Medtronic 2009 Annual Report Download - page 100

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96 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
dispute the application of the ‘288 Patent to certain Medtronic
ICD products. In November 2001, Medtronic ceased paying
royalties and entered into an agreement with Mirowski to pay
putative royalties into an interest-bearing escrow account through
the expiration of the ‘288 Patent in December of 2003. As of April
24, 2009, the current balance in the interest-bearing escrow
account is $85 million. The parties also entered into a tolling
agreement deferring and conditioning any litigation of the
obligation to pay royalties upon certain conditions precedent.
If these conditions are fulfilled and the patent determined to be
invalid or Medtronic’s products found not to infringe, the escrowed
funds will be released to Medtronic.
In the normal course of business, the Company periodically
enters into agreements that require it to indemnify customers or
suppliers for specific risks, such as claims for injury or property
damage arising out of the Company’s products or the negligence
of its personnel or claims alleging that its products infringe third-
party patents or other intellectual property. The Company’s
maximum exposure under these indemnification provisions
cannot be estimated, and the Company has not accrued any
liabilities within the consolidated financial statements. Historically,
the Company has not experienced significant losses on these
types of indemnifications.
The data in the schedule above has been intentionally rounded
to the nearest million and therefore the quarterly amounts may
not sum to the fiscal year to date amounts.
18. Segment and Geographic Information
The Company functions in seven operating segments, consisting
of CRDM, Spinal, CardioVascular, Neuromodulation, Diabetes,
Surgical Technologies and Physio-Control.
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
(in millions) 2009 2008 2007
Cardiac Rhythm Disease Management $ 5,014 $ 4,963 $ 4,876
Spinal 3,400 2,982 2,417
CardioVascular 2,437 2,131 1,909
Neuromodulation 1,434 1,311 1,183
Diabetes 1,114 1,019 863
Surgical Technologies 857 780 666
Physio-Control 343 329 385
Total Net Sales $ 14,599 $ 13,515 $ 12,299
17. Quarterly Financial Data (unaudited)
(in millions)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Fiscal
Year
Net Sales
2009 $3,706 $3,570 $3,494 $3,829 $ 14,599
2008 3,127 3,124 3,405 3,860 13,515
Gross Profit
2009 $2,851 $2,687 $2,646 $2,897 $ 11,081
2008 2,335 2,284 2,535 2,915 10,069
Net Earnings
2009 $ 747 $ 571 $ 723 $ 128 $ 2,169
2008 675 666 77 812 2,231
Basic Earnings per Share
2009 $ 0.67 $ 0.51 $ 0.65 $ 0.11 $ 1.94
2008 0.59 0.59 0.07 0.72 1.97
Diluted Earnings per Share
2009 $ 0.66 $ 0.51 $ 0.65 $ 0.11 $ 1.93
2008 0.59 0.58 0.07 0.72 1.95