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Form 8-K Medtronic plc For: May 24

May 24, 2018 6:49 AM


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
_____________________________ 
FORM 8-K
 _____________________________ 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 24, 2018
 _____________________________ 
Medtronic Public Limited Company
(Exact name of Registrant as Specified in its Charter)
  _____________________________ 
 
Ireland
 
1-36820
 
98-1183488
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
                
20 On Hatch, Lower Hatch Street
Dublin 2, Ireland
(Address of principal executive offices)
(Registrant’s telephone number, including area code): +353 1 438-1700
 _____________________________ 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o






Item 2.02.
Results of Operations and Financial Condition

On May 24, 2018, Medtronic plc, a public limited company organized under the laws of Ireland, issued a press release announcing its fourth quarter and full fiscal year 2018 financial results and posted a related earnings presentation to the Investors section of its website. A copy of the press release and related earnings presentation are furnished as Exhibits 99.1 and 99.2 to this report.

 
Item 9.01.
      Exhibits.
(d) List of Exhibits
Exhibit Number
  
Description
 
 
  
Press release of Medtronic plc, dated May 24, 2018
 
Earnings presentation, dated May 24, 2018









SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MEDTRONIC PUBLIC LIMITED COMPANY
 
 
 
 
 
 
 
 
By
 
/s/ Karen L. Parkhill
Date: May 24, 2018
 
 
 
 
 
Karen L. Parkhill
 
 
 
 
 
 
Executive Vice President and Chief Financial Officer








EXHIBIT INDEX
 
Exhibit Number
  
Description
 
 
  
Press release of Medtronic plc, dated May 24, 2018
 
Earnings presentation, dated May 24, 2018





Exhibit 99.1
 
mdtlogo2a44.jpg
 
 
  
NEWS RELEASE
 
 
 
 
 
 
 
 
Contacts:
  
 
 
 
 
 
 
Fernando Vivanco
  
Ryan Weispfenning
 
 
Public Relations
  
Investor Relations
 
 
+1-763-505-3780
  
+1-763-505-4626



FOR IMMEDIATE RELEASE

MEDTRONIC REPORTS FOURTH QUARTER AND
FISCAL YEAR 2018 FINANCIAL RESULTS


▪
Q4 Revenue of $8.1 Billion Grew 2.9% Reported and 6.5% Organic
▪
Q4 GAAP Diluted EPS of $1.07; Q4 Non-GAAP Diluted EPS of $1.42
▪
FY18 Revenue of $30.0 Billion Grew 0.8% Reported and 4.6% Organic
▪
FY18 GAAP Diluted EPS of $2.27; FY18 Non-GAAP Diluted EPS of $4.77
▪
Company Issues FY19 Guidance

DUBLIN - May 24, 2018 - Medtronic plc (NYSE: MDT) today announced financial results for its fourth quarter and fiscal year 2018, which ended April 27, 2018.

The company reported fourth quarter worldwide revenue of $8.144 billion, an increase of 2.9 percent as reported, or 6.5 percent on an organic basis, which adjusts for the divestiture of its Patient Care, Deep Vein Thrombosis (Compression), and Nutritional Insufficiency businesses to Cardinal Health that occurred in the second quarter, and a $315 million positive impact from foreign currency. As reported, fourth quarter GAAP net income and diluted earnings per share (EPS) were $1.460 billion and $1.07, respectively. As detailed in the financial schedules included through the link at the end of this release, fourth quarter non-GAAP net income and diluted EPS were $1.942 billion and $1.42, increases of 6 percent and 7 percent, respectively. Adjusting for the divestiture and a negative 2 cent impact from foreign currency, fourth quarter non-GAAP diluted EPS increased 15 percent.

Fourth quarter U.S. revenue of $4.187 billion represented 52 percent of company revenue and decreased 4.9 percent as reported, while it increased 5.3 percent on a comparable basis, which adjusts for the divestiture. Non-U.S. developed market revenue of $2.718 billion represented 33 percent of company revenue and increased 10.8 percent as reported and 4.6 percent on a comparable, constant currency basis. Emerging market revenue of $1.239 billion represented 15 percent of company revenue and increased 16.8 percent as reported and 15.5 percent on a comparable, constant currency basis.

Medtronic’s fiscal year 2018 revenue of $29.953 billion increased 0.8 percent, or 4.6 percent on an organic basis, adjusting for the divestiture, acquisitions, and the $494 million positive impact from foreign currency. As reported, fiscal year 2018 net earnings were $3.104 billion or $2.27 per diluted share. As detailed in the link at the end of this release, fiscal year 2018 non-GAAP earnings and diluted EPS were $6.530 billion and $4.77, representing increases of 2 percent and 4 percent, respectively. Adjusting for the divestiture and a negative 4 cent impact from foreign currency, fiscal year 2018 non-GAAP diluted EPS increased 10 percent.


1


Fiscal year 2018 cash flow from operations was $4.7 billion, which includes a $1.1 billion pre-payment the company elected to make late in the fourth quarter to the U.S. IRS related to in-process litigation on Puerto Rico transfer pricing. Excluding the $1.1 billion payment, fiscal year 2018 free cash flow would have been $4.7 billion. The expense associated with this payment was recognized in prior quarters’ earnings, and the payment was made to eliminate the timing uncertainty of the cash outflow, as well as stop the accrual of significant interest.

“Looking at our fourth quarter results, we delivered another strong quarter, as we continue to execute on our sustainable growth strategy, driving therapy innovation and global market penetration, while delivering enterprise synergies to expand margins,” said Omar Ishrak, Medtronic chairman and chief executive officer. “We overcame several challenges in the first half of our fiscal year to deliver a strong second half, led by 6.5 percent organic revenue growth. We came in at the high end of both the revenue and EPS guidance we established at the start of the year.”

Cardiac and Vascular Group
The Cardiac and Vascular Group (CVG) includes the Cardiac Rhythm & Heart Failure (CRHF), Coronary & Structural Heart (CSH), and Aortic & Peripheral Vascular (APV) divisions. CVG worldwide fourth quarter revenue of $3.135 billion increased 10.1 percent, or 5.4 percent on a constant currency basis. CVG revenue performance was driven by strong, low-teens growth in CSH, mid-single digit growth in APV, and low-single digit growth in CRHF, all on a constant currency basis.
▪
CRHF fourth quarter revenue of $1.633 billion increased 5.8 percent, or 1.5 percent on a constant currency basis. Arrhythmia Management grew in the low-single digits on a constant currency basis, driven by high-single digit growth in Pacing, led by the strong adoption of the Micra® Transcatheter Pacing System and the launch of the Azure® wireless pacemaker. Results were also driven by double digit growth in AF Solutions, Mechanical Circulatory Support, and TYRX® in Infection Control.
▪
CSH fourth quarter revenue of $1.005 billion increased 18.7 percent, or 12.8 percent on a constant currency basis, led by low-twenties constant currency growth in transcatheter aortic valves on the global strength of the CoreValve® Evolut® PRO. Coronary grew in the mid-teens on a constant currency basis, driven by strong demand for the company’s Resolute Onyx™ drug-eluting stent in the U.S. and Japan.
▪
APV fourth quarter revenue of $497 million increased 8.8 percent, or 4.8 percent on a constant currency basis. Aortic grew in the low-single digits on a constant currency basis, driven by customer adoption of its endoanchor fixation solutions for short necks. Peripheral grew in the low-single digits on a constant currency basis, driven by strong PTA balloon growth in the United States and drug-coated balloon growth in international markets. Mid-teens constant currency growth in endoVenous was driven by strong demand for the VenaSeal™ closure system.

Minimally Invasive Therapies Group
The Minimally Invasive Therapies Group (MITG) includes the Surgical Innovations (SI) and the Respiratory, Gastrointestinal & Renal (RGR) divisions. MITG worldwide fourth quarter revenue of $2.237 billion decreased 14.1 percent as reported, or increased 4.8 percent on a comparable, constant currency basis. MITG revenue performance was driven by mid-single digit growth in SI and low-single digit growth in RGR, both on a comparable, constant currency basis.
▪
SI fourth quarter revenue of $1.513 billion increased 5.9 percent on a comparable, constant currency basis, driven by growth from new products in Advanced Energy and Advanced Stapling, including LigaSure™ vessel sealing instruments with nano-coating, endo stapling specialty reloads, and the Signia™ powered stapler.
▪
RGR fourth quarter revenue of $724 million increased 2.5 percent on a comparable, constant currency basis. GI and Hepatology grew in the low-double digits on a comparable, constant currency basis, with continued strength across the GI therapeutics, diagnostics, and ablation product lines. Respiratory and Patient Monitoring grew in the low-single digits on a comparable, constant currency basis, with continued strength in Nellcor™ pulse oximetry sensors given the strong incidence of influenza in the U.S.

Restorative Therapies Group
The Restorative Therapies Group (RTG) includes the Spine, Brain Therapies, Specialty Therapies, and Pain Therapies divisions. RTG worldwide fourth quarter revenue of $2.127 billion increased 9.0 percent, or 6.1 percent on a constant currency basis. Group results were driven by low-double digit growth in Brain Therapies and Pain Therapies, mid-single digit growth in Specialty Therapies, and low-single digit growth in Spine, all on a constant currency basis.
▪
Spine fourth quarter revenue of $699 million increased 3.4 percent, or 1.0 percent on a constant currency basis. Spine’s growth was driven by high-single digit constant currency growth in bone morphogenetic protein (BMP) offset by low-single digit declines in Core Spine.
▪
Brain Therapies fourth quarter revenue of $672 million increased 14.9 percent, or 11.3 percent on a constant currency basis. Neurovascular grew in the high-teens on a constant currency basis, with strong growth in stents and access products. Neurosurgery grew in the low-double digits on a constant currency basis, led by strong sales of the StealthStation® S8 surgical navigation system, Mazor X™ robotic guidance system, and Visualase® MRI-guided laser ablation system.

