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Business Combinations | 12 Months Ended
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Sep. 30, 2017
Business Combinations [Abstract] |
Business Combinations | 3. Business Combinations For all business combinations, the Company records all assets and liabilities of the acquired business, including goodwill and other identified intangible assets, at their respective fair values as of the acquisition date. Contingent consideration, if any, is recognized at its fair value on the acquisition date and changes in fair value are recognized in earnings until settlement. Acquisition-related transaction costs are expensed as incurred. Creagh Medical Ltd. On November 20, 2015, the Company acquired 100% of the outstanding common shares and voting shares of Creagh Medical located in Ballinasloe, Ireland. The results of Creagh Medical’s operations have been included in the Company’s consolidated financial statements as of the Creagh Medical acquisition date. The acquisition was financed with cash on hand and contingent seller financing. The Company acquired Creagh Medical for up to €30 million (approximately $32 million as of the acquisition date), including an upfront payment of €18 million (approximately $19.3 million as of the acquisition date), and up to €12 million (approximately $12.8 million as of the acquisition date) based on achievement of revenue and value-creating operational milestones through September 30, 2018. The payment of the milestones, if any, will occur in the quarter ending December 31, 2018. As of September 30, 2017, the Company has paid $18.4 million in cash for this acquisition. Total transaction, integration and other costs associated with the Creagh Medical acquisition aggregated $2.7 million for the fiscal year ended September 30, 2016. Creagh Medical’s operating results have been included in the Medical Device segment since the acquisition date. The Company realized $3.3 million of revenue and a loss of $2.7 million from Creagh Medical’s operations for the period from the acquisition date through September 30, 2016. Creagh Medical designs and manufactures high-quality percutaneous transluminal angioplasty (“PTA”) balloon catheters. Since 2006, Creagh Medical has grown its technical and product capability with PTA products approved throughout the world, including Europe, the United States, and Japan. With these resources, the Company is uniquely positioned to offer a total solutions approach from product design and development through in-house extrusion, balloon forming, top-assembly and packaging and regulatory capabilities to approved products for exclusive distribution. The purchase price of Creagh Medical consisted of the following (in thousands):
Cash paid |  | $ | 18,449 |
Debt assumed |  |  | 761 |
Contingent consideration |  |  | 9,064 |
Total purchase price |  |  | 28,274 |
Less cash and cash equivalents acquired |  |  | (251 | )
Total purchase price, net of cash acquired |  | $ | 28,023 |
The purchase accounting allocation of assets acquired and liabilities assumed was finalized during the fourth quarter of fiscal 2016. During the measurement period, which ended September 30, 2016, certain insignificant adjustments were made from amounts previously reported to finalize Creagh’s preliminary fair value estimates related primarily to other current assets, intangible assets, goodwill, certain property value, contingent liabilities and the related deferred tax impacts. The following table summarizes the final allocation of the purchase price to the fair values assigned to the assets acquired and the liabilities assumed at the date of the Creagh Medical acquisition:
|  | Fair Value (Dollars in thousands) |  | Estimated Useful Life (In years)
Current assets |  | $ | 896 |  | N/A
Property and equipment |  |  | 634 |  | 1.0-10.0
Trade name |  |  | 75 |  | N/A
Developed technology |  |  | 1,787 |  | 7.0
In-process research and development |  |  | 942 |  | N/A
Customer relationships |  |  | 11,119 |  | 7.0-10.0
Other noncurrent assets |  |  | 81 |  | N/A
Current liabilities |  |  | (942 | ) | N/A
Deferred tax liabilities |  |  | (9 | ) | N/A
Net assets acquired |  |  | 14,583 |  |
Goodwill |  |  | 13,440 |  | N/A
Total purchase price, net of cash acquired |  | $ | 28,023 |  |
