Medtronic 2012 Annual Report Download - page 110

Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
93
maturity of the commercial paper outstanding was approximately 102 and 73 days, respectively, and the
weighted average interest rate was 0.15 percent and 0.25 percent, respectively. The issuance of commercial
paper reduces the amount of credit available under the Company’s existing lines of credit.
Bank Borrowings Bank borrowings consist primarily of borrowings from non-U.S. banks at interest
rates considered favorable by management and where natural hedges can be gained for foreign exchange
purposes and borrowings from U.S. banks. Approximately $184 million of the $200 million outstanding bank
borrowings as of April 27, 2012 were short-term advances to certain subsidiaries under credit agreements
with various banks. These advances are guaranteed by the Company.
Lines of Credit The Company has committed and uncommitted lines of credit with various banks.
The committed lines of credit include a four-year $2.250 billion syndicated credit facility dated December 9,
2010 that will expire on December 9, 2014 (Credit Facility). The Credit Facility provides the Company with
the ability to increase its capacity by an additional $500 million at any time during the life of the four-year
term of the agreement. The Company can also request the extension of the Credit Facility maturity date for
one additional year, at the first and second anniversary of the date of the Credit Facility. The Credit Facility
provides backup funding for the commercial paper program, and therefore, the issuance of commercial
paper reduces the amount of credit available under the committed lines of credit. As of April 27, 2012 and
April 29, 2011, no amounts were outstanding on the committed lines of credit.
Interest rates on these borrowings are determined by a pricing matrix, based on the Company’s long-
term debt ratings assigned by Standard and Poor’s Ratings Services 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 customary covenants, all of which the Company remains in compliance with as of
April 27, 2012.
Contractual maturities of long-term debt for the next five fiscal years and thereafter, including current
portions, capital leases, and $13 million of bank borrowings related to the term loan discussed in Note 16,
and excluding the debt discount, the fair value impact of outstanding interest rate swap agreements, and the
remaining gains from terminated interest rate swap agreements are as follows:
(in millions)
Fiscal Year Obligation
___________ ___________
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,227
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,263
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,113
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,121
___________
Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,317
Less: Current portion of long-term debt . . . . . . . . . . . . . 2,227
___________
Long-term portion of long-term debt . . . . . . . . . . . . . . . $ 7, 090
___________
___________
10. Derivatives and Foreign 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 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, liabilities, and probable commitments. At inception
of the forward 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 the Japanese Yen. The Company
does not enter into currency exchange rate derivative instruments for speculative purposes. The gross
notional amount of all currency exchange rate derivative instruments outstanding at April 27, 2012 and
April 29, 2011 was $5.136 billion and $6.834 billion, respectively. The aggregate currency exchange rate