Table of Contents The Company concluded that the acquisition of Sentinelle Medical did not represent a material business combination, and therefore, no pro forma financial information has been provided herein.
Subsequent to the acquisition date, the Company’s results of operations include the results of Sentinelle Medical, which is included within the Company’s Breast Health reporting segment.
The Company accounted for the Sentinelle Medical acquisition as a purchase of a business under ASC 805.
The purchase price was comprised of an $84.8 million cash payment, which was net of certain adjustments, plus three contingent payments up to a maximum of an additional $250.0 million in cash.
The contingent payments are based on a multiple of incremental revenue growth during the two-year period following the completion of the acquisition as follows: six months after acquisition, 12 months after acquisition, and 24 months after acquisition.
Pursuant to ASC 805, the Company recorded its estimate of the fair value of the contingent consideration liability based on future revenue projections of the Sentinelle Medical business under various potential scenarios and weighted probability assumptions of these outcomes.
As of the date of acquisition, these cash flow projections were discounted using a rate of 16.5%.
The discount rate is based on the weighted-average cost of capital of the acquired business plus a credit risk premium for non-performance risk related to the liability pursuant to ASC 820.
This analysis resulted in an initial contingent consideration liability of $29.5 million, which will be adjusted periodically as a component of operating expenses based on changes in the fair value of the liability driven by the accretion of the liability for the time value of money and changes in the assumptions pertaining to the achievement of the defined revenue growth milestones.
This fair value measurement was based on significant inputs not observable in the market and thus represented a Level 3 measurement as defined in ASC 820.
During each quarter in fiscal 2011, the Company has re-evaluated its assumptions and updated the revenue and probability assumptions for future earn-out periods and lowered its projections.
As a result of these adjustments, which were partially offset by the accretion of the liability, and using a current discount rate of approximately 17.0%, the Company recorded a reversal of expense of $14.3 million in fiscal 2011 to record the contingent consideration liability at fair value.
In addition, during the second quarter of fiscal 2011, the first earn-out period ended, and the Company adjusted the fair value of the contingent consideration liability for actual results during the earn-out period.
This payment of $4.3 million was made in the third quarter of fiscal 2011.
At September 24, 2011, the fair value of the liability is $10.9 million.
The Company did not issue any equity awards in connection with this acquisition.
The Company incurred third-party transaction costs of $1.2 million, which were expensed within general and administrative expenses in fiscal 2010.
The purchase price was as follows:
## Table 0 ##
The allocation of the purchase price was based on estimates of the fair value of assets acquired and liabilities assumed as of August 5, 2010.
The components and allocation of the purchase price consisted of the following:
## Table 1 ##
As part of the purchase price allocation, the Company determined that the separately identifiable intangible assets were developed technology, in-process research and development, trade names and non-compete agreements.
The fair value of the intangible assets was determined through the application of the income approach, and the cash flow projections were discounted using rates of 15.0% to 16.0%.
Developed technology represented currently marketable purchased products that the Company will continue to sell as well as utilize to enhance and incorporate into the Company’s existing products.
In determining the allocation of the purchase price to existing technology, consideration was only given to products that had been approved by the FDA.
The trade names related to both the Sentinelle Medical name and certain product names.
The amount allocated to acquired in-process research and development represented the estimated fair value of in-process projects based on risk-adjusted cash flows utilizing a discount rate of 17.0%.
These in-process projects had not yet reached technological feasibility and had no future alternative uses as of the date of the acquisition.
The primary basis for determining the technological feasibility of these projects was obtaining regulatory approval to market the underlying products.
The acquired in-process research and development assets are not subject to amortization until such time the projects are complete, at which time they will be amortized over their estimated remaining useful lives ranging from 10 to 20 years.
These projects related to a prostate MRI coil and certain software.
The Company received FDA approval for both projects during fiscal 2011 and began to amortize them over their estimated useful lives.
The developed technology assets are being amortized over a weighted average life of approximately 19 years, and trade names are being amortized over a weighted average life of approximately 9 years.
Non-compete agreements are being amortized over 3 years.
The excess of the purchase price over the fair value of the tangible net assets and intangible assets acquired was recorded to goodwill.
The goodwill recognized is attributable to expected synergies that the Company will realize from this acquisition.
