Medtronic 2010 Annual Report Download - page 97

Download and view the complete annual report

Please find page 97 of the 2010 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 110

  • 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

93
Medtronic, Inc.
Retirement Benefit Plan Asset Fair Values The following is a
description of the valuation methodologies used for retirement
benefit plan assets measured at fair value.
Short-term investments, Medtronic, Inc. common stock and fixed
income mutual funds: Valued at the quoted market prices of shares
held by the plans at year-end in the active market on which the
individual securities are traded.
U.S. government securities: Certain U.S. government securities
are valued at the closing price reported in the active markets in
which the individual security is traded. Other U.S. government
securities are valued based on inputs other than quoted prices
that are observable for the securities.
Registered investment companies: Valued at the quoted market
prices of shares held by the plan at year-end in the active market
on which the individual securities are traded.
Municipal debt securities and corporate debt securities: Valued
based on inputs other than quoted prices that are observable for
the securities.
Other common stocks: Valued at the closing price reported in
the active markets in which the individual security is traded.
Partnership units: Valued based on the year-end net asset values
of the underlying partnerships. The net asset values of the
partnerships are based on the fair values of the underlying
investments of the partnerships. Quoted market prices are used
to value the underlying investments of the partnerships, where
available. Investments in this category primarily include collective
funds, absolute return strategies and private equity funds. The
collective funds in the Company’s retirement benefit plans can be
redeemed monthly with notice periods ranging from one to 30
days. The absolute return strategies in the Company’s retirement
benefit plans can be redeemed quarterly with notice periods
ranging from 45 to 95 days. There are two absolute return strategy
funds totaling $29 million that are in the process of liquidation,
which the Company expects to receive the majority of the
proceeds over the next five years. For private equity funds, the
sum of the unfunded commitments is $34 million and the
estimated liquidation period of these funds is expected to be one
to 10 years. If a quoted market price is not available for a
partnership investment, other valuation procedures are utilized to
arrive at a fair value.
Insurance Contracts: Comprised of investments in collective
(group) insurance contracts, consisting of individual insurance
policies. The policyholder is the employer and each member is
the owner/beneficiary of their individual insurance policy. These
policies are a part of the insurance company’s general portfolio
and participate in the insurer’s profit-sharing policy on an excess
yield basis.
The methods described above may produce fair values that
may not be indicative of net realizable value or reflective of future
fair values. Furthermore, while the Company believes its valuation
methods are appropriate and consistent with other market
participants, the use of different methodologies or assumptions
to determine fair value of certain financial instruments could
result in a different fair value measurement at the reporting date.
The following tables provide information by level for the
retirement benefit plan assets that are measured at fair value, as
defined by U.S. GAAP. See Note 7 for discussion of the fair value
measurement terms of Levels 1, 2 and 3.
U.S. Pension Benefits
Fair Value Fair Value Measurements
at Using Inputs Considered as
April 30, 2010 Level 1 Level 2 Level 3
Short-term investments $ 39 $ 39 $— $ —
U.S. government and
agency securities 29 15 14 —
Corporate debt securities 24 — 24 —
Medtronic, Inc.
common stock 49 49 — —
Other common stock 195 195 — —
Fixed income
mutual funds 167 167 — —
Partnership units 601 — — 601
$1,104 $465 $38 $601
The following table provides a reconciliation of the beginning
and ending balances of U.S. pension benefits assets measured at
fair value that used significant unobservable inputs (Level 3):
April 30,
2010
Beginning Balance $528
Total realized losses and other-than temporary
impairment losses included in earnings (14)
Total unrealized losses included in other comprehensive income
126
Purchases, issuances and settlements (39)
Ending Balance $601
Non-U.S. Benefits
Fair Value Fair Value Measurements
at Using Inputs Considered as
April 30, 2010 Level 1 Level 2 Level 3
Registered investment
companies $413 $413 $— $—
Insurance contracts 7— — 7
$420 $413 $— $ 7