Medtronic 2010 Annual Report Download - page 82

78 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
respectively. Interest on each series of 2005 Senior Notes is payable
semi-annually, on March 15 and September 15 of each year. The
2005 Senior Notes are unsecured unsubordinated obligations of
the Company and rank equally with all other unsecured and
unsubordinated indebtedness of the Company. The indentures
under which 2005 Senior Notes were issued contain customary
covenants, all of which the Company remains in compliance with
as of April 30, 2010. The Company used the net proceeds from the
sale of the 2005 Senior Notes for repayment of a portion of its
commercial paper.
As of April 30, 2010, the Company had interest rate swap
agreements designated as fair value hedges of underlying fixed
rate obligations including the Company’s $1.250 billion 3.000
percent Senior Notes due 2015, the Company’s $600 million 4.750
percent Senior Notes due 2015, the Company’s $2.200 billion
1.625 percent Senior Convertible Notes due 2013 and the
Company’s $550 million 4.500 percent Senior Notes due 2014. The
Company did not have any interest rate swap agreements
outstanding as of April 24, 2009. For additional information
regarding the interest rate swap agreements, refer to Note 10.
Contingent Convertible Debentures As of April 30, 2010, the
Company has $15 million remaining in aggregate principal amount
of 1.250 percent Contingent Convertible Debentures, Series B due
2021 (the Debentures) outstanding. Interest is payable semi-
annually. Each Debenture is convertible into shares of common
stock at an initial conversion price of $61.81 per share; however,
the Debentures are not convertible before their final maturity
unless the closing price of the Company’s common stock reaches
110 percent of the conversion price for 20 trading days during a
consecutive 30 trading day period. Upon conversion of the
Debentures, the Company will pay holders cash equal to the
lesser of the principal amount of the Debentures or their
conversion value, and shares of the Company’s common stock to
the extent the conversion value exceeds the principal amount of
the Debentures. The Company may be required to repurchase the
remaining debentures at the option of the holders in September
2011 or 2016. For put options exercised by the holders of the
Debentures, the purchase price is equal to the principal amount
of the applicable debenture plus any accrued and unpaid interest
thereon to the repurchase date. If the put option is exercised, the
Company will pay holders the repurchase price solely in cash. The
Company can redeem the debentures for cash at any time.
Commercial Paper The Company maintains a commercial paper
program that allows the Company to have a maximum of $2.250
billion in commercial paper outstanding, with maturities up to
364 days from the date of issuance. There was no outstanding
commercial paper as of April 30, 2010. At April 24, 2009, outstanding
commercial paper totaled $385 million. During fiscal years 2010
and 2009, the weighted average original maturity of the
commercial paper outstanding was approximately 63 and 50 days,
respectively, and the weighted average interest rate was 0.44
percent and 1.60 percent, respectively. The issuance of commercial
paper reduces the amount of credit available under the Company’s
existing lines of credit.
Bank Borrowings Bank borrowings consist primarily of borrowings
from non-U.S. banks at interest rates considered favorable by
management and where natural hedges can be gained for foreign
exchange purposes and borrowings from U.S. banks.
Lines of Credit The Company has 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 the Company 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, the Company 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, the Company is 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 and
commercial paper.
Interest rates on these borrowings are determined by a pricing
matrix, based on the Company’s 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 customary covenants, all of which the
Company remains in compliance with as of April 30, 2010.
As of April 30, 2010, the Company has unused credit lines and
commercial paper of approximately $3.274 billion.