Medtronic 2012 Annual Report Download - page 85

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in a manner consistent with that used to establish the price to sell the deliverable on a standalone basis.
The Company records estimated sales returns, discounts, and rebates as a reduction of net sales in the same
period revenue is recognized.
Research and Development Research and development costs are expensed when incurred. Research
and development costs include costs of all basic research activities as well as other research, engineering, and
technical effort required to develop a new product or service or make significant improvement to an existing
product or manufacturing process. Research and development costs also include pre-approval regulatory and
clinical trial expenses.
Other Expense, Net Other expense, net includes royalty income and expense, realized equity security
gains and losses, realized foreign currency transaction and derivative gains and losses, impairment charges
on equity securities, and the Puerto Rico excise tax.
Stock-Based Compensation The Company’s compensation programs include share-based payments.
All awards under share-based payment programs are accounted for at fair value and these fair values are
generally amortized on a straight-line basis over the vesting terms into cost of products sold, research and
development expense, and selling, general, and administrative expense in the consolidated statements of
earnings, as appropriate. Refer to Note 13 for additional information.
Foreign Currency Translation Assets and liabilities of non-U.S. functional currency entities are
translated to U.S. dollars at period-end exchange rates, and the resulting gains and losses arising from the
translation of those net assets are recorded as a cumulative translation adjustment, a component of
accumulated other comprehensive loss on the consolidated balance sheets. Elements of the consolidated
statements of earnings are translated at average currency exchange rates in effect during the period and
foreign currency transaction gains and losses are included in other expense, net in the consolidated statements
of earnings.
Comprehensive Income and Accumulated Other Comprehensive Loss In addition to net earnings,
comprehensive income includes changes in currency exchange rate translation adjustments, unrealized gains
and losses on currency exchange rate derivative contracts and interest rate derivative instruments qualifying
and designated as cash flow hedges, net changes in retirement obligation funded status, and unrealized gains
and losses on available-for-sale marketable securities. Comprehensive income in fiscal years 2012, 2011, and
2010 was $3.368 billion, $3.179 billion, and $2.997 billion, respectively.
Presented below is a summary of activity for each component of accumulated other comprehensive loss
for fiscal years 2012, 2011, and 2010:
Accumulated
Unrealized Cumulative Net Change in Other
Gain/(Loss) on Translation Retirement Unrealized Comprehensive
(in millions) Investments Adjustments Obligations Gain/(Loss) Loss
____________ _______________ _______________ _______________ _______________ _______________
Balance as of April 24, 2009 . . . . . . . . . $ (95)$ 62 $ (398) $ 228 $ (202)
Other comprehensive (loss)/income . . . 68 181 (214) (137) (102)
Reclassification of other-than-
temporary losses on marketable
securities included in net earnings . . . (3) –––(3)
_______________ _______________ _______________ _______________ _______________
Balance as of April 30, 2010 . . . . . . . . . $ (30) $ 243 $ (612) $ 91 $ (307)
Other comprehensive (loss)/income . . . 226 200 5 (348) 83
_______________ _______________ _______________ _______________ _______________
Balance as of April 29, 2011 . . . . . . . . . $ 196 $ 443 $ (607) $ (257) $ (224)
Other comprehensive (loss)/income . . . (66) (137) (227) 181 (249)
_______________ _______________ _______________ _______________ _______________
Balance as of April 27, 2012 . . . . . . . . . . $ 130 $ 306 $ (834) $(76) $ (473)
_______________ _______________ _______________ _______________ _______________
_______________ _______________ _______________ _______________ _______________
68
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)