce inventories by approximately $89,000, reduce property and equipment by approximately $109,000, reduce goodwill by approximately $1.2 million, reduce accrued expenses by approximately $407,000 and increase the associated deferred tax liabilities by approximately $113,000. Under U.S. GAAP, measurement period adjustments are recognized on a prospective basis in the period of change, instead of restating prior periods. There was no impact to reported earnings in connection with these measurement period adjustments. Acquisition-related costs during the year ended December 31, 2016, which are included in selling, general, and administrative expenses in the accompanying consolidated statements of income, were approximately $1.6 million. The results of operations related to this acquisition have been included in our cardiovascular segment since the acquisition date. During the years ended December 31, 2017 and 2016, our net sales of DFINE products were approximately $27.0 million and $13.5 million, respectively. It is not practical to separately report the earnings related to the DFINE acquisition, as we cannot split out sales costs related to DFINE products, principally because our sales representatives are selling multiple products (including DFINE products) in the cardiovascular business segment. The purchase price was allocated to the net tangible and intangible assets acquired and liabilities assumed, based on estimated fair values, as follows (in thousands):
Assets Acquired |
Trade receivables | $ | 4,054 |
Other receivables | 6 |
Inventories | 8,585 |
Prepaid expenses | 630 |
Property and equipment | 1,630 |
Other long-term assets | 145 |
Intangibles |
Developed technology | 67,600 |
Customer lists | 2,400 |
Trademarks | 4,400 |
Goodwill | 24,818 |
Total assets acquired | 114,268 |
Liabilities Assumed |
Trade payables | (1,790 | )
Accrued expenses | (5,298 | )
Deferred income tax liabilities - current | (701 | )
Deferred income tax liabilities - noncurrent | (10,844 | )
Total liabilities assumed | (18,633 | )
Net assets acquired, net of cash received of $1,327 | $ | 95,635 |
The gross amount of trade receivables we acquired in the acquisition was approximately $4.3 million, of which approximately $224,000 was expected to be uncollectible or returned. With respect to the DFINE assets, we are amortizing developed technology over 15 years and customer lists on an accelerated basis over nine years. While U.S. trademarks can be renewed indefinitely, we currently estimate that we will generate cash flow from the acquired trademarks for a period of 15 years from the acquisition date. The total weighted-average amortization period for these acquired intangible assets is 14.8 years. On February 4, 2016, we purchased the HeRO® Graft device and other related assets from CryoLife, Inc., a developer of medical devices based in Kennesaw, Georgia ("CryoLife"). The HeRO Graft is a fully subcutaneous vascular access system intended for use in maintaining long-term vascular access for chronic hemodialysis patients who have failing fistulas, grafts or are catheter dependent due to a central venous blockage. The purchase price was $18.5 million, which was paid in full during 2016. We accounted for this acquisition as a business combination. The purchase price was allocated as follows (in thousands):
Assets Acquired |
Inventories | $ | 2,455 |
Property and equipment | 290 |
Intangibles |
Developed technology | 12,100 |
Trademarks | 700 |
Customers Lists | 400 |
Goodwill | 2,555 |
Total assets acquired | $ | 18,500 |
We are amortizing the developed HeRO Graft technology asset over 10 years, the related trademarks over 5.5 years, and the associated customer lists over 12 years. We have estimated the weighted average life of the intangible HeRO Graft assets acquired to be approximately 9.8 years. Acquisition-related costs related to the HeRO Graft device and other related assets during the year ended December 31, 2016, which are included in selling, general and administrative expenses in the accompanying consolidated statements of income, were not material. The results of operations related to this acquisition have been included in our cardiovascular segment since the acquisition date. During the years ended December 31, 2017 and 2016, our net sales of the products acquired from CryoLife were approximately $8.6 million and $7.1 million, respectively. It is not practical to separately report the earnings related to the products acquired from CryoLife, as we cannot split out sales costs related to those products, principally because our sales representatives are selling multiple products (including the HeRO Graft device) in the cardiovascular business segment. During 2016, we paid approximately $3.0 million for 3,000,000 preferred limited liability company units of Cagent Vascular, LLC, a medical device company ("Cagent"), which represents a current ownership interest of approximately 18.1% and has been accounted for as a cost method investment reflected within other assets in the accompanying consolidated balance sheets because we are not able to exercise significant influence over the operations of Cagent. On December 4, 2015, we entered into a license agreement with ArraVasc Limited, an Irish medical device company, for the right to manufacture and sell certain percutaneous transluminal angioplasty balloon catheter products. As of December 31, 2016, we had paid $2 million in connection with the agreement. During the year ended December 31, 2017, we paid an additional $500,000. There are no additional payments due under this agreement. We accounted for the transaction as an asset purchase and are amortizing the license agreement intangible asset over a period of 12 years. On September 29, 2015, we entered into a license agreement with Blockade Medical, LLC, a Delaware limited liability company ("Blockade"), for rights to manufacture, market and sell a set of endovascular embolization products. As part of the agreement, we paid $1.7 million during the year ended December 31, 2015 and, in lieu of any additional payment, we converted the cost method investment in Blockade of $1.0 million we had previously recorded, toward the purchase price of the license. We recorded $2.7 million to a license agreement intangible