Medtronic Annual Report 2015

FY2015 Annual Report · Medtronic

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Annual Report

SEC 10-K Filing for Fiscal Year 2015

Fiscal Year 2015

Dear Shareholder,

Of the four years that I have been fortunate enough to be CEO of Medtronic, fiscal year 2015 was by far the most significant.
We made good progress in all of our strategic objectives and continued to execute on the consistent and realistic company
strategy that we established three years ago. This strategy is aligned with the opportunities in healthcare and takes advantage of
our unique strengths. The key elements are:

•

(cid:129)

Continued operational execution
Implement our growth strategies:
(cid:129)

(cid:129)

Maintain or expand market leadership positions in all businesses through therapy innovation
Expand access of existing therapies in emerging markets
Lead the transformation to value-based healthcare
(cid:129)
Create shareholder value through best-in-class financial performance

The above serve as our strategic guideposts, against which we measure progress regularly.

FY15: AN EXCITING YEAR

We delivered solid results in FY15, ultimately reflecting the dedication and passion of more than 85,000 employees striving to
fulfill our Mission, together with healthcare partners around the world. Our overall performance was rewarded by the market, as
our stock appreciated by 33 percent over the course of the fiscal year, 20 percentage points better than the performance of the
S&P 500. I would like to highlight five key drivers of our FY15 performance.

The Covidien Acquisition

The most important event of our fiscal year was the Covidien transaction. In many ways, this acquisition has initiated a new era
for Medtronic, now known as Medtronic plc and legally domiciled in Ireland. The combination of Medtronic and Covidien
positions us as a clear industry leader and has set the stage for us to lead the transformation of healthcare. At $50 billion, it was
the largest ever medical technology acquisition and completion of the transaction less than eight months after the announcement
represented a true stand-out performance by the team. The key element in our success was consistently communicating and
demonstrating that the acquisition was aligned with our Mission, and meaningfully complemented and accelerated all three of
our growth strategies. There were eight equity investment analyst upgrades following the announcement, and by deal closure the
market capitalization of the legacy companies had increased by $32 billion from combined, pre-announcement levels.

The integration strategy follows the acquisition rationale and is clearly articulated through a simple set of four priorities:
preserve the ability of both companies to achieve their strategic plans and growth commitments, optimize our non-customer
facing functions’ cost structure, accelerate specific revenue synergy opportunities, and transform healthcare by developing new
value-based offerings and partnering with key stakeholders to drive new, transformative business models and solutions. Detailed
financial plans have been developed and built into the operating plans of our groups and regions. We have specific cost saving
plans that are expected to result in a minimum of $850 million in cost synergies by the end of FY18. These plans are now being
executed, and we are on track to produce our goal of $300 to $350 million in savings in FY16. Key employee retention has been
good; our employees are engaged and there continues to be a high degree of anticipation and excitement across all levels of the
organization.

Cardiac and Vascular Group Performance

The performance of the Cardiac and Vascular Group (CVG) was another major highlight of FY15. Revenue grew 7 percent on a
comparable, constant currency basis – the highest rate in five years – driven by the flawless execution of several new product
launches, as well as sustained performance from therapies launched in previous years.

It is particularly noteworthy that CVG’s outstanding financial results were largely a result of organic R&D. Our team was
rewarded for making the right product development choices over the years. For example, in our Cardiac Rhythm & Heart
Failure division, our Reveal LINQ® Insertable Cardiac Monitor (ICM) System, which is used to identify a diagnosis from
unexplained syncope, atrial fibrillation, and cryptogenic stroke, had robust growth.

In our Coronary & Structural Heart division, we experienced strong customer acceptance in CE Mark countries for our
CoreValve® Evolut® R next-generation self-expanding transcatheter aortic valve system, which features an option to recapture
and reposition the valve during the procedure and a differentiated 14-French equivalent delivery catheter allowing access to
smaller patient anatomies. In our Aortic & Peripheral Vascular division, we received FDA approval and launched our
IN.PACT® Admiral® drug-coated balloon in the United States late in the fiscal year. This product is an interventional treatment
for peripheral artery disease in the upper leg, a serious and common cardiovascular condition that causes pain in the legs and is
known to be associated with a four- to five-fold increase in risk for heart attack and stroke.

Finally, these FY15 results illustrate how well the CVG team has executed a bold and imaginative turnaround plan first
conceived five years ago. CVG is now embarking on the next phase of their transformation as they organize the Group along
disease states, providing solutions to manage patients across the continuum of care.

Achieving Critical Mass in Services and Solutions

Our Services and Solutions revenue, independent from associated device revenue, more than doubled in FY15. The acquisition
of NGC Medical provided a platform for the acceleration of our Cath Lab Managed Services business in Europe and the Middle
East. As of the end of FY15, we have 50 long-term agreements with providers, representing $1.1 billion in revenue over the life
of these contracts, which typically span five to six years. We also initiated our first Operating Room Managed Services pilot,
combining our existing capabilities in the cath lab with Covidien’s breadth of operating room technology and expertise.
Cardiocom also continued to grow both in the number of accounts as well as capability. We added heart failure data generated
by our implantable devices to the Cardiocom platform, creating a comprehensive heart failure management service offering.
Late in the fiscal year we also added Diabeter, a unique Netherlands-based diabetes integrated care solution that we intend to
introduce and grow globally. These efforts increasingly address the evolving needs of our customers for delivery system
efficiency and integrated care models for patients around the world.

Realignment of our Diabetes Group and Restorative Therapies Group

At the beginning of the year, we named Hooman Hakami as the new Executive Vice President and Group President of our
Diabetes Group. Under his leadership, the Group delivered strong financial performance for the year and set a new, exciting,
and transformative vision for the future. The team has charted a course to increase the number of patients served from 1 million
today to 20 million by 2020. The Group has been re-organized into three customer centric divisions to achieve these goals. The
new focus has enabled us to begin the shift from being solely a pump and sensor company to becoming a holistic diabetes
management company. Technology leadership was strengthened through successful new product launches, as well as significant
progress along the roadmap to develop a fully closed loop diabetes management system. In select international countries, we
began the launch of the MiniMed® 640G System, which features a new insulin pump design, the Enhanced Enlite™ continuous
glucose monitoring sensor, and SmartGuard™ technology, which can automatically suspend insulin delivery when sensor
glucose levels are predicted to approach a low limit and then resume insulin delivery once levels recover. At the same time, we
moved into integrated patient care with the acquisition of Diabeter, and enhanced our data and analytics capabilities with
innovative partnership arrangements with IBM Watson Health and Glooko.

Our Restorative Therapies Group (RTG) performance, although the best in five years, was below our expectations. Surgical
Technologies had a good year with expanded product offerings and continued growth, but we narrowly missed our goal of
returning to growth in our Spine division. At the field level, sales management in both the U.S. and Europe has recently been
realigned along disease states; this will optimize our focus on our Neuroscience, Integrated Pain, and Surgical Synergy
strategies. This realignment is expected to help our performance in Spine, allowing us to take greater advantage of our breadth
of products and services.

Creation of the Minimally Invasive Therapies Group

The Covidien business was highly complementary with our existing set of businesses, fitting relatively seamlessly into our
disease-based organizational structure. The Peripheral Vascular and Neurovascular businesses were natural additions to CVG
and RTG, respectively; the remainder of the Covidien business (representing approximately 90 percent of revenue) became a
separate, fourth group: the Minimally Invasive Therapies Group (MITG). MITG’s charter is to enable less invasive, more
successful procedures through early diagnosis, better treatment, and faster recovery in the following clinical areas: obesity,
gastrointestinal tract, pelvic region, and kidneys. This approach adds diversity to our overall profile both clinically and by
creating economic value for providers during the hospital stay. The new structure has been well received by employees, and we
have maintained business accountability and focus during the transition period, avoiding distractions. The stability contributed
to MITG’s strong performance in the fourth quarter of FY15, the first quarter as part of Medtronic. The Peripheral Vascular and
Neurovascular businesses also contributed solid growth to CVG and RTG.

SOLID FINANCIAL RESULTS

Financially, we had a strong year. Our FY15 revenue grew by 6 percent on a comparable, constant currency basis, which was at
the upper end of our mid-single digit baseline goal, and more than a 2 percentage point improvement from FY14. While it is
difficult to compare earnings per share to the prior year given the acquisition of Covidien, we are looking at some key operating
P&L line items on an approximate, combined constant currency basis in order to better assess our operating performance. In
FY15, our operating margin improved by approximately 60 basis points, which corresponds to roughly 200 basis points of
operating leverage, in line with our baseline expectations. Regarding free cash flow, we also had a strong year in FY15 and met
our commitment to return 50 percent of our free cash flow to our shareholders in the form of dividends and share buybacks.
Following the Covidien acquisition, we have increased the percentage of our cash flow that is accessible; this improved
flexibility with our cash will help us sustain our long-term commitment of returning 50 percent of our free cash flow to
shareholders.

We remain extremely disciplined in how we allocate our capital, with a focus on creating long-term shareholder value. In
particular, as an S&P Dividend Aristocrat, we are focused on delivering dependable, long-term dividend growth. Following our
June 2015 dividend announcement, we have now increased our dividend for 38 consecutive years at a compounded annual
growth rate of 18 percent. In addition to returning capital to our shareholders, we are disciplined when evaluating potential
M&A opportunities. Any investment we make must align with and ultimately strengthen one or more of our three growth
strategies, while at the same time offer high return metrics and minimize near-term shareholder dilution.

REGIONAL HIGHLIGHTS

The U.S. grew 6 percent on a comparable basis in FY15, driven by broad-based procedural growth and strong new product
launches from virtually all businesses. Non-U.S. Developed Markets grew 3 percent on a comparable, constant currency basis in
FY15; new product traction was particularly strong in Australia-New Zealand, while Western Europe continued to benefit from
steady growth in Cath Lab Managed Services.

Emerging Markets grew 12 percent on a comparable, constant currency basis in FY15, short of our stated goal of mid-teens
growth. We continue to implement changes aimed at improving our emerging market growth profile, including making progress
on our public and private partnerships, as well as a channel optimization strategy. We believe these efforts will strengthen our
customer relationships to better meet their needs while providing Medtronic a more efficient, manageable, and organized go-to-
market system in these markets. For example, in countries like India and China, where we have a vast number of distributors,
we are reorganizing and consolidating logistics to a tiered, platform distributor system in order to meet more stringent supply
chain policies and more directly link customers to Medtronic. In the Middle East, we are building strong joint venture
partnerships with leading local distributors to accelerate therapy adoption in the local markets. Overall, we remain confident and
enthusiastic in the long-term outlook of emerging markets.

LOOKING AHEAD

Looking ahead, we believe we have an opportunity to truly meet the universal needs of healthcare – improving clinical
outcomes, expanding access, and optimizing cost and efficiency – in a way that no other company can. Our industry-leading
products, clinical and economic expertise, global footprint, and financial strength position us to be the preferred partner for
physicians, hospital systems, patients, payers, and governments around the world.

Medtronic has changed in many ways, and we continue to transform. However, even through these changes, we remain centered
on our core, collaborating with physicians to create new technologies and services to improve clinical outcomes. We must do
this with the same level of intimacy that our founder, Earl Bakken, had when he worked together with Dr. C. Walton Lillehei on
the pacemaker sixty years ago. Medtronic can never lose this innovative and collaborative spirit with our physician customers.

At the same time, competing solely on technology development and physician collaboration alone is not enough to meet our
Mission and growth objectives in the future. We must do more. We must utilize the full power of our technologies, our people,
and our broad capabilities to more fundamentally change the way we participate in healthcare systems around the world.

In this regard, we are breaking new ground, with a keen focus on partnering with other industry leaders to define the shift to
what is being termed “value based healthcare.” Value based healthcare involves a complete restructuring of healthcare systems
to better reward those who can deliver quality healthcare to more people at the most affordable cost. Though this shift to value
based systems is still being defined and impacts only a small percentage of our revenue today, make no mistake that this shift
will happen – the economics of healthcare require it.

