Medtronic 2009 Annual Report Download - page 62

58 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
than the average market price, resulting in an anti-dilutive effect
on diluted earnings per share.
New Accounting Standards
Effective April 26, 2008, the Company adopted the required
provisions of Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 157, “Fair
Value Measurements” (SFAS No. 157). SFAS No. 157 establishes a
framework for measuring fair value in accordance with generally
accepted accounting principles, clarifies the definition of fair value
within that framework and expands disclosures about fair value
measurements. SFAS No. 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value,
except for the measurement of share-based payments. SFAS No.
157 does not expand the use of fair value in any new circumstances.
For certain types of financial instruments, SFAS No. 157 required a
limited form of retrospective transition, whereby the cumulative
impact of the change in principle is recognized in the opening
balance in retained earnings in the fiscal year of adoption. All
other provisions of SFAS No. 157 will be applied prospectively.
On February 12, 2008, the FASB issued FASB Staff Position (FSP)
FAS 157-2, “Effective Date of FASB Statement No. 157” (FSP FAS
No. 157-2). FSP FAS No. 157-2 defers the implementation of SFAS
No. 157 for certain nonfinancial assets and nonfinancial liabilities.
Accordingly, the Company adopted the required provisions of
SFAS No. 157 at the beginning of fiscal year 2009 and the
remaining provisions will be adopted by the Company at the
beginning of fiscal year 2010. The fiscal year 2009 adoption
did not result in a material impact to the Company’s financial
statements (see Note 6). The adoption of the remaining parts of
SFAS No. 157 in fiscal year 2010 in accordance with FSP FAS No.
157-2 is not expected to be material to the consolidated financial
statements.
Additionally, in April 2009, the FASB issued FSP SFAS No. 157-4,
“Determining Fair Value When the Volume and Level and Activity
for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly” (FSP SFAS No.
157-4). FSP SFAS No. 157-4 provides guidance for estimating fair
value in accordance with SFAS No. 157 when the volume and level
of activity for the asset or liability have significantly decreased
when compared with normal market activity for the asset or
liability (or similar assets or liabilities) and for identifying
circumstances that indicate a transaction is not orderly.
Additionally, FSP SFAS No. 157-4 amends SFAS No. 157 to require
disclosure in interim and annual periods of the inputs and
valuation techniques used to measure fair value. FSP SFAS No.
157-4 is effective for the Company beginning in the first quarter
of fiscal year 2010 and is required to be applied prospectively. The
Company is currently evaluating the impact that FSP SFAS No.
157-4 will have on the consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141(R), “Business
Combinations” (SFAS No. 141(R)). SFAS No. 141(R) replaces SFAS
No. 141, “Business Combinations.” SFAS No. 141(R) establishes
principles and requirements for how an acquirer recognizes
and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any noncontrolling interests in
the acquiree and the goodwill acquired. Some of the key changes
under SFAS No. 141(R) will impact the accounting treatment for
certain acquisition related items including: (1) accounting for
IPR&D as an indefinite-lived intangible asset until approved or
discontinued rather than as an immediate expense; (2) expensing
acquisition costs rather than adding them to the cost of an
acquisition; (3) expensing restructuring costs in connection with
an acquisition rather than adding them to the cost of an
acquisition; and (4) including the fair value of contingent
consideration at the date of an acquisition in the cost of an
acquisition. SFAS No. 141(R) also includes a substantial number of
new disclosure requirements. SFAS No. 141(R) will be effective for
the Company beginning fiscal year 2010 and must be applied
prospectively to all new acquisitions closing on or after April 25,
2009. SFAS No. 141(R) is expected to have a material impact on
how the Company will identify, negotiate and value future
acquisitions and a material impact on how an acquisition will
affect the Company’s consolidated financial statements.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling
Interests in Consolidated Financial Statements, an amendment
of ARB No. 51” (SFAS No. 160). SFAS No. 160 will change the
accounting and reporting for minority interests, which will be
recharacterized as noncontrolling interests and classified as a
component of equity as compared to a liability today. This new
consolidation method will significantly change the accounting for
partial and/or step acquisitions. SFAS No. 160 will be effective for
the Company in the first quarter of fiscal year 2010. The adoption
of SFAS No. 160 will not have a material impact to the Company’s
consolidated financial statements.
In May 2008, the FASB issued FSP APB 14-1, “Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)” (FSP APB 14-1).
FSP APB 14-1 requires the proceeds from the issuance of such
convertible debt instruments to be allocated between a liability