Medtronic 2008 Annual Report Download - page 93

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17. Segment and Geographic Information
During the first quarter of fiscal year 2008, the Company revised its
operating segment reporting to combine its former Vascular and
Cardiac Surgery businesses into the new CardioVascular operating
segment. Additionally, the Navigation business was separated from
Spinal for most of fiscal year 2008 and was reported as part of a
stand-alone segment named Corporate Technologies and New
Ventures. In the fourth quarter of fiscal year 2008, the decision was
made to include the Navigation business as a component of the Ear,
Nose and Throat (ENT) segment, which was renamed Surgical
Technologies to reflect the expanding scope and focus of this business.
As a result, the Company now functions in seven operating segments,
consisting of CRDM, Spinal, CardioVascular, Neuromodulation, Diabetes,
Surgical Technologies and Physio-Control. The applicable information
for fiscal years 2007 and 2006 has been reclassified to conform to the
current presentation.
Each of the Company’s operating segments has similar economic
characteristics, technology, manufacturing processes, customers,
distribution and marketing strategies, regulatory environments and
shared infrastructures. Net sales by operating segment are as follows:
Fiscal Year
2008 2007 2006
Cardiac Rhythm Disease Management $ 4,963 $ 4,876 $ 4,794
Spinal 2,982 2,417 2,136
CardioVascular 2,131 1,909 1,603
Neuromodulation 1,311 1,183 1,016
Diabetes 1,019 863 722
Surgical Technologies 780 666 609
Physio-Control 329 385 412
$ 13,515
$ 12,299
$ 11,292
On December 4, 2006, the Company announced its intention to
pursue a spin-off of Physio-Control into an independent, publicly traded
company. Physio-Control is the Company’s wholly-owned subsidiary
that offers external defibrillators, emergency response systems, data
management solutions and support services used by hospitals and
emergency response personnel. However, shortly thereafter, on
January 15, 2007, the Company announced a voluntary suspension of
U.S. shipments of Physio-Control products manufactured at its facility
in Redmond, Washington in order to address quality system issues. In
the months following the suspension of U.S. shipments, the Company
worked diligently with the FDA to address the quality system issues and
resumed limited shipments to critical customers. As a result of the work
performed, on April 28, 2008, the Company announced that it had
reached an agreement on a consent decree with the FDA regarding
quality system improvements for its external defibrillator products. The
agreement was filed on April 25, 2008 in the U.S. District Court for the
Western District of Washington and was approved by the court on May
9, 2008. The agreement addresses issues raised by the FDA during
inspections regarding Physio-Control’s quality system processes and
outlines the actions Physio-Control must take in order to resume
unrestricted distribution of its external defibrillators. In fiscal year 2008,
Physio-Control has resumed limited shipments to critical need
customers in the U.S. Following the resolution of the quality system
issues, the Company intends to pursue the spin-off of Physio-Control.
Physio-Control’s (loss)/income before interest and income taxes for
fiscal years 2008, 2007 and 2006 were $(28), $7 and $15, respectively.
Geographic Information
United States Europe Asia Pacific Other Foreign
Consolidated
Fiscal Year 2008
Net sales to external customers $ 8,336 $ 3,288 $ 1,437 $ 454 $ 13,515
Long-lived assets* $ 3,611 $ 8,632 $ 171 $ 37 $ 12,451
Fiscal Year 2007
Net sales to external customers $ 7,900 $ 2,811 $ 1,195 $ 393 $ 12,299
Long-lived assets* $ 6,947 $ 1,040 $ 165 $ 35 $ 8,187
Fiscal Year 2006
Net sales to external customers $ 7,626 $ 2,314 $ 1,023 $ 329 $ 11,292
Long-lived assets* $ 7,100 $ 1,039 $ 156 $ 36 $ 8,331
*Excludes other long-term financial instruments and long-term deferred tax assets, net, as applicable.
No single customer represents over 10 percent of the Company’s consolidated net sales in fiscal years 2008, 2007 or 2006.
89Medtronic, Inc.