2


▪
Specialty Therapies fourth quarter revenue of $424 million increased 7.1 percent, or 4.3 percent on a constant currency basis. Results were led by mid-single digit growth in Pelvic Health and ENT and low-single digit growth in Transformative Solutions, all on a constant currency basis.
▪
Pain Therapies fourth quarter revenue of $332 million increased 12.9 percent, or 9.9 percent on a constant currency basis. The division had strong mid-teens growth in Pain Stimulation on the strength of the recently launched Intellis™ platform for spinal cord stimulation, as well as mid-single digit growth in Targeted Drug Delivery and Interventional Pain.

Diabetes Group
The Diabetes Group includes the Intensive Insulin Management (IIM), Diabetes Service & Solutions (DSS), and Non-Intensive Diabetes Therapies (NDT) divisions. Diabetes Group worldwide fourth quarter revenue of $645 million increased 26.0 percent, or 21.3 percent on a constant currency basis. The group is experiencing strong global demand for its new sensor-augmented insulin pump systems.
▪
IIM fourth quarter revenue grew in the high-twenties on a constant currency basis, driven by the U.S. launch of the MiniMed® 670G hybrid closed loop insulin pump system with the Guardian® sensor 3 continuous glucose monitor (CGM). In international markets, IIM delivered mid-twenties constant currency growth on the continued strength of the MiniMed® 640G system.
▪
DSS fourth quarter revenue grew in the low-double digits on a constant currency basis, with strong growth in consumables benefitting from customer base growth and improved patient utilization.
▪
NDT fourth quarter revenue declined in the low twenties on a constant currency basis, given the commercial focus on the MiniMed® 670G launch and competitive pressures.

Guidance
The company today issued its fiscal year 2019 revenue and EPS growth guidance.

In fiscal year 2019, the company expects organic revenue growth to be in the range of 4.0 to 4.5 percent. If current exchange rates remain similar for the fiscal year, the company’s fiscal year 2019 revenue would be negatively affected by approximately $50 million to $150 million.

In fiscal year 2019, the company expects diluted non-GAAP EPS in the range of $5.10 to $5.15, which implies 10 percent growth at the mid-point of the range and assumes a 5 cent benefit from foreign exchange based on current exchange rates.

“Looking ahead, we feel good about the growth opportunities in our markets and our competitive position in these markets. We expect continued revenue growth and margin expansion. We are also focused on improving free cash flow conversion and making the right investments to drive shareholder value,” said Ishrak. “We look forward to discussing our long-term strategies and providing our long-range outlook at our biennial institutional investor and analyst meeting on June 5th.”

Webcast Information
Medtronic will host a webcast today, May 24, at 8:00 a.m. EDT (7:00 a.m. CDT) to provide information about its businesses for the public, analysts, and news media. This quarterly webcast can be accessed by clicking on the Investor Events link at investorrelations.medtronic.com and this earnings release will be archived at newsroom.medtronic.com. Medtronic will be live tweeting during the webcast on our Newsroom Twitter account, @Medtronic. Within 24 hours of the webcast, a replay of the webcast and transcript of the company’s prepared remarks will be available by clicking on the Investor Events link at investorrelations.medtronic.com.

Financial Schedules
To view the fourth quarter and fiscal year 2018 financial schedules and non-GAAP reconciliations, click here. To view the fourth quarter and fiscal year 2018 earnings presentation, click here. Both documents can also be accessed by visiting newsroom.medtronic.com.

About Medtronic
Medtronic plc (www.medtronic.com), headquartered in Dublin, Ireland, is among the world’s largest medical technology, services and solutions companies - alleviating pain, restoring health and extending life for millions of people around the world. Medtronic employs more than 86,000 people worldwide, serving physicians, hospitals and patients in more than 150 countries. The company is focused on collaborating with stakeholders around the world to take healthcare Further, Together.


3



FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements, which are subject to risks and uncertainties, including those described in Medtronic’s periodic reports and other filings with the U.S. Securities and Exchange Commission (the “SEC”). Anticipated results only reflect information available to Medtronic at this time and may differ from actual results. Medtronic does not undertake to update its forward-looking statements or any of the information contained in this press release. Certain information in this press release includes calculations or figures that have been prepared internally and have not been reviewed or audited by our independent registered public accounting firm, including but not limited to, certain information in the financial schedules accompanying this press release. Use of different methods for preparing, calculating or presenting information may lead to differences and such differences may be material.

NON-GAAP FINANCIAL MEASURES
This press release contains financial measures and guidance, including adjusted net income and adjusted diluted EPS, which are considered “non-GAAP” financial measures under applicable SEC rules and regulations. References to quarterly figures increasing or decreasing are in comparison to the fourth quarter of fiscal year 2017, and references to annual figures increasing or decreasing are in comparison to fiscal year 2017.

Medtronic management believes that non-GAAP financial measures provide information useful to investors in understanding the company’s underlying operational performance and trends and to facilitate comparisons with the performance of other companies in the med tech industry. Non-GAAP net income and diluted EPS exclude the effect of certain charges or gains that contribute to or reduce earnings but that result from transactions or events that management believes may or may not recur with similar materiality or impact to operations in future periods (Non-GAAP Adjustments). Medtronic generally uses non-GAAP financial measures to facilitate management’s review of the operational performance of the company and as a basis for strategic planning. Non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with U.S. generally accepted accounting principles (GAAP), and investors are cautioned that Medtronic may calculate non-GAAP financial measures in a way that is different from other companies. Management strongly encourages investors to review the company’s consolidated financial statements and publicly filed reports in their entirety. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial schedules accompanying this press release.

Medtronic calculates forward-looking non-GAAP financial measures based on internal forecasts that omit certain amounts that would be included in GAAP financial measures. For instance, forward-looking revenue growth and EPS projections exclude the impact of foreign currency fluctuations. Forward-looking non-GAAP EPS guidance also excludes other potential charges or gains that would be recorded as Non-GAAP Adjustments to earnings during the fiscal year. Medtronic does not attempt to provide reconciliations of forward-looking non-GAAP EPS guidance to projected GAAP EPS guidance because the combined impact and timing of recognition of these potential charges or gains is inherently uncertain and difficult to predict and is unavailable without unreasonable efforts. In addition, we believe such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance.

Mazor X is a trademark of Mazor Robotics.

-end-

View Fourth Quarter and FY18 Financial Schedules & Non-GAAP Reconciliations
View Fourth Quarter and FY18 Earnings Presentation



4


 
FINANCIAL SCHEDULES
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


5


MEDTRONIC PLC
WORLD WIDE REVENUE
(Unaudited)
 
FOURTH QUARTER
 
 
FISCAL YEAR
 
REPORTED
 
 
 
COMPARABLE CONSTANT CURRENCY
 
 
REPORTED
 
 
 
COMPARABLE CONSTANT CURRENCY
(in millions)
FY18
 
FY17
 

Growth
 
Currency Impact (2)
 
Revised(3)
FY17
 
Growth
 
 
FY18
 
FY17
 

Growth
 
Currency Impact (2)
 
Revised(3)
FY17
 
Growth
Cardiac & Vascular Group
$
3,135

 
$
2,848

 
10
%
 
$
134

 
$
2,848

 
5
%
 
 
$
11,354

 
$
10,498

 
8
%
 
$
215

 
$
10,498

 
6
%
Cardiac Rhythm & Heart Failure
1,633

 
1,544

 
6

 
66

 
1,544

 
1

 
 
5,947

 
5,649

 
5

 
103

 
5,649

 
3

Coronary & Structural Heart
1,005

 
847

 
19

 
50

 
847

 
13

 
 
3,562

 
3,113

 
14

 
83

 
3,113

 
12

Aortic & Peripheral Vascular
497

 
457

 
9

 
18

 
457

 
5

 
 
1,845

 
1,736

 
6

 
29

 
1,736

 
5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimally Invasive Therapies Group(1)
2,237

 
2,605

 
(14)
 
100

 
2,040

 
5

 
 
8,716

 
9,919

 
(12)
 
147

 
8,255

 
4

Surgical Innovations
1,513

 
—
 
—
 
73

 
1,360

 
6

 
 
5,630

 
—
 
—
 
111

 
5,234

 
5

Respiratory, Gastrointestinal, & Renal
724

 
—
 
—
 
27

 
680

 
3

 
 
3,086

 
—
 
—
 
36

 
3,021

 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restorative Therapies Group
2,127

 
1,951

 
9

 
57

 
1,951

 
6

 
 
7,743

 
7,366

 
5

 
85

 
7,366

 
4

Spine
699

 
676

 
3

 
16

 
676

 
1

 
 
2,668

 
2,641

 
1

 
20

 
2,641

 
0

Brain Therapies
672

 
585

 
15

 
21

 
585

 
11

 
 
2,354

 
2,098

 
12

 
34

 
2,098

 
11

Specialty Therapies
424

 
396

 
7

 
11

 
396

 
4

 
 
1,556

 
1,491

 
4

 
16

 
1,491

 
3

Pain Therapies
332

 
294

 
13

 
9

 
294

 
10

 
 
1,165

 
1,136

 
3

 
15

 
1,136

 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diabetes Group
645

 
512

 
26

 
24

 
512

 
21

 
 
2,140

 
1,927

 
11

 
47

 
1,927

 
9

TOTAL
$
8,144

 
$
7,916

 
3
%
 
$
315

 
$
7,351

 
7
%
 
 
$
29,953

 
$
29,710

 
1
%
 
$
494

 
$
28,046

 
5
%

(1) In the second quarter of fiscal year 2018, the Company realigned its divisions within the Minimally Invasive Therapies Group, which included a movement of revenue from certain product lines within Surgical Innovations to Respiratory Gastrointestinal & Renal. As a result, second, third, and fourth quarter fiscal year 2017 revenue has been recast to adjust for this realignment. Revenue for the first quarter of fiscal year 2017 and 2018 included within the year-to-date figures herein has not been recast to adjust for this realignment.
(2) The currency impact to revenue measures the change in revenue between current and prior year periods using constant exchange rates.
(3) Revised revenue excludes revenue related to the divested Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses for the second, third, and fourth quarters of fiscal year 2017.