As an example, in January 2015, the U.S. Health and Human Services (HHS) set a goal of tying 30 percent of traditional, or fee-
for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care
Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models
by the end of 2018. HHS also set a goal of tying 85 percent of ALL traditional Medicare payments to quality or value by 2016
and 90 percent by 2018. This is the first time in the history of the Medicare program that HHS has set explicit goals for
alternative payment models and value based payments.

Leading players in the industry are architecting and experimenting with these new value based models today. Medtronic has
established an early leadership role in this endeavor, and we are committed to making the necessary adjustments to our existing
businesses, as well as investing and creating new services and business models that will position us to win in this new value
based era. This is the transformation of Medtronic – to leverage our expertise and scale at a level no other company can to
improve healthcare outcomes and economics.

Overall, as I begin my fifth year as the CEO of Medtronic, I remain grateful, excited, and humbled by the opportunity to lead
this great company. I could not be more enthusiastic about our future as we strive to fulfill the enduring Medtronic Mission
every day. I want to thank you for your ownership, trust, and support as we continue to realize the significant opportunities in
healthcare.

Omar Ishrak
Chairman and Chief Executive Officer

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MEDTRONIC PLC
RECONCILIATION OF OPERATING PROFIT TO NON-GAAP OPERATING PROFIT, EXCLUDING
FOREIGN CURRENCY
(Unaudited)
(in millions)

Fiscal year ended April 24, 2015

Fiscal year ended April 25, 2014

Net Sales

Operating Profit

Operating Profit
Percent

Net Sales

Operating Profit

20,261
—

3,766
623

18.6% $

17,005
—

3,813
—

Operating Profit
Percent

22.4%

—
—
—
—
—

—

74
(38)
252
42
550

733

—
—
—
—
—

—

—
40
88
770
117

349

20,261

6,002

29.6% $

17,005

5,177

30.4%

As reported
Impact of inventory step-up(4)
Impact of product technology
upgrade commitment(5)
Special (gains) charges, net(6)
Restructuring charges, net(7)
Certain litigation charges, net(8)
Acquisition-related items(9)
Amortization of intangible
assets(10)

Non-GAAP
To combine Medtronic and
Covidien(11)
Foreign currency impact(12)

Adjusted Non-GAAP

29,287

8,108
918

2,124
256

8,382

10,376
—

28.6% $

27,381

2,487
—

7,664

28.0%

(4)

(5)

(6)

(7)

(8)

(9)

(10)
(11)

(12)

To exclude amortization of step-up in preliminary fair value of inventory acquired in connection with the Covidien
acquisition.
To exclude the probable and reasonably estimable commitment related to a CRHF global comprehensive program for
home based monitors due to industry conversion from analog to digital technology.
To exclude charitable contributions made to the Medtronic Foundation. The fiscal year 2015 gain includes a gain on
divestiture recognized in connection with the sale of a product line in the Surgical Technologies division and a gain
recognized in connection with the sale of a certain equity method investment.
To exclude restructuring charges related to the restructuring initiatives in each respective fiscal year, net of reversals of
excess restructuring reserves.
To exclude charges classified as certain litigation charges, net on the consolidated statement of income. The fiscal year
2014 charge includes a charge related to the global patent settlement agreement with Edwards Lifesciences Corporation.
To exclude charges classified as acquisition-related items on the consolidated statement of income. The fiscal year 2015
charge primarily includes transaction and integration-related costs incurred in connection with the Covidien acquisition.
To exclude amortization of intangible assets.
To combine Medtronic's results for the twelve months ended April 24, 2015 with Covidien's results for the nine months
ended December 26, 2014 and Medtronic's results for the twelve months ended April 25, 2015 with Covidien's results
for the twelve months ended March 28, 2014.
To exclude the impact of foreign currency.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

‘

Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934.
For the fiscal year ended April 24, 2015.

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the transition period from

Commission File No. 1-36820

MEDTRONIC PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)

Ireland
(Jurisdiction of incorporation)

98-1183488
(I.R.S. Employer Identification No.)

20 On Hatch, Lower Hatch Street
Dublin 2, Ireland
(Address of principal executive office)

+353 1 438-1700
(Registrant’s telephone number)

Title of each class
Ordinary shares, par value $0.0001 per share

Name of each exchange on which registered
New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act. Yes ‘ No È

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes È No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. È

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer È Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È

Aggregate market value of voting and non-voting common equity of Medtronic, Inc. (predecessor registrant to Medtronic plc) held by
non-affiliates of the registrant as of October 24, 2014, based on the closing price of $66.56, as reported on the New York Stock
Exchange: approximately $65.4 billion. Number of Ordinary Shares outstanding on June 16, 2015: 1,416,351,117

Portions of Registrant’s Proxy Statement for its 2015 Annual General Meeting are incorporated by reference into Part III hereto.

DOCUMENTS INCORPORATED BY REFERENCE

Item

1.
1A.
1B.
2.
3.
4.

6.
7.
7A.
8.
9.
9A.
9B.

10.
11.
12.
13.
14.

15.

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

TABLE OF CONTENTS

Description

PART I

PART II

Market for Medtronic’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information

PART III

Directors, Executive Officers, and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

Exhibits and Financial Statement Schedules
Signatures

PART IV

Page

1
17
34
34
34
34

35
38
39
65
66
143
143
143

144
144
144
144
144

145
155

Investor Information

Annual Meeting and Record Dates

Medtronic Public Limited Company, organized under the laws of Ireland (Medtronic plc, Medtronic, the Company, or we, us, or
our) will hold its 2015 Annual General Meeting of Shareholders (2015 Annual Meeting) on Friday, December 11, 2015 at 9:00
a.m., local Dublin time at the Conrad Dublin Hotel Earlsfort Terrace Dublin 2, Ireland. The record date for the 2015 Annual
Meeting is October 12, 2015 and all shareholders of record at the close of business on that day will be entitled to vote at the
2015 Annual Meeting.

Medtronic Website

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act)
are available through our website (www.medtronic.com under the “Investors” caption and “Financial Information - SEC
Filings” subcaption) free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it
to, the Securities and Exchange Commission (SEC).

Information relating to corporate governance at Medtronic, including our Principles of Corporate Governance, Code of Conduct
(including our Code of Ethics for Senior Financial Officers), Code of Business Conduct and Ethics for Members of the Board of
Directors, and information concerning our executive officers, directors and Board committees (including committee charters) is
available through our website at www.medtronic.com under the “Investors” caption and the “Company Information - Corporate
Governance” subcaption. Information relating to transactions in Medtronic securities by directors and officers is available
through our website at www.medtronic.com under the “Investors” caption and the “Financial Information - SEC Filings”
subcaption.

The information listed above may also be obtained upon request from the Medtronic Investor Relations Department, 710
Medtronic Parkway, Minneapolis (Fridley), MN 55432 USA.

We are not including the information on our website as a part of, or incorporating it by reference into, our Form 10-K.

Available Information

The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers,
including the Company, that file electronically with the SEC. The public can obtain any documents that the Company files with
the SEC at http://www.sec.gov. The Company files annual reports, quarterly reports, proxy statements, and other documents
with the SEC under the Exchange Act. The public may read and copy any materials that the Company files with the SEC at the
SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at 800-SEC-0330.

Stock Transfer Agent and Registrar

Wells Fargo Shareowner ServicesSM acts as transfer agent and registrar, dividend paying agent, and direct stock purchase plan
agent for Medtronic and maintains all shareholder records for the Company. If you are a registered shareholder, you may access
your account information online at www.shareowneronline.com. If you have questions regarding the Medtronic stock you own,
stock transfers, address or name changes, direct deposit of dividends, lost dividend checks, lost stock certificates, or duplicate
mailings, please contact Wells Fargo Shareowner ServicesSM by writing or calling: Wells Fargo Shareowner ServicesSM, 1110
Centre Pointe Curve, Suite 101, Mendota Heights, MN 55120 USA, Telephone: 888-648-8154 or 651-450-4064,
Fax: 651-450-4033, www.wellsfargo.com/shareownerservices.

Direct Stock Purchase Plan

Medtronic’s transfer agent, Wells Fargo Bank N.A, administers the direct stock purchase plan, which is called the Shareowner
Service Plus PlanSM. Features of this plan include direct stock purchase and reinvestment of dividends to purchase whole or
fractional shares of Medtronic stock. All registered shareholders and potential investors may participate.

To request information on the Shareowner Service Plus PlanSM, or to enroll in the plan, contact Wells Fargo Shareowner
ServicesSM at 888-648-8154 or 651-450-4064. You may also enroll via the Internet by visiting www.shareowneronline.com and
selecting “Direct Purchase Plan.”

Item 1. Business

Overview

PART I

Medtronic plc, headquartered in Dublin, Ireland, is the global leader in medical technology — alleviating pain, restoring health,
and extending life for millions of people around the world. Medtronic was founded in 1949 and today serves hospitals,
physicians, clinicians, and patients in approximately 160 countries worldwide. We remain committed to a mission written by
our founder 55 years ago that directs us “to contribute to human welfare by the application of biomedical engineering in the
research, design, manufacture, and sale of products to alleviate pain, restore health, and extend life.”

With innovation and market leadership, we have pioneered advances in medical technology in all of our businesses. Over the
last five years, our net sales on a compounded annual growth basis have increased approximately 6 percent, from $15.508
billion in fiscal year 2011 to $20.261 billion in fiscal year 2015. Our commitment to enhance our offerings by developing and
acquiring new products, wrap-around programs, and solutions to meet the needs of a broader set of stakeholders is driven by the
following primary strategies:

(cid:129)

Therapy Innovation: Delivering a strong launch cadence of meaningful therapies and procedures.

Globalization: Addressing the inequity in health care access globally, primarily in emerging markets.

Economic Value: Becoming a leader in value-based health care by offering new services and solutions to improve
outcomes and efficiencies, lower costs by reducing hospitalizations, improve remote clinical management, and
increase patient engagement.

Our primary customers include hospitals, clinics, third-party health care providers, distributors, and other institutions, including
governmental health care programs and group purchasing organizations (GPOs).

On January 26, 2015 (Acquisition Date), Medtronic completed the acquisition of Covidien plc, a public limited company
organized under the laws of Ireland (Covidien) in a cash and stock transaction valued at approximately $50 billion. In
connection with the transaction, Medtronic, Inc., a Minnesota corporation (Medtronic, Inc.), and Covidien were combined under
and became subsidiaries of Medtronic plc. Covidien was a global leader in the development, manufacture and sale of healthcare
products for use in clinical and home settings and had net sales for its fiscal year ended September 26, 2014 of $10.659 billion.
On a pro forma basis, as if the Covidien merger had occurred at the beginning of fiscal year 2014, our combined net sales would
have been $28.369 billion for fiscal year 2015 and $27.380 billion for fiscal year 2014, see Note 2 to the consolidated financial
statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. The merger with
Covidien provides the combined company with increased financial strength and flexibility and is expected to meaningfully
accelerate all three strategies discussed above.

With the Covidien acquisition, we reorganized our reporting structure and aligned our segments and the underlying divisions
and businesses. The majority of Covidien’s operations are included in our new Minimally Invasive Therapies Group. The net
sales amounts in the summary below include Covidien results for only one quarter since the Acquisition Date. Therefore, the
Minimally Invasive Therapies Group is expected to be similar in size to our Cardiac and Vascular Group as measured by net
sales on an annual basis. For more information on our segments, please see Note 18 to the consolidated financial statements in
“Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

We currently function in four operating segments that primarily manufacture and sell device-based medical therapies. Our
operating segments with each of their reported net sales for fiscal year 2015, along with their related divisions and businesses,
are as follows:

Cardiac and Vascular Group (Fiscal year 2015 net sales of $9.361 billion)

(cid:129)

Cardiac Rhythm & Heart Failure
Coronary & Structural Heart
Aortic & Peripheral Vascular

Minimally Invasive Therapies Group (Fiscal year 2015 net sales of $2.387 billion)

(cid:129)

Surgical Solutions
Patient Monitoring and Recovery

Restorative Therapies Group (Fiscal year 2015 net sales of $6.751 billion)

(cid:129)

Spine
Neuromodulation
Surgical Technologies
Neurovascular

(cid:129)

Diabetes Group (Fiscal year 2015 net sales of $1.762 billion)
Intensive Insulin Management
Non-Intensive Diabetes Therapies
Diabetes Services & Solutions

(cid:129)

Cardiac Rhythm & Heart Failure Disease Management (CRHF)

CARDIAC AND VASCULAR GROUP

Our CRHF division develops, manufactures, and markets products for the diagnosis, treatment, and management of heart
rhythm disorders and heart failure. Our products include implantable devices, leads and delivery systems, products for the
information systems for the
treatment of atrial fibrillation (AF), products designed to reduce surgical site infections,
management of patients with CRHF devices, and an integrated health solutions business.

