Medtronic 2010 Annual Report Download - page 78

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74 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
may have a significant adverse effect on the fair value of these
investments. During fiscal year 2010, the Company determined
that the fair values of certain cost method investments were
below their carrying values and that the carrying values of these
investments were not expected to be recoverable within a
reasonable period of time. As a result, the Company recognized
$40 million in impairment charges in fiscal year 2010. The
Company recognized $4 million in impairment charges in fiscal
years 2009 and 2008. The impairment charges related to the cost
method investments were recorded in other expense, net in the
consolidated statement of earnings. For further discussion on the
impairment charge refer to Note 6. These investments fall within
Level 3 of the fair value hierarchy, due to the use of significant
unobservable inputs to determine fair value, as the investments
are privately held entities without quoted market prices. To
determine the fair value of these investments, the Company used
all pertinent financial information that was available related to the
entities, including financial statements and market participant
valuations from recent and proposed equity offerings.
Financial Instruments Not Measured at Fair Value The estimated fair
value of the Company’s long-term debt, including the short-term
portion, at April 30, 2010 was $10.047 billion compared to a
carrying value of $9.711 billion and $6.375 billion compared to a
carrying value of $6.665 billion at April 24, 2009. Fair value was
estimated using quoted market prices for the same or similar
instruments. The fair values and carrying values consider the
terms of the related debt and exclude the impacts of debt
discounts and derivative/hedging activity.
8. Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill for fiscal years
2010 and 2009 are as follows:
Fiscal Year
(in millions) 2010 2009
Beginning balance $ 8,195 $ 7,519
Goodwill as a result of acquisitions 155 731
Purchase accounting adjustments, net (8) (40)
Currency adjustment, net 49 (15)
Ending balance $ 8,391 $ 8,195
The Company completed its annual impairment test during the
third quarter for all goodwill for fiscal years ending April 30, 2010,
April 24, 2009 and April 25, 2008 and concluded there were no
impairments or reporting units that were considered at risk.
Balances of acquired intangible assets, excluding goodwill, are as follows:
(in millions)
Purchased
Technology
and Patents
Trademarks
and
Tradenames
Acquired
IPR&D Other Total
Amortizable intangible assets as of April 30, 2010:
Original cost $ 3,296 $ 373 $118 $ 252 $ 4,039
Accumulated amortization (1,040) (254) — (186) (1,480)
Carrying value $ 2,256 $ 119 $118 $ 66 $ 2,559
Weighted average original life (in years) 12.6 10.3 N/A 8.6
Amortizable intangible assets as of April 24, 2009:
Original cost $ 3,057 $ 373 $ — $ 238 $ 3,668
Accumulated amortization (801) (217) — (173) (1,191)
Carrying value $ 2,256 $ 156 $ — $ 65 $ 2,477
Weighted average original life (in years) 12.5 10.3 N/A 9.4
Amortization expense for fiscal years 2010, 2009 and 2008 was $318 million, $281 million and $220 million, respectively.