Medtronic 2015 Annual Report Download - page 37

Negative conditions in the global credit market may impair our commercial paper program, our auction rate securities, and
our other fixed income securities, which may cause us losses and liquidity issues.
We have investments in marketable debt securities that are classified and accounted for as available-for-sale. Our debt securities
include U.S. and foreign government and agency securities, corporate debt securities, certificates of deposit, debt funds, and
mortgage-backed and other asset-backed securities, including auction rate securities. Market conditions over the past several
years have included periods of significant economic uncertainty and at times general market distress, especially in the banking
and financial services sector. During these periods of economic uncertainty, we may experience reduced liquidity across the
fixed-income investment market, including the securities in which we invest. In the event we need to sell these securities, we
may not be able to do so in a timely manner or for a value that is equal to the underlying principal. In addition, we may be
required to adjust the carrying value of the securities and record an impairment charge. If we determine that the fair value of
such securities is temporarily impaired, we would record a temporary impairment as a component of accumulated other
comprehensive loss within shareholders’ equity. If it is determined that the fair value of these securities is other-than-
temporarily impaired, we would record a loss in our consolidated statements of earnings, which could materially adversely
impact our results of operations and financial condition.
Negative market conditions may also impair our ability to access the capital markets through the issuance of commercial paper
or debt securities, or may impact our ability to sell such securities at a reasonable price and may negatively impact our ability to
borrow from financial institutions.
Our products are continually the subject of clinical trials conducted by us, our competitors, or other third parties, the results
of which may be unfavorable, or perceived as unfavorable, and could have a material adverse effect on our business,
financial condition, and results of operations.
As a part of the regulatory process of obtaining marketing clearance for new products and new indications for existing products,
we conduct and participate in numerous clinical trials with a variety of study designs, patient populations, and trial endpoints.
Unfavorable or inconsistent clinical data from existing or future clinical trials conducted by us, by our competitors, or by third
parties, or the market’s or U.S. FDA’s perception of this clinical data, may adversely impact our ability to obtain product
approvals, our position in, and share of, the markets in which we participate, and our business, financial condition, and results of
operations.
Failure to integrate acquired businesses into our operations successfully could adversely affect our business.
As part of our strategy to develop and identify new products and technologies, we have made several acquisitions in recent
years, including the recent acquisition of Covidien, and may make additional acquisitions in the future. Our integration of the
operations of acquired businesses requires significant efforts, including the coordination of information technologies, research
and development, sales and marketing, operations, manufacturing, and finance. These efforts result in additional expenses and
involve significant amounts of management’s time that cannot then be dedicated to other projects. Our failure to manage and
coordinate the growth of the combined company successfully could also have an adverse impact on our business. In addition, we
cannot be certain that the businesses we acquire will become profitable or remain so. Factors that will affect the success of our
acquisitions include:
•the presence or absence of adequate internal controls and/or significant fraud in the financial systems of
acquired companies,
•adverse developments arising out of investigations by governmental entities of the business practices of
acquired companies, including potential liability imposed by FCPA,
•any decrease in customer loyalty and product orders caused by dissatisfaction with the combined
companies’ product lines and sales and marketing practices, including price increases,
•our ability to retain key employees, and
•the ability of the combined company to achieve synergies among its constituent companies, such as
increasing sales of the combined company’s products, achieving cost savings, and effectively combining
technologies to develop new products.
We also could experience negative effects on our results of operations, cash flows, and financial condition from acquisition-
related charges, amortization of intangible assets and asset impairment charges. These effects, individually or in the aggregate,
could cause a deterioration of our credit rating and result in increased borrowing costs and interest expense.
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