Medtronic 2015 Annual Report Download - page 109

Medtronic plc
Notes to Consolidated Financial Statements (Continued)
Senior Notes Senior Notes are unsecured, senior obligations of the Company and rank equally with all other unsecured 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 24, 2015. The Company used the net proceeds
from the sale of the Senior Notes primarily for working capital and general corporate uses, which includes the repayment of
other indebtedness of the Company.
On January 26, 2015, Medtronic and Medtronic Luxco each provided a full and unconditional guarantee of the Senior Note
obligations of Medtronic, Inc. and of Covidien International Finance S.A., a Luxembourg company (“CIFSA”).
On December 10, 2014, the Company issued seven tranches of Senior Notes (collectively the 2015 Senior Notes) with an
aggregate face value of $17.000 billion, resulting in cash proceeds of approximately $16.8 billion, net of discounts and issuance
costs. The first tranche consisted of $1.000 billion of 1.500 percent Senior Notes due 2018. The second tranche consisted
of $2.500 billion of 2.500 percent Senior Notes due 2020. The third tranche consisted of $500 million of floating rate Senior
Notes due 2020 (the 2020 floating rate notes). The 2020 floating rate notes bear interest at the three-month London InterBank
Offered Rate (LIBOR) plus 80 basis points. The fourth tranche consisted of $2.500 billion of 3.150 percent Senior Notes due
2022. The fifth tranche consisted of $4.000 billion of 3.500 percent Senior Notes due 2025. The sixth tranche consisted
of $2.500 billion of 4.375 percent Senior Notes due 2035. The seventh tranche consisted of $4.000 billion of 4.625 percent
Senior Notes due 2045. Interest on the 2020 floating rate notes is payable quarterly and interest on each series of the fixed rate
notes is payable semi-annually. The Company used the combined proceeds from the 2015 Senior Notes and the $3.000
billion borrowed for a term of three years under the Term Loan Credit Agreement (as defined below) to fund the
approximately $16 billion cash consideration portion of the January 26, 2015 estimated $50 billion acquisition of Covidien, to
pay certain transaction and financing expenses, and for working capital and general corporate purposes, which may include
repayment of indebtedness.
In February 2014, the Company issued four tranches of Senior Notes (collectively, the 2014 Senior Notes) with an aggregate
face value of $2.000 billion. The first tranche consisted of $250 million of floating rate Senior Notes due 2017. The 2017
floating rate notes bear interest at the three-month London InterBank Offered Rate (LIBOR) plus 9 basis points. The second
tranche consisted of $250 million of 0.875 percent Senior Notes due 2017. The third tranche consisted of $850 million of 3.625
percent Senior Notes due 2024. The fourth tranche consisted of $650 million of 4.625 percent Senior Notes due 2044. Interest
on the 2017 floating rate notes is payable quarterly and interest on the other 2014 Senior Notes are payable semi-annually. The
Company used the net proceeds for working capital and general corporate purposes, including repayment of indebtedness.
As of January 26, 2015, Covidien had $5.000 billion aggregate principal amount issued and outstanding consisting of $750
million aggregate principal amount of 2.950 percent senior notes due 2023, $600 million aggregate principal amount of 1.350
percent senior notes due 2015, $650 million aggregate principal amount of 3.200 percent senior notes due 2022, $400
million aggregate principal amount of 2.800 percent senior notes due 2015, $600 million aggregate principal amount of 4.200
percent senior notes due 2020, $1.150 billion aggregate principal amount of 6.000 percent senior notes due 2018 and $850
million aggregate principal amount of 6.550 percent senior notes due 2037 (collectively, the “Covidien Outstanding Notes”).
The Company recorded a fair value adjustment as required upon acquisition and subsequently recorded a premium totaling $607
million related to Covidien Outstanding Notes.
As of April 24, 2015 and April 25, 2014, the Company had interest rate swap agreements designated as fair value hedges of
certain underlying fixed-rate obligations including the Company’s $600 million 4.750 percent 2005 Senior Notes, $500 million
2.625 percent 2011 Senior Notes, $500 million 4.125 percent 2011 Senior Notes, and $675 million 3.125 percent 2012 Senior
Notes. As of April 25, 2014, the Company also had an interest rate swap agreement designated as a fair value hedge underlying
the fixed rate obligation related to the Company’s $1.250 billion 3.000 percent 2010 Senior Notes, which were due during fiscal
year 2015. For additional information regarding the interest rate swap agreements, refer to Note 9.
Term Loan On January 26, 2015, Medtronic, Inc. borrowed $3.000 billion for a term of three years under that certain Senior
Unsecured Term Loan Credit Agreement (the “Term Loan Credit Agreement”), among Medtronic, Inc., Medtronic, Medtronic
Luxco, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, to finance, in part, the
cash component of the Arrangement Consideration and certain transaction expenses. Medtronic and Medtronic Luxco have
guaranteed the obligations of Medtronic, Inc. under the Term Loan Credit Agreement.
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