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Table of Contents
Medtronic plc
Notes to Consolidated Financial Statements (Continued)
96
Contractual maturities of debt for the next five fiscal years and thereafter, excluding the debt premium and discount, and the fair
value of outstanding interest rate swap agreements are as follows:
(in millions)
Fiscal Year
2017 $ 993
2018 6,176
2019 411
2020 3,777
2021 1,104
Thereafter 18,476
Total debt 30,937
Less: Current portion of debt 993
Long-term portion of debt $ 29,944
Financial Instruments Not Measured at Fair Value
The estimated fair value of the Company’s long-term debt, including the short-term portion, as of April 29, 2016 was $29.8 billion
compared to a principal value of $27.4 billion. As of April 24, 2015 the estimated fair value was $34.6 billion compared to a
principal value of $32.1 billion. Fair value was estimated using quoted market prices for the publicly registered senior notes,
classified as Level 2 within the fair value hierarchy. The fair values and principal values consider the terms of the related debt and
exclude the impacts of debt discounts and derivative/hedging activity.
8. Derivatives and Currency Exchange Risk Management
The Company uses operational and economic hedges, as well as currency exchange rate derivative contracts and interest rate
derivative instruments, to manage the impact of currency exchange and interest rate changes on earnings and cash flows. In addition,
the Company uses cross currency interest rate swaps to manage currency risk related to certain debt. In order to minimize earnings
and cash flow volatility resulting from currency exchange rate changes, the Company enters into derivative instruments, principally
forward currency exchange rate contracts. These contracts are designed to hedge anticipated foreign currency transactions and
changes in the value of specific assets and liabilities. At inception of the contract, the derivative is designated as either a freestanding
derivative or a cash flow hedge. The primary currencies of the derivative instruments are the Euro and Japanese Yen. The Company
does not enter into currency exchange rate derivative contracts for speculative purposes. The gross notional amount of all currency
exchange rate derivative instruments outstanding at April 29, 2016 and April 24, 2015 was $10.8 billion and $9.8 billion,
respectively. The aggregate currency exchange rate gains (losses) were $314 million, $131 million, and $(1) million, in fiscal years
2016, 2015, and 2014, 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 Contracts
Freestanding derivative 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 29,
2016 and April 24, 2015 was $5.0 billion and $4.7 billion, respectively.