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
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
Corporate credit rating A+/Stable/A-1+
Rule 415 unsecured shelf registration A+(prelim)