Medtronic 2012 Annual Report Download - page 132

Download and view the complete annual report

Please find page 132 of the 2012 Medtronic annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 152

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152

Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
115
Effective May 1, 2005, the Company froze participation in the existing defined benefit pension plan in
the U.S. and implemented two new plans including an additional defined benefit pension plan and a new
defined contribution pension plan, respectively: the Personal Pension Account (PPA) and the Personal
Investment Account (PIA). Employees in the U.S. hired on or after May 1, 2005 have the option to
participate in either the PPA or the PIA. Participants in the PPA receive an annual allocation of their salary
and bonus on which they will receive an annual guaranteed rate of return which is based on the ten-year
Treasury bond rate. Participants in the PIA also receive an annual allocation of their salary and bonus;
however, they are allowed to determine how to invest their funds among identified fund alternatives. The
cost associated with the PPA is included in U.S. Pension Benefits in the tables presented earlier. The defined
contribution cost associated with the PIA was approximately $48 million, $46 million, and $41 million in
fiscal years 2012, 2011, and 2010, respectively.
16. Leases
The Company leases office, manufacturing, and research facilities and warehouses, as well as
transportation, data processing, and other equipment under capital and operating leases. A substantial
number of these leases contain options that allow the Company to renew at the fair rental value on the
date of renewal.
Future minimum payments under capitalized leases and non-cancelable operating leases at April 27,
2012 are:
(in millions) Capitalized Operating
Fiscal Year Leases Leases
___________ __________ _________
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19 $ 111
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 77
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 47
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 29
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 17
2018 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 39
__________ _________
Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $214 $ 320
Less amounts representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35) N/A
__________ _________
Present value of net minimum lease payments . . . . . . . . . . . . . . . . . . . . . . $ 179 N/A
__________ _________
__________ _________
Rent expense for all operating leases, including discontinued operations, was $153 million, $148 million,
and $154 million in fiscal years 2012, 2011, and 2010, respectively.
In April 2012, the Company entered into a $165 million sale-leaseback agreement with a financial
institution whereby certain manufacturing equipment was sold to the financial institution and is being leased
by the Company over a ten-year period. The transaction was recorded as a capital lease and is included in
the table above. Payments for the remaining balance of the sale-leaseback agreement are due monthly for
the first five years, and then annually, for the remaining five years. The lease provides for an early buyout
option whereby the Company, at its option, could repurchase the equipment at a pre-determined fair market
value in calendar year 2017.
In April 2006, the Company entered into a sale-leaseback agreement with a financial institution
whereby certain manufacturing equipment was sold to the financial institution and was being leased by the
Company over a seven-year period. The transaction was recorded as a capital lease. The lease provided for
an early buyout option which the Company exercised in fiscal year 2010 which resulted in converting the
lease to a term loan. The balance of the related term loan at April 27, 2012 was $13 million and is included
within bank borrowings in Note 9.
17. Contingencies
The Company is involved in a number of legal actions. The outcomes of these legal actions are not
within the Company’s complete control and may not be known for prolonged periods of time. In some
actions, the claimants seek damages, as well as other relief (including injunctions barring the sale of products