The following are the principal products and services offered by our CRHF division:

Implantable Cardiac Pacemakers (Pacemakers) Our latest generation of pacemaker systems is the Advisa and Revo MRI
SureScan models, which have received United States (U.S.) Food and Drug Administration (U.S. FDA) approval, and the
Advisa and Ensura MRI SureScan models as well as the Micra Transcatheter Pacing System, which have all received
Conformité Européene (CE) Mark approval.

Implantable Cardioverter Defibrillators (ICDs) Our latest generation ICD is the Evera MRI SureScan, the first ICD system
with CE Mark approval for full-body MRI scans. The Evera system is paired with the reliable Sprint Quattro Secure lead, the
only defibrillator lead with more than 10 years of proven performance with active monitoring.

Implantable Cardiac Resynchronization Therapy Devices (CRT-Ds and CRT-Ps) Our latest generation of CRT-Ds is the
Viva/Brava family with Attain Performa quadripolar lead and features a new algorithm, called AdaptivCRT, which improves
heart failure patients’ response rate to CRT-D therapy. With respect to CRT-P, Viva CRT-P is our latest generation device.

AF Products Our portfolio of AF products includes the Arctic Front Advance Cardiac Cryoballoon System designed for
pulmonary vein isolation in the treatment of patients with drug refractory paroxysmal AF. Additionally, we have a second-
generation CE Mark approved Phased RF System, PVAC Gold, which uses duty cycled, phased radio frequency energy for the
treatment of symptomatic paroxysmal persistent and long-standing persistent AF.

Diagnostics and Monitoring Devices Our Reveal LINQ is our newest Insertable Cardiac Monitor (ICM) System. The system
is used to record the heart’s electrical activity before, during, and after transient symptoms such as syncope (i.e., fainting) and
palpitations to assist in diagnosis.

Services and Solutions Our Cardiocom products and services include remote monitoring and patient-centered software to
enable efficient care coordination and specialized telehealth nurse support. Our TYRX products include the Absorbable
Antibacterial Envelope and the TYRX Neuro Absorbable Antibacterial Envelope, which are designed to stabilize electronic
implantable devices and help prevent
infection associated with implantable pacemakers, defibrillators, and spinal cord
neurostimulators. Our Cath Lab Managed Services business is focused on developing novel partnerships with hospitals to
provide services directly related to hospital operational efficiency.

Coronary & Structural Heart Disease Management (CSH)

Our CSH division includes therapies to treat coronary artery disease (CAD), and heart valve disorders. Our products include
coronary stents and related delivery systems, including a broad line of balloon angioplasty catheters, guide catheters, guide
wires, diagnostic catheters, and accessories as well as products for the repair and replacement of heart valves, perfusion systems,
positioning and stabilization systems for beating heart revascularization surgery, and surgical ablation products.

The following are the principal products offered by our CSH division:

Transcatheter Heart Valves (TCVs) Our latest generation TCVs include the CoreValve family of aortic valves. CoreValve,
which is the only TCV system shown to be superior to open-heart surgery, has received U.S. FDA approval for extreme and
high risk patients. Our next-generation recapturable TCV system, CoreValve Evolut R, has received CE Mark approval and
enrollment in the U.S. IDE is complete.

Percutaneous Coronary Intervention (PCI) Our latest generation PCI stent products include our Resolute Integrity drug-
eluting stent systems, which have received U.S. FDA approval, as well as Resolute Onyx drug-eluting stent systems, which have
received CE Mark approval.

Heart Surgery We offer a complete line of surgical valve replacement and repair products for damaged or diseased heart
valves. Our replacement products include both tissue and mechanical valves. We also offer a complete line of blood-handling
products that form a circulatory support system to maintain and monitor blood circulation and coagulation status, oxygen
supply, and body temperature during arrested heart surgery. Additionally, we offer surgical ablation systems and positioning
and stabilization technologies.

Aortic & Peripheral Vascular Disease Management (APV)

Our APV division, which includes a portion of the Covidien Peripheral business, is comprised of a comprehensive line of
products and therapies to treat aortic disease (such as aneurysms, dissections, and transections) as well as peripheral vascular
disease (PVD). Our products include endovascular stent graft systems, peripheral drug coated balloon, stent and angioplasty
systems, and carotid embolic protection systems for the treatment of vascular disease outside the heart.

The following are the principal products offered by our APV division:

Endovascular Stent Grafts Our products are designed to treat aortic aneurysms in either the abdomen (AAA) or thoracic
(TAA) regions of the aorta. Our product line includes a range of endovascular stent grafts and accessories including the market-
leading Endurant II abdominal stent graft system and the Valiant Captivia thoracic stent graft system.

Peripheral Vascular Intervention (PVI) Our primary PVI products include percutaneous angioplasty balloons including the
IN.PACT family of drug-coated balloons, which have U.S. FDA and CE Mark approval, as well as peripheral stents such as the
Complete SE Vascular Stent and the Assurant Cobalt Iliac Stent and directional atherectomy products such as the TurboHawk
plaque excision system, and other products to support procedures.

Surgical Solutions

MINIMALLY INVASIVE THERAPIES GROUP

Surgical Solutions develops, manufactures, and markets products and therapies to treat diseases and conditions that are
typically, but not exclusively, addressed by surgeons. In addition, we develop, manufacture, and market several unique products
in the emerging fields of minimally invasive gastrointestinal diagnostics, ablation, and interventional lung.

The following are the principal products offered by our Surgical Solutions division:

Surgical Innovations This business includes sales of stapling, vessel sealing, fixation (hernia mechanical devices), mesh,
hardware and surgical instruments, sutures, and electrosurgery products. Key advanced surgical products include: the Tri-Staple
technology platform for endoscopic stapling, including the Endo GIA reloads and reinforced reloads with Tri-Staple technology
and the Endo GIA ultra universal stapler; the iDrive powered stapling systems; the LigaSure vessel sealing system, a
multifunctional laparoscopic instrument for use with the ForceTriad; the Sonicision cordless ultrasonic dissection system;
AbsorbaTack absorbable mesh fixation device for hernia repair; Symbotex composite mesh for surgical laparoscopic and open
ventral hernia repair; and Parietex ProGrip, a selfgripping, biocompatible solution for inguinal hernias.

Early Technologies Our products include ablation products, and interventional lung and gastrointestinal solutions. This
includes the i·Logic System to evaluate lung lesions; the Cool-tip radiofrequency ablation system; the Evident microwave
ablation system; the PillCam SB, a minimally-invasive, swallowed optical endoscopy technology; and the HALO ablation
catheters for treatment of Barrett’s esophagus.

Patient Monitoring & Recovery (PMR)

Our PMR division develops, manufactures, and markets products and therapies to enable complication-free recovery to enhance
patient outcomes.

The following are the principal products offered by our PMR division:

Patient Monitoring Our products include sensors, monitors, and temperature management products. Key patient monitoring
products include: the Nellcor Bedside SpO2 patient monitoring system, the Bispectral Index (BIS) brain monitoring technology,
the INVOS Cerebral/Somatic Oximeter, Microstream® capnography monitors, and related modules and sensors.

Airway & Ventilation This business primarily includes sales of airway, ventilator and inhalation therapy products. Key
airway & ventilation products include: the Puritan Bennett 840 and 980 ventilators, the Newport e360 and HT70 ventilators,
theTaperGuard Evac tube, Mallinckrodt®Endotracheal Tubes, Shiley Tracheostomy Tubes, DAR Filters, and resuscitation bags.

Nursing Care This business primarily includes sales of incontinence, wound care, enteral feeding, urology, and suction
products. Key nursing care products include Curity and Kerlix gauze and bandages and Kangaroo enteral feeding systems.

Patient Care & Safety (PCS) Our products include medical surgical products, such as operating room supply products,
electrodes, and SharpSafety products, which includes needles, syringes, and sharps disposal products. In addition, we
manufacture Original Equipment Manufacturer (OEM) products, which are various medical supplies manufactured for other
medical products companies. Under our Medi-Trace brand, we offer a comprehensive line of monitoring, diagnostic, and
defibrillation electrodes.

Spine

RESTORATIVE THERAPIES GROUP

Our Spine division develops, manufactures, and markets a comprehensive line of medical devices and implants used in the
treatment of the spine and musculoskeletal system. Our products and therapies treat a variety of conditions affecting the spine,
including degenerative disc disease, spinal deformity, spinal tumors, fractures of the spine, and stenosis. Our Spine division also
provides biologic solutions for the orthopedic and dental markets and, in concert with our Surgical Technologies business, we
offer unique and highly differentiated navigation, neuromonitoring, and power technologies designed for spine procedures.

The following are the principal products offered by our Spine division:

Thoracolumbar Products Our products used to treat conditions in this region of the spine include the CD HORIZON
SOLERA and LEGACY Systems, and the CAPSTONE interbody spacers. In addition, Medtronic offers a number of products
that facilitate less invasive thoracolumbar surgeries, including the CD HORIZON SOLERA SEXTANT and LONGITUDE
Percutaneous Fixation Systems, the Direct Lateral Access System and corresponding CLYDESDALE Interbody Implant,
Xpander II Balloon Kyphoplasty product for vertebral compression fractures, and the METRx System. Other products include
AMT interbody implants, Powerease powered surgical instruments, and the NIM-ECLIPSE Spinal System.

Cervical Products Products used to treat conditions in this region of the spine include the ATLANTIS VISION ELITE
Anterior Cervical Plate System, the VERTEX SELECT Reconstruction System, and the PRESTIGE and BRYAN Cervical
Artificial Discs.

Biologics Products Our Biologics platform products include INFUSE Bone Graft (InductOs in the European Union (EU)),
which contains a recombinant human bone morphogenetic protein, rhBMP-2, for certain spinal, trauma, and oral maxillofacial
applications, Demineralized Bone Matrix (DBM) products, including MagniFuse, Grafton/Grafton Plus, and PROGENIX, and
the MASTERGRAFT family of synthetic bone graft products — Matrix, Putty, and Granules.

Neuromodulation

Our Neuromodulation division includes implantable neurostimulation and targeted drug delivery systems for the management of
chronic pain, common movement disorders, spasticity, and urologic and gastrointestinal disorders. Neurostimulation uses an
implantable medical device, similar to a pacemaker, called a neurostimulator.

The following are the principal products offered by our Neuromodulation division:

Neurostimulation Systems for Chronic Pain We have a large portfolio of neurostimulation systems, including rechargeable
and non-rechargeable devices and a large selection of leads used to treat chronic back and/or limb pain. Our portfolio of
products includes pain neurostimulation systems with SureScan MRI Technology, including the RestoreSensor (rechargeable)
SureScan MRI, with its proprietary AdaptiveStim technology.

Implantable Drug Infusion Systems Our SynchroMed II Implantable Infusion System delivers small quantities of drug
directly into the intrathecal space surrounding the spinal cord. These devices are used to treat chronic, intractable pain and
severe spasticity associated with cerebral palsy, multiple sclerosis, spinal cord and traumatic brain injuries, and stroke.