6


MEDTRONIC PLC
U.S.(1) REVENUE
(Unaudited)
 
FOURTH QUARTER
 
 
FISCAL YEAR
 
REPORTED
 
COMPARABLE
 
 
REPORTED
 
COMPARABLE
(in millions)
FY18
 
FY17
 

Growth
 
Revised(3)
FY17
 

Growth
 
 
FY18
 
FY17
 

Growth
 
Revised(3) FY17
 
Growth
Cardiac & Vascular Group
$
1,530

 
$
1,484

 
3
 %
 
$
1,484

 
3
 %
 
 
$
5,681

 
$
5,454

 
4
 %
 
$
5,454

 
4
 %
Cardiac Rhythm & Heart Failure
877

 
888

 
(1
)
 
888

 
(1
)
 
 
3,272

 
3,234

 
1

 
3,234

 
1

Coronary & Structural Heart
382

 
331

 
15

 
331

 
15

 
 
1,368

 
1,203

 
14

 
1,203

 
14

Aortic & Peripheral Vascular
271

 
265

 
2

 
265

 
2

 
 
1,041

 
1,017

 
2

 
1,017

 
2

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 

Minimally Invasive Therapies Group(2)
902

 
1,314

 
(31)
 
887

 
2

 
 
3,804

 
5,049

 
(25)
 
3,781

 
1

Surgical Innovations
577

 
—
 
—
 
558

 
3

 
 
2,245

 
—
 
—
 
2,195

 
2

Respiratory, Gastrointestinal, & Renal
325

 
—
 
—
 
329

 
(1
)
 
 
1,559

 
—
 
—
 
1,586

 
(2
)
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 

Restorative Therapies Group
1,385

 
1,302

 
6

 
1,302

 
6

 
 
5,164

 
5,012

 
3

 
5,012

 
3

Spine
477

 
471

 
1

 
471

 
1

 
 
1,849

 
1,858

 
—

 
1,858

 
—

Brain Therapies
370

 
324

 
14

 
324

 
14

 
 
1,323

 
1,191

 
11

 
1,191

 
11

Specialty Therapies
306

 
297

 
3

 
297

 
3

 
 
1,160

 
1,138

 
2

 
1,138

 
2

Pain Therapies
232

 
210

 
10

 
210

 
10

 
 
832

 
825

 
1

 
825

 
1

 
 
 
 
 

 
 
 

 
 
 
 
 
 
 
 
 
 

Diabetes Group
370

 
303

 
22

 
303

 
22

 
 
1,226

 
1,148

 
7

 
1,148

 
7

 
 
 
 
 

 
 
 

 
 
 
 
 
 
 
 
 
 

TOTAL
$
4,187

 
$
4,403

 
(5
)%
 
$
3,976

 
5
 %
 
 
$
15,875

 
$
16,663

 
(5
)%
 
$
15,395

 
3
 %

(1) U.S. includes the United States and U.S. territories.
(2) In the second quarter of fiscal year 2018, the Company realigned its divisions within the Minimally Invasive Therapies Group, which included a movement of revenue from certain product lines
within Surgical Innovations to Respiratory Gastrointestinal & Renal. As a result, second, third, and fourth quarter fiscal year 2017 revenue has been recast to adjust for this realignment. Revenue for the first quarter of fiscal year 2017 and 2018 included within the year-to-date figures herein has not been recast to adjust for this realignment.
(3) Revised revenue excludes revenue related to the divested Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses for the second, third, and fourth quarters of fiscal year 2017.


7


MEDTRONIC PLC
WORLD WIDE REVENUE: GEOGRAPHIC(1) 
(Unaudited)
 
FOURTH QUARTER
 
 
FISCAL YEAR
 
REPORTED
 
 
 
COMPARABLE CONSTANT CURRENCY
 
 
REPORTED
 
 
 
COMPARABLE CONSTANT CURRENCY
(in millions)
FY18
 
FY17
 
Growth
 
Currency Impact(2)
 
Revised(3)
FY17
 
Growth
 
 
FY18
 
FY17
 

Growth
 
Currency Impact(2)
 
Revised(3)
FY17
 
Growth
U.S.
$
1,530

 
$
1,484

 
3
 %
 
$
0

 
$
1,484

 
3
%
 
 
$
5,681

 
$
5,454

 
4
 %
 
$
0

 
$
5,454

 
4
%
Non-U.S. Developed
1,074

 
926

 
16

 
110

 
926

 
4

 
 
3,790

 
3,393

 
12

 
177

 
3,393

 
6

Emerging Markets
531

 
438

 
21

 
24

 
438

 
16

 
 
1,883

 
1,651

 
14

 
38

 
1,651

 
12

Cardiac & Vascular Group
3,135

 
2,848

 
10

 
134

 
2,848

 
5

 
 
11,354

 
10,498

 
8

 
215

 
10,498

 
6

 
 
 
 
 

 
 
 
 
 

 
 
 
 
 
 

 
 
 
 
 

U.S.
902

 
1,314

 
(31)
 
0

 
887

 
2

 
 
3,804

 
5,049

 
(25)
 
0

 
3,781

 
1

Non-U.S. Developed
923

 
921

 
—
 
85

 
816

 
3

 
 
3,378

 
3,479

 
(3)
 
122

 
3,178

 
2

Emerging Markets
412

 
370

 
11
 
15

 
337

 
18

 
 
1,534

 
1,391

 
10
 
25

 
1,296

 
16

Minimally Invasive Therapies Group
2,237

 
2,605

 
(14)
 
100

 
2,040

 
5

 
 
8,716

 
9,919

 
(12)
 
147

 
8,255

 
4

 
 
 
 
 

 
 
 
 
 

 
 
 
 
 
 

 
 
 
 
 

U.S.
1,385

 
1,302

 
6

 
0

 
1,302

 
6

 
 
5,164

 
5,012

 
3

 
0

 
5,012

 
3

Non-U.S. Developed
503

 
437

 
15

 
46

 
437

 
5

 
 
1,720

 
1,588

 
8

 
68

 
1,588

 
4

Emerging Markets
239

 
212

 
13

 
11

 
212

 
8

 
 
859

 
766

 
12

 
17

 
766

 
10

Restorative Therapies Group
2,127

 
1,951

 
9

 
57

 
1,951

 
6

 
 
7,743

 
7,366

 
5

 
85

 
7,366

 
4

 
 
 
 
 

 
 
 
 
 

 
 
 
 
 
 

 
 
 
 
 

U.S.
370

 
303

 
22

 
0

 
303

 
22

 
 
1,226

 
1,148

 
7

 
0

 
1,148

 
7

Non-U.S. Developed
218

 
168

 
30

 
22

 
168

 
17

 
 
739

 
625

 
18

 
44

 
625

 
11

Emerging Markets
57

 
41

 
39

 
2

 
41

 
34

 
 
175

 
154

 
14

 
3

 
154

 
12

Diabetes Group
645

 
512

 
26

 
24

 
512

 
21

 
 
2,140

 
1,927

 
11

 
47

 
1,927

 
9

 
 
 
 
 

 
 
 
 
 

 
 
 
 
 
 

 
 
 
 
 

U.S.
4,187

 
4,403

 
(5
)
 
0

 
3,976

 
5

 
 
15,875

 
16,663

 
(5
)
 
0

 
15,395

 
3

Non-U.S. Developed
2,718

 
2,452

 
11

 
263

 
2,347

 
5

 
 
9,627

 
9,085

 
6

 
411

 
8,784

 
5

Emerging Markets
1,239

 
1,061

 
17

 
52

 
1,028

 
15

 
 
4,451

 
3,962

 
12

 
83

 
3,867

 
13

TOTAL
$
8,144

 
$
7,916

 
3
 %
 
$
315

 
$
7,351

 
7
%
 
 
$
29,953

 
$
29,710

 
1
 %
 
$
494

 
$
28,046

 
5
%

(1) U.S. includes the United States and U.S. territories. Non-U.S. developed markets include Japan, Australia, New Zealand, Korea, Canada, and the countries of Western Europe. Emerging Markets include the countries of the Middle East, Africa, Latin America, Eastern Europe, and the countries of Asia that are not included in the non-U.S. developed markets, as previously defined.
(2) The currency impact to revenue measures the change in revenue between current and prior year periods using constant exchange rates.
(3) Revised revenue excludes revenue related to the divested Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses for the second, third, and fourth quarters of fiscal year 2017.

8


MEDTRONIC PLC
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
Three months ended
 
Fiscal year ended
(in millions, except per share data)
April 27, 2018
 
April 28, 2017
 
April 27, 2018
 
April 28, 2017
Net sales
$
8,144

 
$
7,916

 
$
29,953

 
$
29,710

 
 
 
 
 
 
 
 
Costs and expenses:
 
 
 
 
 
 
 
Cost of products sold
2,395

 
2,436

 
9,055

 
9,291

Research and development expense
592

 
553

 
2,253

 
2,193

Selling, general, and administrative expense
2,552

 
2,479

 
9,974

 
9,711

Amortization of intangible assets
448

 
496

 
1,823

 
1,980

Restructuring charges, net
7

 
201

 
30

 
363

Acquisition-related items
27

 
72

 
104

 
220

Certain litigation charges
—

 
—

 
61

 
300

Divestiture-related items
—

 
—

 
114

 
—

Gain on sale of businesses
—

 
—

 
(697
)
 
—

Special charge
—

 
—

 
80

 
100

Other expense, net
188

 
48

 
505

 
222

Operating profit
1,935

 
1,631

 
6,651

 
5,330

 
 
 
 
 
 
 
 
Investment loss
—

 
—

 
227

 
—

 
 
 
 
 
 
 
 
Interest income
(107
)
 
(94
)
 
(397
)
 
(366
)
Interest expense
317

 
290

 
1,146

 
1,094

Interest expense, net
210

 
196

 
749

 
728

Income before income taxes
1,725

 
1,435

 
5,675

 
4,602

Income tax provision
260

 
271

 
2,580

 
578

Net income
1,465

 
1,164

 
3,095

 
4,024

Net (income) loss attributable to noncontrolling interests
(5
)
 
(1
)
 
9

 
4

Net income attributable to Medtronic
$
1,460

 
$
1,163

 
$
3,104

 
$
4,028

 
 
