Medtronic 2012 Annual Report Download - page 109

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Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
92
The following table provides equity and debt information for the 2013 Senior Convertible Notes under
the convertible debt guidance:
2013 Senior Convertible Notes
___________________________________
(in millions) April 27, 2012 April 29, 2011
___________ _____________ _____________
Carrying amount of the equity component . . . . . . . . . . . . . . . . . $ 547 $ 547
_____________ _____________
Principal amount of the Senior Convertible Notes . . . . . . . . . . $ 2,200 $ 2,200
Unamortized discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (90) (177)
_____________ _____________
Net carrying amount of the debt component . . . . . . . . . . . . . . . $ 2,110 $ 2,023
_____________ _____________
_____________ _____________
As of April 27, 2012, the unamortized balance of the debt discount will be amortized over the remaining
life of the 2013 Senior Convertible Notes, which is approximately one year. The following table provides
interest expense amounts related to the Senior Convertible Notes.
2013 Senior 2011 Senior
Convertible Notes Convertible Notes
_____________________ _____________________
(in millions) 2012 2011 2012 2011
___________ ________ ________ ________ ________
Interest cost related to contractual interest coupon . . . . $ 36 $ 36 $ –$32
Interest cost related to amortization of the discount . . . 87 82 – 90
Senior Notes Senior Notes are unsecured, senior obligations of the Company and rank equally with
all other secured and unsubordinated indebtedness of the Company. The indentures under which the
Senior Notes were issued contain customary covenants, all of which the Company remains in compliance
with as of April 27, 2012. The Company used the net proceeds from the sale of the Senior Notes primarily
for working capital and general corporate purposes, which include the repayment of other indebtedness of
the Company.
In March 2012, the Company issued two tranches of Senior Notes (collectively, the 2012 Senior Notes)
with an aggregate face value of $1.075 billion. The first tranche consisted of $675 million of 3.125 percent
Senior Notes due 2022. The second tranche consisted of $400 million of 4.500 percent Senior Notes due
2042. Interest on each series of 2012 Senior Notes is payable semi-annually, on March 15 and September 15
of each year, commencing September 15, 2012. The Company used the net proceeds from the sale of the 2012
Senior Notes for working capital and general corporate purposes.
As of April 27, 2012 and April 29, 2011, the Company had interest rate swap agreements designated as
fair value hedges of underlying fixed-rate obligations including the Company’s $1.250 billion 3.000 percent
2010 Senior Notes due 2015, the $600 million 4.750 percent 2005 Senior Notes due 2015, the Company’s
$500 million 2.625 percent 2011 Senior Notes due 2016, and the Company’s $500 million 4.125 percent 2011
Senior Notes due 2021. Additionally, as of April 27, 2012, the Company had interest rate swap agreements
designated as fair value hedges of underlying fixed-rate obligations including the Company’s $675 million
3.125 percent 2012 Senior Notes due 2022. As of April 29, 2011, the Company had interest rate swap
agreements designated as fair value hedges of underlying fixed-rate obligations including the $2.200 billion
1.625 percent Senior Convertible Notes due 2013, and the $550 million 4.500 percent 2009 Senior Notes
due 2014. For additional information regarding the interest rate swap agreements, refer to Note 10.
Contingent Convertible Debentures As of April 29, 2011, the Company had $15 million remaining in
aggregate principal amount of 1.250 percent Contingent Convertible Debentures, Series B due 2021 (the
Debentures) outstanding. Each Debenture was convertible into shares of common stock at an initial
conversion price of $61.81 per share. In July 2011, the Company gave notice to the holders of the Debentures
of its intent to redeem the Debentures for cash at a price equal to 100% of the principal amount, plus any
accrued and unpaid interest, on September 15, 2011 (the Redemption Date). All of the outstanding
Debentures were settled for cash on the Redemption Date and no holders converted Debentures into shares
of the Company’s common stock.
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 27, 2012 and April 29, 2011, outstanding commercial paper totaled
$950 million and $1.500 billion, respectively. During fiscal years 2012 and 2011, the weighted average original