Deep Brain Stimulation (DBS) Systems DBS is currently approved in many countries around the world for the treatment of
the disabling symptoms of essential tremor, Parkinson’s disease, refractory epilepsy (outside the U.S.), severe, treatment-
resistant obsessive-compulsive disorder (approved under a Humanitarian Device Exemption (HDE) in the U.S.), and chronic,
intractable primary dystonia (approved under a HDE in the U.S.). Our family of Activa Neurostimulators for DBS includes
Activa SC (single-channel primary cell battery), Activa PC (dual channel primary cell battery), and Activa RC (dual channel
rechargeable battery).

Gastroenterology & Urology (Gastro/Uro) Systems Our Sacral neuromodulation uses InterStim, a neurostimulator, to help
control the symptoms of overactive bladder, (non-obstructive) urinary retention, and chronic fecal incontinence. Currently,
Enterra Therapy is the only gastric electrical stimulation therapy approved in the U.S. (under a HDE), Europe, and Canada for
use in the treatment of intractable nausea and vomiting associated with gastroparesis. The system, which contains a small
neurostimulator and two leads, stimulates the smooth muscles of the lower stomach.

Surgical Technologies

Our Surgical Technologies division develops, manufactures, and markets products and therapies to treat diseases and conditions
of the ear, nose, and throat (ENT) and certain neurological disorders. In addition, the division develops, manufactures, and
markets image-guided surgery and intra-operative imaging systems that facilitate surgical planning during precision cranial,
spinal, sinus, and orthopedic surgeries. Our Advanced Energy business includes products in the emerging field of advanced
energy surgical incision technology, as well as the haemostatic sealing of soft tissue and bone.

The following are the principal products offered by our Surgical Technologies division:

Neurosurgery Our Navigation products are used in cranial, spinal, sinus, and orthopedic surgeries: the StealthStation S7
Navigation and i7 Integrated Navigation Systems, and the O-arm 2D/3D Surgical Imaging System.

ENT
The following products treat ENT diseases and conditions: Straightshot M5 Microdebrider Handpiece, the IPC system,
NIM Nerve Monitoring Systems, Fusion ENT Navigation System, as well as surgical products for Snoring and Obstructive
Sleep Apnea.

Advanced Energy Our PEAK Surgery System is a tissue dissection system that consists of the PEAK PlasmaBlade and
PULSAR Generator and is cleared for use in a variety of settings, including plastic reconstructive surgery, general surgery, and
certain conditions of ENT. Our Aquamantys System uses patented transcollation technology to provide haemostatic sealing of
soft tissue and bone and is cleared for use in a variety of surgical procedures, including orthopedic surgery, spine, solid organ
resection and thoracic procedures.

Neurovascular

Our Neurovascular division, which was acquired in the Covidien acquisition, develops, manufactures, and markets products and
therapies to treat diseases of the vasculature in and around the brain. Our products include coils, neurovascular stents, and flow
diversion products, as well as access and delivery products to support procedures.

The following are the principal products offered by our Neurovascular division:

The Pipeline and Pipeline Flex Embolization Devices, endovascular treatments for large or giant wide-necked brain aneurysms;
the Solitaire FR revascularization device for treatment of acute ischemic stroke; and the Apollo Onyx delivery micro catheter,
the first detachable tip micro-catheter available in the U.S.

DIABETES GROUP

Our Diabetes group consists of three divisions (Intensive Insulin Management, Non-Intensive Diabetes Therapies, and Diabetes
Services & Solutions) that develop, manufacture, and market advanced, integrated diabetes management solutions that include
insulin pump therapy, continuous glucose monitoring (CGM) systems, and therapy management software.

The following are the principal products offered by our Diabetes divisions:

Integrated Diabetes Management Solutions We have the only integrated insulin pump and CGM system currently available
on the market. In the U.S., we offer the MiniMed 530G System featuring our threshold suspend technology, which
automatically suspends insulin delivery when glucose levels reach a pre-determined threshold, and newest CGM sensor, Enlite,
a sensor that can be worn for 6-days and is more comfortable, more accurate, and smaller than our previous generation sensor.
Outside the U.S., we offer our MiniMed 640G System, an integrated system with the Enhanced Enlite CGM sensor that features
SmartGuard technology, which automatically suspends insulin delivery when sensor glucose levels are predicted to approach a
low limit and then resumes insulin delivery once levels recover.

Professional CGM In addition to our Personal CGM (Enlite), we offer physicians a Professional CGM product called the
iPro2/iPro Professional CGM System. Patients wear the iPro2/iPro recorder to capture glucose data that is later uploaded in a
physician’s office to reveal glucose patterns and potential problems, including hyperglycemic and hypoglycemic episodes. The
data leads to more informed treatment decisions.

CareLink Therapy Management Software Our web-based therapy management software solutions, including CareLink
Personal software for patients and CareLink Pro software, to help patients and their health care providers control their diabetes.

Customers and Competitors

Cardiac and Vascular Group The primary medical specialists who use our Cardiac and Vascular products include
electrophysiologists, implanting cardiologists, heart failure specialists, cardiovascular and vascular surgeons and interventional
cardiologists and radiologists. Our primary competitors are St. Jude Medical, Inc. (St. Jude), Boston Scientific Corporation
(Boston Scientific), Sorin Group (Sorin), Edwards Lifesciences Corporation (Edwards), C.R. Bard Inc. (Bard), and Abbott
Laboratories (Abbott).

Minimally Invasive Therapies Group The products and therapies of this group are used primarily by hospitals, physicians’
offices, and ambulatory care centers, as well as other alternate site healthcare providers. Our primary competitors are Johnson &
Johnson, Boston Scientific, Baxter International Inc., and Bard.

Restorative Therapies Group The primary medical specialists who use the products of this group include spinal surgeons,
neurosurgeons, neurologists, pain management specialists, anesthesiologists, orthopedic surgeons, urologists, interventional
radiologists, and ear, nose, and throat specialists. Our primary competitors include Johnson & Johnson, Boston Scientific, St.
Jude, Stryker Corporation (Stryker), NuVasive, Inc., and Zimmer Holdings, Inc. (Zimmer).

Diabetes Group The primary medical specialists who use and/or prescribe our Diabetes products are endocrinologists,
diabetologists, and internists. Our primary competitors are Johnson & Johnson, DexCom, Inc., Insulet Corporation, and
F. Hoffmann-La Roche Ltd.

OTHER FACTORS IMPACTING OUR OPERATIONS

Research and Development

The markets in which we participate can be subject to rapid technological advances. Constant improvement of products and
introduction of new products is necessary to maintain market leadership. Our research and development (R&D) efforts are
directed toward maintaining or achieving technological leadership in each of the markets we serve in order to help ensure that
patients using our devices and therapies receive the most advanced and effective treatment possible. We remain committed to
developing technological enhancements and new indications for existing products, and less invasive and new technologies for
new and emerging markets to address unmet patient needs. That commitment leads to our initiation and participation in many
clinical trials each fiscal year as the demand for clinical and economic evidence remains high. Furthermore, our development
activities are intended to help reduce patient care costs and the length of hospital stays in the future. We have not engaged in
significant customer or government-sponsored research.

During fiscal years 2015, 2014, and 2013, we spent $1.640 billion (8.1 percent of net sales), $1.477 billion (8.7 percent of net
sales), and $1.557 billion (9.4 percent of net sales) on R&D, respectively. The Covidien acquisition contributed to the decline in
R&D as a percent of net sales during fiscal year 2015. Our R&D activities include improving existing products and therapies,
expanding their indications and applications for use, and developing new products. We continue to focus on optimizing
innovation, improving our R&D productivity, driving growth in emerging markets, clinical evidence generation, and assessing
our R&D programs based on their ability to deliver economic value to our customers.

Acquisitions and Investments

Our strategy to provide a broad range of therapies to restore patients’ health and extend lives requires a wide variety of
technologies, products, and capabilities. The rapid pace of technological development
industry and the
specialized expertise required in different areas of medicine make it difficult for one company alone to develop an all-
encompassing portfolio of technological solutions. In addition to internally generated growth through our R&D efforts,
historically we have relied, and expect to continue to rely, upon acquisitions, investments, and alliances to provide access to
new technologies both in areas served by our existing businesses as well as in new areas and markets.

in the medical

We expect to make future investments or acquisitions where we believe that we can stimulate the development of, or acquire
new technologies and products to further, our strategic objectives, and strengthen our existing businesses. Mergers and
acquisitions of medical technology companies are inherently risky and no assurance can be given that any of our previous or
future acquisitions will be successful or will not materially adversely affect our consolidated results of operations, financial
condition, and/or cash flows.

For additional
information, see Note 2 to the consolidated financial statements in “Item 8. Financial Statements and
Supplementary Data” in this Annual Report on Form 10-K and “Item 1A. Risk Factors — Failure to integrate acquired
businesses into our operations successfully could adversely affect our business.”

Acquisition of Covidien plc

On January 26, 2015, pursuant to a transaction agreement, dated as of June 15, 2014 (the Transaction Agreement), Medtronic,
Inc. and Covidien became subsidiaries of the Company. The total cash and stock value of the Covidien acquisition was
approximately $50 billion. The operating results for Covidien are included in the Minimally Invasive Therapies Group, Cardiac
and Vascular Group and Restorative Therapies Group segments.

Based upon a preliminary acquisition valuation, the Company acquired $18.3 billion of customer-related intangible assets, $7.1
billion of technology-based intangible assets, $0.5 billion of tradenames, with weighted average estimated useful lives of 18, 16,
and 3 years, respectively, $0.4 billion of in-process research and development (IPR&D), and $29.6 billion of goodwill.

Other Fiscal Year 2015 Acquisitions

Sophono, Inc.

On March 26, 2015, the Company acquired Sophono, Inc. (Sophono), a privately-held developer and manufacturer of minimally
invasive, transcutaneous bone conduction hearing implants. Total consideration for the transaction was approximately $17
million, which included an upfront payment of $6 million and the estimated fair value of revenue-based contingent
consideration of $11 million. Based upon a preliminary acquisition valuation, the Company acquired $11 million of technology-
based intangible assets with an estimated useful life of 13 years at the time of the acquisition, $2 million of IPR&D, and $5
million of goodwill.

Diabeter

On March 26, 2015, the Company acquired Diabeter, an innovative Netherlands-based diabetes clinic and research center
dedicated to providing comprehensive and individualized care for children and young adults with diabetes. Total consideration
for the transaction was approximately $10 million. Based upon a preliminary acquisition valuation, the Company acquired $9
million of goodwill.

NGC Medical S.p.A.

On August 26, 2014, the Company acquired NGC Medical S.p.A. (NGC), a privately-held Italian company that offers a broad
suite of hospital management services. Total consideration for this transaction was approximately $340 million. Medtronic had
previously invested in NGC and held a 30 percent ownership position. Net of this ownership position, the transaction value was

approximately $238 million. Based upon a preliminary valuation, the Company acquired $159 million of customer-related
intangible assets and tradenames with an estimated useful life of 20 years at the time of acquisition and $197 million of
goodwill.

Sapiens Steering Brain Stimulation

On August 25, 2014, the Company acquired Sapiens Steering Brain Stimulation (Sapiens), a privately-held developer of deep
brain stimulation technologies. Total consideration for the transaction was approximately $203 million. Based upon a
preliminary valuation, the Company acquired $30 million of IPR&D and $170 million of goodwill.

Visualase, Inc.

On July 25, 2014, the Company acquired Visualase, Inc. (Visualase), a privately-held developer of minimally invasive MRI
guided laser ablation for surgical applications. Total consideration for the transaction was approximately $97 million. Based
upon a preliminary valuation, the Company acquired $66 million of technology-based intangible assets with an estimated useful
life of 10 years at the time of acquisition and $43 million of goodwill.

Corventis, Inc.

On June 20, 2014, the Company acquired Corventis, Inc. (Corventis), a privately-held developer of wearable, wireless
technologies for cardiac disease. Total consideration for the transaction was approximately $131 million, including a $50
million payment to Medtronic with respect to settlement of outstanding debt. Based upon the acquisition valuation, the
Company acquired $80 million of technology-based intangible assets with an estimated useful life of 16 years at the time of
acquisition and $48 million of goodwill.

