Medtronic 2012 Annual Report Download - page 70

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 our common stock.
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 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 maturity of the commercial paper
outstanding was approximately 102 and 73 days, respectively, and the weighted average interest rate was
0.15 percent and 0.25 percent, respectively. The issuance of commercial paper reduces the amount of credit
available under our existing lines of credit.
We have committed and uncommitted lines of credit with various banks. The existing committed lines
of credit include a four-year $2.250 billion syndicated credit facility dated December 9, 2010 that will expire
on December 9, 2014 (Credit Facility). The Credit Facility provides backup funding for the commercial
paper program and may also be used for general corporate purposes. The Credit Facility provides us with
the ability to increase our capacity by an additional $500 million at any time during the life of the four-year
term of the agreement. As of April 27, 2012 and April 29, 2011, no amounts were outstanding 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 $184 million of the $200 million outstanding bank borrowings as of April 27,
2012 were short-term advances to certain subsidiaries under credit agreements with various banks. These
advances are guaranteed by the Company.
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
Services 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 short-term debt ratings and Moody’s Investors
Service long-term debt ratings remain unchanged as compared to fiscal year 2011. On February 14, 2012,
Standard & Poor’s Ratings Services downgraded our long-term debt ratings to A+, compared to AA- for the
fiscal year ended April 29, 2011. The downgrade of our long-term debt rating by Standard & Poor’s reflects
their expectations for near-term revenue growth in the low single digits, caused by declines in CRDM and
Spinal sales, combined with increased debt leverage over the past several years. We do not expect this
downgrade to have a significant impact on our liquidity or future flexibility to access additional liquidity
given our strong balance sheet, existing cash and investments, as well as our Credit Facility and related
commercial paper program discussed above. In connection with the issuance of the 2012 Senior Notes,
Standard and Poor’s Ratings Services and Moody’s Investors Service issued long-term debt ratings of A+
and A1, respectively, and short-term debt ratings of A-1+ and P-1, respectively.
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 Rating Services 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 we remain in compliance with as of
April 27, 2012.
Acquisitions
Fiscal Year 2012
On August 31, 2011, we acquired Salient. Salient develops and markets devices for haemostatic sealing
of soft tissue and bone incorporating advanced energy technology. Salient’s devices are used in a variety of
surgical procedures including orthopedic surgery, spine, open abdominal, and thoracic procedures. Total
consideration for the transaction was approximately $497 million. We had previously invested in Salient
and held an 8.9 percent ownership position in the company. In connection with the acquisition of Salient,
we recognized a gain on our previously-held investment of $32 million, which was recorded within
acquisition-related items in the consolidated statement of earnings in the second quarter of fiscal year 2012.
Net of this ownership position, the transaction value was approximately $452 million.
On August 31, 2011, we acquired PEAK. PEAK develops and markets tissue dissection devices
incorporating advanced energy technology. Total consideration for the transaction was approximately
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