Medtronic 2010 Annual Report Download - page 104

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100
Notes to Consolidated Financial Statements
(continued)
Medtronic, Inc.
Beginning on September 20, 2007, the Company has received
letter requests from Senator Grassley of the U.S. Senate Finance
Committee requesting information on a variety of subjects,
including financial ties between the medical device industry
and physicians; the Company’s decision to suspend distribution of
its Fidelis family of defibrillation leads; financial ties between
the Company and physicians who use INFUSE Bone Graft; the
Cardiac Research Foundation and Columbia University; certain
communications regarding INFUSE Bone Graft and the Company’s
clinical research projects with the U.S. military and compensation
paid to physicians working for the U.S. military. The Company is
fully cooperating with these requests.
On October 24, 2005, the Company received a subpoena from
the United States Attorney’s Office for the District of Massachusetts
issued under HIPAA requesting documents the Company may
have, if any, relating to pacemakers and defibrillators and related
components; monitoring equipment and services; a provision of
benefits, if any, to persons in a position to recommend purchases
of such devices; and the Company’s training and compliance
materials relating to the fraud and abuse and federal Anti-Kickback
statutes. In September 2008, the United States Attorney’s office
for the District of Massachusetts informed Medtronic that it is no
longer pursuing its investigation of Medtronic, related to the
October 24, 2005 subpoena. On September 5, 2008, Medtronic
received a subpoena from the Office of Inspector General for the
Department of Health and Human Services in the District of
Minnesota, requesting production of substantially the same
materials covered in the 2005 Massachusetts subpoena. The
Company is fully cooperating with this inquiry.
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.
18. Quarterly Financial Data (unaudited)
(in millions, except per share data)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Fiscal
Year
Net Sales
2010 $3,933 $3,838 $3,851 $4,196 $ 15,817
2009 3,706 3,570 3,494 3,829 14,599
Gross Profit
2010 $2,967 $2,916 $2,939 $3,184 $ 12,005
2009 2,851 2,687 2,646 2,897 11,081
Net Earnings
2010 $ 445 $ 868 $ 831 $ 954 $ 3,099
2009 723 547 698 103 2,070
Basic Earnings per Share
2010 $ 0.40 $ 0.78 $ 0.75 $ 0.87 $ 2.80
2009 0.64 0.49 0.62 0.09 1.85
Diluted Earnings per Share
2010 $ 0.40 $ 0.78 $ 0.75 $ 0.86 $ 2.79
2009 0.64 0.48 0.62 0.09 1.84
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.
19. Segment and Geographic Information
In December 2009, the Company consolidated its businesses
into two operating groups: one which combined its Cardiac
Rhythm Disease Management, CardioVascular and Physio-Control
businesses, the other which combined its Spinal, Neuromodulation,
Diabetes and Surgical Technologies businesses. Subsequent to
April 30, 2010 the operating groups were formally named the
Cardiac and Vascular Group and the Restorative Therapies Group,
respectively. The creation of these two operating groups did not
change how the Company internally manages and reports the
results of these businesses. As a result, for fiscal year 2010 the
Company continued to function in seven operating segments,
consisting of Cardiac Rhythm Disease Management, Spinal,
CardioVascular, Neuromodulation, Diabetes, Surgical Technologies