Medtronic 2009 Annual Report Download - page 43

39
Medtronic, Inc.
Our net cash provided by operating activities was $3.489
billion for the fiscal year ended April 25, 2008 compared to net
cash provided by operating activities of $2.979 billion in the same
period of the prior year. The $510 million increase in net cash
provided by operating activities was primarily attributable to
a $442 million decrease in cash used for operating assets and
liabilities. The decrease in cash used was led by our improved
management of outstanding accounts receivable and inventory.
Investing Activities Our net cash used in investing activities was
$2.740 billion for the fiscal year ended April 24, 2009 compared to
$2.790 billion used in investing activities for the fiscal year ended
April 25, 2008. Although we had a number of acquisitions which
took place in fiscal year 2009, overall cash used for acquisitions
decreased in comparison to the prior fiscal year which included
the acquisition of Kyphon. The reduction in acquisition spending
was largely offset by increased investing in marketable securities
in fiscal year 2009 which resulted in net purchases of $115 million
as compared to net proceeds of $2.124 billion in the prior year
as we readied our cash position for the acquisition of Kyphon.
Lastly, fiscal year 2009 included increased other investing activities
which primarily relate to the purchase of minority investments.
Although we generally invest in a number of early stage companies
each year, fiscal year 2009 included the use of $221 million in cash
for the purchase of a 15 percent interest in Weigao which is a
component of our strategy to increase investment in China.
Our net cash used in investing activities was $2.790 billion for
the fiscal year ended April 25, 2008 compared to $1.701 billion
used in investing activities for the fiscal year ended April 27, 2007.
The $1.089 billion increase in net cash used in investing activities
was primarily attributable to the $4.185 billion increase in cash
used for acquisitions and the purchase of intellectual property,
principally the Kyphon acquisition, partially offset by $3.067
billion in incremental cash generated through the liquidation of
marketable securities as compared to the prior year.
Financing Activities Our net cash used in financing activities was
consistent with the prior year at $845 million for the fiscal year
ended April 24, 2009 compared to $835 million for the fiscal year
ended April 25, 2008. Proceeds from net short- and long-term
borrowing were approximately $500 million lower in fiscal year
2009 as compared to fiscal year 2008, primarily due to the lower
acquisition related cash needs in the current fiscal year. Our cash
returned to shareholders in the form of dividends and the
repurchase of common stock was approximately $500 million
lower in fiscal year 2009 as compared to fiscal year 2008. Although
dividends were up during fiscal year 2009 by approximately $300
million due to an increase in the amount of dividends per share,
this increase was more than offset by approximately $800 million
in lower share repurchases as compared to fiscal year 2008.
Our net cash used in financing activities was $835 million for
the fiscal year ended April 25, 2008, compared to net cash used in
financing activities of $3.011 billion for the fiscal year ended April
27, 2007. The $2.176 billion decrease in net cash used in financing
activities was primarily attributable to the fact that in the prior
year $1.877 billion in cash was used to repurchase long-term debt
as the bond holders put the Contingent Convertible Debentures
to us and in fiscal year 2008 we generated proceeds of $843
million from net short- and long-term borrowings. These cash
inflows were offset by a $505 million increase in cash used for
share repurchases.
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.