Patents and Licenses

We rely on a combination of patents, trademarks, tradenames, copyrights, trade secrets, and non-disclosure and non-competition
agreements to establish and protect our proprietary technology. We have filed and obtained numerous patents in the U.S. and
abroad, and regularly file patent applications worldwide in our continuing effort to establish and protect our proprietary
technology. U.S. patents typically have a 20-year term from the application date while patent protection outside the U.S. varies
from country to country. In addition, we have entered into exclusive and non-exclusive licenses relating to a wide array of third-
party technologies. We have also obtained certain trademarks and tradenames for our products to distinguish our genuine
products from our competitors’ products, and we maintain certain details about our processes, products, and strategies as trade
secrets. In the aggregate, these intellectual property assets and licenses are of material importance to our business; however, we
believe that no single patent, technology, trademark, intellectual property asset or license is material in relation to any segment
of our business as a whole. Our efforts to protect our intellectual property and avoid disputes over proprietary rights have
included ongoing review of third-party patents and patent applications. For additional information see “Item 1A. Risk Factors—
We are substantially dependent on patent and other proprietary rights and failing to protect such rights or to be successful in
litigation related to our rights or the rights of others may result in our payment of significant monetary damages and/or royalty
payments, negatively impact our ability to sell current or future products, or prohibit us from enforcing our patent and other
proprietary rights against others.” and Note 16 to the consolidated financial statements in “Item 8. Financial Statements and
Supplementary Data” in this Annual Report on Form 10-K.

Markets and Distribution Methods

We sell most of our medical devices and therapies through direct sales representatives in the U.S. and a combination of direct
sales representatives and independent distributors in markets outside the U.S. For certain portions of our business acquired
through the Covidien acquisition, we also sell through distributors in the U.S. Our medical supplies products are used primarily
in hospitals, surgi-centers and alternate care facilities, such as home care and long-term care facilities, and are marketed to
materials managers, GPOs and integrated delivery networks (IDNs) primarily through third-party distributors, although we also
have direct sales representatives. We often negotiate with GPOs and IDNs, which enter into supply contracts for the benefit of
their member facilities. Our three largest markets are the U.S., Western Europe, and Japan. Emerging markets are an area of
increasing focus and opportunity as we believe they remain under-penetrated.

Our marketing and sales strategy is focused on rapid, cost-effective delivery of high-quality products to a diverse group of
customers worldwide — including physicians, hospitals, other medical institutions, and GPOs. To achieve this objective, we

organize our marketing and sales teams around physician specialties. This focus enables us to develop highly knowledgeable
and dedicated sales representatives who are able to foster strong relationships with physicians and other customers and enhance
our ability to cross-sell complementary products. We believe that we maintain excellent working relationships with physicians
and others in the medical industry that enable us to gain a detailed understanding of therapeutic and diagnostic developments,
trends, and emerging opportunities and respond quickly to the changing needs of physicians and patients. We attempt to
enhance our presence in the medical community through active participation in medical meetings and by conducting
comprehensive training and educational activities. We believe that these activities contribute to physician expertise.

In keeping with the increased emphasis on cost-effectiveness in health care delivery, the current trend among hospitals and other
customers is to consolidate into larger purchasing groups to enhance purchasing power. This enhanced purchasing power may
lead to pressure on pricing and increased use of preferred vendors. Our customer base continues to evolve to reflect such
economic changes across the geographic markets we serve. We are not dependent on any single customer for more than 10
percent of our total net sales.

Competition and Industry

We compete in both the therapeutic and diagnostic medical markets in approximately 160 countries throughout the world. These
markets are characterized by rapid change resulting from technological advances and scientific discoveries. Our product lines
face a mixture of competitors ranging from large manufacturers with multiple business lines to small manufacturers offering a
limited selection of products. In addition, we face competition from providers of other medical therapies such as pharmaceutical
companies.

Major shifts in industry market share have occurred in connection with product problems, physician advisories, safety alerts,
and publications about our products, reflecting the importance of product quality, product efficacy, and quality systems in the
in the current environment of managed care, economically motivated customers,
medical device industry. In addition,
consolidation among health care providers,
increased competition, and declining reimbursement rates, we have been
increasingly required to compete on the basis of price. In order to continue to compete effectively, we must continue to create or
acquire advanced technology, incorporate this technology into proprietary products, obtain regulatory approvals in a timely
manner, maintain high-quality manufacturing processes, and successfully market these products.

Worldwide Operations

Our global operations are accompanied by certain financial and other risks. Relationships with customers and effective terms of
sale vary by country; often with longer-term receivables than are typical in the U.S. Foreign currency exchange rate fluctuations
can affect revenues, net of expenses, and cash flows from operations outside the U.S. We use operational and economic hedges,
as well as currency exchange rate derivative contracts, to manage the impact of currency exchange rate changes on earnings and
cash flow. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” and Note 9 to the consolidated financial
statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. In addition, the
repatriation of earnings of certain subsidiaries outside the U.S. may result in substantial U.S. tax cost.

For financial reporting purposes, net sales and property, plant, and equipment attributable to significant geographic areas are
presented in Note 18 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this
Annual Report on Form 10-K.

Production and Availability of Raw Materials

We manufacture most of our products at 80 manufacturing facilities located in various countries throughout the world. The
largest of these manufacturing facilities are located in Ireland, the U.S. (in thirteen states), Puerto Rico, Canada, Costa Rica,
Dominican Republic, France, Germany, Israel, Italy, Japan, Mexico, The People’s Republic of China, Singapore, and
Switzerland. We purchase many of the components and raw materials used in manufacturing these products from numerous
suppliers in various countries. For reasons of quality assurance, sole source availability, or cost effectiveness, certain
components and raw materials are available only from a sole supplier. We work closely with our suppliers to help ensure
continuity of supply while maintaining high quality and reliability. Due to the U.S. FDA’s requirements regarding
manufacturing of our products, we may not be able to quickly establish additional or replacement sources for certain
components or materials. Generally, we have been able to obtain adequate supplies of such raw materials and components.
However, a sudden or unexpected reduction or interruption in supply, and an inability to develop alternative sources for such
supply, could adversely affect our operations. We have reporting and disclosure requirements related to the use of certain

minerals, known as “conflict minerals” (tantalum, tin, tungsten (or their ores), and gold) which are mined from the Democratic
Republic of the Congo and adjoining countries. Pursuant to these requirements, we are required to report on Form SD the
procedures we employ to determine the sourcing of such minerals and metals produced from those minerals. There are costs
associated with complying with these disclosure requirements, including for diligence in regards to the sources of any conflict
minerals used in our products, in addition to the cost of remediation and other changes to products, processes, or sources of
supply as a consequence of such verification activities. In addition, the implementation of these rules could adversely affect the
sourcing, supply, and pricing of materials used in our products. As of the date of our conflict minerals report for the 2014
calendar year, we were unable to obtain the necessary information on conflict minerals from all of our suppliers and were
unable to determine that all of our products are conflict free. We may continue to face difficulties in gathering this information
in the future. We may face reputational challenges if we determine that certain of our products contain minerals not determined
to be conflict free or if we are unable to sufficiently verify the origins for all conflict minerals used in our products through the
procedures we implement.

Working Capital Practices

Our goal is to carry sufficient levels of inventory to ensure adequate supply of raw materials from suppliers and meet the
product delivery needs of our customers. We also provide payment terms to customers in the normal course of business and
rights to return product under warranty to meet the operational demands of our customers.

Employees

On April 24, 2015, we employed more than 92,000 employees (including full-time equivalent employees). Our employees are
vital to our success. We believe we have been successful in attracting and retaining qualified personnel in a highly competitive
labor market due to our competitive compensation and benefits, and our rewarding work environment.

Seasonality

Worldwide sales, including U.S. sales, do not reflect a significant degree of seasonality; however, the number of medical
procedures incorporating Medtronic products is generally lower during summer months, due to summer vacation schedules in
the northern hemisphere, particularly in European countries. In addition, pulse oximetry sales can be impacted by flu season.

Government Regulation and Other Considerations

Our products are subject to regulation by numerous government agencies, including the U.S. FDA and similar agencies outside
the U.S. To varying degrees, each of these agencies requires us to comply with laws and regulations governing the development,
testing, manufacturing, labeling, marketing, and distribution of our products. Our business is also affected by U.S. and foreign
patient privacy laws, cost containment initiatives and environmental health and safety laws and regulations. The primary laws
and regulations that affect our business are described below.

The laws applicable to us are subject to change and are subject to evolving interpretations. If a governmental authority were to
conclude that we are not in compliance with applicable laws and regulations, Medtronic and its officers and employees could be
subject to severe criminal and civil penalties including substantial fines and damages, and exclusion from participation as a
supplier of product to beneficiaries covered by Medicare or Medicaid.

Product Approval Processes

Authorization to commercially distribute a new medical device or technology in the U.S. is generally received in one of two
ways. The first, known as pre-market notification or the 510(k) process, requires us to demonstrate that our new medical device
or technology is substantially equivalent to a legally marketed medical device or technology. In this process, we must submit
data that supports our equivalence claim. If human clinical data is required, it must be gathered in compliance with U.S. FDA
investigational device exemption regulations. We must receive an order from the U.S. FDA finding substantial equivalence to
another legally marketed medical device or technology before we can commercially distribute the new medical device or
technology. Modifications to cleared medical devices or technologies can be made without using the 510(k) process if the
changes do not significantly affect safety or effectiveness. Covidien products are generally subject to the pre-market notification
process. A very small number of our devices are exempt from pre-market review.

The second, more rigorous process, known as pre-market approval (PMA), requires us to independently demonstrate that the
new medical device is safe and effective. We do this by collecting data regarding design, materials, bench and animal testing,
and human clinical data for the medical device. The U.S. FDA will authorize commercial distribution if it determines there is
reasonable assurance that the medical device is safe and effective. This determination is based on the benefit outweighing the
risk for the population intended to be treated with the device. This process is much more detailed, time-consuming, and
expensive than the 510(k) process. A third, seldom used, process for approval exists for humanitarian use devices, intended for
patient populations of less than 4,000 patients per year in the U.S. This exemption is similar to the PMA process; however, a full
showing of product effectiveness from large clinical trials is not required. The threshold for approving these products is
probable benefit and safety.

Many countries outside the U.S. to which we export medical devices also subject such medical devices and technologies to their
own regulatory requirements. Frequently, regulatory approval may first be obtained in a foreign country prior to application in
the U.S. due to differing regulatory requirements; however, other countries, such as China for example, require approval in the
country of origin first. Most countries outside of the U.S. require that product approvals be recertified on a regular basis,
generally every five years. The recertification process requires that we evaluate any device or technology changes and any new
regulations or standards relevant to the device or technology and, where needed, conduct appropriate testing to document
continued compliance. Where recertification applications are required, they must be approved in order to continue selling our
products in those countries. Because export control and economic sanctions laws and regulations are complex and constantly
changing, we cannot assure you that laws and regulations may not be enacted, amended, enforced or interpreted in a manner
materially impacting our ability to sell or distribute products.

In the European Union (EU), a single regulatory approval process exists, and conformity with the legal requirements is
represented by the CE Mark. To obtain a CE Mark, defined products must meet minimum standards of performance, safety, and
quality (i.e., the essential requirements), and then, according to their classification, comply with one or more of a selection of
conformity assessment routes. A notified body assesses the quality management systems of the manufacturer and the product
conformity to the essential and other requirements within the medical device directive. Medtronic is subject to inspection by
notified bodies for compliance. The competent authorities of the EU countries, generally in the form of their ministries or
departments of health, oversee the clinical research for medical devices and are responsible for market surveillance of products
once they are placed on the market. We are required to report device failures and injuries potentially related to product use to
these authorities in a timely manner. Various penalties exist for non-compliance with the laws transcribing the medical device
directives.

