Medtronic 2013 Annual Report Download - page 102

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Table of Contents
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
performed, the fair value of each reporting unit's goodwill was deemed to be greater than the carrying value. The Company did
not record any goodwill impairments during fiscal years 2013, 2012, or 2011. Similar to the goodwill impairment test, the IPR&D
impairment test requires the Company to make several estimates about fair value, most of which are based on projected future
cash flows. The Company calculated the excess of the IPR&D asset carrying values over their fair values utilizing a discounted
future cash flow analysis. As a result of the analysis performed during fiscal year 2013, the fair value of IPR&D assets related to
a technology recently acquired by the Structural Heart business was deemed to be less than the carrying value, resulting in a pre-
tax impairment loss of $5 million that was recorded in acquisition-related items in the consolidated statements of earnings. The
Company did not record any IPR&D impairments during fiscal years 2012 or 2011. Due to the nature of IPR&D projects, the
Company may experience future delays or failures to obtain regulatory approvals to conduct clinical trials, failures of such clinical
trials, delays or failures to obtain required market clearances or other failures to achieve a commercially viable product, and as a
result, may record impairment losses in the future.
The Company assesses the impairment of property, plant, and equipment whenever events or changes in circumstances indicate
that the carrying amount of property, plant, and equipment assets may not be recoverable. As part of the Company’s restructuring
initiatives, the Company recorded property, plant, and equipment impairments of $6 million, $9 million, and $13 million during
fiscal years 2013, 2012, and 2011, respectively. For further discussion of the restructuring initiatives refer to Note 3.
Financial Instruments Not Measured at Fair Value
The estimated fair value of the Company’s long-term debt, including the short-term portion, as of April 26, 2013 was $10.820
billion compared to a principal value of $9.928 billion, and as of April 27, 2012 was $9.965 billion compared to a principal value
of $9.138 billion. Fair value was estimated using quoted market prices for the publicly registered senior notes and senior convertible
notes, classified as Level 1 within the fair value hierarchy. The fair values and principal values consider the terms of the related
debt and exclude the impacts of debt discounts and derivative/hedging activity.
7. Goodwill and Other Intangible Assets, Net
The changes in the carrying amount of goodwill for fiscal years 2013 and 2012 are as follows:
Cardiac and Restorative
(in millions) Vascular Group Therapies Group Total
Balance as of April 29, 2011 $ 2,662 $ 6,858 $ 9,520
Goodwill as a result of acquisitions — 404 404
Purchase accounting adjustments, net 6 38 44
Currency adjustment, net (32) (2) (34)
Balance as of April 27, 2012 $ 2,636 $ 7,298 $ 9,934
Goodwill as a result of acquisitions — 414 414
Purchase accounting adjustments, net — 3 3
Currency adjustment, net (12) (10) (22)
Balance as of April 26, 2013 $ 2,624 $ 7,705 $ 10,329
During fiscal year 2013, the Company recorded $3 million in purchase accounting adjustments, net. These adjustments primarily
relate to the fourth quarter finalization of the valuation of inventory, net of tax, for the Kanghui acquisition.
During fiscal year 2012, the Company recorded $44 million in purchase accounting adjustments, net, primarily including
adjustments of $29 million and $11 million recorded in the second and fourth quarters, respectively. These adjustments primarily
relate to a valuation correction for the calculation of deferred tax assets associated with the net operating losses available to the
Company for the fiscal year 2008 acquisition of Kyphon Inc. (Kyphon).
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