Medtronic 2008 Annual Report Download - page 72

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accounted for using the cost or equity method was $231 and $173,
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 estimated if there are
no identified events or changes in circumstances that may have a
material adverse effect on the fair value of the investment.
Gains and losses recognized on debt instruments are recorded in
interest income, net in the consolidated statements of earnings. Gains
and losses recognized on equity instruments are recorded in other
expense, net in the consolidated statements of earnings. Gains and losses
from the sale of investments are calculated based on the specific
identification method.
The Company lends certain fixed income securities to enhance its
investment income. These lending activities are collateralized at an
average rate of 103 percent, with the collateral determined based on
the underlying securities and creditworthiness of the borrowers. The
value of the securities on loan at April 25, 2008 and April 27, 2007 was
$610 and $1,318, respectively.
6. Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill for fiscal years 2008
and 2007 are as follows:
Fiscal Year
2008 2007
Beginning balance $ 4,327 $ 4,346
Goodwill as a result of acquisitions 3,178 16
Purchase accounting adjustments, net(1) (10) (41)
Currency adjustment, net 24 6
Ending balance
$ 7,519
$ 4,327
(1) Fiscal years 2008 and 2007 included $10 and $41, respectively, related to the reversal of tax
valuation allowances on deferred tax assets previously established with certain acquisitions.
The Company completed its fiscal years 2008, 2007 and 2006 impairment
tests of all goodwill and concluded there were no impairments.
Balances of acquired intangible assets, excluding goodwill, are
as follows:
Purchased
Technology
and Patents
Trademarks
and
Trade names
Other Total
Amortizable
intangible assets as
of April 25, 2008:
Original cost $ 2,538 $ 373 $ 244 $ 3,155
Accumulated
amortization (616) (181) (165) (962)
Carrying value
$ 1,922
$ 192
$ 79
$ 2,193
Weighted average
original life
(in years)
14.0
10.3
9.7
Amortizable
intangible assets
as of April 27, 2007:
Original cost $ 1,754 $ 265 $ 217 $ 2,236
Accumulated
amortization (519) (150) (134) (803)
Carrying value
$1,235
$ 115
$ 83
$ 1,433
Weighted average
original life
(in years)
14.5
10.0
10.2
Amortization expense for fiscal years 2008, 2007 and 2006 was
$220, $182 and $175, respectively. See Note 2 for discussion of the
special charges recorded in fiscal year 2008 and the impact on the
above balances.
Estimated aggregate amortization expense based on the current
carrying value of amortizable intangible assets is as follows:
Fiscal Year
Amortization
Expense
2009 $ 248
2010 250
2011 236
2012 212
2013 197
Thereafter 1,050
$ 2,193
Notes to Consolidated Financial Statements
(continued)
(dollars in millions, except per share data)
68 Medtronic, Inc.