To be sold in Japan, most medical devices must undergo thorough safety examinations and demonstrate medical efficacy before
they are granted approval, or “shonin.” The Japanese government, through the Ministry of Health, Labour, and Welfare
(MHLW), regulates medical devices under the Pharmaceutical Affairs Law (PAL). Oversight for medical devices is conducted
with participation by the Pharmaceutical and Medical Devices Agency (PMDA), a quasi-government organization performing
many of the review functions for MHLW. Penalties for a company’s noncompliance with PAL could be severe, including
revocation or suspension of a company’s business license and criminal sanctions. MHLW and PMDA also assess the quality
management systems of the manufacturer and the product conformity to the requirements of the PAL. Medtronic is subject to
inspection for compliance by these agencies.

Our global regulatory environment is becoming increasingly stringent, and unpredictable, which could increase the time, cost
and complexity of obtaining regulatory approvals for our products. Several countries that did not have regulatory requirements
for medical devices have established such requirements in recent years and other countries have expanded, or plan to expand, on
existing regulations. Certain regulators are requiring local clinical data in addition to global clinical data. While harmonization
of global regulations has been pursued, requirements continue to differ significantly among countries. We expect this global
regulatory environment will continue to evolve, which could impact our ability to obtain future approvals for our products, or
could increase the cost and time to obtain such approvals in the future. There can be no assurance that any new medical devices
we develop will be approved in a timely or cost-effective manner or approved at all.

Ongoing U.S. FDA Regulations

Both before and after a product is commercially released, we have ongoing responsibilities under U.S. FDA regulations. The
U.S. FDA reviews design and manufacturing practices, labeling and record keeping, and manufacturers’ required reports of
adverse experiences and other information to identify potential problems with marketed medical devices. We are also subject to
periodic inspection by the U.S. FDA for compliance with the U.S. FDA’s quality system regulations, which govern the methods
used in, and the facilities and controls used for, the design, manufacture, packaging, and servicing of all finished medical

devices intended for human use. In addition, the U.S. FDA and other U.S. regulatory bodies (including the Federal Trade
Commission, the Office of the Inspector General of the Department of Health and Human Services, the Department of Justice
(DOJ), and various state Attorneys General) monitor the manner in which we promote and advertise our products. Although
surgeons are permitted to use their medical judgment to employ medical devices for indications other than those cleared or
approved by the U.S. FDA, we are prohibited from promoting products for such “off-label” uses, and can only market our
products for cleared or approved uses. If the U.S. FDA were to conclude that we are not in compliance with applicable laws or
regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the U.S. FDA could require
us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health,
order a recall, repair, replacement, or refund of such devices, detain or seize adulterated or misbranded medical devices, or ban
such medical devices. The U.S. FDA may also impose operating restrictions, enjoin and/or restrain certain conduct resulting in
violations of applicable law pertaining to medical devices, including a hold on approving new devices until issues are resolved
to its satisfaction, and assess civil or criminal penalties against our officers, employees, or us. The U.S. FDA may also
recommend prosecution to the DOJ. Conduct giving rise to civil or criminal penalties may also form the basis for private civil
litigation by third-party payers or other persons allegedly harmed by our conduct.

In April 2015 we entered into a consent decree with the FDA relating to our Neuromodulation business’ SynchroMed drug
infusion system and the Neuromodulation quality system. The consent decree requires the Company to complete certain
corrections and enhancements to the SynchroMed pump and the Neuromodulation quality system. The consent decree limits the
Company’s ability to manufacture and distribute the SynchroMed drug infusion system, unless specific conditions are met. The
agreement does not require the retrieval of any of the Company’s products, but the Company must retain a third-party expert to
inspect the Neuromodulation quality system and to provide a certification that the system complies with the requirements of the
consent decree. Once this certification is provided to the FDA’s satisfaction, the limitations on manufacturer and distribution of
SynchroMed pumps will be lifted. Thereafter, the Company must submit periodic audit reports to the FDA to ensure ongoing
compliance with the consent decree.

Governmental Trade Regulations

The sale and shipment of our products and services across international borders, as well as the purchase of components and
products from international sources, subject us to extensive governmental trade regulations. A variety of laws and regulations,
both in the U.S. and in the countries in which we transact business, apply to the sale, shipment and provision of goods, services
and technology across international borders. Because we are subject to extensive regulations in the countries in which we
operate, we are subject to the risk that laws and regulations could change in a way that would expose us to additional costs,
penalties or liabilities. These laws and regulations govern, among other things, our import and export activities.

The U.S. FDA, in cooperation with U.S. Customs and Border Protection (CBP), administers controls over the import of medical
devices into the U.S. The CBP imposes its own regulatory requirements on the import of our products, including inspection and
possible sanctions for noncompliance. Medtronic is also subject to foreign trade controls administered by several U.S.
government agencies, including the Bureau of Industry and Security within the Commerce Department and the Office of
Foreign Assets Control within the Treasury Department. We import raw materials, components and finished products into the
countries in which we transact business. We act as the import of record in many instances, but we also sell and ship goods to
third parties who are themselves responsible for complying with applicable trade laws and regulations. In our role as importer of
record, we are directly responsible for complying with customs laws and regulations concerning the importation of our raw
materials, components and finished products. If applicable government agencies were to determine that we or such third parties
were not in compliance with applicable U.S. FDA or customs laws and regulations when engaging in cross-border transactions
involving our products, we may be subject to civil or criminal enforcement action, and varying degrees of liability, depending
on the nature of the violation and the extent of our culpability. In addition, such determinations may cause supply chain
disruptions and delays in the distribution of our products that impact our business activities.

Many countries, including the U.S., control the export and re-export of goods, technology and services for reasons including
public health, national security, regional stability, antiterrorism policies and other reasons. In certain circumstances, approval
from governmental authorities may be required before goods, technology or services are exported or re-exported to certain
destinations, to certain end-users and for certain end-uses. In addition, international sales of our medical devices that have not
received U.S. FDA approval are subject to U.S. FDA export requirements. Some governments may also impose economic
sanctions against certain countries, persons or entities. In addition to our need to comply with such regulations in connection
with our direct export activities, we also sell and provide goods, technology and services to agents, representatives and
distributors who may export such items to customers and end-users. If applicable government agencies were to determine that
we, or the third parties through which we export goods, were not in compliance with applicable export control or economic

sanctions laws and regulations when engaging in transactions involving our products, we may be subject to civil or criminal
enforcement action, and varying degrees of liability, dependent upon the nature of the violation and the extent of our culpability.
Similarly, such determinations may cause disruption or delays in the distribution and sales of our products, or result in
restrictions being placed upon our international distribution and sales of products which may materially impact our business
activities.

Anti-Boycott Laws

Under U.S. laws and regulations, U.S. companies and their controlled-in-fact foreign subsidiaries and affiliates are prohibited
from participating or agreeing to participate in unsanctioned foreign boycotts in connection with certain business activities,
including the sale, purchase, transfer, shipping or financing of goods or services within the U.S. or between the U.S. and a
foreign country. Currently, the U.S. considers the Arab League boycott of Israel to constitute an unsanctioned foreign boycott.
We are responsible for ensuring we comply with the requirements of U.S. anti-boycott laws for all transactions in which we are
involved. If we, or certain third parties through which we sell or provide goods or services, are determined to have violated U.S.
anti-boycott laws and regulations, we may be subject to civil or criminal enforcement action, and varying degrees of liability,
dependent upon the nature of the violation and the extent of our culpability. Penalties for any violations of anti-boycott laws and
regulations could include criminal penalties and civil sanctions such as fines, imprisonment, debarment from government
contracts, loss of export privileges and the denial of certain tax benefits, including foreign tax credits, and foreign subsidiary
deferrals.

Patient Privacy Laws

U.S. federal and state laws protect the confidentiality of certain patient health information, including patient medical records,
and restrict the use and disclosure of patient health information by health care providers. In particular, in April 2003, the U.S.
Department of Health and Human Services (HHS) published patient privacy rules under the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) and, in April 2005, published security rules for protected health information. The HIPAA
privacy and security rules govern the use, disclosure, and security of protected health information by “Covered Entities,” which
are health care providers that submit electronic claims, health plans, and health care clearinghouses. In 2009, Congress passed
the HITECH Act, which modified certain provisions of the HIPAA privacy and security rules for Covered Entities and their
Business Associates (which is anyone that performs a service on behalf of a Covered Entity involving the use or disclosure of
protected health information and is not a member of the Covered Entity’s workforce). These included directing HHS to publish
more specific security standards, and increasing breach notification requirements, as well as tightening certain aspects of the
privacy rules. HHS published the final versions of these new rules in January 2013, and Covered Entities and Business
Associates were expected to be in compliance by September 2013. In addition, the HITECH Act provided that Business
Associates will now be subject to the same security requirements as Covered Entities, and that with regard to both the security
and privacy rule, Business Associates will be subject to direct enforcement by HHS, including civil and criminal liability, just as
Covered Entities are. In the past, HIPAA has generally affected us indirectly. Medtronic is generally not a Covered Entity,
except for a few units such as our Diabetes business, Medtronic Monitoring, Inc. and our health insurance plans. Medtronic only
operates as a Business Associate to Covered Entities in a limited number of instances. In those cases, the patient data that we
receive and analyze may include protected health information. We are committed to maintaining the security and privacy of
patients’ health information and believe that we meet the expectations of the HIPAA rules. Some modifications to our systems
and policies may be necessary, but the framework is already in place. However, the potential for enforcement action against us
is now greater, as HHS can take action directly against Business Associates. Thus, while we believe we are and will be in
substantial compliance with HIPAA standards, there is no guarantee that the government will agree. Enforcement actions can be
costly and interrupt regular operations of our business. We believe the ongoing costs and impacts of assuring compliance with
the HIPAA privacy and security rules are not material to our business. In addition, there has been a developing trend of civil
lawsuits and class actions relating to breaches of consumer data held by large companies. While Medtronic has not been named
in any such suits, if a substantial breach or loss of data from our records were to occur, we could become a target of such
litigation.

We are also impacted by the privacy requirements of countries outside the United States. Privacy standards in Europe and Asia
are becoming increasingly strict. Enforcement action and financial penalties related to privacy in the EU are growing, and new
laws and restrictions are being passed. The management of cross border transfers of information among and outside of EU
member countries is becoming more complex, which may complicate our clinical research activities, as well as product
offerings that involve transmission or use of clinical data. China and Russia have passed so-called “data localization” laws,
which require multi-national companies that store certain individually identifiable data on their citizens to maintain that data on
servers located in their country. Restrictions on transfer or processing of that data may apply as well. These laws are new and

the Chinese and Russian governments have not yet issued guidance on how they will apply or enforce them. The restrictions
may complicate our operations in those countries, adding complexity and additional management and oversight needs. We will
continue our efforts to comply with those requirements and to adapt our business processes to applicable laws.

Cost Containment Initiatives

Government and private sector initiatives to limit the growth of health care costs, including price regulation, competitive
pricing, bidding and tender mechanics, coverage and payment policies, comparative effectiveness of therapies, technology
assessments, and managed-care arrangements, are continuing in many countries where we do business, including the U.S. These
changes are causing the marketplace to put increased emphasis on the delivery of more cost-effective medical devices and
therapies. Government programs, including Medicare and Medicaid, private health care insurance, and managed-care plans have
attempted to control costs by limiting the amount of reimbursement they will pay for particular procedures or treatments, tying
reimbursement to outcomes, shifting to population health management, and other mechanisms designed to constrain utilization
and contain costs. Hospitals, which purchase implants, are also seeking to reduce costs through a variety of mechanisms,
including, for example, creating centralized purchasing functions that set pricing and in some cases limiting the number of
vendors that can participate in the purchasing program. Hospitals are also aligning interests with physicians through
employment and other arrangements, such as gainsharing, where a hospital agrees with physicians to share any realized cost
savings resulting from the physicians’ collective change in practice patterns such as standardization of devices where medically
appropriate. This has created an increasing level of price sensitivity among customers for our products.

