Medtronic 2011 Annual Report Download - page 72

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68 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
securities and the amortized cost. Based on the Company’s
assessment of the credit quality of the underlying collateral and
credit support available to each of the remaining securities
in which invested, the Company believes it has recorded all
necessary other-than-temporary impairments as the Company
does not have the intent to sell, nor is it more likely than not that
the Company will be required to sell before recovery of the
amortized cost.
The following table shows the credit loss portion of other-than-
temporary impairments on debt securities held by the Company
as of the dates indicated and the corresponding changes in
such amounts:
(in millions)
Balance as of April 24, 2009 $ —
Credit losses remaining in retained earnings upon adoption 4
Credit losses recognized on securities previously not impaired 10
Additional credit losses recognized on securities previously
impaired 4
Reductions for securities sold during the period (1)
Balance as of April 30, 2010 17
Credit losses recognized on securities previously not impaired 2
Additional credit losses recognized on securities previously
impaired 3
Reductions for securities sold during the period (2)
Balance as of April 29, 2011 $ 20
The April 29, 2011 balance of available-for-sale debt securites
by contractual maturity is shown in the following table at fair
value. Within the table, maturities of mortgage-backed securities
have been allocated based upon timing of estimated cash flows,
assuming no change in the current interest rate environment.
Actual maturities may differ from contractual maturities because
the issuers of the securities may have the right to prepay
obligations without prepayment penalties.
(in millions)
April 2 9,
2011
Due in one year or less $1,252
Due after one year through five years 4,507
Due after five years through ten years 325
Due after ten years 150
Total debt securities $6,234
As of April 29, 2011 and April 30, 2010, the aggregate carrying
amount of equity and other securities without a quoted market
price and accounted for using the cost or equity method was
$656 million and $542 million, respectively. The total carrying
value of these investments is reviewed quarterly for changes
in circumstance or the occurrence of events that suggest the
Company’s investment may not be recoverable. The fair value of
cost or equity method investments is not adjusted if there are no
identified events or changes in circumstances that may have a
material adverse effect on the fair value of the investment. During
fiscal year 2011, in accordance with authoritative guidance, the
Company transferred investments accounted for as cost method
investments with a cost basis of $163 million to available-for-sale
marketable equity securities, due to restrictions on a public
company investment being within one year from expiration as
well as the initial public offering of two other companies in which
the Company holds investments. The April 29, 2011 cost method,
equity method, and other investments balance includes $316
million of investments in a public company with trading
restrictions through December 31, 2013. These investments will be
reclassified to available-for-sale marketable equity securities
within one year of the restriction lapsing.
Gains and losses realized on trading securities and available-
for-sale debt securities are recorded in interest expense, net in the
consolidated statements of earnings. Gains and losses realized
on marketable equity securities, cost method, equity method, and
other investments are recorded in other expense, net in the
consolidated statements of earnings. In addition, unrealized gains
and losses on available-for-sale debt and marketable equity
securities are recorded in accumulated other comprehensive loss in
the consolidated balance sheets and unrealized gains and losses
on trading securities are recorded in interest expense, net in the
consolidated statements of earnings. Gains and losses from
the sale of investments are calculated based on the specific
identification method.