Medtronic 2011 Annual Report Download - page 43

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Medtronic, Inc.
We believe our off-balance sheet arrangements do not have a material current or anticipated future effect on our consolidated
earnings, financial position, or cash flows. Presented below is a summary of contractual obligations and other minimum commercial
commitments as of April 29, 2011. See Notes 8 and 15 to the consolidated financial statements for additional information regarding
long-term debt and lease obligations, respectively. Additionally, see Note 13 to the consolidated financial statements for additional
information regarding accrued income tax obligations, which are not reflected in the table below.
Maturity by Fiscal Year
(in millions) Total 2012 2013 2014 2015 2016 Thereafter
Contractual obligations related to off-balance sheet arrangements:
Operating leases(1)$ 358 $ 118 $ 86 $ 63 $ 34 $ 22 $ 35
Inventory purchases(2) 314 227 62 12 10 — 3
Commitments to fund minority investments/contingent acquisition consideration(3) 282 37 116 8 83 13 25
Interest payments(4) 2,727 286 286 250 225 173 1,507
Other(5) 165 69 36 22 18 4 16
Total$ 3,846 $ 737 $ 586 $ 355 $ 370 $ 212 $1,586
Contractual obligations reflected in the balance sheet:
Long-term debt, including current portion(6) $ 8,096 $ 32 $ 2,214 $ 550 $ 1 ,250 $ 1 ,100 $2,950
Capital leases 34 2 2 2 2 2 24
Total$ 8,130 $ 34 $ 2,216 $ 552 $ 1 ,252 $ 1 ,102 $2,974
(1) Certain leases require us to pay real estate taxes, insurance, maintenance, and other operating expenses associated with the leased premises. These future costs are not
included in the schedule above.
(2) We have included inventory purchase commitments which are legally binding and specify minimum purchase quantities. These purchase commitments do not exceed our
projected requirements and are in the normal course of business. These commitments do not include open purchase orders.
(3) Certain commitments related to the funding of minority investments and/or previous acquisitions are contingent upon the achievement of certain product-related
milestones and various other favorable operational conditions. While it is not certain if and/or when these payments will be made, the maturity dates included in this table
reflect our best estimates. In accordance with authoritative accounting guidance on business combinations effective in fiscal year 2010, we are required to record the fair
value of contingent acquisition considerations as a liability on the consolidated balance sheets on a prospective basis, therefore, contingent acquisition considerations are
not included in the off-balance sheet disclosure for acquisitions subsequent to April 24, 2009. During fiscal year 2011, the table above was adjusted to reflect the
achievement and subsequent $81 million payment of a revenue milestone to the former shareholders of CoreValve, Inc. in accordance with the fiscal year 2009 acquisition
agreement.
(4) Interest payments in the table above reflect the interest on our outstanding debt, including $1.000 billion of 2011 Senior Notes, $3.000 billion of 2010 Senior Notes, $1.250
billion of 2009 Senior Notes, $2.200 billion of Senior Convertible Notes, $600 million of 2005 Senior Notes, and $15 million of Contingent Convertible Debentures. The
interest rate on each outstanding obligation varies and interest is payable semi-annually. The interest rate is 2.625 percent on $500 million of the 2011 Senior Notes due
2016, 4.125 percent on $500 million of 2011 Senior Notes due 2021, 3.000 percent on $1.250 billion of the 2010 Senior Notes due 2015, 4.450 percent on $1.250 billion of the
2010 Senior Notes due 2020, 5.550 percent on $500 million of the 2010 Senior Notes due 2040, 4.500 percent on $550 million of the 2009 Senior Notes due 2014, 5.600
percent on $400 million of the 2009 Senior Notes due 2019, 6.500 percent on $300 million of the 2009 Senior Notes due 2039, 1.625 percent on the $2.200 billion Senior
Convertible Notes due 2013, 4.750 percent on the $600 million of 2005 Senior Notes due 2015, and 1.250 percent on the Contingent Convertible Debentures due 2021. The
table above excludes the impact of the debt discount amortization on the Senior Convertible Notes.
(5) These obligations include certain research and development arrangements.
(6) Long-term debt in the table above includes the $1.000 billion of 2011 Senior Notes, $3.000 billion of 2010 Senior Notes, $1.250 billion of 2009 Senior Notes, $2.200 billion
of Senior Convertible Notes, $600 million of 2005 Senior Notes, $15 million related to our Contingent Convertible Debentures, and certain bank borrowings. The table
above excludes the debt discount, the fair value impact of outstanding interest rate swap agreements, and the remaining gains from terminated interest rate swap
agreements. See Notes 8 and 9 to the consolidated financial statements for additional information regarding the interest rate swap agreements.
Debt and Capital
In June 2007 and June 2009, our Board of Directors authorized
the repurchase of up to 50 million and 60 million shares of our
common stock, respectively.
As part of our focus on returning value to our shareholders,
shares are repurchased from time to time. During fiscal years 2011
and 2010, we repurchased approximately 30.1 million shares and
27.0 million shares at an average price of $37.86 and $38.10,
respectively. As of April 29, 2011, we have approximately 20.7
million shares remaining under current buyback authorizations
approved by the Board of Directors. In June 2011, our Board of
Directors authorized the repurchase of an additional 75 million
shares of our common stock.
We periodically issue Senior Notes that are unsecured, senio r
obligations that rank equally with all other secured and
unsubordinated indebtedness. The indentures under which the
Senior Notes were issued contain customary covenants, all of
which we remain in compliance with as of April 29, 2011. We used
the net proceeds from the sale of the Senior Notes primarily for
working capital and general corporate uses.