Medtronic 2015 Annual Report Download - page 88

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Medtronic plc
Notes to Consolidated Financial Statements (Continued)
their respective fair values as of the Acquisition Date. Each reporting period, the Company evaluates the potential loss that it
believes is probable. This guarantee currently has not been amortized into income because there has been no predictable pattern
of performance. As a result, the liability generally will be reduced upon the Company’s release from its obligations or as
payments are made. As of April 24, 2015, current and non-current liabilities related to guarantee commitments associated with
Tyco International’s and TE Connectivity’s tax obligations totaled $481 million and are included in other accrued expenses and
other long-term liabilities on the Company’s consolidated balance sheet.
The Company also has current and non-current receivables due from Tyco International and TE Connectivity as a result of the
tax sharing agreement. As of April 24, 2015, current and non-current receivables from Tyco International and TE Connectivity
totaled $296 million and are included in prepaid expenses and other current assets and other assets on the Company’s
consolidated balance sheet. See Note 16 for additional background on the tax sharing agreement.
Other Expense, Net Other expense, net includes royalty income and expense, realized equity security gains and losses,
realized foreign currency transaction and derivative gains and losses, impairment charges on equity securities, Puerto Rico
excise tax, and U.S. medical device excise tax.
Foreign Currency Translation Assets and liabilities of non-U.S. dollar functional currency entities are translated to U.S.
dollars at period-end exchange rates, and the resulting gains and losses arising from the translation of those net assets are
recorded as a cumulative translation adjustment, a component of accumulated other comprehensive loss on the consolidated
balance sheets. Elements of the consolidated statements of income are translated at the average monthly currency exchange rates
in effect during the period and foreign currency transaction gains and losses are included in other expense, net in the
consolidated statements of income.
Comprehensive Income and Accumulated Other Comprehensive Loss In addition to net income, comprehensive income
includes changes in currency exchange rate translation adjustments, unrealized gains and losses on currency exchange rate
derivative contracts and interest rate derivative instruments qualifying and designated as cash flow hedges, net changes in
retirement obligation funded status, and unrealized gains and losses on available-for-sale marketable securities. Taxes are not
provided on cumulative translation adjustments as substantially all translation adjustments relate to earnings that are intended to
be indefinitely reinvested outside the U.S.
Presented below is a summary of activity for each component of accumulated other comprehensive loss for fiscal year 2013:
(in millions)
Unrealized
Gain (Loss)
on
Available-for-
Sale Securities
Cumulative
Translation
Adjustments
Net Change
in
Retirement
Obligations
Unrealized
(Loss) Gain
on
Derivatives
Accumulated
Other
Comprehensive
Loss
Balance as of April 27, 2012 $ 130 $ 306 $ (834) $ (75) $ (473)
Other comprehensive (loss) income (33) (21) (18) 53 (19)
Correction of classification — (80) — 80 —
Balance as of April 26, 2013 $ 97 $ 205 $ (852) $ 58 $ (492)
Included in cumulative translation adjustments is translation on certain foreign exchange rate derivatives held by non-U.S.
dollar functional currency entities. In the first quarter of fiscal year 2014, the Company prospectively adopted guidance issued
that requires additional disclosure related to the impact of reclassification adjustments out of accumulated other comprehensive
loss on net income. The required disclosures are included in Note 15.
Refer to the consolidated statements of comprehensive income for additional information.
Earnings Per Share Earnings per share is calculated using the two-class method, as the Company’s A Preferred Shares,
issued as part of the Transaction, are considered a participating security. Accordingly, earnings are allocated to both ordinary
shares and participating securities in determining earnings per ordinary share. Due to the limited number of A Preferred Shares
outstanding, this allocation had no effect on ordinary earnings per share; therefore, it is not presented below. Basic earnings per
share is computed based on the weighted average number of ordinary shares outstanding. Diluted earnings per share is
78