Medtronic 2012 Annual Report Download - page 113

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Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
96
As of April 27, 2012 and April 29, 2011, the Company had interest rate swaps in gross notional amounts
of $2.625 billion and $3.500 billion, respectively, designated as fair value hedges of underlying fixed-rate
obligations. As of April 27, 2012 and April 29, 2011, 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 2010 Senior Notes due 2015, the $600 million 4.750 percent 2005 Senior Notes due 2015, the
$500 million 2.625 percent 2011 Senior Notes due 2016, and the $500 million 4.125 percent 2011 Senior
Notes due 2021. Additionally, as of April 27, 2012 the Company had interest rate swap agreements designated
as fair value hedges of underlying fixed-rate obligations including the Company’s $675 million 3.125 percent
2012 Senior Notes due 2022. As of April 29, 2011 the Company also had interest rate swap agreements
designated as fair value hedges of underlying fixed-rate obligations including the Company’s $2.200 billion
1.625 percent Senior Convertible Notes due 2013 and the $550 million 4.500 percent 2009 Senior Notes
due 2014.
In March 2012, the Company entered into ten-year fixed-to-floating interest rate swap agreements with
a consolidated notional amount of $675 million, which were designated as fair value hedges of fixed interest
rate obligations under the Company’s 2012 Senior Notes due 2022. The Company pays variable interest
equal to the one-month London Interbank Offered Rate (LIBOR) plus approximately 92.00 basis points,
and receives a fixed interest rate of 3.125 percent.
In July 2011, the Company terminated interest rate swap agreements with a consolidated notional
amount of $900 million that were designated as fair value hedges of the fixed interest rate obligation under
the Company’s $2.200 billion 1.625 percent 2013 Senior Convertible Notes and $550 million 4.500 percent
2009 Senior Notes due 2014. Upon termination, the contracts were in an asset position, resulting in cash
receipts of $46 million, which included $10 million of accrued interest. The gain from terminating the interest
rate swap agreements increased the outstanding balances of the 2013 Senior Convertible Notes and the
2009 Senior Notes due 2014 and is being amortized as a reduction of interest expense over the remaining
life of the 2013 Senior Convertible Notes and the 2009 Senior Notes due 2014. The cash flows from the
termination of these interest rate swap agreements have been reported as operating activities in the
consolidated statements of cash flows.
In August 2011, the Company terminated interest rate swap agreements with a consolidated notional
amount of $650 million that were designated as fair value hedges of the fixed interest rate obligation under
the Company’s $1.250 billion 3.000 percent 2010 Senior Notes due 2015. Upon termination, the contracts
were in an asset position, resulting in cash receipts of $42 million, which included $7 million of accrued
interest. The gain from terminating the interest rate swap agreement increased the outstanding balance of
the 2010 Senior Notes due 2015 and is being amortized as a reduction of interest expense over the remaining
life of the 2010 Senior Notes due 2015. The cash flows from the termination of these interest rate swap
agreements have been reported as operating activities in the consolidated statements of cash flows.
In March 2011, the Company entered into five-year and ten-year fixed-to-floating interest rate swap
agreements with a consolidated notional amount of $750 million, which were designated as fair value hedges
of fixed interest rate obligations under the Company’s 2011 Senior Notes due 2016 and 2021. The Company
pays variable interest equal to the LIBOR plus approximately 37.00 and 66.00 basis points, and receives a
fixed interest rate of 2.625 percent and 4.125 percent, respectively.
In March 2010, the Company entered into 12 five-year fixed-to-floating interest rate swap agreements
with a consolidated notional amount of $1.850 billion. Nine of these interest rate swap agreements were
designated as fair value hedges of the fixed interest rate obligation under the Company’s $1.250 billion
3.000 percent 2010 Senior Notes due 2015. The remaining three interest rate swap agreements were
designated as fair value hedges of the fixed interest rate obligation under the Company’s $600 million
4.750 percent 2010 Senior Notes due 2015. On the first nine interest rate swap agreements, the Company
pays variable interest equal to the three-month LIBOR plus 36.00 basis points and it receives a fixed interest
rate of 3.000 percent. On the remaining three interest rate swap agreements, the Company pays variable
interest equal to the LIBOR plus 185.00 basis points and it receives a fixed interest rate of 4.750 percent.