Medtronic 2008 Annual Report Download - page 63

cost will be reflected in accumulated other comprehensive (loss)/income.
As of April 25, 2008 and April 27, 2007, the net overfunded/(underfunded)
status of the Company’s defined benefit plans was $90 and $(2),
respectively, and recognition of this status upon the adoption of
SFAS No. 158 resulted in an after-tax charge to shareholders’ equity of
$209 in fiscal year 2007. Amounts recognized in accumulated other
comprehensive (loss)/income are adjusted as they are subsequently
recognized as a component of net periodic benefit cost. The method
of calculating net periodic benefit cost will not change from existing
guidance. SFAS No. 158 also prescribes enhanced disclosures, including
current and long-term components of plan assets and liabilities, as well
as amounts recognized in accumulated other comprehensive (loss)/income
that will subsequently be recognized as a component of net periodic
benefit cost in the following year. See Note 13 for additional information.
The funded status recognition and certain disclosure provisions of
SFAS No. 158 were effective for the Company’s fiscal year ended April 27,
2007. SFAS No. 158 also requires the consistent measurement of plan
assets and benefit obligations as of the date of the Company’s fiscal
year-end statement of financial position effective for the Company’s
fiscal year ended April 24, 2009. A select number of the Company’s
plans, including the U.S. plans, currently have a January 31 measurement
date. This standard will require the Company to change, in fiscal year
2009, that measurement date to match the date of the Company’s fiscal
year-end. The Company does not expect a material impact on the
financial condition for those plans in which the Company has not
adopted the requirement to measure the plan assets and benefit
obligations as of the date of the balance sheet.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities” (SFAS No. 159). SFAS No. 159
permits entities to choose to measure many financial instruments
and certain other items at fair value. SFAS No. 159 will be effective for
the Company at the beginning of fiscal year 2009. The Company has
not elected the fair value option for eligible items that existed as of
April 26, 2008.
In June 2007, the Emerging Issues Task Force (EITF) reached a
consensus on EITF Issue No. 07-3, “Accounting for Nonrefundable
Advance Payments for Goods or Services Received to Be Used in Future
Research and Development Activities” (EITF No. 07-3). EITF No. 07-3
requires companies that are involved in research and development
activities to defer nonrefundable advance payments for future
research and development activities and to recognize those payments
as goods and services are delivered. The Company will be required to
assess on an ongoing basis whether or not the goods or services will
be delivered and to expense the nonrefundable advance payments
immediately if it is determined that delivery is unlikely. EITF No. 07-3 is
effective for new arrangements entered into subsequent to April 25,
2008. The adoption of EITF No. 07-3 will not be material to the
consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141(R), “Business
Combinations” (SFAS No. 141(R)). SFAS No. 141(R) replaces SFAS No. 141,
“Business Combinations.” SFAS No. 141(R) establishes principles and
requirements for how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities
assumed, any noncontrolling interests in the acquiree and the goodwill
acquired. Some of the key changes under SFAS No. 141(R) will impact
the accounting treatment for certain specific acquisition related items
including: (1) accounting for acquired in process research and
development (IPR&D) as an indefinite-lived intangible asset until
approved or discontinued rather than as an immediate expense;
(2) expensing acquisition costs rather than adding them to the cost of
an acquisition; (3) expensing restructuring costs in connection with an
acquisition rather than adding them to the cost of an acquisition;
(4) including the fair value of contingent consideration at the date of an
acquisition in the cost of an acquisition; and (5) recording at the date of
an acquisition the fair value of contingent liabilities that are more likely
than not to occur. SFAS No. 141(R) also includes a substantial number of
new disclosure requirements. SFAS No. 141(R) will be effective for the
Company beginning fiscal year 2010 and must be applied prospectively
to all new acquisitions closing on or after April 25, 2009. Early adoption
of SFAS No. 141(R) is prohibited. SFAS No. 141(R) is expected to have a
material impact on how the Company will identify, negotiate and value
future acquisitions and a material impact on how an acquisition will
affect the Company’s consolidated financial statements.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling
Interests in Consolidated Financial Statements, an amendment of
ARB No. 51” (SFAS No. 160). SFAS No. 160 will change the accounting and
reporting for minority interests, which will be recharacterized as
noncontrolling interests and classified as a component of equity. This
new consolidation method will significantly change the accounting for
partial and/or step acquisitions. SFAS No. 160 will be effective for
the Company in the first quarter of fiscal year 2010. The Company is
currently evaluating the impact that the adoption of SFAS No. 160 will
have, but does not believe it will be material to the consolidated
financial statements.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about
Derivative Instruments and Hedging Activities,” (SFAS No. 161) which
will require increased disclosures about an entity’s strategies and
objectives for using derivative instruments; the location and amounts
of derivative instruments in an entity’s financial statements; how
derivative instruments and related hedged items are accounted for
59Medtronic, Inc.