Medtronic 2012 Annual Report Download - page 81

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Medtronic, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Nature of Operations Medtronic, Inc. (Medtronic or the Company) is the global leader in medical
technology – alleviating pain, restoring health, and extending life for millions of people around the world.
The Company provides innovative products and therapies for use by medical professionals to meet the
health care needs of their patients. Primary products include those for cardiac rhythm disorders,
cardiovascular disease, neurological disorders, spinal conditions and musculoskeletal trauma, urological and
digestive disorders, diabetes, and ear, nose, and throat conditions.
The Company is headquartered in Minneapolis, Minnesota, and markets its products primarily through
a direct sales force in the United States (U.S.) and a combination of direct sales representatives and
independent distributors in international markets. The primary markets for products are the U.S., Western
Europe, Japan, and emerging markets.
Principles of Consolidation The consolidated financial statements include the accounts of
Medtronic, Inc., and all of its subsidiaries. All significant intercompany transactions and accounts have been
eliminated. U.S. generally accepted accounting principles (U.S. GAAP) are applied when determining
whether an entity is subject to consolidation.
Beginning in the third quarter of fiscal year 2012, the results of operations, assets, and liabilities of the
Physio-Control business, which were previously presented as a component of the Cardiac and Vascular
Group operating segment, are classified as discontinued operations. All information in the following notes
to the consolidated financial statements includes only results from continuing operations (excluding Physio-
Control) for all periods presented, unless otherwise noted. For further information regarding discontinued
operations, see Note 3.
Fiscal Year-End The Company utilizes a 52/53-week fiscal year, ending the last Friday in April. The
Company’s fiscal years 2012 and 2011 ended on April 27, 2012 and April 29, 2011, respectively, both of which
were 52-week years. Fiscal year 2010 ended on April 30, 2010 and was a 53-week year.
Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts in the financial statements
and accompanying notes. Actual results could differ materially from those estimates.
Cash Equivalents The Company considers highly liquid investments with maturities of three months
or less from the date of purchase to be cash equivalents. These investments are carried at cost, which
approximates fair value.
Investments Investments in marketable equity securities and debt securities that are classified and
accounted for as available-for-sale at April 27, 2012 and April 29, 2011 include corporate debt securities,
U.S. and foreign government and agency securities, certificates of deposit, mortgage-backed securities, other
asset-backed securities, and auction rate securities. The Company invests in available-for-sale securities to
promote business and strategic objectives. Available-for-sale debt securities are recorded at fair value in
both short-term and long-term investments and marketable equity securities are recorded at fair value in
long-term investments on the consolidated balance sheets. The change in fair value for available-for-sale
securities is recorded, net of taxes, as a component of accumulated other comprehensive loss on the
consolidated balance sheets.
Investments in securities that are classified and accounted for as trading securities at April 27, 2012 and
April 29, 2011 include exchange-traded funds. Trading securities are recorded at fair value in long-term
investments on the consolidated balance sheets. The Company’s trading securities seek to offset changes in
liabilities related to equity and other market risks of certain deferred compensation arrangements. The
change in fair value for trading securities is recorded as a component of interest expense, net on the
consolidated statements of earnings. Management determines the appropriate classification of its
investments in debt and equity securities at the time of purchase and reevaluates such determinations at each
balance sheet date.
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