 
 
 
 
 
 
Basic earnings per share
$
1.08

 
$
0.85

 
$
2.29

 
$
2.92

 
 
 
 
 
 
 
 
Diluted earnings per share
$
1.07

 
$
0.84

 
$
2.27

 
$
2.89

 
 
 
 
 
 
 
 
Basic weighted average shares outstanding
1,354.9

 
1,369.0

 
1,356.7

 
1,378.9

 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding
1,366.0

 
1,380.6

 
1,368.2

 
1,391.4

 
 
 
 
 
 
 
 
Cash dividends declared per ordinary share
$
0.46

 
$
0.43

 
$
1.84

 
$
1.72



9



MEDTRONIC PLC
GAAP TO NON-GAAP RECONCILIATIONS
(Unaudited)
 
Three months ended April 27, 2018
(in millions, except per share data)
Net Sales
 
Cost of Products Sold
 
Gross Margin Percent
 
Operating Profit
 
Operating Profit Percent
 
Income Before Income Taxes
 
Net Income attributable to Medtronic
 
Diluted
EPS (1)
 
Effective Tax Rate
GAAP
$
8,144

 
$
2,395

 
70.6
%
 
$
1,935

 
23.8
%
 
$
1,725

 
$
1,460

 
$
1.07

 
15.1
%
Non-GAAP Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring and associated costs (2)
—

 
(15
)
 
0.2

 
45

 
0.6

 
45

 
35

 
0.03

 
22.2

Acquisition-related items
—

 
(4
)
 
—

 
31

 
0.4

 
31

 
24

 
0.02

 
22.6

Debt redemption premium (3)
—

 
—

 
—

 
—

 
—

 
38

 
26

 
0.02

 
31.6

Amortization of intangible assets
—

 
—

 
—

 
448

 
5.4

 
448

 
367

 
0.27

 
18.1

Certain tax adjustments, net (4)
—

 
—

 
—

 
—

 
—

 
—

 
30

 
0.02

 
—

Non-GAAP
$
8,144

 
$
2,376

 
70.8
%
 
$
2,459

 
30.2
%
 
$
2,287

 
$
1,942

 
$
1.42

 
14.9
%
Currency impact
(315
)
 
(95
)
 
0.1

 
31

 
1.6

 
 
 
 
 
0.02

 
 
Currency Adjusted
$
7,829

 
$
2,281

 
70.9
%
 
$
2,490

 
31.8
%
 
 
 
 
 
$
1.44

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended April 28, 2017
(in millions, except per share data)
Net Sales
 
Cost of Products Sold
 
Gross Margin Percent
 
Operating Profit
 
Operating Profit Percent
 
Income Before Income Taxes
 
Net Income attributable to Medtronic
 
Diluted
EPS (1)
 
Effective Tax Rate
GAAP
$
7,916

 
$
2,436

 
69.2
%
 
$
1,631

 
20.6
%
 
$
1,435

 
$
1,163

 
$
0.84

 
18.9
%
Non-GAAP Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring charges, net
—

 
—

 
—

 
201

 
2.5

 
201

 
139

 
0.10

 
30.8

Acquisition-related items
—

 
(10
)
 
0.2

 
82

 
1.0

 
82

 
62

 
0.04

 
24.4

Amortization of intangible assets
—

 
—

 
—

 
496

 
6.3

 
496

 
325

 
0.24

 
34.5

Certain tax adjustments, net (5)
—

 
—

 
—

 
—

 
—

 
—

 
147

 
0.11

 
—

Non-GAAP
$
7,916

 
$
2,426

 
69.4
%
 
$
2,410

 
30.4
%
 
$
2,214

 
$
1,836

 
$
1.33

 
17.0
%
See description of non-GAAP financial measures at the end of the earnings press release.
(1)
The data in this schedule has been intentionally rounded to the nearest $0.01 and, therefore, may not sum.
(2)
Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.
(3)
The charge, included within interest expense, net in our consolidated statements of income, was recognized in connection with the early redemption of approximately $1.2 billion of Medtronic Inc. senior notes.
(4)
The net charge primarily relates to the impact of U.S. tax reform, inclusive of the transition tax, remeasurement of deferred tax assets and liabilities, and the decrease in the U.S. statutory tax rate. Additionally, the net charge includes the net tax cost associated with an internal reorganization, partially offset by the tax effects from the intercompany sale of intellectual property and the impacts from the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.
(5)
The net charge primarily relates to the tax effect from the recognition of the outside basis difference of certain subsidiaries which were included in the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses completed during the second quarter of fiscal year 2018.


10


MEDTRONIC PLC
GAAP TO NON-GAAP RECONCILIATIONS
(Unaudited)
 
Three months ended April 27, 2018
(in millions)
Net Sales
 
SG&A Expense
 
SG&A Expense as a Percentage of Net Sales
 
R&D Expense
 
R&D Expense as a Percentage of Net Sales
 
Other Expense, net
 
Other Expense, net as a Percentage of Net Sales
GAAP
$
8,144

 
$
2,552

 
31.3
 %
 
$
592

 
7.3
%
 
$
188

 
2.3
 %
Non-GAAP Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring and associated costs (1)
—

 
(23
)
 
(0.2
)
 
—

 
—

 
—

 
—

Non-GAAP
8,144

 
2,529

 
31.1
 %
 
592

 
7.3
%
 
188

 
2.3
 %
Currency impact
(315
)
 
(91
)
 
—

 
(7
)
 
0.2

 
(153
)
 
(1.9
)
Currency Adjusted
$
7,829

 
$
2,438

 
31.1
 %
 
$
585

 
7.5
%
 
$
35

 
0.4
 %
See description of non-GAAP financial measures at the end of the earnings press release.
(1)
Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.



11


MEDTRONIC PLC
GAAP TO NON-GAAP RECONCILIATIONS
(Unaudited)
 
Fiscal year ended April 27, 2018
(in millions, except per share data)
Net Sales
 
Cost of Products Sold
 
Gross Margin Percent
 
Operating Profit
 
Operating Profit Percent
 
Income Before Income Taxes
 
Net Income attributable to Medtronic
 
Diluted
EPS (1)
 
Effective Tax Rate
GAAP
$
29,953

 
$
9,055

 
69.8
%
 
$
6,651

 
22.2
 %
 
$
5,675

 
$
3,104

 
$
2.27

 
45.5
 %
Non-GAAP Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring and associated costs (2)
—

 
(40
)
 
0.1

 
107

 
0.4

 
107

 
87

 
0.06

 
18.7

Acquisition-related items
—

 
(28
)
 
0.1

 
132

 
0.4

 
132

 
90

 
0.07

 
31.8

Debt redemption premium (3)
—

 
—

 
—

 
—

 
—

 
38

 
26

 
0.02

 
31.6

Divestiture-related items (4)
—

 
—

 
—

 
115

 
0.4

 
115

 
103

 
0.08

 
10.4

Certain litigation charges
—

 
—

 
—

 
61

 
0.2

 
61

 
53

 
0.04

 
13.1

Investment loss (5)
—

 
—

 
—

 
—

 
—

 
227

 
228

 
0.17

 
(0.4
)
IPR&D impairment
—

 
—

 
—

 
46

 
0.1

 
46

 
41

 
0.03

 
10.9

Gain on sale of businesses (6)
—

 
—

 
—

 
(697
)
 
(2.3
)
 
(697
)
 
(697
)
 
(0.51
)
 
—

Hurricane Maria (7)
—

 
(17
)
 
0.1

 
34

 
0.1

 
34

 
33

 
0.02

 
2.9

Special charge (8)
—

 
—

 
—

 
80

 
0.3

 
80

 
54

 
0.04

 
32.5

Amortization of intangible assets
—

 
—

 
—

 
1,823

 
6.1

 
1,823

 
1,501

 
1.10

 
17.7

Certain tax adjustments, net (9)
—

 
—

 
—

 
—

 
—

 
—

 
1,907

 
1.39

 
—

Non-GAAP
$
29,953

 
$
8,970

 
70.1
%
 
$
8,352

 
27.9
 %
 
$
7,641

 
$
6,530

 
$
4.77

 
14.7
 %
Currency impact
(494
)
 
(148
)
 
—

 
75

 
0.7

 
 
 
 
 
0.04

 
 
Currency Adjusted
$
29,459

 
$
8,822

 
70.1
%
 
$
8,427

 
28.6
 %
 
 
 


 
$
4.81

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal year ended April 28, 2017
(in millions, except per share data)
Net Sales
 
Cost of Products Sold
 
Gross Margin Percent
 
Operating Profit
 
Operating Profit Percent
 
Income Before Income Taxes
 
Net Income attributable to Medtronic
 
Diluted
EPS (1)
 
Effective Tax Rate
GAAP
$
29,710

 
$
9,291

 
68.7
%
 
$
5,330

 
17.9
 %
 
$
4,602

 
$
4,028

 
$
2.89

 
12.6
 %
Non-GAAP Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impact of inventory step-up (10)
—

 
(38
)
 
0.1

 
38

 
0.1

 
38

 
24

 
0.02

 
36.8

Special charge (8)
—

 
—

 
—

 
100

 
0.3

 
100

 
63

 
0.05

 
37.0

Restructuring charges, net
—

 
(10
)
 
—

 
373

 
1.3

 
373

 
272

 
0.20

 
27.1

Certain litigation charges
—

 
—

 
—

 
300

 
1.0

 
300

 
190

 
0.14

 
36.7

Acquisition-related items
—

 
(10
)
 
—

 
230

 
0.8

 
230

 
156

 
0.11

 
32.2

Amortization of intangible assets
—

 
—

 
—

 
1,980

 
6.7

 
1,980

 
1,460

 
1.05

 
26.3

Certain tax adjustments, net (11)
—

 
—

 
—

 
—

 
—

 
—

 
202

 
0.15

 
—

Non-GAAP
$
29,710

 
$
9,233

 
68.8
%
 
$
8,351

 
28.1
 %
 
$
7,623

 
$
6,395

 
$
4.60

 
16.2
 %
See description of non-GAAP financial measures contained in this release.
(1)
The data in this schedule has been intentionally rounded to the nearest $0.01 and, therefore, may not sum.
(2)
Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.
(3)
The charge, included within interest expense, net in our consolidated statements of income, was recognized in connection with the early redemption of approximately $1.2 billion of Medtronic Inc. senior notes.
(4)
The transaction expenses incurred in connection with the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.
(5)
The charge was recognized in connection with the impairment of certain cost and equity method investments.
(6)
The gain on the divestiture of our Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.
(7)
The charges represent idle facility costs, asset write-downs, and humanitarian efforts related to Hurricane Maria.
(8)
The charge represents a contribution to the Medtronic Foundation.

