Medtronic 2013 Annual Report Download - page 64

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Table of Contents
U.S. subsidiaries or raise additional capital in the U.S. through debt or equity issuances. These alternatives could result in higher
effective tax rates, increased interest expense, or other dilution of our earnings.
Cash, cash equivalents, and investments at April 27, 2012 includes $153 million of cash invested in short-term instruments held
in an indemnification trust established for self-insurance coverage for our directors and officers. In August 2012, we purchased
$300 million of directors and officers insurance coverage and commenced termination of the previously established self-insurance
indemnification trust. The termination of the Company’s indemnification trust, including the liquidation of approximately $153
million thereunder, was completed during the second quarter of fiscal year 2013.
We have investments in marketable debt securities that are classified and accounted for as available-for-sale. Our debt securities
include U.S. government and agency securities, foreign government and agency securities, corporate debt securities, certificates
of deposit, mortgage-backed securities, other asset-backed securities, and auction rate securities. Some of our investments may
experience reduced liquidity due to changes in market conditions and investor demand. Our auction rate security holdings have
experienced reduced liquidity in recent years due to changes in investor demand. Although our auction rate securities are currently
illiquid and other securities could become illiquid, we believe we could liquidate a substantial amount of our portfolio without
incurring a material impairment loss.
For the fiscal year ended April 26, 2013, the total other-than-temporary impairment losses on available-for-sale debt securities
were not significant. Based on our assessment of the credit quality of the underlying collateral and credit support available to each
of the remaining securities in which we are invested, we believe we have recorded all necessary other-than-temporary impairments
as we do not have the intent to sell, nor is it more likely than not that we will be required to sell, before recovery of the amortized
cost. However, as of April 26, 2013, we have $25 million of gross unrealized losses on our aggregate short-term and long-term
available-for-sale debt securities of $10.300 billion; if market conditions deteriorate, some of these holdings may experience other-
than-temporary impairment in the future which could have a material impact on our financial results. Management is required to
use estimates and assumptions in its valuation of our investments, which requires a high degree of judgment, and therefore, actual
results could differ materially from those estimates. See Note 6 to the consolidated financial statements in “Item 8. Financial
Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information regarding fair value
measurements.
Summary of Cash Flows
Fiscal Year
(in millions) 2013 2012 2011
Cash provided by (used in):
Operating activities $ 4,883 $ 4,470 $ 3,741
Investing activities (3,101) (2,662) (1,734)
Financing activities (2,101) (1,882) (2,006)
Effect of exchange rate changes on cash and cash equivalents 7 (71) 62
Net change in cash and cash equivalents $ (312) $ (145) $ 63
Operating Activities Our net cash provided by operating activities was $4.883 billion for the fiscal year ended April 26, 2013
compared to $4.470 billion for the prior year. The $413 million increase in net cash provided by operating activities was primarily
attributable to an increase in accounts receivable collections, primarily in certain Southern European countries, and a decrease in
inventories, partially offset by a decrease in accrued income taxes due to the timing of certain tax payments during fiscal year
2013 as compared to the prior fiscal year.
Our net cash provided by operating activities was $4.470 billion for the fiscal year ended April 27, 2012 compared to $3.741
billion for the fiscal year ended April 29, 2011. The $729 million increase in net cash provided by operating activities was primarily
attributable to the increase in earnings and increases in accrued income taxes and accrued liabilities, partially offset by the gain
on sale of Physio-Control, a decrease in certain litigation charges, net, and an increase in certain litigation payments as compared
to the prior fiscal year.
Investing Activities Our net cash used in investing activities was $3.101 billion for the fiscal year ended April 26, 2013 compared
to $2.662 billion for the prior year. The $439 million increase in net cash used in investing activities was primarily attributable to
an increase in cash used for acquisitions in comparison to the prior fiscal year and the proceeds from divestiture of Physio-Control
last year, partially offset by a decrease in net purchases and sales and maturities of marketable securities.
Our net cash used in investing activities was $2.662 billion for the fiscal year ended April 27, 2012 compared to $1.734 billion
for the prior year. The $928 million increase in cash used in investing activities was primarily attributable to increased net investing
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