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75732me_10K.indd 96 7/1/13 6:36 PM
Table of Contents
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
recorded as an increase in other accrued expenses on the consolidated balance sheets. As of April 27, 2012, no collateral was
posted by either the Company or its counterparties.
Global concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of customers
and their dispersion across many geographic areas. The Company monitors the creditworthiness of its customers to which it
grants credit terms in the normal course of business. However, a significant amount of trade receivables are with hospitals
that are dependent upon governmental health care systems in many countries. The current economic conditions in many countries
outside the U.S. (particularly the recent economic challenges faced by Italy, Spain, Portugal, and Greece) have deteriorated
and may continue to increase the average length of time it takes the Company to collect on its outstanding accounts receivable
in these countries as certain payment patterns have been impacted. As of April 26, 2013 and April 27, 2012, the Company’s
aggregate accounts receivable balance for Italy, Spain, Portugal, and Greece, net of the allowance for doubtful accounts, was
$770 million and $967 million, respectively. The Company continues to monitor the creditworthiness of customers located in
these and other geographic areas. In the past, accounts receivable balances with certain customers in these countries have accumulated
over time and were subsequently settled as large lump-sum payments. In the first quarter of fiscal year 2013, the Company
received a $212 million payment in Spain. Although the Company does not currently foresee a significant credit risk associated
with the outstanding accounts receivable, repayment is dependent upon the financial stability of the economies of these countries.
For certain Greece distributors, collectability is not reasonably assured for revenue transactions and the Company defers revenue
recognition until all revenue recognition criteria are met. As of April 26, 2013 and April 27, 2012, the Company's deferred
revenue balance for certain Greece distributors was $21 million and $15 million, respectively. As of April 26, 2013 and April
27, 2012, no one customer represented more than 10% of the Company’s outstanding accounts receivable.
10. Interest Expense, Net
Interest income and interest expense for fiscal years 2013, 2012, and 2011 are as follows:
Fiscal Year
(in millions) 2013 2012 2011
Interest income $ (237) $ (200) $ (172)
Interest expense 388 349 450
Interest expense, net $ 151 $ 149 $ 278
Interest income includes interest earned on the Company’s cash, cash equivalents and investments, the net realized and unrealized
gain or loss on trading securities, ineffectiveness on interest rate derivative instruments, and the net realized gain or loss on the
sale or impairment of available-for-sale debt securities. See Note 5 for further discussion of these items.
Interest expense includes the expense associated with the interest on the Company’s outstanding borrowings, including short- and
long-term instruments, ineffectiveness on interest rate derivative instruments, and the amortization of debt issuance costs and debt
discounts.
11. Shareholders’ Equity
Repurchase of Common Stock Shares are repurchased from time to time to support the Company’s stock-based compensation
programs and to return capital to shareholders. In June 2011, the Company’s Board of Directors authorized the repurchase of 75
million shares of the Company’s common stock. During fiscal years 2013 and 2012, the Company repurchased approximately
31.2 million and 37.3 million shares at an average price of $39.97 and $38.64, respectively. As of April 26, 2013, the Company
had used 47.8 million of the 75 million shares authorized under the June 2011 repurchase program, leaving 27.2 million shares
available for future repurchases. In June 2013, the Company's Board of Directors authorized the repurchase of an additional 80
million shares of the Company's common stock. The Company accounts for repurchases of common stock using the par value
method and shares repurchased are canceled.
12. Stock Purchase and Award Plans
Under the fair value recognition provisions of U.S. GAAP for accounting for stock-based compensation, the Company measures
stock-based compensation expense at the grant date based on the fair value of the award and recognizes the compensation expense
over the requisite service period, which is generally the vesting period.
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