Medtronic 2012 Annual Report Download - page 106

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Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
89
Financial Instruments Not Measured at Fair Value
The estimated fair value of the Company’s long-term debt, including the short-term portion, as of
April 27, 2012 was $9.965 billion compared to a principal value of $9.138 billion, and as of April 29, 2011 was
$8.524 billion compared to a principal value of $8.096 billion. Fair value was estimated using quoted market
prices for the publicly registered senior notes and senior convertible notes, classified as Level 1 within the
fair value hierarchy, and quoted market prices for similar instruments for the term loan on capital lease
buyout, classified as Level 2 within the fair value hierarchy. The fair values and principal 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, Net
The changes in the carrying amount of goodwill for fiscal years 2012 and 2011 are as follows:
Cardiac and Restorative
(in millions) Vascular Group Therapies Group Total
___________ ________________ ________________ ________________
Balance as of April 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,588 $ 6,803 $ 8,391
Goodwill as a result of acquisitions . . . . . . . . . . . . . . . . . . . 1,028 33 1,061
Purchase accounting adjustments, net . . . . . . . . . . . . . . . . . 25 4 29
Currency adjustment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 18 39
________________ ________________ ________________
Balance as of April 29, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,662 $ 6,858 $ 9,520
Goodwill as a result of acquisitions . . . . . . . . . . . . . . . . . . . – 404 404
Purchase accounting adjustments, net . . . . . . . . . . . . . . . . . 6 38 44
Currency adjustment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . (32) (2) (34)
________________ ________________ ________________
Balance as of April 27, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,636 $ 7,298 $ 9,934
________________ ________________ ________________
________________ ________________ ________________
During fiscal year 2012, the Company recorded $44 million in purchase accounting adjustments, net,
primarily including adjustments of $29 million and $11 million recorded in the second and fourth quarters,
respectively. These adjustments primarily relate to a valuation correction for the calculation of deferred tax
assets associated with the net operating losses available to the Company for the fiscal year 2008 acquisition
of Kyphon Inc. (Kyphon).
The Company completed its annual goodwill impairment test during the third quarter of fiscal years
ended April 27, 2012, April 29, 2011, and April 30, 2010 and concluded that there were no impairments or
reporting units that were considered at risk of impairment. See Note 7 for further information.
Balances of intangible assets, net, excluding goodwill, for fiscal years 2012 and 2011 are as follows:
Purchased Trademarks
Technology and Acquired
(in millions) and Patents Tradenames IPR&D Other Total
___________ ___________ ___________ ___________ ___________ ___________
Amortizable intangible assets as of April 27, 2012:
Original cost . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,604 $ 373 $ 370 $ 148 $ 4,495
Accumulated amortization . . . . . . . . . . . . . . . (1,440) (307) – (101) (1,848)
___________ ___________ ___________ ___________ ___________
Carrying value . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,164 $ 66 $ 370 $ 47 $ 2,647
___________ ___________ ___________ ___________ ___________
___________ ___________ ___________ ___________ ___________
Weighted average original life (in years) . . . . . 12.6 10.3 N/A 9.6
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Amortizable intangible assets as of April 29, 2011:
Original cost . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,509 $ 373 $ 338 $ 149 $ 4,369
Accumulated amortization . . . . . . . . . . . . . . . (1,261) (290) – (93) (1,644)
___________ ___________ ___________ ___________ ___________
Carrying value . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,248 $ 83 $ 338 $ 56 $ 2,725
___________ ___________ ___________ ___________ ___________
___________ ___________ ___________ ___________ ___________
Weighted average original life (in years) . . . . . 12.5 10.3 N/A 8.5
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
Amortization expense for fiscal years 2012, 2011, and 2010 was $335 million, $339 million, and
$317 million, respectively.