Some third-party payers must also approve coverage and set reimbursement levels for new or innovative devices or therapies
before they will reimburse health care providers who use the medical devices or therapies. Even though a new medical device
may have been cleared for commercial distribution, we may find limited demand for the device until coverage and sufficient
reimbursement levels have been obtained from governmental and private third-party payers. In addition, some private third-
party payers require that certain procedures or that the use of certain products be authorized in advance as a condition of
reimbursement. International examples of cost containment initiatives and health care reforms in markets significant to
Medtronic’s business include Japan, where the government reviews reimbursement rate benchmarks every two years, which
may significantly reduce reimbursement for procedures using our medical devices or deny coverage for those procedures. As a
result of our manufacturing efficiencies, cost controls and other cost-savings initiatives, we believe we are well-positioned to
respond to changes resulting from the worldwide trend toward cost-containment; however, uncertainty remains as to the nature
of any future legislation, new or changed coverage and reimbursement government or private payor policies or decisions, or
other reforms, making it difficult for us to predict the potential impact of cost-containment trends on future operating results.

Regulations Governing Reimbursement

The delivery of our devices is subject to regulation by HHS and comparable state and non-U.S. agencies responsible for
reimbursement and regulation of health care items and services. U.S. laws and regulations are imposed primarily in connection
with the Medicare and Medicaid programs, as well as the government’s interest in regulating the quality and cost of health care.
Foreign governments also impose regulations in connection with their health care reimbursement programs and the delivery of
health care items and services.

U.S. federal health care laws apply when we or customers submit claims for items or services that are reimbursed under
Medicare, Medicaid, or other federally-funded health care programs. The principal U.S. federal laws include: (1) the Anti-
kickback Statute, which prohibits offers to pay or receive remuneration of any kind for the purpose of purchasing, ordering,
recommending making referrals to items or services reimbursable by a federal health care program; (2) the False Claims Act
which prohibits the submission of false or otherwise improper claims for payment to a federally-funded health care program,
including claims resulting from a violation of the Anti-kickback Statute; (3) the Stark law, which prohibits physicians from
referring Medicare or Medicaid patients to a provider that bills these programs for the provision of certain designated health
services if the physician (or a member of the physician’s immediate family) has a financial relationship with that provider; and
(4) health care fraud statutes that prohibit false statements and improper claims to any third-party payer. There are often similar
state false claims, anti-kickback, and anti-self-referral and insurance laws that apply to state-funded Medicaid and other health
care programs and private third-party payers. Insurance companies can also bring a private cause of action for treble damages
against a manufacturer for a pattern of causing false claims to be filed under the federal Racketeer Influenced and Corrupt
Organizations Act, or RICO. In addition, the U.S. Foreign Corrupt Practices Act (FCPA) can be used to prosecute companies in
the U.S. for arrangements with physicians, or other parties outside the U.S. if the physician or party is a government official of
another country and the arrangement violates the law of that country.

The laws and regulations of health care goods and services that are applicable to us, including those described above, are subject
to evolving interpretations and enforcement discretion. If a governmental authority were to conclude that we are not in
compliance with applicable laws and regulations, we and our officers and employees could be subject to severe criminal and
civil financial penalties, including, for example, exclusion from participation as a supplier of product to beneficiaries covered by
Medicare. Any failure to comply with laws and regulations relating to reimbursement and health care goods and services could
adversely affect our reputation, business, financial condition and cash flows.

Our profitability and operations are subject to risks relating to changes in U.S. and foreign legislative, regulatory and
reimbursement policies and decisions as well as changes to private payer reimbursement coverage and payment decisions and
policies. Implementation of further legislative or administrative reforms to the reimbursement system in the U.S. and abroad, or
adverse decisions relating to our products by administrators of these systems in coverage or reimbursement, could significantly
reduce reimbursement or result in the denial of coverage, which could have an impact on the acceptance of and demand for our
products and the prices that our customers are willing to pay for them.

Environmental Health and Safety Laws

We are also subject to various environmental health and safety laws and regulations both within and outside the U.S. Like other
companies in our industry, our manufacturing and other operations involve the use and transportation of substances regulated
under environmental health and safety laws including those related to the transportation of hazardous materials. To the best of
our knowledge at this time, we do not expect that compliance with environmental protection laws will have a material impact on
our consolidated results of operations, financial position, or cash flows.

Litigation Risks

Patent Litigation We operate in an industry characterized by extensive patent litigation. Patent litigation can result in
significant damage awards and injunctions that could prevent the manufacture and sale of affected products or result in
significant royalty payments in order to continue selling the products. At any given time, we are involved as both a plaintiff and
a defendant in a number of patent infringement actions, the outcomes of which may not be known for prolonged periods of time.
While it is not possible to predict the outcome of patent litigation incidents to our business, we believe the outcomes associated
with this type of litigation could have a material adverse impact on our consolidated results of operations, financial position, or
cash flows. For additional information, see “Item 1A. Risk Factors — We are substantially dependent on patent and other
proprietary rights and failing to protect such rights or to be successful in litigation related to our rights or the rights of others
may result in our payment of significant monetary damages and/or royalty payments, negatively impact our ability to sell
current or future products, or prohibit us from enforcing our patent and other proprietary rights against others.” and Note 16 to
the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on
Form 10-K.

Product Liability and Other Claims We operate in an industry susceptible to significant product liability claims. These
claims may be brought by individuals seeking relief on their own behalf or purporting to represent a class. We are also
susceptible to other litigation, including private securities litigation, shareholder derivative suits and contract litigation. These
claims may be asserted against us in the future based on events we are not aware of at the present time. While it is not possible
to predict the outcome of product liability litigation, we believe the outcomes associated with this type of litigation could have a
material adverse impact on our consolidated results of operations, financial position, or cash flows. For additional information,
see “Item 1A. Risk Factors — Quality problems with, and product liability claims in connection with, our processes, goods, and
services, could lead to recalls or safety alerts, harm our reputation and have a material adverse effect on our business, results of
operations, financial condition and our cash flows.” and Note 16 to the consolidated financial statements in “Item 8. Financial
Statements and Supplementary Data” in this Annual Report on Form 10-K.

Self-Insurance

With the exception of insurance that Covidien currently holds for certain risks, we have elected to self-insure most of our
insurable risks. We made this decision based on conditions in the insurance marketplace that have led to increasingly higher
levels of self-insurance retentions, increasing numbers of coverage limitations, and dramatically higher insurance premium
rates. We maintain a directors and officers insurance policy providing limited coverage and we continue to monitor the
insurance marketplace to evaluate the value to us of obtaining insurance coverage for other categories of losses in the future.
Based on historical loss trends, we believe that our self-insurance program accruals and our existing insurance coverage will be
adequate to cover future losses. Historical trends, however, may not be indicative of future losses. The absence of third-party
insurance coverage for other categories of losses increases our exposure to unanticipated claims and these losses could have a
material adverse impact on our consolidated earnings, financial condition and/or cash flows.

Section 13(r) of the Exchange Act

Under Section 13(r) of the Exchange Act, the Company is required to include certain disclosures in its periodic reports if the
Company or any of its affiliates knowingly engaged in certain specified activities during the period covered by the report. As
part of its ongoing compliance program, the Company identified certain sales of medical devices made during fiscal year 2015
by one of its non-U.S. affiliated entities to parties in Iran that were not covered by a general license issued by the U.S. Treasury
Department’s Office of Foreign Assets Controls (“OFAC”). Those sales, which were generally conducted through distributors,
whose customers include public hospitals which may be owned or controlled directly or indirectly by the Iranian government,
resulted in approximately $4 million in gross revenues and approximately $3 million in net profits (excluding selling, general,
and administrative expenses and allocations) in fiscal year 2015. At the time of these sales, the Company believed, based on
correspondence received from OFAC in response to a request to renew the specific licenses the Company had to cover these
sales, that the sales were eligible for an OFAC general license. The Company subsequently obtained the specific licenses
required for these continued sales. The Company has also submitted an initial notification of voluntary self-disclosure regarding
this matter to OFAC.

Executive Officers of Medtronic

Set forth below are the names and ages of current Section 16(b) executive officers of Medtronic, as well as information
regarding their positions with Medtronic, their periods of service in these capacities, and their business experiences. There are
no family relationships among any of the officers named, nor is there any arrangement or understanding pursuant to which any
person was selected as an officer.

Omar Ishrak, age 59, has been Chairman and Chief Executive Officer of the Company since January 2015 and of Medtronic,
Inc. since June 2011. Prior to that, Mr. Ishrak served as President and Chief Executive Officer of GE Healthcare Systems, a
division of GE Healthcare, from 2009 to 2011. Prior to that, Mr. Ishrak was President and Chief Executive Officer of GE
Healthcare Clinical Systems from 2005 to 2008 and President and Chief Executive Officer of GE Healthcare Ultrasound and
BMD from 1995 to 2004.

Michael J. Coyle, age 52, has been Executive Vice President and Group President, Cardiac and Vascular Group of the Company
since January 2015 and of Medtronic, Inc. since December 2009. Prior to that, he served as President of the Cardiac Rhythm
Management division at St. Jude from 2001 to 2007, and prior positions included serving St. Jude as President of the company’s
Daig Catheter division and numerous leadership positions at Eli Lilly & Company.

Gary L. Ellis, age 58, has been Executive Vice President and Chief Financial Officer of the Company since January 2015 and of
Medtronic, Inc. since April 2014. Prior to that, he was Senior Vice President and Chief Financial Officer from May 2005 to
April 2014; Vice President, Corporate Controller and Treasurer from October 1999 to May 2005, and Vice President and
Corporate Controller from August 1994 to October 1999. Mr. Ellis joined Medtronic in 1989 as Assistant Corporate Controller
and was promoted to Vice President of Finance for Medtronic Europe in 1992, until being named as Corporate Controller in
1994. Mr. Ellis is a member of the board of directors of The Toro Company and past chairman of the American Heart
Association.

Hooman C. Hakami, age 45, has been Executive Vice President and Group President, Diabetes Group of the Company since
January 2015 and of Medtronic, Inc. since June 2014. Prior to that, he was President and Chief Executive Officer of Detection
and Guidance Solutions at GE Healthcare from April 2012 to May 2014. Prior to that, he served as President and Chief
Executive Officer of Interventional Systems from July 2009 to April 2012; Global Business Transformation leader for GE
Healthcare from December 2008 to July 2009; and Vice President and General Manager, Global Ultrasound Services from June
2004 to December 2008. Mr. Hakami started his career with GE and has held the following financial roles: Chief Financial
Officer for the Global Ultrasound division from 2001 to 2004; Chief Financial Officer for Clinical and Multi-vendor Services
from 1999 to 2001; as well as various finance roles at GE Capital from 1994 to 1999; GE’s Aerospace Division from 1992 to
1994 and GE Power Systems from 1991 to 1992.

Bryan C. Hanson, age 48, has been Executive Vice President and Group President, Minimally Invasive Therapies Group of the
Company since January 2015. Prior to that, he was Senior Vice President and Group President, Covidien since October 2014;
Senior Vice President and Group President, Medical Devices and United States of Covidien from October 2013 to September
2014; Senior Vice President and Group President of Covidien for the Surgical Solutions business from July 2011 to October
2013; and President of Covidien’s Energy-based Devices business from July 2006 to June 2011. Mr. Hanson held several other
positions of increasing responsibility in sales, marketing and general management with Covidien from October 1992 to July
2006.

Bradley E. Lerman, age 58, has been Senior Vice President, General Counsel and Corporate Secretary of the Company since
January 2015 and of Medtronic, Inc. since May 2014. Prior to that, he was Executive Vice President, General Counsel, and
Corporate Secretary at Federal National Mortgage Association (Fannie Mae) from October 2012 to May 2014; Senior Vice
President and Chief Litigation Counsel at Pfizer, Inc. from January 2009 to September 2012; Partner at Winston & Strawn from
August 1998 to January 2009; partner at Kirkland & Ellis from March 1996 to July 1998; Associate Independent Counsel from
October 1994 to March 1996; and Assistant U.S. Attorney in the Northern District of Illinois from February 1986 to September
1994.

