Medtronic 2012 Annual Report Download - page 73

initiatives, intellectual property rights, litigation and tax matters, mergers and acquisitions, divestitures,
market acceptance of our products, accounting estimates, financing activities, ongoing contractual
obligations, working capital adequacy, our effective tax rate, and sales efforts. Such statements can be
identified by the use of terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,”
“intend,” “looking ahead,” “may,” “plan,” “possible,” “potential,” “project,” “should,” “will,” and similar
words or expressions. Forward-looking statements in this Annual Report include, but are not limited to,
statements regarding our ability to drive long-term shareholder value, development and future launches of
products and continued or future acceptance of products in our operating segments; expected timing for
completion of research studies relating to our products; market positioning and performance of our products,
including stabilization of the ICD market and unanticipated issues that may affect U.S. FDA and non-U.S.
regulatory approval of new products; increased presence in new markets, including markets outside the U.S.;
changes in the market and our market share; acquisitions and investment initiatives, as well as integration
of acquired companies into our operations; the resolution of tax matters; the effectiveness of our
development activities in reducing patient care costs; our expectations regarding health care costs; the
elimination of certain positions or costs related to restructuring initiatives; outcomes in our litigation matters
and government investigations; general economic conditions; the adequacy of available working capital and
our working capital needs; the continued strength of our balance sheet and liquidity; and the potential
impact of our compliance with governmental regulations and accounting guidance. One must carefully
consider forward-looking statements and understand that such statements may be affected by inaccurate
assumptions and may involve a variety of risks and uncertainties, known and unknown, including, among
others, those discussed in the sections entitled “Government Regulation and Other Considerations” within
“Item 1. Business” and “Item 1A. Risk Factors” in this Annual Report on Form 10-K, as well as those related
to competition in the medical device industry, reduction or interruption in our supply, quality problems,
liquidity, decreasing prices, adverse regulatory action, litigation success, self-insurance, health care policy
changes, and international operations. Consequently, no forward-looking statement can be guaranteed and
actual results may vary materially. We intend to take advantage of the Safe Harbor provisions of the Private
Securities Litigation Reform Act of 1995 regarding our forward-looking statements, and are including this
sentence for the express purpose of enabling us to use the protections of the safe harbor with respect to all
forward-looking statements.
We undertake no obligation to update any statement we make, but investors are advised to consult all
other disclosures by us in our filings with the Securities and Exchange Commission, especially on Forms 10-K,
10-Q, and 8-K, in which we discuss in more detail various important factors that could cause actual results
to differ from expected or historical results. In addition, actual results may differ materially from those
anticipated due to a number of factors, including, among others, those discussed in the section entitled “Item
1A. Risk Factors” in this Annual Report on Form 10-K. It is not possible to foresee or identify all such
factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all
risks, uncertainties, or potentially inaccurate assumptions.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Due to the global nature of our operations, we are exposed to currency exchange rate changes. In a
period where the U.S. dollar is strengthening/weakening as compared to other currencies, our revenues and
expenses denominated in foreign currencies are translated into U.S. dollars at a lower/higher value than
they would be in an otherwise constant currency exchange rate environment.
We use operational and economic hedges, as well as currency exchange rate derivative instruments, to
manage the impact of currency exchange rate changes on earnings and cash flows. In order to minimize
earnings and cash flow volatility resulting from currency exchange rate changes, we enter into derivative
instruments, principally forward currency exchange rate contracts. These contracts are designed to hedge
anticipated foreign currency transactions and changes in the value of specific assets, liabilities, and probable
commitments. At inception of the contract, the derivative is designated as either a freestanding derivative
or a cash flow hedge. The primary currencies of the derivative instruments are the Euro and Japanese Yen.
We do not enter currency exchange rate derivative instruments for speculative purposes.
We had foreign exchange rate derivative contracts outstanding in notional amounts of $5.136 billion and
$6.384 billion at April 27, 2012 and April 29, 2011, respectively. At April 27, 2012, these contracts were in an
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