Medtronic 2011 Annual Report Download - page 79

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Medtronic, Inc.
Contingent Convertible Debentures As of April 29, 2011 and April
30, 2010, the Company had $15 million remaining in aggregate
principal amount of 1.250 percent Contingent Convertible
Debentures, Series B due 2021 (the Debentures) outstanding.
Interest is payable semi-annually. Each Debenture is convertible
into shares of common stock at an initial conversion price of
$61.81 per share; however, the Debentures are not convertible
before their final maturity unless the closing price of the
Company’s common stock reaches 110 percent of the conversion
price for 20 trading days during a consecutive 30 trading day
period. Upon conversion of the Debentures, the Company will
pay holders cash equal to the lesser of the principal amount of
the Debentures or their conversion value, and shares of the
Company’s common stock to the extent the conversion value
exceeds the principal amount of the Debentures. The Company
may be required to repurchase the remaining Debentures at the
option of the holders in September 2011 or 2016. For put options
exercised by the holders of the Debentures, the purchase price is
equal to the principal amount of the applicable Debenture plus
any accrued and unpaid interest thereon to the repurchase date.
If the put option is exercised, the Company will pay holders the
repurchase price solely in cash. The Company can redeem the
Debentures for cash at any time.
Commercial Paper The Company maintains a commercial paper
program that allows the Company 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
the Company’s existing lines of credit.
Bank Borrowings Bank borrowings consist primarily of borrowings
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.
Lines of Credit The Company has 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 the Company’s five-year
$1.750 billion syndicated credit facility which was scheduled to
expire in December 2011. The New Facility provides the Company
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. The Company 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, no amounts were outstanding
on the committed lines of credit.
On November 2, 2007, the Company entered into a credit
agreement with the Bank of Tokyo-Mitsubishi UFJ, Ltd. The credit
agreement provided for a $300 million unsecured, committed
revolving credit facility which matured on November 2, 2010, with
no outstanding balance as of that date.
Interest rates on these borrowings are determined by a pricing
matrix, based on the Company’s long-term debt ratings, assigned
by Standard and Poor’s Ratings Group and Moody’s Investors
Service. Facility fees are payable on the credit facilities and
are determined in the same manner as the interest rates. The
agreements also contain customary covenants, all of which the
Company remains in compliance with as of April 29, 2011.
Contractual maturities of long-term debt for the next five
fiscal years and thereafter, including the current portion and
capital leases, and excluding the debt discount, the fair value
impact of outstanding interest rate swap agreements, and the
remaining gains from terminated interest rate swap agreements
are as follows:
(in millions)
Fiscal Year Obligation
2012$ 3 4
2013 2,216
2014 552
20151,252
20161,102
Thereafter 2,974
Total long-term debt 8,130
Less: Current portion of long-term debt 34
Long-term portion of long-term debt $8,096