Medtronic 2012 Annual Report Download - page 66

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reduced liquidity in recent years due to changes in investor demand. Although our auction rate securities
are currently illiquid and other securities could become illiquid, we believe we could liquidate a substantial
amount of our portfolio without incurring a material impairment loss.
For the fiscal year ended April 27, 2012, other-than-temporary impairment losses on available-for-sale
debt securities were $6 million, of which $4 million was recognized in other comprehensive income and
$2 million was recognized in earnings. For the fiscal year ended April 29, 2011, other-than-temporary
impairment losses on available-for-sale debt securities were $18 million, of which $13 million was recognized
in other comprehensive income and $5 million was recognized in earnings. In determining these other-than-
temporary impairment losses, U.S. GAAP specifies that we consider a variety of factors, including the quality
and estimated value of the underlying credit support for our holdings and the financial condition and credit
rating of the issuer in estimating the credit loss portion of other-than-temporary impairment losses. Based
on our assessment of the credit quality of the underlying collateral and credit support available to each of
the remaining securities in which we are invested, we believe we have recorded all necessary other-than-
temporary impairments as we do not have the intent to sell, nor is it more likely than not that we will be
required to sell, before recovery of the amortized cost. However, as of April 27, 2012, we have $44 million
of gross unrealized losses on our aggregate short-term and long-term available-for-sale debt securities of
$8.242 billion; if market conditions deteriorate, some of these holdings may experience other-than-temporary
impairment in the future which could have a material impact on our financial results. Management is
required to use estimates and assumptions in its valuation of our investments, which requires a high degree
of judgment, and therefore, actual results could differ materially from those estimates. See Note 7 to the
consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual
Report on Form 10-K for additional information regarding fair value measurements.
Summary of Cash Flows
Fiscal Year
________________________________________________
(in millions) 2012 2011 2010
___________ ______________ ______________ ______________
Cash provided by (used in):
Operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,470 $ 3,741 $ 4,131
Investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,651) (1,815) (4,759)
Financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,882) (2,006) 764
Effect of exchange rate changes on cash and
cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (71) 62 (7)
______________ ______________ ______________
Net change in cash and cash equivalents . . . . . . . . . . . . . . . . . . $ (134) $ (18) $ 129
______________ ______________ ______________
______________ ______________ ______________
Operating Activities Our net cash provided by operating activities was $4.470 billion for the fiscal
year ended April 27, 2012 compared to $3.741 billion for the prior year. The $729 million increase in net
cash provided by operating activities was primarily attributable to the increase in earnings and increases in
accrued income taxes and accrued liabilities, partially offset by the gain on sale of Physio-Control, a decrease
in certain litigation charges, net, and an increase in certain litigation payments as compared to the prior
fiscal year.
Our net cash provided by operating activities was $3.741 billion for the fiscal year ended April 29, 2011
compared to $4.131 billion for the fiscal year ended April 30, 2010. The $390 million decrease in net cash
provided by operating activities was primarily attributable to changes in working capital needs resulting
from increased accounts receivable balances in certain EU countries and increased global pension
contributions compared to the prior fiscal year.
Investing Activities Our net cash used in investing activities was $2.651 billion for the fiscal year
ended April 27, 2012 compared to $1.815 billion for the prior year. The $836 million increase in cash used in
investing activities was primarily attributable to increased investing in marketable securities in fiscal year
2012, partially offset by proceeds from the divestiture of Physio-Control and a decrease in cash used for
acquisitions in comparison to the prior fiscal year. The increased investing in marketable securities in fiscal
year 2012 resulted primarily from investing the proceeds from the $1.075 billion debt issuance.
49