Medtronic 2012 Annual Report Download - page 41

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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, 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 that we invest in. 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 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. If our acquisitions are not successful, we may
record unexpected impairment charges. 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,
• 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.
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