Medtronic 2016 Annual Report Download - page 29

Table of Contents
26
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)
income 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 2015 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,
• our ability or inability to integrate information technology systems of acquired companies in a secure and
reliable manner,
• 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.
The expansion of our services and solutions business may not yield the revenue we expect and will expose us to new risks.
We are increasingly focusing on our services and solutions businesses and the creation of comprehensive value-based healthcare
offerings, in which payment is based on measurable patient outcomes over a specific time horizon. These offerings include care
management services, cath lab and operating room managed services, and solutions for chronic disease management. We intend
to expand our services and solutions model across all of our business groups and across geographic regions. However, we remain
in the relatively early stages of developing and implementing this business model. As a result, we will need to invest significant
expense and management resources into developing our expertise and executing our strategies, and our efforts may not be profitable.