Medtronic 2009 Annual Report Download - page 47

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Medtronic, Inc.
average interest rate was 1.60 percent and 4.46 percent,
respectively.
In connection with the issuance of the contingent convertible
debentures, New Senior Notes, Senior Notes, Senior Convertible
Notes and commercial paper, Standard and Poor’s Ratings Group
and Moody’s Investors Service issued us strong long-term debt
ratings of AA- and A1, respectively, and strong short-term debt
ratings of A-1+ and P-1, respectively. These ratings remain
unchanged from the same periods of the prior year.
We have existing unsecured lines of credit of approximately
$2.807 billion with various banks at April 24, 2009. The existing
lines of credit include a five-year $1.750 billion syndicated credit
facility dated December 20, 2006 that will expire on December 20,
2011 (Credit Facility). The Credit Facility provides backup funding
for the commercial paper program and may also be used for
general corporate purposes. The Credit Facility provides us with
the ability to increase its capacity by an additional $500 million at
any time during the life of the five-year term of the agreement.
On November 2, 2007, we entered into a new Credit Agreement
(the “New Credit Agreement”) with the Bank of Tokyo-Mitsubishi
UFJ, Ltd. (the “New Lender”). The New Credit Agreement provides
for a $300 million unsecured revolving credit facility (the “New
Facility”) maturing November 2, 2010. In addition to certain initial
fees, we are obligated to pay a commitment fee based on the
total revolving commitment.
As of April 24, 2009 and April 25, 2008, $508 million and $1.350
billion, respectively, were outstanding on all lines of credit.
Interest rates on advances on our lines of credit are determined
by a pricing matrix, based on our long-term debt ratings, assigned
by Standard and Poor’s Ratings Group and Moody’s Investors
Service. Facility fees are payable on the credit facilities and
are determined in the same manner as the interest rates. The
agreements also contain other customary covenants, all of which
we remain in compliance with as of April 24, 2009.
As of April 24, 2009, we have unused credit lines and commercial
paper capacity of approximately $2.799 billion.
Acquisitions
In April 2009, we acquired CoreValve. Under the terms of the
agreement, the transaction included an initial up-front payment
of $700 million plus potential additional payments contingent
upon achievement of certain clinical and revenue milestones.
CoreValve develops percutaneous, catheter-based transfemoral
aortic valve replacement products.
In February 2009, we acquired Ventor, a development stage
company focused on transcatheter heart valve technologies for
the treatment of aortic valve disease. Total consideration for the
transaction, net of cash acquired, was approximately $308 million,
of which $307 million was expensed as IPR&D since technological
feasibility of the underlying project had not yet been reached and
such technology has no future alternative use. This acquisition
adds two technologies to our transcatheter valve portfolio: a
minimally invasive, surgical transapical technology and a next
generation percutaneous, transfemoral technology.
It is expected that the acquisitions of CoreValve and Ventor will
allow us to pursue opportunities that have natural synergies with
our existing heart valve franchise in our CardioVascular business
and leverage our global footprint.
In February 2009, we also acquired Ablation Frontiers. Under
the terms of the agreement, the transaction included an initial
up-front payment of $225 million plus potential additional
payments contingent upon achievement of certain clinical and
revenue milestones. Total consideration for the transaction was
approximately $235 million including the assumption and
settlement of existing Ablation Frontiers debt and payment of
direct acquisition costs. Ablation Frontiers develops radiofrequency
(RF) ablation solutions for treatment of atrial fibrillation.
In November 2008, we acquired CryoCath. Under the terms of
the agreement, CryoCath shareholders received $8.75 Canadian
dollars per share in cash for each share of CryoCath common
stock that they owned. Total consideration for the transaction, net
of cash acquired, was approximately $352 million U.S. dollars
including the purchase of outstanding CryoCath common stock,
the assumption and settlement of existing CryoCath debt and the
payment of direct acquisition costs. CyroCath develops cryotherapy
products to treat cardiac arrhythmias. CryoCath’s Arctic Front
product is a minimally invasive cryo-balloon catheter designed
specifically to treat atrial fibrillation and is currently approved in
markets outside the U.S.
It is expected that the acquisitions of Ablation Frontiers and
CryoCath will allow our CRDM business to extend its reach into
the under-penetrated market of catheter based treatment of atrial
fibrillation.
In July 2008, we acquired Restore. Under the terms of the
agreement, Restore shareholders received $1.60 per share in
cash for each share of Restore common stock they owned. Total
consideration for the transaction, net of cash acquired, was
approximately $29 million. Restore’s Pillar System will provide us
with a minimally invasive, implantable medical device used to