Medtronic 2010 Annual Report Download - page 25

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21
Medtronic, Inc.
Contingent consideration is recorded at the acquisition date at
the estimated fair value of the contingent milestone payments for
all acquisitions subsequent to April 24, 2009. The acquisition date
fair value is measured based on the consideration expected to be
transferred (probability-weighted), discounted back to present
value. The discount rate used is determined at the time of the
acquisition in accordance with accepted valuation methods. The
fair value of the contingent milestone consideration is remeasured
at the estimated fair value at each reporting period with the
change in fair value recognized as income or expense in our
consolidated statements of earnings.
Goodwill represents the excess of the aggregate purchase price
over the fair value of net assets, including IPR&D, of acquired
businesses. Goodwill is tested for impairment annually, or more
frequently if changes in circumstance or the occurrence of events
suggest that the carrying amount may be impaired.
The test for impairment requires us to make several estimates
about fair value, most of which are based on projected future
cash flows. Our estimates associated with the goodwill impairment
test are considered critical due to the amount of goodwill
recorded on our consolidated balance sheets and the judgment
required in determining assumptions necessary to estimate fair
value, including projected future cash flows. Goodwill was $8.391
billion and $8.195 billion as of April 30, 2010 and April 24, 2009,
respectively.
Other intangible assets include patents, trademarks, purchased
technology and IPR&D. Intangible assets with a definite life are
amortized on a straight-line or accelerated basis, as appropriate,
with estimated useful lives ranging from three to 20 years. We
review all intangible assets for impairment annually or as changes
in circumstance or the occurrence of events suggest the remaining
value may not be recoverable. Other intangible assets, net of
accumulated amortization, were $2.559 billion and $2.477 billion
as of April 30, 2010 and April 24, 2009, respectively.
Net Sales
The table below illustrates net sales by product line and operating segment for fiscal years 2010, 2009 and 2008:
Net Sales Net Sales
Fiscal Year Fiscal Year
(dollars in millions) 2010 2009 % Change 2009 2008 % Change
Defibrillation Systems $ 3,167 $ 2,962 7% $ 2,962 $ 2,897 2%
Pacing Systems 1,987 1,984 — 1,984 2,008 (1)
Other 114 68 68 68 58 17
CARDIAC RHYTHM DISEASE MANAGEMENT 5,268 5,014 5 5,014 4,963 1
Core Spinal 2,632 2,560 3 2,560 2,167 18
Biologics 868 840 3 840 815 3
SPINAL 3,500 3,400 3 3,400 2,982 14
Coronary 1,489 1,292 15 1,292 1,118 16
Structural Heart 880 747 18 747 728 3
Endovascular 495 398 24 398 285 40
CARDIOVASCULAR 2,864 2,437 18 2,437 2,131 14
NEUROMODULATION 1,560 1,434 9 1,434 1,311 9
DIABETES 1,237 1,114 11 1,114 1,019 9
SURGICAL TECHNOLOGIES 963 857 12 857 780 10
PHYSIO-CONTROL 425 343 24 343 329 4
TOTAL $ 15,817 $ 14,599 8% $ 14,599 $ 13,515 8%