Medtronic 2010 Annual Report Download - page 46

42 Medtronic, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(continued)
In connection with the issuance of the Debentures, 2010 Senior
Notes, 2009 Senior Notes, 2005 Senior Notes, Senior Convertible
Notes and commercial paper, Standard and Poor’s Ratings Group
and Moody’s Investors Service issued long-term debt ratings of
AA- and A1, respectively, and short-term debt ratings of A-1+ and
P-1, respectively. These ratings remain unchanged from the same
periods of the prior year.
We have existing unsecured lines of credit of approximately
$2.839 billion with various banks at April 30, 2010. The existing
lines of credit include a five-year $1.750 billion syndicated credit
facility dated December 20, 2006 that will expire on December 20,
2011. The credit facility provides backup funding for the commercial
paper program and may also be used for general corporate
purposes. The credit facility provides us with the ability to increase
its capacity by an additional $500 million at any time during the
life of the five-year term of the agreement.
On November 2, 2007, we entered into a credit agreement with
the Bank of Tokyo-Mitsubishi UFJ, Ltd. The credit agreement
provides for a $300 million unsecured revolving credit facility
maturing November 2, 2010. In addition to certain initial fees, we
are obligated to pay a commitment fee based on the total
revolving commitment.
As of April 30, 2010 and April 24, 2009, $65 million and $508
million, respectively, were outstanding on all lines of credit.
Interest rates on advances on our lines of credit are determined
by a pricing matrix, based on our long-term debt ratings, assigned
by Standard and Poor’s Ratings Group 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 other customary covenants, all of which
we remain in compliance with as of April 30, 2010.
As of April 30, 2010, we have unused credit lines and commercial
paper capacity of approximately $3.274 billion.
Pending Acquisition
On April 29, 2010 we announced the signing of a definitive
agreement to acquire ATS Medical, Inc. (ATS Medical). ATS Medical
is a leading developer, manufacturer and marketer of products
and services focused on cardiac surgery, including heart valves
and surgical cryoablation technology. Under the terms of the
agreement, we will pay $4.00 per share in cash for each share of
ATS Medical stock. The total value of the transaction is expected
to be approximately $370 million, which includes the purchase of
ATS Medical stock and assumption of net debt. The transaction is
expected to close this summer and is subject to customary closing
conditions, including approval by ATS Medical’s shareholders and
U.S. and foreign regulatory clearances.
Acquisitions
In April 2010, we acquired Invatec. Under the terms of the
agreement, the transaction included an initial up-front payment
of $350 million, which includes the assumption and settlement of
existing Invatec debt. The agreement also includes potential
additional payments of up to $150 million contingent upon
achievement of certain milestones. Invatec is a developer of
innovative medical technologies for the interventional treatment
of cardiovascular disease.
In April 2009, we acquired CoreValve. Under the terms of the
agreement, the transaction included an initial up-front payment
of $700 million plus potential additional payments contingent
upon achievement of certain clinical and revenue milestones.
CoreValve develops percutaneous, catheter-based transfemoral
aortic valve replacement products that are approved in certain
markets outside the U.S.
In February 2009, we acquired Ventor, a development stage
company focused on transcatheter heart valve technologies for
the treatment of aortic valve disease. Total consideration for the
transaction, net of cash acquired, was approximately $308 million,
of which $307 million was expensed as IPR&D since technological
feasibility of the underlying project had not yet been reached and
such technology has no future alternative use. This acquisition
adds two technologies to our transcatheter valve portfolio: a
minimally invasive, surgical transapical technology and a next
generation percutaneous, transfemoral technology.
It is expected that the acquisitions of CoreValve and Ventor will
allow us to pursue opportunities that have natural synergies with
our existing heart valve franchise in our CardioVascular business
and leverage our global footprint.
In February 2009, we also acquired Ablation Frontiers. Under
the terms of the agreement, the transaction included an initial
up-front payment of $225 million plus potential additional
payments contingent upon achievement of certain clinical and
revenue milestones. Total consideration for the transaction
was approximately $235 million including the assumption and
settlement of existing Ablation Frontiers debt and payment
of direct acquisition costs. Ablation Frontiers develops radio
frequency ablation solutions for treatment of atrial fibrillation.
Ablation Frontiers’ system of ablation catheters and radio
frequency generator is currently approved in certain markets
outside the U.S.