None of the goodwill is expected to be deductible for income tax purposes.4.
Sale of Makena On January 16, 2008, the Company entered into a definitive agreement to sell full world-wide rights of its Makena (formerly Gestiva) pharmaceutical product to K-V Pharmaceutical Company (“KV”) upon FDA approval of the then pending Makena new drug application for $82.0 million.
The Company had received $9.5 million of this amount, which had been recorded as a deferred gain, and the remainder was due upon FDA approval.
Under this agreement, either party had the right to terminate the agreement if FDA approval was not obtained by February 19, 2010.
On January 8, 2010, the parties executed an amendment (“First Amendment”) to the agreement eliminating the date by which FDA approval must be received and extending the term indefinitely.
Table of Contents As of September 25, 2010, the carrying amount of the Original Notes and related equity component (recorded in capital in excess of par value, net of deferred taxes) consisted of the following:
## Table 2 ##
As noted above, on November 18, 2010, the Company executed separate, privately-negotiated exchange agreements, and the Company retired $450.0 million in aggregate principal of its Original Notes for $450.0 million in aggregate principal of Exchange Notes.
The Company accounted for this retirement under the derecognition provisions of subtopic ASC 470-20-40, which requires the allocation of the fair value of the consideration transferred (i. e. , the Exchange Notes) between the liability and equity components of the original instrument to determine the gain or loss on the transaction.
In connection with this transaction, the Company recorded a loss on extinguishment of debt of $29.9 million, which is comprised of the loss on the debt itself of $26.0 million and the write-off of the pro-rata amount of debt issuance costs of $3.9 million allocated to the notes retired.
The loss on the debt itself is calculated as the difference between the fair value of the liability component of the Original Notes’ amount retired immediately before the exchange and its related carrying value immediately before the exchange.
The fair value of the liability component was calculated similar to the description above for initially recording the Original Notes under FSP APB 14-1, and the Company used an effective interest rate of 5.46%, representing the estimated nonconvertible debt borrowing rate with a three year maturity at the measurement date.
In addition, under this accounting standard, a portion of the fair value of the consideration transferred is allocated to the reacquisition of the equity component, which is the difference between the fair value of the consideration transferred and the fair value of the liability component immediately before the exchange.
As a result, $39.9 million was allocated to the reacquisition of the equity component of the original instrument, which is recorded net of deferred taxes within capital in excess of par value.
Since the Exchange Notes have the same characteristics as the Original Notes and can be settled in cash or a combination of cash and shares of common stock (i. e. , partial settlement), the Company is required to account for the liability and equity components of its Exchange Notes separately to reflect its nonconvertible debt borrowing rate.
The Company estimated the fair value of the Exchange Notes liability component to be $349.0 million using a discounted cash flow technique.
Key inputs used to estimate the fair value of the liability component included the Company’s estimated nonconvertible debt borrowing rate as of November 18, 2010 (the date the Convertible Notes were issued), the amount and timing of cash flows, and the expected life of the Exchange Notes.
The Company used an estimated effective interest rate of 6.52%.
The excess of the fair value transferred over the estimated fair value of the liability component totaling $97.3 million was allocated to the conversion feature as an increase to capital in excess of par value with a corresponding offset recognized as a discount to reduce the net carrying value of the Exchange Notes.
As a result of the fair value of the Exchange Notes being lower than the Exchange Notes principal value, there is an additional discount on the Exchange Notes of $3.7 million at the measurement date.
The total discount is being amortized to interest expense over a six-year period ending December 15, 2016 (the expected life of the liability component) using the effective interest method.
In addition, third-party transaction costs have been allocated to the liability and equity components based on the relative values of these components.
Table of Contents Finance Lease Obligations The Company has a non-cancelable lease agreement for a building with approximately 164,000 square feet located in Alajuela, Costa Rica, to be used as a manufacturing and office facility.
The Company was responsible for a significant portion of the construction costs, and in accordance with ASC 840, Leases, Subsection 40-15-5, the Company was deemed to be the owner of the building during the construction period.
The building was completed in fiscal 2008, and the Company has recorded the fair market value of the building and land of $15.1 million within property and equipment on its Consolidated Balance Sheets.
At September 24, 2011, the Company has recorded $1.6 million in accrued expenses and $16.9 million in other long-term liabilities related to this obligation in the Consolidated Balance Sheet.
