Medtronic 2012 Annual Report Download - page 87

Download and view the complete annual report

Please find page 87 of the 2012 Medtronic annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

fair value of the derivative instrument are recorded in interest expense, net, and are offset by changes in the
fair value on the underlying debt instrument. Interest expense, net includes interest payments made or
received under interest rate derivative instruments.
In addition, the Company has collateral credit agreements with its primary derivative counterparties.
Under these agreements, either party is required to post eligible collateral when the market value of
transactions covered by the agreement exceeds specific thresholds, thus limiting credit exposure for
both parties.
Earnings Per Share Basic earnings per share is computed based on the weighted average number of
common shares outstanding. Diluted earnings per share is computed based on the weighted average number
of common shares outstanding increased by the number of additional shares that would have been
outstanding had the potentially dilutive common shares been issued and reduced by the number of shares
the Company could have repurchased with proceeds from issuance of the potentially dilutive shares.
Potentially dilutive shares of common stock include stock options and other stock-based awards granted
under stock-based compensation plans and shares committed to be purchased under the employee stock
purchase plan.
The table below sets forth the computation of basic and diluted earnings per share:
Fiscal Year
______________________________________________
(in millions, except per share data) 2012 2011 2010
__________________________________ ____________ ____________ ____________
Numerator:
Earnings from continuing operations . . . . . . . . . . . . . . . . . . $ 3,415 $ 3,055 $ 3,083
Earnings from discontinued operations . . . . . . . . . . . . . . . . 202 41 16
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,617 3,096 3,099
Denominator:
Basic – weighted average shares outstanding . . . . . . . . . . . 1,053.9 1,077.4 1,106.3
Effect of dilutive securities:
Employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 0.6 0.9
Employee restricted stock units . . . . . . . . . . . . . . . . . . . 4.9 3.4 1.9
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 0.3 0.3
____________ ____________ ____________
Diluted – weighted average shares outstanding . . . . . . . . . 1,059.9 1,081.7 1,109.4
____________ ____________ ____________
____________ ____________ ____________
Basic earnings per share:
Earnings from continuing operations . . . . . . . . . . . . . . $ 3.24 $ 2.84 $ 2.79
Earnings from discontinued operations . . . . . . . . . . . . $ 0.19 $ 0.04 $ 0.01
Net earnings* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.43 $ 2.87 $ 2.80
Diluted earnings per share:
Earnings from continuing operations . . . . . . . . . . . . . . $ 3.22 $ 2.82 $ 2.78
Earnings from discontinued operations . . . . . . . . . . . . $ 0.19 $ 0.04 $ 0.01
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.41 $ 2.86 $ 2.79
* All earnings per share amounts have been rounded to the nearest $0.01, and therefore, may not sum.
The calculation of weighted average diluted shares outstanding excludes options for approximately
51 million, 59 million, and 65 million shares of common stock in fiscal years 2012, 2011, and 2010, respectively,
because their effect would be anti-dilutive on the Company’s earnings per share. For fiscal years 2012, 2011,
and 2010, common share equivalents related to the Company’s $2.200 billion of Senior Convertible Notes
were anti-dilutive as the market price of the Company’s stock was below the conversion price of the Senior
Convertible Notes and, therefore, were excluded from the calculation of weighted average diluted shares.
New Accounting Standards
In June 2011, the Financial Accounting Standards Board (FASB) updated the disclosure requirements
for comprehensive income. The updated guidance requires companies to disclose the total of comprehensive
income, the components of net income, and the components of other comprehensive income either in a
70
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)