Medtronic 2015 Annual Report Download - page 110

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Medtronic plc
Notes to Consolidated Financial Statements (Continued)
Contractual maturities of debt for the next five fiscal years and thereafter, excluding the debt premium and discount, the fair
value of outstanding interest rate swap agreements, and the remaining deferred gains from terminated interest rate swap
agreements are as follows:
(in millions)
Fiscal Year
2016 $ 2,419
2017 538
2018 6,173
2019 423
2020 4,273
Thereafter 21,764
Total debt 35,590
Less: Current portion of debt 2,419
Long-term portion of debt $ 33,171
9. Derivatives and Foreign Exchange Risk Management
The Company enters into derivative instruments, principally forward currency exchange rate contracts, in order to minimize
earnings and cash flow volatility resulting from currency exchange rate changes. These contracts are designed to hedge
anticipated foreign currency transactions and changes in the value of specific assets and liabilities. The primary currencies of
these derivative instruments are the Euro and Japanese Yen. The gross notional amount of all currency exchange rate derivative
instruments outstanding at April 24, 2015 and April 25, 2014 was $9.782 billion and $8.051 billion, respectively. The aggregate
currency exchange rate gains (losses) were $131 million, $(1) million, and $25 million, in fiscal years 2015, 2014, and 2013,
respectively.
The information that follows explains the various types of derivatives and financial instruments used by the Company, how and
why the Company uses such instruments, how such instruments are accounted for, and how such instruments impact the
Company’s consolidated balance sheets, statements of income, and statements of cash flows.
Freestanding Derivative Forward Contracts
Freestanding derivative forward contracts are used to offset the Company’s exposure to the change in value of specific foreign
currency denominated assets and liabilities and to offset variability of cash flows associated with forecasted transactions
denominated in a foreign currency. The gross notional amount of these contracts, not designated as hedging instruments,
outstanding at April 24, 2015 and April 25, 2014 was $4.713 billion and $2.202 billion, respectively.
The amount and location of the gains in the consolidated statements of income related to derivative instruments, not designated
as hedging instruments, for fiscal years 2015, 2014, and 2013 are as follows:
(in millions) Fiscal Year
Derivatives Not Designated as Hedging Instruments Location 2015 2014 2013
Foreign currency exchange rate contracts Other expense, net $ 210 $ 15 $ 26
Cash Flow Hedges
Foreign Currency Exchange Rate Risk Forward contracts designated as cash flow hedges are designed to hedge the
variability of cash flows associated with forecasted transactions denominated in a foreign currency that will take place in the
future. No gains or losses relating to ineffectiveness of cash flow hedges were recognized in earnings during fiscal years 2015,
2014, or 2013. No components of the hedge contracts were excluded in the measurement of hedge ineffectiveness and no hedges
were derecognized or discontinued during fiscal years 2015, 2014, or 2013. The gross notional amount of these contracts,
designated as cash flow hedges, outstanding at April 24, 2015 and April 25, 2014 was $5.069 billion and $5.849 billion,
respectively, and will mature within the subsequent two-year period.
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