12


(9)
The net charge primarily relates to the impact of U.S. tax reform, inclusive of the transition tax, remeasurement of deferred tax assets and liabilities, and the decrease in the U.S. statutory tax rate. Additionally, the net charge includes the impacts from the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses, and the net tax cost associated with an internal reorganization, which were partially offset by the tax effects from the intercompany sale of intellectual property.
(10)
The charge represents the amortization of the step-up in fair value of inventory acquired in connection with the HeartWare acquisition.
(11)
The net charge primarily relates to the tax effect from the recognition of the outside basis of certain subsidiaries which were included in the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses completed during the second quarter of fiscal year 2018, along with certain tax charges recorded in connection with the redemption of an intercompany minority interest, and the resolution of various tax matters from prior periods.

13


MEDTRONIC PLC
GAAP TO NON-GAAP RECONCILIATIONS
(Unaudited)
 
Fiscal year ended April 27, 2018
(in millions)
Net Sales
 
SG&A Expense
 
SG&A Expense as a Percentage of Net Sales
 
R&D Expense
 
R&D Expense as a Percentage of Net Sales
 
Other Expense, net
 
Other Expense, net as a Percentage of Net Sales
GAAP
$
29,953

 
$
9,974

 
33.3
 %
 
$
2,253

 
7.5
%
 
$
505

 
1.7
 %
Non-GAAP Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring and associated costs (1)
—

 
(37
)
 
(0.1
)
 
—

 
—

 
—

 
—

Divestiture-related items (2)
—

 
(1
)
 
—

 
—

 
—

 
—

 
—

Hurricane Maria
—

 
(2
)
 
—

 
—

 
—

 
(15
)
 
—

IPR&D impairment
—

 
—

 
—

 
—

 
—

 
(46
)
 
(0.2
)
Non-GAAP
29,953

 
9,934

 
33.2
 %
 
2,253

 
7.5
%
 
444

 
1.5
 %
Currency impact
(494
)
 
(153
)
 
—

 
(12
)
 
0.1

 
(256
)
 
(0.9
)
Currency Adjusted
$
29,459

 
$
9,781

 
33.2
 %
 
$
2,241

 
7.6
%
 
$
188

 
0.6
 %
See description of non-GAAP financial measures at the end of the earnings press release.
(1)
Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.
(2)
The transaction expenses incurred in connection with the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.

14


MEDTRONIC PLC
GAAP TO NON-GAAP RECONCILIATIONS
(Unaudited)
 
Fiscal Year
(in millions)
2018
 
2017
 
2016
Net cash provided by operating activities
$
4,684

 
$
6,880

 
$
5,218

Additions to property, plant, and equipment
(1,068
)
 
(1,254
)
 
(1,046
)
Free Cash Flow (1)
$
3,616

 
$
5,626

 
$
4,172

See description of non-GAAP financial measures at the end of the earnings press release.

(1)
Free cash flow represents operating cash flows less property, plant, and equipment additions.


15


MEDTRONIC PLC
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
(in millions)
 
April 27, 2018
 
April 28, 2017
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
3,669

 
$
4,967

Investments
 
7,558

 
8,741

Accounts receivable, less allowances of $193 and $155, respectively
 
5,987

 
5,591

Inventories, net
 
3,579

 
3,338

Other current assets
 
2,187

 
1,865

Current assets held for sale
 
—

 
371

Total current assets
 
22,980

 
24,873

 
 
 
 
 
Property, plant, and equipment
 
10,259

 
9,691

Accumulated depreciation
 
(5,655
)
 
(5,330
)
Property, plant, and equipment, net
 
4,604

 
4,361

Goodwill
 
39,543

 
38,515

Other intangible assets, net
 
21,723

 
23,407

Tax assets
 
1,465

 
1,550

Other assets
 
1,078

 
1,232

Noncurrent assets for sale
 
—

 
5,919

Total assets
 
$
91,393

 
$
99,857

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
Current debt obligations
 
$
2,058

 
$
7,520

Accounts payable
 
1,628

 
1,555

Accrued compensation
 
1,988

 
1,904

Accrued income taxes
 
979

 
633

Other accrued expenses
 
3,431

 
2,618

Current liabilities held for sale
 
—

 
34

Total current liabilities
 
10,084

 
14,264

 
 
 
 
 
Long-term debt
 
23,699

 
25,921

Accrued compensation and retirement benefits
 
1,425

 
1,724

Accrued income taxes
 
3,051

 
2,405

Deferred tax liabilities
 
1,423

 
2,978

Other liabilities
 
889

 
1,515

Noncurrent liabilities held for sale
 
—

 
720

Total liabilities
 
40,571

 
49,527

 
 
 
 
 
Commitments and contingencies
 
 
 
 
Shareholders’ equity:
 
 
 
 
 
 
 
 
 
Ordinary shares— par value $0.0001, 2.6 billion shares authorized, 1,354,218,154 and 1,369,424,818 shares issued and outstanding, respectively
 
—

 
—

Additional paid-in capital
 
28,127

 
29,551

Retained earnings
 
24,379

 
23,270

Accumulated other comprehensive loss
 
(1,786
)
 
(2,613
)
Total shareholders’ equity
 
50,720

 
50,208

Noncontrolling interests
 
102

 
122

Total equity
 
50,822

 
50,330

Total liabilities and equity
 
$
91,393

 
$
99,857


16



MEDTRONIC PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
 
Fiscal Year
(in millions)
 
2018
 
2017
 
2016
Operating Activities:
 
 
 
 
 
 
Net income
 
$
3,095

 
$
4,024

 
$
3,538

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
2,644

 
2,917

 
2,820

Amortization of debt premium, discount, and issuance costs
 
(13
)
 
11

 
29

Acquisition-related items
 
(31
)
 
(46
)
 
218

Provision for doubtful accounts
 
52

 
39

 
49

Deferred income taxes
 
(919
)
 
(459
)
 
(460
)
Stock-based compensation
 
344

 
348

 
375

Loss on debt extinguishment
 
38

 
—

 
163

Gain on sale of businesses
 
(697
)
 
—

 
—

Investment loss
 
227

 
—

 
70

Other, net
 
117

 
(93
)
 
(181
)
Change in operating assets and liabilities, net of acquisitions and divestitures:
 
 
 
 
 
 
Accounts receivable, net
 
(275
)
 
(75
)
 
(435
)
Inventories, net
 
(192
)
 
(227
)
 
(186
)
Accounts payable and accrued liabilities
 
65

 
356

 
(379
)
Other operating assets and liabilities
 
229

 
85

 
(403
)
Net cash provided by operating activities
 
4,684

 
6,880

 
5,218

Investing Activities:
 
 
 
 
 
 
Acquisitions, net of cash acquired
 
(137
)
 
(1,324
)
 
(1,213
)
Proceeds from sale of businesses
 
6,058

 
—

 
—

Additions to property, plant, and equipment
 
(1,068
)
 
(1,254
)
 
(1,046
)
Purchases of investments
 
(3,200
)
 
(4,371
)
 
(5,406
)
Sales and maturities of investments
 
4,227

 
5,356

 
9,924

Other investing activities, net
 
(22
)
 
22

 
(14
)
Net cash provided by (used in) investing activities
 
5,858

 
(1,571
)
 
2,245

Financing Activities:
 
 
 
 
 
 
Acquisition-related contingent consideration
 
(48
)
 
(69
)
 
(22
)
Change in current debt obligations, net
 
(249
)
 
906

 
7

Repayment of short-term borrowings (maturities greater than 90 days)
 
(45
)
 
(2
)
 
(139
)
Proceeds from short-term borrowings (maturities greater than 90 days)
 
1

 
12

 
139

Issuance of long-term debt
 
21

 
2,140

 
—

Payments on long-term debt
 
(7,370
)
 
(863
)
 
(5,132
)
Dividends to shareholders
 
(2,494
)
 
(2,376
)
 
(2,139
)
Issuance of ordinary shares
 
403

 
428

 
491

Repurchase of ordinary shares
 
(2,171
)
 
(3,544
)
 
(2,830
)
Other financing activities
 
(2
)
 
85

 
82

Net cash used in financing activities
 
(11,954
)
 
(3,283
)
 
(9,543
)
Effect of exchange rate changes on cash and cash equivalents
 
114

 
65

 
113

Net change in cash and cash equivalents
 
(1,298
)
 
2,091

 
(1,967
)
Cash and cash equivalents at beginning of period
 
4,967

 
2,876

 
4,843

Cash and cash equivalents at end of period
 
$
3,669

 
$
4,967

 
$
2,876

Supplemental Cash Flow Information
 
 
 
 
 
 
Cash paid for:
 
 
 
 
 
 
Income taxes
 
$
2,542

 
$
1,029

 
$
1,379

Interest
 
1,147

 
1,134

 
1,266


17
Exhibit 99.2 MEDTRONIC PLC Q4 FY18 EARNINGS PRESENTATION MAY 24, 2018 • Q4 FY18 CONSOLIDATED RESULTS & GROUP REVENUE HIGHLIGHTS • FY18 FINANCIAL HIGHLIGHTS • FREE CASH FLOW • FY18 DIVESTITURE IMPACT • FY19 GUIDANCE & OTHER ASSUMPTIONS

