Medtronic 2012 Annual Report Download - page 88

single continuous statement of comprehensive income or in two separate but consecutive statements. The
updated guidance does not affect how earnings per share is calculated or presented. In December 2011, the
FASB deferred the requirement in the updated guidance to present on the face of the financial statements
the effects of reclassifications out of accumulated other comprehensive income on the components of net
income and other comprehensive income. The updated guidance is effective for the Company retrospectively
beginning in the first quarter of fiscal year 2013. Since the accounting guidance only impacts presentation,
its adoption will not have a material impact on the Company’s consolidated financial statements.
In September 2011, the FASB updated the accounting guidance related to annual and interim goodwill
impairment tests. The updated accounting guidance allows entities to first assess qualitative factors before
performing a quantitative assessment of the fair value of a reporting unit. If it is determined on the basis of
qualitative factors, that the fair value of the reporting unit is more-likely-than-not less than the carrying
amount, the existing quantitative impairment test is required. Otherwise, no further impairment testing is
required. The updated guidance is effective for the Company beginning in the first quarter of fiscal year
2013. The Company does not expect adoption to have a material impact on the Company’s consolidated
financial statements.
In December 2011, the FASB issued new accounting guidance related to disclosures on offsetting assets
and liabilities on the balance sheet. This newly issued accounting standard requires an entity to disclose
both gross and net information about instruments and transactions eligible for offset in the balance sheet
as well as instruments and transactions executed under a master netting or similar arrangement and was
issued to enable users of financial statements to understand the effects or potential effects of those
arrangements on its financial position. This accounting guidance is required to be applied retrospectively and
is effective for the Company beginning in the first quarter of fiscal year 2014. Since the accounting guidance
only impacts disclosure requirements, its adoption will not have a material impact on the Company’s
consolidated financial statements.
2. Certain Litigation Charges, Net
The Company classifies material litigation reserves and gains recognized as certain litigation
charges, net.
During fiscal year 2012, the Company recorded certain litigation charges, net of $90 million related to
the agreement in principle to settle the federal securities class action initiated by the Minneapolis
Firefighters’ Relief Association in December 2008. During the fourth quarter of fiscal year 2012, Medtronic
reached a settlement agreement to resolve all of these class claims for $85 million and incurred $5 million
in additional litigation fees as a result of the agreement. Refer to Note 17 for additional information.
During fiscal year 2011, the Company recorded certain litigation charges, net of $245 million related
primarily to a $221 million settlement involving the Sprint Fidelis family of defibrillation leads and charges
for certain Other Matters litigation. The Sprint Fidelis settlement related to the resolution of certain
outstanding product liability litigation related to the Sprint Fidelis family of defibrillation leads that were
subject to a field action announced October 15, 2007. During the third quarter of fiscal year 2012, the
Company paid out the settlement for both the Sprint Fidelis settlement and for certain Other Matters
litigation. Refer to Note 17 for additional information.
During fiscal year 2010, the Company recorded certain litigation charges, net of $374 million related to
settlements with Abbott Laboratories (Abbott) and W.L. Gore & Associates, Inc. (Gore). The Abbott
settlement accounted for $444 million in litigation charges and the Gore settlement accounted for a
$70 million litigation gain. The Abbott settlement related to the resolution of all outstanding intellectual
property litigation. The terms of the Abbott agreement stipulate that neither party will sue the other in the
field of coronary stent and stent delivery systems for a period of at least ten years, subject to certain
conditions. Both parties also agreed to a cross-license of the disputed patents within the defined field. The
$444 million settlement amount included a $400 million payment made to Abbott and a $42 million success
payment made to evYsio Medical Devices, LLC (evYsio). In addition, a $2 million payment was made to
evYsio in connection with an amendment to the parties’ existing agreement in order to expand the scope
of the definition of the license field from evYsio. The Company paid the settlement in the second quarter
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Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)