asset, which we intend to amortize over 10 years. On August 19, 2015, we purchased 116,279 shares of Series A Preferred Stock of Xablecath, Inc., a Delaware corporation ("Xablecath"), for an aggregate price of approximately $300,000. During the three months ended December 31, 2017, we paid $247,500 for 656,848 shares of Series B Preferred Stock of Xablecath. Our ownership interest in Xablecath is approximately 15.9% and is accounted for as a cost-method investment reflected within other assets in the accompanying consolidated balance sheets. Xablecath is developing an over-the-wire crossing catheter. On July 17, 2015, we entered into an asset purchase agreement with LeMaitre Vascular, Inc., a Delaware corporation ("LeMaitre"), for rights to the Unballoon® non-occlusive modeling catheter. We accounted for the transaction as an asset purchase. The full purchase price of $400,000 was paid as of December 31, 2015, and the purchase price was recorded as a developed technology intangible asset, which we are amortizing over a period of 10 years. On July 14, 2015, we entered into an asset purchase agreement with Quellent, LLC, a California limited liability company ("Quellent"), for superabsorbent pad technology. The purchase price for the asset was $1.0 million, payable in two installments. We accounted for this acquisition as a business combination. The first payment of $500,000 was paid as of December 31, 2015, and the second payment of $500,000 was recorded as an accrued liability as of December 31, 2015 and paid in the first quarter of 2016. We also recorded $270,000 of contingent consideration related to royalties payable to Quellent pursuant to the asset purchase agreement. The sales and results of operations related to this acquisition have been included in our cardiovascular segment since the acquisition date and were not material. The purchase price was allocated as follows: $1.21 million to a developed technology intangible asset and $60,000 to goodwill. We are amortizing the developed technology intangible asset over 13 years. On July 1, 2015, we entered into an agreement with Catch Medical, LLC, a Utah limited liability company ("Catch Medical"), to purchase rights to a steerable snare. We expensed the full purchase price of $1.0 million to in-process research and development during the year ended December 31, 2015, because the initial costs of in-process research and development acquired in this asset purchase do not have an alternative future use. These costs include payments incurred prior to regulatory approval in connection with acquired research and development projects that provide rights to develop, manufacture, market and sell products. As of December 31, 2017, we have paid cash of $600,000, have a current liability recorded in accrued expenses of $200,000 for the payment that will be due in less than a year and have a long-term obligation of $200,000 recorded for the payments that will be due in over a year. On July 1, 2015, we entered into a license agreement with Distal Access, LLC, a Utah limited liability company ("Distal"), for guidewire controller technology. We made a payment of $3.5 million upon the closing of the agreement during the year ended December 31, 2015. We accounted for this acquisition as an asset purchase. We recorded the purchase price to a license agreement intangible asset of $3.5 million, which we are amortizing over a period of six years. On March 26, 2015, we entered into an asset purchase agreement with Teleflex Incorporated, a Delaware corporation ("Teleflex"). We accounted for the transaction as an asset purchase. During the year ended December 31, 2015, we paid $400,000 to acquire the asset, which we recorded as a customer list intangible asset. We paid an additional $400,000 in the year-ended December 31, 2016, which was recorded to the customer list intangible asset, because Teleflex met certain obligations under the agreement. There are no additional payments due under this agreement. We are amortizing the asset over a period of five years. The following table summarizes our consolidated results of operations for the years ended December 31, 2017, 2016 and 2015, as well as unaudited pro forma consolidated results of operations as though the DFINE acquisition had occurred on January 1, 2015 and the acquisition of the Argon critical care division had occurred on January 1, 2016 (in thousands, except per common share amounts):
| 2017 |  | 2016 |  | 2015
| As Reported |  | Pro Forma |  | As Reported |  | Pro Forma |  | As Reported |  | Pro Forma
Net sales | $ | 727,852 |  |  | $ | 730,612 |  |  | $ | 603,838 |  |  | $ | 664,366 |  |  | $ | 542,149 |  |  | $ | 575,541 |
Net income | 27,523 |  |  | 17,419 |  |  | 20,121 |  |  | 23,068 |  |  | 23,802 |  |  | 3,135 |
Earnings per common share: |  |  |  |  |  |  |  |  |  |  |
Basic | $ | 0.56 |  |  | $ | 0.36 |  |  | $ | 0.45 |  |  | $ | 0.52 |  |  | $ | 0.54 |  |  | $ | 0.07 |
Diluted | $ | 0.55 |  |  | $ | 0.35 |  |  | $ | 0.45 |  |  | $ | 0.51 |  |  | $ | 0.53 |  |  | $ | 0.07 |
The unaudited pro forma information set forth above is for informational purposes only and includes adjustments related to the step-up of acquired inventories, amortization expense of acquired intangible assets, interest expense on long-term debt and changes in the timing of the recognition of the gain on bargain purchase. The pro forma information should not be considered indicative of actual results that would have been achieved if the DFINE acquisition had occurred on January 1, 2015 and the acquisition of the Argon critical care division had occurred on January 1, 2016, or results that may be obtained in any future period. The proforma consolidated results of operations do not include the ITL, Laurane, Osseon, VAT, Catheter Connections, HeRO Graft or Quellent acquisitions as we do not deem the pro forma effect of these transactions to be material. The goodwill arising from the acquisitions discussed above consists largely of the synergies and economies of scale we hope to achieve from combining the acquired assets and operations with our historical operations (see Note 4). The goodwill recognized from certain acquisitions is expected to be deductible for income tax purposes.

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