 
FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements. They are based on current assumptions and expectations that involve uncertainties or risks. These uncertainties and risks include, but are not limited to, those described in the filings we make with the U.S. Securities and Exchange Commission (SEC). Actual results may differ materially from anticipated results. Forward-looking statements are made as of today's date, and we undertake no duty to update them or any of the information contained in this presentation. Financial Data Certain information in this presentation includes calculations or figures that have been prepared internally and have not been reviewed or audited by our independent registered public accounting firm. Use of different methods for preparing, calculating or presenting information may lead to differences and such differences may be material. This presentation contains financial measures and guidance which are considered “non-GAAP” financial measures under applicable SEC rules and regulations. Medtronic management believes that non-GAAP financial measures provide information useful to investors in understanding the company’s underlying operational performance and trends and to facilitate comparisons with the performance of other companies in the med tech industry. Medtronic calculates forward-looking non-GAAP financial measures based on internal forecasts that omit certain amounts that would be included in GAAP financial measures. For instance, forward-looking EPS projections exclude the impact of foreign currency fluctuations and other potential charges or gains that would be recorded as non-GAAP adjustments to earnings during the fiscal year. Medtronic does not attempt to provide reconciliations of forward-looking non-GAAP EPS guidance to projected GAAP EPS guidance, because the combined impact and timing of recognition of these potential charges or gains is inherently uncertain and difficult to predict, and is unavailable without unreasonable efforts. In addition, we believe such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance. GAAP to non-GAAP reconciliations are provided on our website and can be accessed using this link. Financial Comparisons References to quarterly results increasing or decreasing are in comparison to Q4 FY17, and references to annual results increasing or decreasing are in comparison to FY17. References to organic revenue growth exclude the impact of material acquisitions, divestitures, and currency. References to comparable exclude the impact of material divestitures. Unless stated otherwise, quarterly and annual rates and ranges are given on a comparable, constant currency basis, which adjusts for material divestitures, as well as the impact of foreign currency. BASIS OF PRESENTATION OF COMPARABLE Q1 & FULL YEAR FY18 FINANCIAL METRICS Previously disclosed Q1 and full year FY18 financial metrics have been revised to adjust for (a) the estimated results of the portion of our Patient Monitoring & Recovery division, which was divested to Cardinal Health on July 29, 2017, and (b) the change in the presentation of revenue related to the Advanced Ablation and GI Solutions product lines, which were historically included within the Surgical Solutions division and which, effective Q2 FY18, are now included within the Respiratory, Gastrointestinal, and Renal (RGR) division. The non-GAAP reconciling items remain the same as those presented in previous earnings release materials. The GAAP to Non-GAAP reconciliations are available with previous earnings release materials, available at http://investorrelations.medtronic.com. The revised comparable financial metrics represent estimates based upon available information and certain assumptions which management believes are reasonable under the circumstances. Actual results may have differed materially from the assumptions used to prepare the revised financial metrics. The revised financial metrics are not necessarily indicative of the financial position or results of operations that would have been realized had the divestiture occurred as of the dates or for the periods indicated, nor is it meant to be indicative of any financial position or results of operations that Medtronic plc may have experienced had the divestiture occurred in an earlier period. Q4 FY18 Earnings Results | May 24, 2018 | 2

 
Q4 FY18 CONSOLIDATED RESULTS & GROUP REVENUE HIGHLIGHTS

 
MDT ANOTHER STRONG QUARTER; Q4 FY18 HIGHLIGHTS EXPANDED OUR OPERATING MARGIN AND DELIVERED EPS LEVERAGE Revenue: DIAB . Delivered 6.5% organic revenue growth; 100 – 200 bps above guidance provided on 8% EM 15% CVG Q3 earnings call RTG 39% U.S. 26% 52% • Continue to see a clear acceleration in therapy innovation, with new product launches and value- Non-U.S. Dev based healthcare initiatives driving growth in all business groups 33% MITG • Strong revenue performance led by: 27% • Diabetes growth of 21.3%, reflecting US patient demand for the MiniMed® 670G hybrid closed Revenue As Rep CCC1 loop system $M Y/Y % Y/Y % • RTG growth of 6.1%, powered by double-digit growth in Neurovascular, Neurosurgery, and CVG 3,135 10 5 Pain Therapies, was the best quarter of organic growth in group history MITG 2,237 (14) 5 RTG 2,127 9 6 • Emerging Markets grew 15.5%, driven by: Diabetes 645 26 21 • Low-20’s growth in Middle East & Africa and Latin America Total 8,144 3% 7% • Double-digit revenue growth in China and Eastern Europe U.S. 4,187 (5) 5 • Developed Market growth of 5.0%, driven by strength in Japan (5.5%), the US (5.3%), and Western Non-U.S. Dev 2,718 11 5 Europe (4.4%) EM 1,239 17 15 . Delivered strong margin expansion and double digit EPS growth Total $8,144 3% 7% • Operating Profit grew 9%; Operating Margin: ~80 bps improvement Y/Y Earnings Per Share: • FX Impact to Op Margin (160 bps); at current rates, this headwind turns into a modest tailwind in FY19 Diluted As Rep CCC1 • SG&A: Significant +150 bps improvement Y/Y, reflecting our company-wide cost savings initiatives EPS Y/Y Y/Y% • EPS: 15% growth; 14% comparable; 7% Non-GAAP GAAP $1.07 27% NC Non-GAAP $1.42 7% 15% 1 Figures represent comparison to Q4 FY17 on a comparable, constant currency basis. Q4 FY18 Earnings Results | May 24, 2018 | 4

 
MDT Q4 FY18 GAAP SELECT FINANCIAL INFORMATION Q4 Q4 Y/Y Growth / FY18 FY17 Y/Y Change Net Sales ($M) 8,144 7,916 3% Cost of Products Sold 2,395 2,436 -2% Gross Margin 70.6% 69.2% 140 bps SG&A ($M) 2,552 2,479 3% % of Sales 31.3% 31.3% Flat R&D ($M) 592 553 7% % of Sales 7.3% 7.0% (30 bps) Other Expense, Net ($M) 188 48 292% Operating Profit 1,935 1,631 19% Operating Margin 23.8% 20.6% 320 bps Diluted EPS ($) 1.07 0.84 27% Q4 FY18 Earnings Results | May 24, 2018 | 5

 
MDT Q4 FY18 Y/Y EPS WALK EPS Strong EPS leverage of 870 bps 15% Y/Y1 1.60 $0.19 $1.44 ($0.02) $1.42 ($0.35) 1.40 $0.49 ($0.08) $1.25 1.20 $1.07 1.00 $0.84 0.80 0.60 0.40 0.20 0.00 Q4 FY17, Q4 FY17, Q4 FY17, Q4 FY17, Performance Q4 FY18, FX Q4 FY18, Q4 FY18, Q4 FY18, GAAP Non-GAAP Divestiture Impact Comparable CC Non-GAAP Non-GAAP GAAP Adjustments Non-GAAP Non-GAAP Adjustments FY17 FY18 1 Figures represent comparison to Q4 FY17 on a comparable, constant currency basis. Q4 FY18 Earnings Results | May 24, 2018 | 6

 
MDT Q4 FY18 Y/Y OPERATING MARGIN CHANGES Operating Margin Significant operating margin expansion driven by continued company-wide focus 35.0% 0.8% 31.8% 0.6% 31.0% (1.6%) 9.8% 30.2% (6.4%) 30.0% 25.0% 23.8% 20.6% 20.0% 15.0% 10.0% 5.0% 0.0% Q4 FY17, Q4 FY17, Q4 FY17, Q4 FY17, Performance Q4 FY18, FX Q4 FY18, Q4 FY18, Q4 FY18, GAAP Non-GAAP Divestiture Impact Comparable CC Non-GAAP Non-GAAP GAAP Adjustments Non-GAAP Non-GAAP Adjustments FY17 FY18 Q4 FY18 Earnings Results | May 24, 2018 | 7

 
MDT Q4 FY18 NON-GAAP SELECT FINANCIAL INFORMATION Q4 FY18 Q4 FX Q4 FY18 Q4 Comparable FY17 Impact CCC Growth FY18 Constant Revised1 $M / Change / Change3 Currency3 Net Sales ($M) 8,144 7,351 315 -- 7% Cost of Products Sold2 2,376 2,101 95 -- 9% Gross Margin2 70.8% 71.4% (10 bps) 70.9% (50 bps) SG&A ($M)2 2,529 2,399 91 -- 2% % of Sales 31.1% 32.6% Flat 31.1% 150 bps R&D ($M) 592 548 7 -- 7% % of Sales 7.3% 7.5% (20 bps) 7.5% Flat Other Expense, Net ($M)2 188 26 153 -- 35% Operating % of Sales 2.3% 0.4% 190 bps 0.4% Flat Leverage3 Operating Profit2 2,459 2,277 (31) -- 9% 290 bps Operating Margin2 30.2% 31.0% (160 bps) 31.8% 80 bps EPS Diluted EPS2 ($) 1.42 1.25 (0.02) -- 15% Leverage3 870 bps 1 Restatement on comparable basis: Represents management’s best estimate to exclude the impact of the Patient Care, Deep Vein Thrombosis & Nutritional Insufficiency divestiture to Cardinal Health. 2 Non-GAAP Q4 FY18 Earnings Results | May 24, 2018 | 8 3 Figures represent comparison to Q4 FY17 on a comparable, constant currency basis.

