Medtronic 2012 Annual Report Download - page 69

We use a combination of bank borrowings and commercial paper issuances to fund our short-term
financing needs. Short-term debt, including the current portion of our long-term debt and capital lease
obligations, as of April 27, 2012, was $3.274 billion compared to $1.723 billion as of April 29, 2011. We utilize
a combination of Contingent Convertible Debentures, Series B due 2021 (the Debentures), Senior
Convertible Notes, and Senior Notes to meet our long-term financing needs. Long-term debt as of April 27,
2012 was $7.359 billion compared to $8.112 billion as of April 29, 2011. In September 2011, we redeemed the
Debentures for cash equal to 100% of the principal amount plus accrued interest.
We periodically issue Senior Notes that are unsecured, senior obligations that rank equally with all
other secured and unsubordinated indebtedness. We use the net proceeds from the sale of the Senior Notes
primarily for working capital and general corporate purposes. The indentures under which the Senior Notes
have been issued contain customary covenants, all of which we remain in compliance with as of April 27, 2012.
In March 2012, we issued two tranches of Senior Notes (collectively, the 2012 Senior Notes) with an
aggregate face value of $1.075 billion. The first tranche consisted of $675 million of 3.125 percent Senior
Notes due 2022. The second tranche consisted of $400 million of 4.500 percent Senior Notes due 2042.
Interest on each series of 2012 Senior Notes is payable semi-annually, on March 15 and September 15 of each
year, commencing September 15, 2012. We used the net proceeds from the sale of the 2012 Senior Notes for
working capital and general corporate purposes.
In April 2006, we issued $2.200 billion of 1.500 percent Senior Convertible Notes due 2011 (2011 Senior
Convertible Notes) and $2.200 billion of 1.625 percent Senior Convertible Notes due 2013 (2013 Senior
Convertible Notes) (collectively, the Senior Convertible Notes). The Senior Convertible Notes were issued
at par and pay interest in cash semi-annually in arrears on April 15 and October 15 of each year. The 2011
Senior Convertible Notes were repaid in April 2011. The 2013 Senior Convertible Notes are unsecured
unsubordinated obligations and rank equally with all other unsecured and unsubordinated indebtedness. The
Senior Convertible Notes had an initial conversion price of $56.14 per share. As of April 27, 2012, pursuant
to provisions in the indentures relating to our increase of our quarterly dividend to shareholders, the
conversion rate for the Senior Convertible Notes is now 18.8218, which correspondingly changed the
conversion price per share for the Senior Convertible Notes to $53.13.
Concurrent with the issuance of the Senior Convertible Notes, we purchased call options on our
common stock in private transactions. The call options allow us to receive shares of our common stock
and/or cash from counterparties equal to the amounts of common stock and/or cash related to the excess
conversion value that it would pay to the holders of the 2013 Senior Convertible Notes upon conversion.
These call options will terminate upon the earlier of the maturity dates of the related Senior Convertible
Notes or the first day all of the related Senior Convertible Notes are no longer outstanding due to conversion
or otherwise.
In separate transactions, we sold warrants to issue shares of our common stock at an exercise price of
$76.56 per share in private transactions. Pursuant to these transactions, warrants for 41 million shares of
our common stock may be settled over a specified period that began in July 2011 and warrants for 41 million
shares of the Company’s common stock may be settled over a specified period beginning in July 2013. As
of April 27, 2012, warrants for 41 million shares of the Company’s common stock expired.
As of April 27, 2012 and April 29, 2011, we had interest rate swap agreements designated as fair value
hedges of underlying fixed-rate obligations including the $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, we had interest rate swap agreements designated as fair value hedges of underlying fixed-rate
obligations including the $675 million 3.125 percent 2012 Senior Notes due 2022. As of April 29, 2011, we
had interest rate swap agreements designated as fair value hedges of underlying fixed-rate obligations
including the $2.200 billion 1.625 percent 2013 Senior Convertible Notes, and the $550 million 4.500 percent
2009 Senior Notes due 2014. For additional information regarding the interest rate swap agreements, refer
to Note 10 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary
Data” in this Annual Report on Form 10-K.
As of April 29, 2011, we had $15 million remaining in aggregate principal amount of the Debentures
outstanding. Each Debenture was convertible into shares of common stock at an initial conversion price of
$61.81 per share. In July 2011, we gave notice to the holders of the Debentures of our intent to redeem the
Debentures for cash at a price equal to 100% of the principal amount, plus any accrued and unpaid interest,
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