Medtronic 2013 Annual Report Download - page 39

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Table of Contents
If we experience decreasing prices for our goods and services and we are unable to reduce our expenses, our results of operations
will suffer.
We may experience decreasing prices for our goods and services due to pricing pressure experienced by our customers from
managed care organizations and other third-party payers, increased market power of our customers as the medical device industry
consolidates, and increased competition among medical engineering and manufacturing services providers. If the prices for our
goods and services decrease and we are unable to reduce our expenses, our results of operations will be adversely affected.
Continuing worldwide economic instability, including challenges faced by the Eurozone countries, could adversely affect our
revenues, financial condition or results of operations.
Since fiscal year 2008, the global economy has been impacted by the sequential effects of an ongoing global financial crisis. This
global financial crisis, including the European sovereign debt crisis, has caused extreme disruption in the financial markets,
including severely diminished liquidity and credit availability. There can be no assurance that there will not be further deterioration
in the global economy. Our customers and vendors may experience financial difficulties or be unable to borrow money to fund
their operations which may adversely impact their ability to purchase our products or to pay for our products on a timely basis, if
at all. As with our customers and vendors, these economic conditions make it more difficult for us to accurately forecast and plan
our future business activities. In addition, a significant amount of our trade receivables are with national health care systems in
many countries (including, but not limited to, Greece, Ireland, Portugal, and Spain). Repayment of these receivables is dependent
upon the financial stability of the economies of those countries. In light of the current economic state of many countries outside
the U.S., we continue to monitor their creditworthiness. Failure to receive payment of all or a significant portion of these receivables
could adversely affect our results of operations. Further, there are concerns for the overall stability and suitability of the Euro as
a single currency, given the economic and political challenges facing individual Eurozone countries. Continuing deterioration in
the creditworthiness of the Eurozone countries, the withdrawal of one or more member countries from the EU, or the failure of
the Euro as a common European currency could adversely affect our revenues, financial condition or results of operations.
We are subject to a variety of market and financial risks due to our international operations that could adversely affect those
operations or our profitability and operating results.
Our operations in countries outside the U.S., which accounted for 45 percent of our net sales for the fiscal year ended April 26,
2013, are accompanied by certain financial and other risks. We intend to continue to pursue growth opportunities in sales outside
the U.S., especially in emerging markets, which could expose us to greater risks associated with international sales and operations.
Our profitability and international operations are, and will continue to be, subject to a number of risks and potential costs, including:
• local product preferences and product requirements,
• longer-term receivables than are typical in the U.S.,
• fluctuations in foreign currency exchange rates,
• less intellectual property protection in some countries outside the U.S. than exists in the U.S.,
• trade protection measures and import and export licensing requirements,
• work force instability,
• political and economic instability, and
• the potential payment of U.S. income taxes on certain earnings of our subsidiaries outside the U.S. upon
repatriation.
In particular, the Obama Administration has announced potential legislative proposals to tax profits of U.S. companies earned
abroad. While it is impossible for us to predict whether these and other proposals will be implemented, or how they will ultimately
impact us, they may materially impact our results of operations if, for example, our profits earned abroad are subject to U.S. income
tax, or we are otherwise disallowed deductions as a result of these profits.
Finally, changes in foreign currency exchange rates may reduce the reported value of our foreign currency revenues, net of expenses,
and cash flows. We cannot predict changes in currency exchange rates, the impact of exchange rate changes, nor the degree to
which we will be able to manage the impact of currency exchange rate changes.
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