Medtronic 2008 Annual Report Download - page 41

fiscal year 2008 we generated proceeds of $543 million from short-term
borrowings and $300 million from the issuance of long-term debt.
These cash inflows were offset by a $505 million increase in cash used
for stock repurchases.
Our net cash used in financing activities was $3.011 billion for the
fiscal year ended April 27, 2007, compared to net cash provided by
financing activities of $1.304 billion for the fiscal year ended April 28,
2006. The $4.315 billion increase in net cash used in financing activities
was primarily attributable to the following: a $1.877 billion increase in
cash used to repurchase long-term debt as the bond holders put the
Contingent Convertible Debentures to us in fiscal year 2007, a $5.428
billion decrease in proceeds from the issuance of long-term debt, and
a $517 million net reduction in the sale of warrants. These cash outflows
were offset by a $2.550 billion decline in cash used to repurchase
common stock and a $1.075 billion decrease in cash used in the
purchase of call options.
Off-Balance Sheet Arrangements and Long-Term
Contractual Obligations
We acquire assets still in development, enter into research and
development arrangements and sponsor certain clinical trials that often
require milestone and/or royalty payments to a third-party, contingent
upon the occurrence of certain future events. Milestone payments may
be required contingent upon the successful achievement of an
important point in the development life cycle of a product or upon
certain pre-designated levels of achievement in clinical trials. In addition,
if required by the arrangement, we may have to make royalty payments
based on a percentage of sales related to the product under
development or in the event that regulatory approval for marketing is
obtained. In situations where we have no ability to influence the
achievement of the milestone or otherwise avoid the payment, we have
included those milestone or minimum royalty payments in the following
table. However, the majority of these arrangements give us the
discretion to unilaterally make the decision to stop development of a
product or cease progress of a clinical trial, which would allow us to
avoid making the contingent payments. Although we are unlikely to
cease development if a device successfully achieves clinical testing
objectives, these payments are not included in the table of contractual
obligations because of the contingent nature of these payments and
our ability to avoid them if we decided to pursue a different path of
development or testing.
In the normal course of business, we periodically enter into
agreements that require us to indemnify customers or suppliers for
specific risks, such as claims for injury or property damage arising out
of our products or the negligence of our personnel or claims
alleging that our products infringe third-party patents or other
intellectual property. Our maximum exposure under these
indemnification provisions cannot be estimated, and we have not
accrued any liabilities within our consolidated financial statements or
included any indemnification provisions in our commitments table.
Historically, we have not experienced significant losses on these types
of indemnification obligations.
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. Presented below is a summary
of contractual obligations and other minimum commercial
commitments. See Notes 7, 8 and 14 to the consolidated financial
statements for additional information regarding long-term debt, foreign
currency contracts and lease obligations, respectively.
In addition to the amounts shown in the following table, we have
$455 million of unrecognized tax benefits recorded as long-term
liabilities in long-term accrued incomes taxes on the April 25, 2008
consolidated balance sheet. However, we are uncertain as to if or
when such amounts may be settled. The gross accrued interest and
penalties related to these uncertain tax positions totaled $126 million
at April 25, 2008.
37Medtronic, Inc.