Medtronic 2011 Annual Report Download - page 45

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Medtronic, Inc.
any accrued and unpaid interest thereon to the repurchase date.
If the put option is exercised, we will pay holders the repurchase
price solely in cash. We can redeem the remaining Debentures for
cash at any time.
We maintain a commercial paper program that allows us
to have a maximum of $2.250 billion in commercial paper
outstanding, with maturities up to 364 days from the date of
issuance. As of April 29, 2011, outstanding commercial paper
totaled $1.500 billion. There was no outstanding commercial
paper as of April 30, 2010. During fiscal years 2011 and 2010, the
weighted average original maturity of the commercial paper
outstanding was approximately 73 and 63 days, respectively, and
the weighted average interest rate was 0.25 percent and 0.21
percent, respectively. The issuance of commercial paper reduces
the amount of credit available under our existing lines of credit.
In connection with the issuance of the Debentures, 2011 Senior
Notes, 2010 Senior Notes, 2009 Senior Notes, 2005 Senior Notes,
Senior Convertible Notes, and commercial paper, Standard and
Poor’s Ratings Group and Moody’s Investors Service issued long-
term debt ratings of AA- and A1, respectively, and short-term
debt ratings of A-1+ and P-1, respectively. These ratings remain
unchanged from the same periods of the prior year.
We have committed and uncommitted lines of credit with
various banks. The committed lines of credit include a new four-
year $2.250 billion syndicated credit facility dated December 9,
2010 that will expire on December 9, 2014 (New Facility). This New
Facility replaced our five-year $1.750 billion syndicated credit
facility which was scheduled to expire in December 2011. The
New Facility provides us with the ability to increase its capacity
by an additional $500 million at any time during the life of
the four-year term of the agreement. We can also request the
extension of the New Facility maturity date for one additional
year, at the first and second anniversary of the date of the
New Facility. The New Facility provides backup funding for the
commercial paper program and may also be used for general
corporate purposes. As of April 29, 2011 and April 30, 2010, there
were no outstanding borrowings on the committed lines of credit.
We have bank borrowings primarily from non-U.S. banks at
interest rates considered favorable by management and where
natural hedges can be gained for foreign exchange purposes and
borrowings from U.S. banks. Approximately $201 million of the
$236 million outstanding bank borrowings as of April 29, 2011
were short-term advances to certain subsidiaries under credit
agreements with various banks. These advances are guaranteed
by the Company.
On November 2, 2007, we entered into a credit agreement with
the Bank of Tokyo-Mitsubishi UFJ, Ltd. The credit agreement
provided for a $300 million unsecured committed revolving credit
facility which matured on November 2, 2010, with no outstanding
balance as of that date.
Interest rates on advances on our lines of credit are determined
by a pricing matrix, based on our long-term debt ratings, assigned
by Standard and Poor’s Ratings Group and Moody’s Investors
Service. Facility fees are payable on the credit facilities and are
determined in the same manner as the interest rates. The
agreements also contain other customary covenants, all of which
we remain in compliance with as of April 29, 2011.
Acquisitions
On February 25, 2011, we acquired Jolife AB (Jolife), a privately-
held company. Jolife develops, manufactures, and markets the
LUCAS Chest Compression System together with complementary
technologies. Total consideration for the transaction was
approximately $53 million.
On January 13, 2011, we acquired Ardian, a privately-held
company. We had previously invested in Ardian and held an
11.3 percent ownership position prior to the acquisition.
Ardian develops catheter-based therapies to treat uncontrolled
hypertension and related conditions. Total consideration for the
transaction was $1.020 billion which includes the estimated fair
value of revenue-based contingent consideration of $212 million.
The terms of the transaction included a up-front cash payment of
$717 million, excluding our pro-rata share in Ardian, plus potential
future commercial milestone payments equal to the annual
revenue growth beginning in fiscal year 2012 through the end
of our fiscal year 2015. We recorded a gain of $85 million on our
previously held investment.
On November 16, 2010, we acquired Osteotech. Osteotech
develops innovative biologic products for regenerative medicine.
Under the terms of the agreement announced August 17, 2010,
we paid shareholders $6.50 per share in cash for each share of
Osteotech common stock that they owned. Total consideration
for the transaction was approximately $123 million.
On September 14, 2010, we acquired a developer of vascular
suturing products used in connection with cardiovascular and
vascular procedures that require a puncture or incision to the
artery. Total consideration for the transaction was valued at
approximately $21 million.