 
CVG REVENUES GREW 5.4% ORGANIC Q4 FY18 HIGHLIGHTS HeartWare™ . Cardiac Rhythm & Heart Failure: +1.5% growth driven by LSD growth in HVAD™ System Growth Driven by Arrhythmia Management, partially offset by LSD declines in Heart Failure CSH, AFS and Emerging Markets • Continued strength in AF Solutions (AFS), Low Power (CRT-P, Azure, Micra) and Mechanical Circulatory Support (MCS) offset High Power replacement headwinds ® APV • TYRX - related VBHC arrangements: More than 1,100 hospitals under contract, covering Arctic Front EM Advance® 16% 17% over 30% of US CRHF implantables revenue U.S. • Services & Solutions HSD growth led by continued CLMS/ORMS adoption and strong Y/Y CRHF 49% CSH 52% Non- MCMS growth 32% U.S. Dev 34% . Coronary & Structural Heart: +12.8% growth driven by TAVR and DES CoreValve® Evolut® PRO • Above-market, 20%+ WW TAVR growth, driven by continued adoption of Evolut® PRO and the valve’s industry-leading hemodynamics and PVL performance Revenue As Rep CC1 $M Y/Y % Y/Y % – Market leading European TAVR share in Q4 CRHF 1,633 6 1 – Enveo Pro delivery system: Q4 US launch; CE Mark received with launch underway Resolute Onyx™ CSH 1,005 19 13 • Continued Resolute Onyx™ launch momentum and adoption in US and Japan drove High- APV 497 9 5 Teens growth in DES; Resolute Onyx™ now a majority of DES mix Total $3,135 10% 5% • APOLLO trial (TMVR) enrollment started Heli-FX® U.S. 1,530 3 3 • Positive RDN ON-MED results released at EuroPCR demonstrated clinically and EndoAnchor® Non-U.S. Dev 1,074 16 4 statistically significant blood pressure reductions; US pivotal IDE underway EM 531 21 16 . Aortic & Peripheral Vascular: +4.8% growth driven by mid-teens growth in Total $3,135 10% 5% endoVenous VenaSeal™ Closure System • DCB maintained global share leadership; decelerated SFA segment growth due to CMS reimbursement changes, offset by strong OUS growth • VenaSeal™ growth accelerated with recent payer coverage approvals 1 Figures represent comparison to Q4 FY17 on a constant currency basis. Q4 FY18 Earnings Results | May 24, 2018 | 9

 
MITG REVENUES GREW 4.8% ORGANIC Q4 FY18 HIGHLIGHTS Signia™ . Surgical Innovations (SI): +5.9% growth driven by Advanced Energy and Stapling Growth Driven by Open to MIS and System Stapling Emerging Markets • Stability of procedure volumes continues to drive Advanced Surgical growth • Strong growth in Advanced Stapling driven by: EM – Signia™ powered stapler (US, Japan, Europe) 19% U.S. 40% RGR – Tri-Staple™ 2.0 specialty reloads Surg. LigaSure™ 32% Innov. • Continued strength in Advanced Energy driven by: Vessel 68% Sealing Non- U.S. Dev – ValleyLab™ FT10 41% – LigaSure™ vessel sealing instruments with nano-coating . Respiratory, GI, & Renal: +2.5% growth; LSD growth in Respiratory & GI and Revenue As Rep CCC1 $M Y/Y % Y/Y % MSD growth in Renal Care Solutions (RCS) Nellcor™ Surg Innov 1,513 -- 6 • Respiratory & Patient Monitoring: Strong flu season helped to offset tough comps and Pulse RGR 724 -- 3 lower volume in Ventilation and Airways Oximetry Total $2,237 (14%) 5% • GI and Hepatology delivered DD growth, driven by strong performance across all businesses U.S. 902 (31) 2 • Renal Care grew MSD in line with market growth Non-U.S. Dev 923 0 3 EM 412 11 18 . Strong Emerging Market growth across MITG Bellco Total $2,237 (14%) 5% Amplya™ 1 Figures represent comparison to Q4 FY17 on a comparable, constant currency basis. Q4 FY18 Earnings Results | May 24, 2018 | 10

 
RTG REVENUES GREW 6.1% ORGANIC; Q4 FY18 HIGHLIGHTS BEST QUARTER IN RTG’S 8-YEAR HISTORY . Spine: +1.0% growth driven by HSD growth in BMP offset by LSD declines in Infuse® Continued Strength in Brain and Pain; Bone Graft Core Spine (in-line with global spine market) LSD Spine Growth • Core Spine revenue combined with Spine enabling technologies (reported in Neurosurgery business), grew ~3%, driven by the ongoing success of the Surgical Synergy strategy Pain EM 11% 16% Spine 33% Non-US . Brain Therapies: +11.3% growth from strength in both Neurovascular & StealthStationTM Specialty Dev S8 U.S. 65% 20% 24% Neurosurgery Neurovascular led by high-twenties growth in Stents Brain • 31% • LDD growth in Neurosurgery from continued penetration of StealthStation® S8 navigation systems, Mazor X™ robotic guidance systems, & Visualase laser ablation systems Revenue As Rep CC1 $M Y/Y % Y/Y % Spine 699 3 1 . Pain Therapies: +9.9% growth driven by mid-teens growth in spinal cord Intellis™ Brain 672 15 11 Spinal Cord stimulation Stimulator Specialty 424 7 4 Pain 332 13 10 • Momentum from Intellis™ Platform launch in US, EMEA, and Japan continues to drive growth along with the ongoing global roll-out of EvolveSM workflow Total $2,127 9% 6% – FY19 Intellis™ launch in Canada, ANZ, and Latin America U.S. 1,385 6 6 • Second consecutive quarter of TDD pump growth following lifting of FDA distribution Non-U.S. Dev 503 15 5 restriction InterStimTM II EM 239 13 8 Total $2,127 9% 6% . Specialty Therapies: +4.3% growth from strength in ENT & Pelvic Health • ENT: Powered instruments growth in EM and US capital; Pelvic Health: Strong US InterStimTM II neurostimulator sales and regional performance in APAC and EMEA 1 Figures represent comparison to Q4 FY17 on a constant currency basis. Q4 FY18 Earnings Results | May 24, 2018 | 11

 
DIABETES REVENUES GREW 21.3% ORGANIC Q4 FY18 HIGHLIGHTS . Intensive Insulin Management: Over 25% growth driven by robust demand MiniMed® Strong 670G Adoption; Unconstrained 670G for the MiniMed® 670G hybrid closed loop insulin pump sensor manufacturing capacity • Strong CGM and sensor utilization EM • Completed sensor capacity expansion efforts and finished quarter with no back orders 9% Over 70,000 trained, active 670G users; Excellent feedback continues Total Group Non-US • ® Revenue Dev MiniMed 640G $645M 34% US International expansion progress with Japan launch of MiniMed® 640G 57% • – Moving towards servicing OUS Animas customers and launching 670G in new geographies Revenue As Rep CC1 . Diabetes Service & Solutions: Low double-digit growth driven by $M Y/Y % Y/Y % ® momentum in Consumables and Guardian Connect Guardian® IIM -- >30 >25 Connect DSS -- High Teens LDD • Easing of sensor supply constraints allowed for broader promotion of Guardian® NDT -- (High Teens) (Low Twenties) Connect in Europe Total $645 26% 21% – Guardian® Connect US launch Q1FY19 U.S. 370 22 22 • Strength in consumables from new pump patients and Animas revenue Non-U.S. Dev 218 30 17 Capitalizing on VBHC trends and leveraging the Diabeter model in US Type 2 clinics iPro®2 CGM EM 57 39 34 • w/ Pattern Snapshot Total $645 26% 21% 1 Figures represent comparison to Q4 FY17 on a constant currency basis. Q4 FY18 Earnings Results | May 24, 2018 | 12

 
FY18 FINANCIAL HIGHLIGHTS

 
MDT STRONG SECOND HALF PERFORMANCE; FY18 HIGHLIGHTS REVENUE AND EPS GROWTH AT HIGH END OF ANNUAL GUIDANCE Revenue: DIAB . Executed on our broad, sustainable growth strategy, driving therapy innovation and 7% EM 15% CVG global market penetration RTG 38% 26% U.S. Non-U.S. 53% • 4.6% organic revenue growth, with strong, diversified performance in all groups and regions Dev 32% • Acquisitions contributed ~40 bps MITG Foreign currency had a positive ~180 bps impact 29% • • Steady cadence of innovative, new product launches driving continued growth in all business groups Revenue As Rep CCC1 $M Y/Y % Y/Y % • Double-digit Emerging Market growth; FY18 revenue of ~$4.5B CVG 11,354 8 6 MITG 8,716 (12) 4 . Delivered enterprise synergies to overcome margin headwinds; Solid EPS growth RTG 7,743 5 4 • EPS: 10% growth; 9% comparable; 4% Non-GAAP Diabetes 2,140 11 9 Total $29,953 1% 5% • Operating Margin: ~20 bps improvement Y/Y • Completed $850M Covidien synergy commitment; Launched new Enterprise Excellence program to U.S. 15,875 (5) 3 increase effectiveness, drive continued savings, and enable reinvestment for growth Non-U.S. Dev 9,627 6 5 EM 4,451 12 13 . Free cash flow2 would have been $4.7B, after adjusting for $1.1B IRS pre-payment for Total $29,953 1% 5% Puerto Rico Other Financial Highlights: . Capital allocation: Strategically deploying capital against priorities 1 Diluted As Rep CCC • FY18: $2,494M in dividends and $1,768M in net share repurchases; representing 118% of FCF2 and EPS Y/Y Y/Y% 65% of Non-GAAP Net Income GAAP $2.27 (21%) NC Non-GAAP $4.77 4% 10% Cash Flow Free Cash from Ops $4.7B Flow2 $3.6B 1 Figures represent comparison to FY17 on a comparable, constant currency basis. 2 Operating cash flows less property, plant and equipment additions. Q4 FY18 Earnings Results | May 24, 2018 | 14

 
MDT FY18 GAAP SELECT FINANCIAL INFORMATION Y/Y Growth / FY18 FY17 Y/Y Change Net Sales ($M) 29,953 29,710 1% Cost of Products Sold 9,055 9,291 -3% Gross Margin 69.8% 68.7% 110 bps SG&A ($M) 9,974 9,711 3% % of Sales 33.3% 32.7% (60 bps) R&D ($M) 2,253 2,193 3% % of Sales 7.5% 7.4% (10 bps) Other Expense, Net ($M) 505 222 127% Operating Profit 6,651 5,330 25% Operating Margin 22.2% 17.9% 430 bps Diluted EPS ($) 2.27 2.89 -21% Q4 FY18 Earnings Results | May 24, 2018 | 15

