Medtronic 2016 Annual Report Download - page 95

Table of Contents
Medtronic plc
Notes to Consolidated Financial Statements (Continued)
92
indefinite-lived assets impairment test requires the Company to make several estimates about fair value, most of which are based
on projected future cash flows. The Company calculates the excess of indefinite-lived asset fair values over their carrying values
utilizing a discounted future cash flow analysis. The Company did not record any significant indefinite-lived asset impairments
during fiscal year 2016. As a result of the analysis performed during fiscal year 2015, the fair value of certain IPR&D indefinite-
lived assets were deemed to be less than their carrying value, resulting in an impairment loss of $5 million, which was recorded
in acquisition-related items in the consolidated statements of income. During fiscal year 2014, the fair value of IPR&D indefinite-
lived assets were deemed to be less than the carrying value, resulting in a pre-tax impairment loss of $207 million primarily related
to the Ardian acquisition and was recorded in acquisition-related items in the consolidated statements of income. See discussion
below for additional information on impairments recorded on the Ardian long-lived asset group. Due to the nature of IPR&D
projects, the Company may experience future delays or failures to obtain regulatory approvals to conduct clinical trials, failures
of such clinical trials, delays or failures to obtain required market clearances or other failures to achieve a commercially viable
product, and as a result, may record impairment losses in the future.
The Company assesses definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of an intangible asset (asset group) may not be recoverable. When events or changes in circumstances indicate
that the carrying amount of an intangible asset may not be recoverable, the Company calculates the excess of an intangible asset's
carrying value over its undiscounted future cash flows. If the carrying value is not recoverable, an impairment loss is recorded
based on the amount by which the carrying value exceeds the fair value. The inputs used in the fair value analysis fall within Level
3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value. The Company did not record
any intangible asset impairments during fiscal year 2016 and 2015. During fiscal year 2014, the Company determined that a change
in events and circumstances indicated that the carrying amount of certain definite-lived intangible assets, representing less than
five percent of the total aggregate carrying amount of intangible assets, may not be fully recoverable. During fiscal year 2014, the
carrying amount of Ardian definite-lived intangible assets was less than the undiscounted future cash flows, therefore, the Company
assessed the fair value of the assets and recorded an impairment of $41 million that was included in acquisition-related items in
the consolidated statements of income.
Intangible Asset Amortization
Amortization expense for fiscal years 2016, 2015, and 2014 was $1.9 billion, $733 million, and $349 million, respectively.
Estimated aggregate amortization expense by fiscal year based on the current carrying value of definite-lived intangible assets,
excluding any possible future amortization associated with acquired IPR&D, which has not met technological feasibility, is as
follows:
(in millions)
Fiscal Year Amortization Expense
2017 $ 1,931
2018 1,899
2019 1,805
2020 1,757
2021 1,739