Medtronic 2013 Annual Report Download - page 65

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Table of Contents
in marketable securities in fiscal year 2012, partially offset by proceeds from the divestiture of Physio-Control and a decrease in
cash used for acquisitions in comparison to the prior fiscal year. The increased net investing in marketable securities in fiscal year
2012 resulted primarily from a decrease in sales of marketable securities as compared to fiscal year 2011, during which period we
sold securities to repay maturing debt.
Financing Activities We had net cash used in financing activities of $2.101 billion for the fiscal year ended April 26, 2013
compared to $1.882 billion for the prior year. The $219 million increase in cash used in financing activities primarily resulted
from a $627 million decrease in net borrowings (long-term debt issuances and short-term borrowings in excess of payments),
partially offset by higher levels of common stock issuances under employee stock purchase and award plans and a $159 million
net decrease in cash returned to shareholders in the form of dividends and common stock repurchases compared to the prior fiscal
year.
We had net cash used in financing activities of $1.882 billion for the fiscal year ended April 27, 2012 compared to $2.006 billion
for the prior fiscal year. The $124 million decrease in cash used in financing activities was primarily attributable to a $583 million
increase in net borrowings (long-term debt issuances and short-term borrowings in excess of payments) partially offset by a $352
million increase in cash returned to shareholders in the form of dividends and common stock repurchases as compared to fiscal
year 2011.
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. See Note 4 to the consolidated financial statements in “Item 8. Financial Statements
and Supplementary Data” in this Annual Report on Form 10-K for additional information regarding contingent consideration.
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 as of April 26, 2013. See Notes 8 and 15 to the consolidated financial statements in “Item 8. Financial Statements
and Supplementary Data” in this Annual Report on Form 10-K for additional information regarding long-term debt and lease
obligations, respectively. Additionally, see Note 13 to the consolidated financial statements in “Item 8. Financial Statements and
Supplementary Data” in this Annual Report on Form 10-K for additional information regarding accrued income tax obligations,
which are not reflected in the table below.
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