Medtronic 2013 Annual Report Download - page 67

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Table of Contents
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 26, 2013.
In March 2013, we issued three tranches of Senior Notes (collectively, the 2013 Senior Notes) with an aggregate face value of
$3.000 billion. The first tranche consisted of $1.000 billion of 1.375 percent Senior Notes due 2018. The second tranche consisted
of $1.250 billion of 2.750 percent Senior Notes due 2023. The third tranche consisted of $750 million of 4.000 percent Senior
Notes due 2043. Interest on each series of the 2013 Senior Notes is payable semi-annually on April 1 and October 1 of each year,
commencing on October 1, 2013. The Company used the net proceeds from the sale of the 2013 Senior Notes for working capital
and general corporate purposes, including repayment of our indebtedness.
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 paid interest in cash semi-annually. The 2011 Senior
Convertible Notes were repaid in April 2011. The 2013 Senior Convertible Notes were repaid in April 2013. Concurrent with the
issuance of the 2013 Senior Convertible Notes, we purchased call options on our common stock in private transactions. The call
options expired in June 2013 with no financial statement impact.
In separate private transactions, we sold warrants to issue shares of our common stock at an exercise price of $76.56 per share.
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 our common stock may be settled over a specified period beginning in
July 2013 (the settlement dates). As of April 26, 2013 and April 27, 2012, warrants for 41 million shares of our common stock
had expired.
As of April 26, 2013 and April 27, 2012, we had interest rate swap agreements designated as fair value hedges of underlying fixed-
rate obligations including the Company’s $1.250 billion 3.000 percent 2010 Senior Notes due 2015, $600 million 4.750 percent
2005 Senior Notes due 2015, $500 million 2.625 percent 2011 Senior Notes due 2016, $500 million 4.125 percent 2011 Senior
Notes due 2021, and $675 million 3.125 percent 2012 Senior Notes due 2022. For additional information regarding the interest
rate swap agreements, refer to Note 9 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary
Data” in this Annual Report on Form 10-K.
We maintain a commercial paper program that allows us to have a maximum of $2.250 billion in commercial paper outstanding,
with maturities up to 364 days from the date of issuance. As of April 26, 2013 and April 27, 2012, outstanding commercial paper
totaled $125 million and $950 million, respectively. During fiscal years 2013 and 2012, the weighted average original maturity
of the commercial paper outstanding was approximately 89 and 102 days, respectively, and the weighted average interest rate was
0.18 percent and 0.15 percent, respectively. The issuance of commercial paper reduces the amount of credit available under our
existing lines of credit.
We have a $2.250 billion syndicated credit facility dated December 17, 2012 which expires on December 17, 2017 (Credit Facility).
The Credit Facility provides backup funding for the commercial paper program and may also be used for general corporate purposes.
The Credit Facility provides us with the ability to increase its capacity by an additional $750 million at any time during the term
of the agreement. The Credit Facility replaced our four-year $2.250 billion syndicated credit facility which was scheduled to expire
on December 9, 2013. As of April 26, 2013 and April 27, 2012, no amounts were outstanding on the committed lines of credit.
Approximately $218 million of the $224 million outstanding bank borrowings as of April 26, 2013 were short-term advances to
certain non-U.S. subsidiaries under credit agreements with various banks. These advances are guaranteed by the Company. We
have bank borrowings at interest rates considered favorable by management and where natural hedges can be gained for foreign
exchange purposes.
At April 26, 2013, our S&P Ratings Services' ratings remain unchanged as compared to those at April 27, 2012 with long-term
debt ratings of A+ and strong short-term debt ratings of A-1+ . On March 14, 2013, Moody's downgraded our long-term debt rating
to A2, from A1. The downgrade of our long-term debt rating by Moody's reflects their belief that we will add future debt to help
fund shareholder initiatives and potential U.S. acquisitions. We do not expect this downgrade to have a significant impact on our
liquidity or future flexibility to access additional liquidity given our strong balance sheet and existing cash and investments, as
well as our syndicated Credit Facility and related commercial paper program discussed above and within the “Liquidity and Capital
Resources” section of this management’s discussion and analysis. Moody's short-term debt rating remains unchanged at P-1 as
compared to the fiscal year ended April 27, 2012.
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