Medtronic 2014 Annual Report Download - page 77

Download and view the complete annual report

Please find page 77 of the 2014 Medtronic annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 147

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147

Medtronic, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Nature of Operations Medtronic, Inc. (Medtronic or the Company) is the global leader in medical technology – alleviating
pain, restoring health, and extending life for millions of people around the world. The Company provides innovative products
and therapies for use by medical professionals to meet the health care needs of their patients. Primary products include those for
cardiac rhythm disorders, cardiovascular disease, neurological disorders, spinal conditions and musculoskeletal trauma,
urological and digestive disorders, and ear, nose, and throat and diabetes conditions.
The Company is headquartered in Minneapolis, Minnesota, and markets its products primarily through a direct sales force in the
United States (U.S.) and a combination of direct sales representatives and independent distributors in international markets. The
primary markets for products are the U.S., Western Europe, Japan, and emerging markets.
Principles of Consolidation The consolidated financial statements include the accounts of Medtronic, Inc., and its
consolidated subsidiaries. All significant intercompany transactions and accounts have been eliminated. U.S. generally accepted
accounting principles (U.S. GAAP) are applied when determining whether an entity is subject to consolidation.
Beginning in the third quarter of fiscal year 2012, the results of operations, assets, and liabilities of the Physio-Control business,
which were previously presented as a component of the Cardiac and Vascular Group operating segment, are classified as
discontinued operations. All information in the following notes to the consolidated financial statements includes only results
from continuing operations (excluding Physio-Control) for all periods presented, unless otherwise noted. For further information
regarding discontinued operations, see Note 17.
Fiscal Year-End The Company utilizes a 52/53-week fiscal year, ending the last Friday in April. The Company’s fiscal years
2014, 2013, and 2012 ended on April 25, 2014, April 26, 2013, and April 27, 2012, respectively, all of which were 52-week
years. Fiscal year 2016 is the next 53-week year.
Reclassifications In the first quarter of fiscal year 2014, the Company revised the classification of certain outstanding checks
previously classified as a reduction of cash and cash equivalents in the prior period consolidated balance sheets to accounts
payable, and revised the prior period consolidated statements of cash flows for the associated impact. Certain prior period
disclosures have been reclassified to conform to current year presentation. These revisions are considered immaterial.
Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results
could differ materially from those estimates.
Cash Equivalents The Company considers highly liquid investments with maturities of three months or less from the date of
purchase to be cash equivalents. These investments are carried at cost, which approximates fair value.
Investments Investments in marketable equity securities and debt securities are classified and accounted for as available-for-
sale. Debt securities include corporate debt securities, U.S. and foreign government and agency securities, certificates of
deposit, mortgage-backed securities, other asset-backed securities, debt funds, and auction rate securities. These investments are
recorded at fair value in the consolidated balance sheets. The change in fair value for available-for-sale securities is recorded,
net of taxes, as a component of accumulated other comprehensive loss on the consolidated balance sheets. Management
determines the appropriate classification of its investments in debt and equity securities at the time of purchase and reevaluates
such determinations at each balance sheet date. The classification of marketable securities as current or long-term is based on
the nature of the securities and their availability for use in current operations consistent with how the Company manages its
capital structure and liquidity.
Investments in securities that are classified and accounted for as trading securities include exchange-traded funds and are
recorded at fair value on the consolidated balance sheets. The Company’s trading securities seek to offset changes in liabilities
related to equity and other market risks of certain deferred compensation arrangements. The change in fair value for trading
securities is recorded as a component of interest expense, net on the consolidated statements of earnings.
69