Medtronic 2009 Annual Report Download - page 25

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Medtronic, Inc.
net tangible assets and goodwill as required by U.S. GAAP. IPR&D
is defined as the value assigned to those projects for which the
related products have not received regulatory approval and have
no alternative future use. Determining the portion of the purchase
price allocated to IPR&D and other intangible assets requires us to
make significant estimates. The amount of the purchase price
allocated to IPR&D and other intangible assets is determined by
estimating the future cash flows of each project or technology
and discounting the net cash flows back to their present values.
The discount rate used is determined at the time of the acquisition
in accordance with accepted valuation methods. For IPR&D, these
valuation methodologies include consideration of the risk of the
project not achieving commercial feasibility.
Goodwill represents the excess of the aggregate purchase price
over the fair value of net assets, including IPR&D, of acquired
businesses. Goodwill is tested for impairment annually, or more
frequently if changes in circumstance or the occurrence of events
suggest that the carrying amount may be impaired.
The test for impairment requires us to make numerous estimates
about fair value, most of which are based on projected future
cash flows. Our estimates associated with the goodwill impairment
test are considered critical due to the amount of goodwill recorded
on our consolidated balance sheets and the judgment required
in determining assumptions necessary to estimate fair value,
including projected future cash flows. Goodwill was $8.195 billion
and $7.519 billion as of April 24, 2009 and April 25, 2008,
respectively.
Other intangible assets consist primarily of purchased
technology, patents and trademarks which are amortized using
the straight-line or accelerated basis, as appropriate, over their
estimated useful lives, ranging from 3 to 20 years. As of April 24,
2009, all of our intangible assets have definite lives and are
amortized on a straight-line basis. We review these intangible
assets for impairment annually or as changes in circumstance or
the occurrence of events suggest the remaining value may not
be recoverable. Other intangible assets, net of accumulated
amortization, were $2.477 billion and $2.193 billion as of April 24,
2009 and April 25, 2008, respectively.
Net Sales
The table below illustrates net sales by product line and operating segment for fiscal years 2009, 2008 and 2007:
Net Sales Net Sales
Fiscal Year Fiscal Year
(dollars in millions) 2009 2008 % Change 2008 2007 % Change
Defibrillation Systems $ 2,962 $ 2,897 2% $ 2,897 $ 2,917 (1)%
Pacing Systems 1,984 2,008 (1) 2,008 1,895 6
Other 68 58 17 58 64 (9)
CARDIAC RHYTHM DISEASE MANAGEMENT 5,014 4,963 1 4,963 4,876 2
Core Spinal 1,951 1,869 4 1,869 1,713 9
Biologics 840 815 3 815 704 16
Kyphon 609 298 104 298 — N/A
SPINAL 3,400 2,982 14 2,982 2,417 23
Coronary Stents 844 710 19 710 560 27
Other Coronary/Peripheral 448 408 10 408 386 6
Endovascular 398 285 40 285 259 10
Revascularization and Surgical Therapies 447 431 4 431 417 3
Structural Heart Disease 300 297 1 297 287 3
CARDIOVASCULAR 2,437 2,131 14 2,131 1,909 12
Neuro Implantables 1,145 1,069 7 1,069 962 11
Gastroenterology and Urology 289 242 19 242 221 10
NEUROMODULATION 1,434 1,311 9 1,311 1,183 11
DIABETES 1,114 1,019 9 1,019 863 18
Core Ear, Nose and Throat (ENT) 352 323 9 323 278 16
Neurologic Technologies 320 298 7 298 261 14
Navigation 185 159 16 159 127 25
SURGICAL TECHNOLOGIES 857 780 10 780 666 17
PHYSIO-CONTROL 343 329 4 329 385 (15)
TOTAL $ 14,599 $ 13,515 8% $ 13,515 $ 12,299 10%