 
MDT FY18 Y/Y EPS WALK EPS EPS growth at upper-end of annual guidance range despite headwinds 10% Y/Y1 5.00 $0.44 $4.81 ($0.04) $4.77 ($2.50) $1.71 ($0.23) $4.37 4.00 $2.89 3.00 $2.27 2.00 1.00 0.00 FY17, FY17, FY17, Divestiture FY17, Performance FY18, FX FY18, FY18, FY18, GAAP Non-GAAP Impact Comparable CC Non-GAAP Non-GAAP GAAP Adjustments Non-GAAP Non-GAAP Adjustments FY17 FY18 1 Figures represent comparison to FY17 on a comparable, constant currency basis. Q4 FY18 Earnings Results | May 24, 2018 | 16

 
MDT FY18 Y/Y OPERATING MARGIN CHANGES Operating Margin Operating margin expansion driven by SG&A leverage 0.3% 28.4% 0.2% 28.6% (0.7%) 30.0% 10.2% 27.9% (5.7%) 25.0% 22.2% 20.0% 17.9% 15.0% 10.0% 5.0% 0.0% FY17, FY17, FY17, FY17, Performance FY18, FX FY18, FY18, FY18, GAAP Non-GAAP Divestiture Impact Comparable CC Non-GAAP Non-GAAP GAAP Adjustments Non-GAAP Non-GAAP Adjustments FY17 FY18 Q4 FY18 Earnings Results | May 24, 2018 | 17

 
MDT FY18 NON-GAAP SELECT FINANCIAL INFORMATION FY18 FX FY18 FY17 Comparable FY18 Impact CCC Growth Revised1 Constant $M / Change / Change3 Currency3 Net Sales ($M) 29,953 28,046 494 -- 5% Cost of Products Sold2 8,970 8,278 148 -- 7% Gross Margin2 70.1% 70.5% Flat 70.1% (40 bps) SG&A ($M)2 9,934 9,478 153 -- 3% % of Sales 33.2% 33.8% Flat 33.2% 60 bps R&D ($M) 2,253 2,175 12 -- 3% % of Sales 7.5% 7.8% (10 bps) 7.6% 20 bps Other Expense, Net ($M)2 444 150 256 -- 25% % of Sales 1.5% 0.5% 90 bps 0.6% (10 bps) Operating Leverage3 Operating Profit2 8,352 7,965 (75) -- 6% 80 bps Operating Margin2 27.9% 28.4% (70 bps) 28.6% 20 bps EPS Diluted EPS2 ($) 4.77 4.37 (0.04) -- 10% Leverage3 500 bps 1 Restatement on comparable basis: Represents management’s best estimate to exclude the impact of the Patient Care, Deep Vein Thrombosis & Nutritional Insufficiency divestiture to Cardinal Health. 2 Non-GAAP Q4 FY18 Earnings Results | May 24, 2018 | 18 3 Figures represent comparison to FY17 on a comparable, constant currency basis.

 
FREE CASH FLOW

 
MDT COMPONENTS OF FREE CASH FLOW $ Billions FY16 FY17 FY18 Operating Cash Flow $5.2 $6.9 $4.7 CAPEX ($1.0) ($1.3) ($1.1)  FY18 free cash flow would have been $4.7B, after adjusting for Free Cash Flow $4.2 $5.6 $3.6 the $1.1B Puerto Rico IRS pre- Divestiture Impact1 ($0.3) ($0.3) $0.3 payment the company elected Comparable Free Cash Flow $3.9 $5.3 $3.9 to make late in Q4 Included in Operating Cash Flow: Certain Litigation Payments, net2,3 $0.2 $0.3 $0.3  Expect to improve free cash Restructuring Payments2 $0.2 $0.2 $0.2 flow conversion over the next Tax ItemsTax 2 couple of years as litigation and - Divestiture Related Payments -- -- $0.1 Pre Other Payments2,4 $0.2 $0.3 $0.2 tax payments reduce Puerto Rico IRS Pre-Payment -- -- $1.1 Certain Other Tax Payments $0.8 $0.4 $0.4 1 Represents three quarters of estimated cash flow impact to FY16 & FY17 from the Patient Care, DVT, and NI divestiture to Cardinal Health, and adds back Divestiture Related Payments and Certain Tax Payments associated with the divestiture to FY18 2 Cash flow impact does not reflect associated tax cost / benefit, as timing and amount are difficult to estimate 3 Includes payments accrued as “Non-GAAP” charges, as well as COV acquisition opening balance sheet adjustments Q4 FY18 Earnings Results | May 24, 2018 | 20 4 Includes acquisition-related and special charges

 
FY18 DIVESTITURE IMPACT

 
MDT Q1 & FULL YEAR FY18 REVISED HISTORICAL REVENUE & SELECT BASELINE FINANCIAL METRICS Revised to reflect divestiture & new MITG reporting structure All figures in $millions 3 Q1 FY18 FY18 Q1 FY18 FY183 Minimally Invasive Therapies Group 1,936 8,166 Net Sales ($M) 6,840 29,403 World Wide Surgical Innovations 1,306 5,537 Respiratory, GI & Renal 630 2,629 Cost of Products Sold1 2,029 8,664 TOTAL MEDTRONIC PLC 6,840 29,403 Gross Margin1 70.3% 70.5% 1 Q1 FY18 FY183 SG&A ($M) 2,412 9,863 Minimally Invasive Therapies Group 835 3,394 % of Sales 35.3% 33.5% Surgical Innovations 531 2,190 U.S. 1 Respiratory, GI & Renal 304 1,204 R&D ($M) 539 2,244 TOTAL MEDTRONIC PLC 3,632 15,465 % of Sales 7.9% 7.6% Other (Income) Expense, Net ($M)1 42 420 Q1 FY18 FY183 U.S. 3,632 15,465 % of Sales 0.6% 1.4% Medtronic Plc Non-U.S. Developed 2,202 9,516 Operating Profit1 1,818 8,212 Emerging Markets 1,006 4,422 1 TOTAL MEDTRONIC PLC 6,840 29,403 Operating Margin 26.6% 27.9% Diluted EPS1,2 ($) 1.03 4.68 Q1 FY18 FY183 U.S. 835 3,394 Note: Gross Margin, Operating Margin, and Diluted MITG Non-U.S. Developed 754 3,267 EPS are management’s best estimates and include Emerging Markets 347 1,505 assumptions, including cost allocation. TOTAL MITG 1,936 8,166 1 Non-GAAP measure. Refer to “Basis of Presentation of Revised Financial Metrics” disclaimer on slide 2 to address the calculation of the revised baseline. 2 Assumes no change to interest expense or diluted share count related to divested businesses. 3 Q2, Q3, and Q4 FY18 values are not adjusted. Q4 FY18 Earnings Results | May 24, 2018 | 22

 
FY19 GUIDANCE & OTHER ASSUMPTIONS

 
MDT FY19 GUIDANCE & OTHER ASSUMPTIONS FY18 Organic Growth Implied Revenue Implied Revenue FX1 Comparable Base2 Guidance Range Growth REVENUE $29,403M 4.0 – 4.5% (-$50M) to (-$150M) $30.4 - $30.7B 3.5% - 4.3% FY18 Constant Currency Implied Operating Implied Operating FX1 Comparable Base2 Guidance Margin Margin Expansion OPERATING MARGIN 27.9% +50 bps Approx. +10 bps 28.5% +60 bps FY18 Implied Constant Implied EPS FX1 EPS Guidance Comparable Base2 Currency Growth EPS $4.68 8 – 9% $0.05 $5.10 - $5.15 9 – 10% 1 While FX rates are fluid, assumptions above are based on current rates. 2 Comparable base adjusts for the Patient Care / DVT / NI divestiture to Cardinal Health in Q2 FY18. Q4 FY18 Earnings Results | May 24, 2018 | 24

 
APPENDIX ACRONYMS / ABBREVIATIONS Growth Other Business Specific Business Specific DD Double Digit FDA Food and Drug Administration AF Atrial Fibrillation JNJ/J&J Johnson & Johnson HSD High-Single Digit FX Foreign Exchange AFS AF Solutions MCS Mechanical Circulatory Systems LDD Low-Double Digit FY Fiscal Year APV Aortic & Peripheral Vascular MDT Medtronic Generally Accepted Accounting LSD Low-Single Digit GAAP BKP Balloon Kyphoplasty Procedure MIS Minimally Invasive Surgery Principles MSD Mid-Single Digit BMP Bone Morphogenetic Protein MITG Minimally Invasive Therapies Group IDE Investigational Device Exemption CGM Continuous Glucose Monitoring NDT Non-Intensive Diabetes Therapies IRS Internal Revenue Service Other CLMS Cath Lab Management Services ORMS Operating Room Management Services IT Information Technology ANZ Australia and New Zealand CRHF Cardiac Rhythm & Heart Failure PTA Percutaneous Transluminal Angioplasty OUS Outside the United States Cardiac Resynchronization Therapy – APAC Asia Pacific CRT-P RCS Renal Care Solutions Q Quarter Pacemakers Bps Basis Points RDN Renal Denervation R&D Research & Development CSH Coronary & Structural Heart CC Constant Currency RGR Respiratory, Gastrointestinal, & Renal Rep Reported CVG Cardiac & Vascular Group CCC Comparable, Constant Currency RTG Restorative Therapies Group SEC U.S. Securities & Exchange Commission DCB Drug Coated Balloon CE Conformité Européene SFA Superficial Femoropopliteal Artery Seq Sequential DES Drug Eluting Stent Centers for Medicare and Medicaid Surg CMS DIAB Diabetes Surgical Innovations Services SG&A Selling, General & Administrative Innov / SI Comps Comparisons WW Worldwide DSS Diabetes Services & Solutions TAVR Transcatheter Aortic Valve Replacement Dev Developed YTD Year to Date DVT Deep Vein Thrombosis TDD Targeted Drug Delivery EM Emerging Markets Y/Y Year-over-Year ENT Ears, Nose, & Throat TMVR Transcatheter Mitral Valve Replacement EMEA Europe, Middle East, and Africa $B Billions of Dollars GI Gastrointestinal UHG United Health Group EPS Earnings Per Share $M Millions of Dollars HVAD MDT Left Ventricular Assist Device VBHC Value-Based Healthcare EU European Union IIM Intensive Insulin Management Q4 FY18 Earnings Results | May 24, 2018 | 25

 

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