The Creagh Medical goodwill, which is a result of acquiring and retaining the Creagh Medical existing workforce and expected synergies from integrating their business into the Company’s Medical Device segment, is not deductible for tax purposes. NorMedix, Inc. On January 8, 2016, the Company acquired 100% of the shares of NorMedix, a privately owned design and development company focused on ultra thin-walled, minimally invasive catheter technologies based in Plymouth, Minnesota. The acquisition was financed with cash on hand and contingent seller financing. The Company acquired NorMedix for up to $14.0 million, including an upfront payment of $7.0 million, and up to $7.0 million based on achievement of revenue and value-creating operational milestones through September 30, 2019. Contingent consideration associated with the NorMedix transaction is payable as earned. This acquisition strengthens the Company’s vascular device expertise and R&D capabilities. Total transaction, integration and other costs associated with the NorMedix acquisition aggregated $0.3 million for the year ended September 30, 2016. NorMedix’s operating results have been included in the Medical Device segment since the acquisition date. The Company realized $0.9 million of revenue and a loss of $0.4 million from the NorMedix’s operations for the period from the acquisition date through September 30, 2016. The purchase price of NorMedix consisted of the following (in thousands):
Cash paid |  | $ | 6,905 |
Contingent consideration |  |  | 3,520 |
Total purchase price |  |  | 10,425 |
Less cash and cash equivalents acquired |  |  | (17 | )
Total purchase price, net of cash acquired |  | $ | 10,408 |
The purchase accounting allocation of assets acquired and liabilities assumed was finalized during the fourth quarter of fiscal 2016. During the measurement period, which ended September 30, 2016, certain insignificant adjustments were made from amounts previously reported to finalize NorMedix’s preliminary fair value estimates related primarily to working capital, intangible assets, goodwill, certain property value, contingent liabilities and the related deferred tax impacts. The following table summarizes the allocation of the purchase price to the fair values assigned to the assets acquired and the liabilities assumed at the date of the NorMedix acquisition:
|  | Fair Value (Dollars in thousands) |  | Estimated Useful Life (In years)
Net current assets |  | $ | 113 |  | N/A
Property and equipment |  |  | 60 |  | 7.0
Developed technology |  |  | 6,850 |  | 10.0-14.0
Customer relationships |  |  | 900 |  | 4.0
Deferred tax asset |  |  | 690 |  | N/A
Other noncurrent asset |  |  | 13 |  | N/A
Accounts payable |  |  | (187 | ) | N/A
Deferred tax liabilities |  |  | (2,483 | ) | N/A
Net assets acquired |  |  | 5,956 |  |
Goodwill |  |  | 4,452 |  | N/A
Total purchase price, net of cash acquired |  | $ | 10,408 |  |
The NorMedix goodwill, which is a result of acquiring and retaining the NorMedix existing workforce and expected synergies from integrating their business into the Medical Device segment, is not deductible for tax purposes. Unaudited Pro Forma Results The following unaudited pro forma financial information presents the combined results of operation of the Company as if the acquisitions of Creagh Medical and NorMedix had occurred as of October 1, 2014, the beginning of fiscal 2015. The fiscal 2016 unaudited pro forma financial information includes adjustments for additional amortization expense on identifiable intangible assets of $2.8 million and contingent consideration accretion expense of $1.8 million, and to eliminate non-recurring, transactional professional fees of $3.2 million, and the related tax effect impact of $0.2 million. The fiscal 2015 unaudited pro forma financial information includes adjustments for additional amortization expense on identifiable intangible assets of $3.2 million and contingent consideration accretion expense of $2.1 million and tax effect impact of $0.5 million. The tax impact of the adjustments in all periods reflects no tax benefit from either the contingent consideration accretion or a significant portion of the transaction related costs in fiscal 2016 as they are not deductible for tax purposes. Further, Creagh Medical amortization expense does not reflect an Irish tax benefit as the Company acquired a net operating loss carryforward as of the acquisition date that was offset in the aggregate by deferred tax liabilities and valuation allowance. Therefore, the amortization of Creagh Medical intangible assets results in an increase in deferred tax liabilities with a corresponding increase to a deferred tax valuation allowance. NorMedix amortization expense reflects a tax benefit based on the Company’s incremental U.S. tax rate. The unaudited pro forma financial information is not necessarily indicative of what the Company’s consolidated results of operations actually would have been had the acquisition occurred at the beginning of each year. Additionally, the unaudited pro forma financial information does not attempt to project the future operating results of the combined company.
|  | Years Ended |
|  | September 30, |
|  | 2016 |  |  | 2015 |
(In thousands, except per share data) | (Unaudited) |
Revenue |  | $ | 72,416 |  |  | $ | 65,432 |
Net income |  | $ | 12,315 |  |  | $ | 6,583 |
Per share amounts: |  |  |  |  |  |  |  |
Basic net income per share |  | $ | 0.95 |  |  | $ | 0.51 |
Diluted net income per share |  | $ | 0.93 |  |  | $ | 0.50 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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