Medtronic 2013 Annual Report Download - page 98

Download and view the complete annual report

Please find page 98 of the 2013 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 145

  • 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

75732me_10K.indd 83 6/25/13 6:39 PM
Table of Contents
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
(in millions) April 26, 2013
Due in one year or less $ 2,169
Due after one year through five years 7,040
Due after five years through 10 years 978
Due after 10 years 113
Total debt securities $ 10,300
As of April 26, 2013 and April 27, 2012, the aggregate carrying amount of equity and other securities without a quoted market
price and accounted for using the cost or equity method was $549 million and $508 million, respectively. The total carrying value
of these investments is reviewed quarterly for changes in circumstance or the occurrence of events that suggest the Company’s
investment may not be recoverable. The fair value of cost or equity method investments is not adjusted if there are no identified
events or changes in circumstances that may have a material adverse effect on the fair value of the investment.
Gains and losses realized on trading securities and available-for-sale debt securities are recorded in interest expense, net in the
consolidated statements of earnings. Gains and losses realized on marketable equity securities, cost method, equity method, and
other investments are recorded in other expense, net in the consolidated statements of earnings. In addition, unrealized gains and
losses on available-for-sale debt securities are recorded in other comprehensive income (loss) and unrealized gains and losses on
trading securities are recorded in interest expense, net in the consolidated statements of earnings. Gains and losses from the sale
of investments are calculated based on the specific identification method.
6. Fair Value Measurements
The Company follows the authoritative guidance on fair value measurements and disclosures with respect to assets and liabilities
that are measured at fair value on both a recurring and non-recurring basis. Under this guidance, fair value is defined as the exit
price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants as of the measurement date. The authoritative guidance also establishes a hierarchy for inputs used in measuring fair
value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most
observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or
liability, developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that
reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based
upon the best information available in the circumstances. The categorization of financial assets and financial liabilities within the
valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken
down into three levels defined as follows:
• Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities.
• Level 2 - Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices
for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted
prices) that are observable for the asset or liability, either directly or indirectly.
• Level 3 - Inputs are unobservable for the asset or liability.
See the section below titled Valuation Techniques for further discussion of how the Company determines fair value for investments.
Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis
Assets and liabilities that are measured at fair value on a recurring basis primarily relate to marketable equity securities and debt
and equity securities that are classified and accounted for as trading, available-for-sale, and derivative instruments. Derivatives
include cash flow hedges, freestanding derivative forward contracts, and fair value hedges. These items are marked-to-market at
each reporting period.
80