TEXT-S&P rts Medtronic Inc. WKSI shelf registration prelim A+

Wed Mar 7, 2012 8:50am EST

March 07 - Standard & Poor's Ratings Services said today that it assigned a preliminary 'A+' to the senior unsecured debt securities filed under Minneapolis, Minn.-based Medtronic Inc.'s Rule 415 shelf registration. The filing falls under the SEC's well-known seasoned issuer (WKSI) rules, which do not require a dollar amount of securities to be registered. Each time the company sells securities, it will provide a prospectus supplement that will contain specific information about the terms of that offering.

Our A+/Stable/A-1+ rating on medical device manufacturer Medtronic Inc. reflect the company's "strong" business risk profile and "modest" financial risk profile, according to our criteria. Contributing to Medtronic's strong business risk profile is its significant scale (over $16 billion revenues) and product diversity. Geography is also diverse--in 2011, 45% of sales were generated outside the U.S. We expect near-term revenue growth to be in the low-single-digit area. Stabilization in CRDM and spinal sales could stem the drag on total revenue growth, and provide better-than-expected performance. Medtronic should be able to drive more meaningful revenue growth in the medium term as a result of acquisitions, ongoing product launches, and geographic expansion. We expect a stable EBITDA margin over the next few years, as restructuring efforts offset the implementation of the legislated medical device tax (2.3% of U.S. device revenues) on Jan. 1, 2013. Medtronic's "modest" financial risk profile is evidenced by under 2x adjusted debt leverage, very strong cash flow generation, and conservative financial policies. Liquidity is exceptional; substantial internally generated cash and access to external capital mitigates immediate competitive, technological, and litigation issues.

RELATED CRITERIA AND RESEARCH

-- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011

-- Business Risk/Financial Risk Matrix Expanded, May 27, 2009

-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

-- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008

RATING LIST

Medtronic Inc.

Corporate credit rating A+/Stable/A-1+

Rating Assigned

Rule 415 unsecured shelf registration A+(prelim)

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