The term of the lease, which commenced in May 2008, is for a period of approximately ten years with the option to extend for two consecutive 5-year terms.
At the completion of the construction period, the Company reviewed the lease for potential sale-leaseback treatment in accordance with ASC 840, Subsection 40, Sale-Leaseback Transactions.
Based on its analysis, the Company determined that the lease did not qualify for sale-leaseback treatment.
Therefore, the building, leasehold improvements and associated liabilities remain on the Company’s financial statements throughout the lease term, and the building and leasehold improvements are being depreciated on a straight line basis over their estimated useful lives of 35 years.
Future minimum lease payments, including principal and interest, under this lease were as follows at September 24, 2011:
## Table 3 ##
The Company also has to a non-cancelable lease agreement for a building with approximately 146,000 square feet located in Marlborough, Massachusetts, to be principally used as an additional manufacturing facility.
As part of the lease agreement, the lessor agreed to allow the Company to make significant renovations to the facility to prepare the facility for the Company’s manufacturing needs.
The Company was responsible for a significant amount of the construction costs and therefore in accordance with ASC 840-40-15-5 was deemed to be the owner of the building during the construction period.
The $13.2 million fair market value of the facility is included within property and equipment on the Consolidated Balance Sheet.
At September 24, 2011, the Company has recorded $1.0 million in accrued expenses and $15.9 million in other long-term liabilities related to this obligation in the Consolidated Balance Sheet.
The term of the lease is for a period of approximately 12 years commencing on November 14, 2006 with the option to extend for two consecutive 5-year terms.
Based on its ASC 840-40 analysis, the Company determined that the lease did not qualify for sale-leaseback treatment.
Therefore, the improvements and associated liabilities will remain on the Company’s financial statements throughout the lease term, and the leasehold improvements are being depreciated on a straight line basis over their estimated useful lives of up to 35 years.
Table of Contents Fiscal Year Ended September 24, 2011 Compared to Fiscal Year Ended September 25, 2010 Product Sales.
## Table 4 ##
In fiscal 2011, our product sales increased $63.4 million, or 4%, compared to fiscal 2010 due to an increase in revenues of $24.5 million from Breast Health, $17.8 million from GYN Surgical, $17.5 million from Diagnostics, and $3.7 million from Skeletal Health.
Breast Health product sales increased 5% in fiscal 2011 compared to fiscal 2010 primarily due to growth in our breast biopsy products of $16.8 million, the inclusion of a full year of revenues from Sentinelle Medical (acquired in the fourth quarter of fiscal 2010), which increased $12.9 million, and a favorable foreign currency impact of $3.4 million.
The increase in breast biopsy products revenue is primarily attributable to an increase in the number of Eviva biopsy devices sold with the largest increase in the U. S.  Overall, our digital mammography systems revenues decreased $2.9 million in fiscal 2011 compared to fiscal 2010.
We experienced a decrease in the number of Selenia systems sold worldwide, and to a lesser extent, Selenia product mix and configuration differences resulted in lower revenues in fiscal 2011 compared to fiscal 2010.
We sold a greater number of our Selenia value-related models and a lesser amount of our full featured Selenia models in fiscal 2011.
Our value-related models have lower average selling prices than our full featured Selenia models.
In addition, we sold more Selenia systems internationally as a percentage of total Selenia systems and average selling prices are lower in our international markets compared to the domestic market.
Mostly offsetting these decreases was an increase in the number of units sold of our new 2D/3D Dimensions products as these systems continue to gain traction.
These systems also have higher average selling prices than our Selenia systems.
We expect the shift in sales from our Selenia to our Dimensions products to continue as we received FDA approval of our 3D tomosynthesis capability in February 2011.
Diagnostics product sales increased 3% in fiscal 2011 compared to fiscal 2010 primarily due to an increase in revenues from our Cervista HPV tests, the inclusion of TCT (acquired in the third quarter of fiscal 2011) resulting in incremental revenues of approximately $10 million, a favorable foreign currency impact of $5.2 million and to a lesser extent an increase in the number of ThinPrep pap tests sold internationally, partially offset by a reduction in domestic sales.
Cervista HPV revenues have increased as we continue to gain new customer accounts and unit sales to existing customers increase.
