Medtronic 2013 Annual Report Download - page 63

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Table of Contents
Liquidity and Capital Resources
Fiscal Year
(dollars in millions) 2013 2012
Working capital $ 13,902 $ 10,409
Current ratio* 4.6:1.0 2.8:1.0
Cash, cash equivalents, and current investments $ 11,071 $ 9,350
Non-current investments in debt, marketable equity and trading securities** 293 439
Total $ 11,364 $ 9,789
Short-term borrowings and long-term debt $ 10,651 $ 10,633
Net cash position*** $ 713 $ (844)
* Current ratio is the ratio of current assets to current liabilities.
** Non-current investments include debt, marketable equity, and trading securities that are not considered readily available
to fund current operations.
*** Net cash position is the sum of cash, cash equivalents, current investments, and non-current investments in debt,
marketable equity, and trading securities less short-term borrowings and long-term debt.
As of April 26, 2013, we believe our strong balance sheet and liquidity provide us with flexibility in the future. We believe our
existing cash and investments, as well as our $2.250 billion syndicated credit facility and related commercial paper program ($125
million of commercial paper outstanding as of April 26, 2013), will satisfy our foreseeable working capital requirements for at
least the next 12 months. However, we periodically consider various financing alternatives and may, from time to time, seek to
take advantage of favorable interest rate environments or other market conditions. We also generally expect to refinance maturities
of long-term debt. At April 26, 2013, our Standard & Poor's (S&P) Ratings Services ratings remain unchanged as compared to
those at April 27, 2012 with long-term debt ratings of A+ and strong short-term debt ratings of A-1+. On March 14, 2013, Moody's
Investors Service (Moody's) downgraded our long-term debt rating to A2 from A1. The downgrade of our long-term debt rating
by Moody’s reflects their belief that the Company will add future debt to help fund shareholder initiatives and potential U.S.
acquisitions. We do not expect this downgrade to have a significant impact on our liquidity or future flexibility to access additional
liquidity given our strong balance sheet and existing cash and investments, as well as our syndicated credit facility and related
commercial paper program discussed above and within the “Debt and Capital” section of this management’s discussion and
analysis. Moody's short-term debt rating remains unchanged at P-1 as compared to the fiscal year ended April 27, 2012.
Our net cash position in fiscal year 2013 increased by $1.557 billion as compared to fiscal year 2012. See the “Summary of Cash
Flows” section of this management’s discussion and analysis for further information.
We have future contractual obligations and other minimum commercial commitments that are entered into in the normal course
of business. We believe our off-balance sheet arrangements do not have a material current or anticipated future effect on our
consolidated earnings, financial position, or cash flows. See the “Off-Balance Sheet Arrangements and Long-Term Contractual
Obligations” section of this management’s discussion and analysis for further information.
Note 17 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report
on Form 10-K provides information regarding amounts we have accrued related to significant legal proceedings. In accordance
with U.S. GAAP, we record a liability in our consolidated financial statements for these actions when a loss is known or considered
probable and the amount can be reasonably estimated. For the fiscal year ended April 26, 2013, we have made payments related
to certain legal proceedings. For information regarding these payments, please see the “Restructuring Charges, Net, Certain
Litigation Charges, Net, and Acquisition-Related Items” section of this management’s discussion and analysis.
A significant amount of our earnings occur outside the U.S., and are indefinitely reinvested in non-U.S. subsidiaries, resulting in
a majority of our cash, cash equivalents, and investments being held by such non-U.S. subsidiaries. As of April 26, 2013 and
April 27, 2012, approximately $10.930 billion and $9.121 billion, respectively, of cash, cash equivalents, and investments in
marketable debt and equity securities were held by our non-U.S. subsidiaries. These funds are available for use by our non-U.S.
operations. We continue to be focused on goals to grow our business through increased globalization of the Company, as
demonstrated by the recent acquisition of Kanghui in China, as emerging markets continue to be a significant driver of potential
growth. However, if these funds were repatriated to the U.S. or used for U.S. operations, the amounts would generally be subject
to U.S. tax. As a result, we continue to accumulate earnings in non-U.S. subsidiaries for investment in operations outside the U.S.
and to use cash generated from U.S. operations as well as short- and long-term borrowings to meet our U.S. cash needs. Should
we require more capital in the U.S. than is generated by our U.S. operations, we could elect to repatriate earnings from our non-
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