Medtronic 2010 Annual Report Download - page 42

38 Medtronic, Inc.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
(continued)
Summary of Cash Flows
Fiscal Year
(in millions) 2010 2009 2008
Cash provided by (used in):
Operating activities $ 4,131 $ 3,878 $ 3,489
Investing activities (4,759) (2,740) (2,790)
Financing activities 764 (845) (835)
Effect of exchange rate changes
on cash and cash equivalents (7) (82) (60)
Net change in cash and cash
equivalents $ 129 $ 211 $ (196)
Operating Activities Our net cash provided by operating activities
was $4.131 billion for the fiscal year ended April 30, 2010 compared
to $3.878 billion provided by operating activities for the same
period of the prior year. The $253 million increase in net cash
provided by operating activities is primarily attributable to the
increase in earnings offset by an increase in certain litigation
payments. For more information regarding these payments, refer
to Note 3 of the consolidated financial statements.
Our net cash provided by operating activities was $3.878 billion
for the fiscal year ended April 24, 2009 compared to net cash
provided by operating activities of $3.489 billion in the same
period of the prior year. The $389 million increase in net cash
provided by operating activities was primarily attributable to the
increase in earnings and due to the timing of receipts and
payments for disbursements in the ordinary course of business.
Investing Activities Our net cash used in investing activities was
$4.759 billion for the fiscal year ended April 30, 2010 compared to
$2.740 billion used in investing activities for the fiscal year ended
April 24, 2009. Cash used for acquisitions decreased in comparison
to the prior fiscal year as the prior fiscal year included the
acquisitions of Restore Medical, Inc. (Restore), CryoCath, Ablation
Frontiers and CoreValve. The reduction in acquisition spending
was more than offset by increased investing in marketable
securities in fiscal year 2010 which resulted in net purchases of
$3.687 billion as compared to net purchases of $115 million in the
prior year. The increased investing in marketable securities
resulted from investing the proceeds of our fiscal year 2010 $3.000
billion debt issuance.
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 was a
component of our strategy to increase investment in China.
Financing Activities We had net cash provided by financing
activities of $764 million for the fiscal year ended April 30, 2010
compared to net cash used in financing activities of $845 million
for the fiscal year ended April 24, 2009. Proceeds from net short- and
long-term borrowings were approximately $2.219 billion higher in
fiscal year 2010 as compared to fiscal year 2009, primarily due to the
debt issuance of $3.000 billion during fiscal year 2010. Our cash
returned to shareholders in the form of dividends and the repurchase
of common stock was approximately $335 million higher in fiscal
year 2010 as compared to fiscal year 2009. Both dividends and
share repurchases were up compared to fiscal year 2009.
Our net cash used in financing activities was $845 million for
the fiscal year ended April 24, 2009 compared to $835 billion for
the fiscal year ended April 25, 2008. Proceeds from net short- and
long-term borrowings 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.
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