Medtronic 2012 Annual Report Download - page 47

2011 net earnings included after-tax restructuring charges, net, certain litigation charges, net, and acquisition-
related items that decreased net earnings by an aggregate of $430 million ($529 million pre-tax). See further
discussion of these items in the “Restructuring Charges, Net, Certain Litigation Charges, Net, and
Acquisition-Related Items” section of this management’s discussion and analysis.
Net Sales
________________________________
Fiscal Year
________________________________
(dollars in millions) 2012 2011 % Change
__________________ ______________ ______________ ______________
Cardiac and Vascular Group . . . . . . . . . . . . . . . . . . . . . . . $ 8,482 $ 8,119 4%
Restorative Therapies Group . . . . . . . . . . . . . . . . . . . . . . 7,702 7,389 4
______________ ______________
Total Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,184 $ 15,508 4
______________ ______________
______________ ______________
Net sales in fiscal year 2012 were $16.184 billion, an increase of 4 percent from the prior fiscal year.
Foreign currency translation had a favorable impact of $273 million on net sales when compared to the
prior fiscal year. Net sales growth for fiscal year 2012 was driven by a 4 percent increase in both the Cardiac
and Vascular Group and Restorative Therapies Group when compared to the prior fiscal year. The Cardiac
and Vascular Group’s performance was a result of strong sales in Coronary, Structural Heart, Endovascular
and Peripheral, CRDM pacing systems, and AF Solutions, partially offset by declines in CRDM defibrillation
systems. The Cardiac and Vascular Group’s net sales outside the U.S. were $4.795 billion compared to
$4.403 billion for the prior fiscal year. Growth outside the U.S. continued to be strong across all of the
Cardiac and Vascular Group’s businesses. The Cardiac and Vascular Group’s performance was favorably
affected by new products, with growth offset by the continued macroeconomic downturn, pricing pressures
due to competition, slowing of certain market growth rates, and the continued trend of increased hospital
ownership of physician practices. Additionally, the ICD utilization article in the January 2011 Journal of the
American Medical Association and the hospital investigation by the DOJ had an effect on the U.S. ICD
market throughout fiscal year 2012; however, in the fourth quarter we began to see signs of stabilization. The
Restorative Therapies Group’s performance was a result of strong net sales in Diabetes and Surgical
Technologies, as well as solid growth in Neuromodulation, partially offset by weaker net sales in Spinal. The
Restorative Therapies Group’s net sales outside the U.S. were $2.561 billion compared to $2.233 billion for
the prior fiscal year. Growth outside the U.S. continued to be strong across all of the Restorative Therapies
Group’s businesses. The Restorative Therapies Group’s performance was favorably affected by the recent
launch of notable products, sales force expansion, and the acquisitions of Salient and PEAK in the second
quarter of fiscal year 2012, and negatively impacted by the continued macroeconomic downturn, continued
heightened payer scrutiny, competition, and the continued trend of increased hospital ownership of physician
practices. See our discussion in the “Net Sales” section of this management’s discussion and analysis for
more information on the results of our operating segments.
We remain committed to our Mission of developing lifesaving and life-enhancing therapies to alleviate
pain, restore health, and extend life. The diversity and depth of our current product offerings enable us to
provide medical therapies to patients worldwide. We work to improve patient access through well-planned
studies which show the safety, efficacy, and cost-effectiveness of our therapies, and our alliances with patients,
clinicians, regulators, and reimbursement agencies. Our investments in R&D, strategic acquisitions, expanded
clinical trials, and infrastructure provide the foundation for our growth. We are confident in our ability to
drive long-term shareholder value using the principles of our Mission, our strong product pipelines, and our
continued commitment to innovative R&D.
Critical Accounting Estimates
We have adopted various accounting policies to prepare the consolidated financial statements in
accordance with accounting principles generally accepted in the U.S. (U.S. GAAP). Our most significant
accounting policies are disclosed in Note 1 to the consolidated financial statements in “Item 8. Financial
Statements and Supplementary Data” in this Annual Report on Form 10-K.
The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires us to
make estimates and assumptions that affect the amounts reported in the consolidated financial statements
and accompanying notes. Our estimates and assumptions, including those related to bad debts, inventories,
intangible assets, asset impairment, legal proceedings, in-process research and development (IPR&D),
contingent consideration, warranty obligations, product liability, self-insurance, pension and post-retirement
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