Medtronic 2010 Annual Report Download - page 47

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43
Medtronic, Inc.
In November 2008, we acquired CryoCath. Under the terms of
the agreement, CryoCath shareholders received $8.75 Canadian
dollars per share in cash for each share of CryoCath common
stock that they owned. Total consideration for the transaction, net
of cash acquired, was approximately $352 million U.S. dollars
including the purchase of outstanding CryoCath common stock,
the assumption and settlement of existing CryoCath debt and the
payment of direct acquisition costs. CyroCath develops cryotherapy
products to treat cardiac arrhythmias. CryoCath’s Arctic Front
product is a minimally invasive cryo-balloon catheter designed
specifically to treat atrial fibrillation and is currently approved in
markets outside the U.S.
It is expected that the acquisitions of Ablation Frontiers and
CryoCath will allow our CRDM operating segment to extend its
reach into the under-penetrated market of catheter based
treatment of atrial fibrillation.
In July 2008, we acquired Restore. Under the terms of the
agreement, Restore shareholders received $1.60 per share in cash
for each share of Restore common stock they owned. Total
consideration for the transaction, net of cash acquired, was
approximately $29 million. Restore’s Pillar System will provide us
with a minimally invasive, implantable medical device used to
treat the soft palate component of sleep breathing disorders,
including mild to moderate obstructive sleep apnea and snoring.
The pro forma impact of the above acquisitions were not
significant, individually or in the aggregate, to our results for the
fiscal years ended April 30, 2010, April 24, 2009 or April 25, 2008.
The results of operations related to each company have been
included in our consolidated statements of earnings since the
date each company was acquired.
In addition to the acquisitions above, we periodically acquire
certain tangible or intangible assets from enterprises that do not
otherwise qualify for accounting as a business combination. These
transactions are largely reflected in the consolidated statements
of cash flows as a component of investing activities under
purchase of intellectual property.
New Accounting Pronouncements
Information regarding new accounting pronouncements is
included in Note 1 to the consolidated financial statements.
Operations Outside of the United States
The table below illustrates U.S. net sales versus net sales outside
the U.S. for fiscal years 2010, 2009 and 2008:
Fiscal Years
(in millions) 2010 2009 2008
U.S. net sales $ 9,366 $ 8,987 $ 8,336
Non-U.S. net sales 6,451 5,612 5,179
Total net sales $ 15,817 $ 14,599 $ 13,515
From fiscal year 2009 to fiscal year 2010, consolidated net sales
growth in the U.S. and outside the U.S. grew 4 percent and 15
percent, respectively. Foreign currency had a positive impact of
$113 million on net sales for fiscal year 2010. Outside the U.S., net
sales growth was strong across all of our operating segments and
led by strong performance in CardioVascular, Neuromodulation,
Diabetes, Spinal and Surgical Technologies. CardioVascular net
sales were led by increased sales of Resolute, Endeavor, CoreValve
transcatheter valves and Endovascular. Pain Stim, DBS and
Uro/Gastro led the increase within our Neuromodulation operating
segment. Diabetes sales increased as a result of strong pump
sales driven by the expanded launch of Veo. Spinal net sales
growth was led by growth in balloon kyphoplasty. Increased sales
of the O-Arm Imaging System led to the growth within the
Surgical Technologies business outside the U.S.
From fiscal year 2008 to fiscal year 2009, consolidated net sales
growth in the U.S. and outside the U.S. both grew 8 percent.
Foreign currency had a negative impact of $100 million on net
sales for fiscal year 2009. Outside the U.S., net sales growth was
led by strong performance in Spinal, Diabetes and Surgical
Technologies. Spinal net sales growth was led by growth in Core
Spinal due to increased sales of the CD HORIZON family of
products. Also, the acquisition of Kyphon in the third quarter of
fiscal year 2008 increased the sales growth for Spinal as the
comparative period only included six months of Kyphon net sales.
Diabetes growth outside the U.S. was led by the continued
acceptance of the MiniMed Paradigm REAL-Time System. Increased
sales of the O-Arm Imaging System led to the growth within the
Surgical Technologies operating segment outside the U.S.
Net sales outside the U.S. are accompanied by certain financial
risks, such as collection of receivables, which typically have longer
payment terms. Outstanding receivables from customers outside
the U.S. totaled $1.855 billion at April 30, 2010, or 55 percent,
of total outstanding accounts receivable, and $1.592 billion at
April 24, 2009, or 50 percent, of total outstanding accounts
receivable.