We believe the decline in the number of ThinPrep pap tests sold domestically is due to the decline in patient visits year over year attributable to the lagging effects of unemployment, continuing economic uncertainty, recent changes in cervical cancer screening guidelines to extend the recommended intervals between such screenings, and to a lesser extent laboratory consolidation.
GYN Surgical product sales increased 6% in fiscal 2011 compared to fiscal 2010 due to an increase in the number of Adiana systems sold and the inclusion of MyoSure system sales (acquired in the second quarter of fiscal 2011).
NovaSure system sales were essentially flat year over year.
While we experienced an increase in the number of NovaSure devices sold internationally and to a lesser extent a slight increase in average selling prices, these increases were offset by a decline in the number of NovaSure devices sold domestically.
We believe the decline in units sold domestically is due to the lagging effects of unemployment and continuing economic uncertainty, which has resulted in patients delaying surgery and opting for lower cost and generally less effective alternatives.

<table><tr><td>Cash</td><td>$84,751</td></tr><tr><td>Contingent consideration</td><td>29,500</td></tr><tr><td>Total purchase price</td><td>$114,251</td></tr></table>
<table><tr><td>Cash</td><td>$429</td></tr><tr><td>Inventory, including fair value adjustments</td><td>9,899</td></tr><tr><td>Other tangible assets</td><td>7,247</td></tr><tr><td>Accounts payable and accrued expenses</td><td>-6,304</td></tr><tr><td>Deferred revenue, including fair value adjustments</td><td>-2,056</td></tr><tr><td>Developed technology</td><td>60,900</td></tr><tr><td>In-process research and development</td><td>4,800</td></tr><tr><td>Trade names</td><td>1,600</td></tr><tr><td>Non-compete agreements</td><td>300</td></tr><tr><td>Deferred taxes, net</td><td>-11,181</td></tr><tr><td>Goodwill</td><td>48,617</td></tr><tr><td>Purchase Price</td><td>$114,251</td></tr></table>
<table><tr><td>Convertible notes principal amount</td><td>$1,725,000</td></tr><tr><td>Unamortized discount</td><td>-277,947</td></tr><tr><td>Net carrying amount</td><td>$1,447,053</td></tr><tr><td>Equity component, net of taxes</td><td>$283,638</td></tr></table>
<table><tr><td>Fiscal 2012</td><td>$1,616</td></tr><tr><td>Fiscal 2013</td><td>1,672</td></tr><tr><td>Fiscal 2014</td><td>1,731</td></tr><tr><td>Fiscal 2015</td><td>1,791</td></tr><tr><td>Fiscal 2016</td><td>1,854</td></tr><tr><td>Thereafter</td><td>3,643</td></tr><tr><td>Total minimum payments</td><td>12,307</td></tr><tr><td>Less-amount representing interest</td><td>-4,017</td></tr><tr><td>Total</td><td>$8,290</td></tr></table>
<table><tr><td></td><td colspan="6"> Years Ended</td></tr><tr><td></td><td colspan="2">September 24, 2011</td><td colspan="2">September 25, 2010</td><td colspan="2"> Change</td></tr><tr><td></td><td> Amount</td><td>% of Total Revenue</td><td> Amount</td><td>% of Total Revenue</td><td> Amount</td><td> %</td></tr><tr><td><i>Product Sales</i></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Breast Health</td><td>$550,112</td><td>31%</td><td>$525,622</td><td>31%</td><td>$24,490</td><td>5%</td></tr><tr><td>Diagnostics</td><td>566,349</td><td>32%</td><td>548,832</td><td>33%</td><td>17,517</td><td>3%</td></tr><tr><td>GYN Surgical</td><td>299,120</td><td>17%</td><td>281,364</td><td>17%</td><td>17,756</td><td>6%</td></tr><tr><td>Skeletal Health</td><td>62,759</td><td>3%</td><td>59,082</td><td>3%</td><td>3,677</td><td>6%</td></tr><tr><td></td><td>$1,478,340</td><td>83%</td><td>$1,414,900</td><td>84%</td><td>$63,440</td><td>4%</td></tr></table>

Question: What's the average of Equity component, net of taxes, and Accounts payable and accrued expenses ?
Answer: 144971