Geoffrey S. Martha, age 45, has been Senior Vice President of Strategy and Business Development of the Company since
January 2015 and of Medtronic, Inc. since August 2011. Prior to that, he served as Managing Director of Business Development
at GE Healthcare from April 2007 to July 2011; General Manager for GE Capital Technology Finance Services from November
2003 to March 2007; Senior Vice President, Business Development for GE Capital Vendor Financial Services from February
2002 to October 2003; General Manager for GE Capital Colonial Pacific Leasing from February 2001 to January 2002; and
Vice President, Business Development for Potomac Federal, the GE Capital federal financing investment bank from May 1998
to January 2001.

Christopher J. O’Connell, age 48, has been Executive Vice President and Group President, Restorative Therapies Group of the
Company since January 2015 and of Medtronic, Inc. since August 2009. Prior to that, he was Senior Vice President and
President, Diabetes from October 2006 to August 2009; President of Medtronic’s Emergency Response Systems division from
May 2005 to October 2006; and Vice President of Sales and Marketing of Medtronic’s Cardiac Rhythm Disease Management
division from November 2001 to May 2005. Mr. O’Connell has served in various management positions since joining the
Company in 1994.

Carol A. Surface, age 49, has been Senior Vice President and Chief Human Resources Officer of the Company since January
2015 and of Medtronic, Inc. since September 2013. Prior to that, she was the Executive Vice President and Chief Human
Resources Officer at Best Buy Co., Inc. from March 2010 to September 2013, and held a series of HR leadership roles at
PepsiCo Inc., from May 2000 to March 2010.

Robert ten Hoedt, age 54, has been Executive Vice President and President, EMEAC of the Company since January 2015 and
of Medtronic, Inc. since May 2014. Prior to that, he was Senior Vice President and President, EMEA and Canada from 2009 to
2014; Vice President CardioVascular Europe and Central Asia from 2006 to 2009; Vice President and General Manager,
Vitatron from 1999 to 2006; Gastro-Uro leader from 1994 to 1999; and Marketing Manager, Neurological from 1991 to 1994.

Item 1A. Risk Factors

Investing in us involves a variety of risks and uncertainties, known and unknown, including, among others, those discussed
below. Each of the following risks should be carefully considered. Based on the information currently known to us, we believe
the following information identifies the most significant risk factors affecting our Company. However,
the risks and
uncertainties described below are not the only ones related to our businesses and are not necessarily listed in the order of their
importance. Additional risks and uncertainty not presently known to us or that we currently believe to be immaterial may also
adversely affect our business.

Risks Relating to the Company

We operate in a highly competitive industry and we may be unable to compete effectively.

We compete in both the therapeutic and diagnostic medical markets in approximately 160 countries throughout the world. These
markets are characterized by rapid change resulting from technological advances and scientific discoveries. In the product lines
in which we compete, we face a mixture of competitors ranging from large manufacturers with multiple business lines to small

manufacturers that offer a limited selection of niche products. Development by other companies of new or improved products,
processes, technologies, or the introduction of reprocessed products or generic versions when our proprietary products lose their
patent protection may make our products or proposed products less competitive. In addition, we face competition from
providers of alternative medical therapies such as pharmaceutical companies. Competitive factors include:

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product reliability,
product performance,
product technology,
product quality,
breadth of product lines,
product services,
customer support,
price, and
reimbursement approval from health care insurance providers.

We also face competition for marketing, distribution, and collaborative development agreements, for establishing relationships
with academic and research institutions, and for licenses to intellectual property. In addition, academic institutions,
governmental agencies and other public and private research organizations also may conduct research, seek patient protection
and establish collaborative arrangements for discovery, research, clinical development and marketing of products similar to
ours. These companies and institutions compete with us in recruiting and retaining qualified scientific and management
personnel, as well as in acquiring necessary product technologies.

Major shifts in industry market share have occurred in connection with product problems, physician advisories, safety alerts,
and publications about our products; reflecting the importance of product quality, product efficacy, and quality systems in our
industry. In the current environment of managed care, consolidation among health care providers, increased competition, and
declining reimbursement rates, we have been increasingly required to compete on the basis of price. In order to continue to
compete effectively, we must continue to create, invest in, or acquire advanced technology, incorporate this technology into our
proprietary products, obtain regulatory approvals in a timely manner, and manufacture and successfully market our products.
Given these factors, we cannot guarantee that we will be able to compete effectively or continue our level of success in our
industry.

Reduction or interruption in supply and an inability to develop alternative sources for supply or other manufacturing
difficulties, may adversely affect our manufacturing operations and related product sales.

The manufacture of our products requires the timely delivery of sufficient amount of quality components and materials and is
highly exacting and complex, due in part to strict regulatory requirements. We manufacture most of our products at numerous
manufacturing facilities located throughout the world. We purchase many of the components and raw materials used in
manufacturing these products from numerous suppliers in various countries. We have generally been able to obtain adequate
supplies of such raw materials and components. However, for reasons of quality assurance, cost effectiveness, or availability,
we procure certain components and raw materials from a sole supplier. We work closely with our suppliers to try to ensure
continuity of supply while maintaining high quality and reliability. However, we cannot guarantee that these efforts will be
successful. In addition, due to the stringent regulations and requirements of the U.S. FDA regarding the manufacture of our
products, we may not be able to quickly establish additional or replacement sources for certain components or materials. A
reduction or interruption in supply, and an inability to develop alternative sources for such supply, could adversely affect our
ability to manufacture our products in a timely or cost-effective manner and to make our related product sales.

Other problems in the manufacturing process, including equipment malfunction, failure to follow specific protocols and
procedures, defective raw materials and environmental factors, could lead to launch delays, product shortage, unanticipated
costs, lost revenues and damage to our reputation. A failure to identify and address manufacturing problems prior to the release
of products to our customers may also result in quality or safety issues.

In addition, several of our key products are manufactured at a single manufacturing facility, with limited alternate facilities. If
an event occurs that results in damage to one or more of such facilities, we may be unable to manufacture the relevant products
at the previous levels or at all. Because of the time required to approve and license a manufacturing facility, a third-party
manufacturer may not be available on a timely basis to replace production capacity in the event manufacturing capacity is lost.

Moreover, pursuant to the conflict minerals requirements promulgated by the SEC as a part of Dodd-Frank, we are required to
report on the source of any conflict minerals used in our products, as well as the process we use to determine the source of such

materials. We will incur expenses as we work with our suppliers to evaluate the source of any conflict minerals in our products,
and compliance with these requirements could adversely affect the sourcing, supply, and pricing of our raw materials.

Our industry is experiencing greater scrutiny and regulation by governmental authorities, which may lead to greater
regulation in the future.

Our medical devices and technologies and our business activities are subject to a complex regime of regulations and an
aggressive enforcement environment, including by the U.S. FDA, DOJ, Health and Human Services-Office of the Inspector
General, and numerous other federal, state, and foreign governmental authorities. These authorities and members of Congress
have been increasing their scrutiny of our industry. In addition, certain state governments and the federal government have
enacted legislation aimed at increasing transparency of our interactions with health care providers. As a result, we are required
by law to disclose payments and other transfers of value to health care providers licensed by certain states and, starting with
payments or other transfers of value made on or after August 1, 2013, to all U.S. physicians and U.S. teaching hospitals at the
federal level. Any failure to comply with these legal and regulatory requirements could impact our business. In addition, we
may continue to devote substantial additional time and financial resources to further develop and implement policies, systems,
and processes to comply with enhanced legal and regulatory requirements, which may also impact our business. We anticipate
that governmental authorities will continue to scrutinize our industry closely, and that additional regulation may increase
compliance and legal costs, exposure to litigation, and other adverse effects to our operations.

We are subject to costly and complex U.S. and foreign laws and governmental regulations and any adverse regulatory action
may materially adversely affect our financial condition and business operations.

Our medical devices are subject to regulation by numerous U.S. and foreign government agencies, including the U.S. FDA and
comparable agencies outside the U.S. To varying degrees, each of these agencies requires us to comply with laws and
regulations governing the development, testing, manufacturing, labeling, marketing, and distribution of our products. We cannot
guarantee that we will be able to obtain or maintain marketing clearance for our new products or enhancements or modifications
to existing products, and the failure to maintain approvals or obtain approval or clearance could have a material adverse effect
on our business, results of operations, financial conditions and cash flows. Even if we are able to obtain such approval or
clearance, it may:

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take a significant amount of time,
require the expenditure of substantial resources,
involve stringent clinical and pre-clinical testing, as well as increased post-market surveillance,
involve modifications, repairs, or replacements of our products, and
result in limitations on the proposed uses of our products.

Both before and after a product is commercially released, we have ongoing responsibilities under U.S. FDA regulations. Many
of our facilities and procedures and those of our suppliers are also subject to periodic inspections by the U.S. FDA to determine
compliance with the U.S. FDA’s requirements, including primarily the quality system regulations and medical device reporting
regulations. The results of these inspections can include inspectional observations on U.S. FDA’s Form-483, warning letters, or
other forms of enforcement. Since 2009, the U.S. FDA has significantly increased its oversight of companies subject to its
regulations, including medical device companies, by hiring new investigators and stepping up inspections of manufacturing
facilities. The U.S. FDA has recently also significantly increased the number of warning letters issued to companies. If the U.S.
FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are
ineffective or pose an unreasonable health risk, the U.S. FDA could ban such medical devices, detain or seize adulterated or
misbranded medical devices, order a recall, repair, replacement, or refund of such devices, refuse to grant pending pre-market
approval applications or require certificates of foreign governments for exports, and/or require us to notify health professionals
and others that the devices present unreasonable risks of substantial harm to the public health. The U.S. FDA may also assess
civil or criminal penalties against us, our officers or employees and impose operating restrictions on a company-wide basis, or
enjoin and/or restrain certain conduct resulting in violations of applicable law. The U.S. FDA may also recommend prosecution
to the DOJ. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively marketing and selling
our products and limit our ability to obtain future pre-market clearances or approvals, and could result in a substantial
modification to our business practices and operations.

In addition, device manufacturers are permitted to promote products solely for the uses and indications set forth in the approved
product labeling. A number of enforcement actions have been taken against manufacturers that promote products for “off-label”

uses, including actions alleging that federal health care program reimbursement of products promoted for “off-label” uses
constitute false and fraudulent claims to the government. The failure to comply with “off-label” promotion restrictions can
result in significant civil or criminal exposure, administrative obligations and costs, and/or other potential penalties from, and/or
agreements with, the federal government.

Pursuant to Dodd-Frank, the SEC promulgated final rules regarding disclosure of the use of certain minerals, known as “conflict
minerals” (tantalum, tin, tungsten (or their ores), and gold) which are mined from the Democratic Republic of the Congo and
adjoining countries. Under the rules, we are now required to disclose the procedures we employ to determine the sourcing of
such minerals and metals produced from those minerals. There are costs associated with complying with these disclosure
requirements, including for diligence in regards to the sources of any conflict minerals used in our products, in addition to the
cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification
activities. In addition, the implementation of these rules could adversely affect the sourcing, supply, and pricing of materials
used in our products. As of the date of each of Medtronic Inc.’s and Covidien’s conflict minerals report for the 2014 calendar
year, each of Medtronic, Inc. and Covidien were unable to obtain the necessary information on conflict minerals from all of its
respective suppliers and was unable to determine that all of its respective products are conflict free. In addition, we may
continue to face difficulties in gathering this information in the future. We may face reputational challenges if we determine that
certain of our products contain minerals not determined to be conflict free or if we are unable to sufficiently verify the origins
for all conflict minerals used in our products through the procedures we implement.

Foreign governmental regulations have become increasingly stringent and more common, and we may become subject to more
rigorous regulation by foreign governmental authorities in the future. Penalties for a company’s non-compliance with foreign
governmental regulation could be severe, including revocation or suspension of a company’s business license and criminal
sanctions. Any domestic or foreign governmental law or regulation imposed in the future may have a material adverse effect on
us.

We are subject to environmental laws and regulations and the risk of environmental liabilities, violations and litigation.

We are subject to numerous U.S. federal, state, local and non-U.S. environmental, health and safety laws and regulations
concerning, among other things, the generation, storage, use and transportation of hazardous materials, emissions or discharges
of substances into the environment, investigation and remediation of hazardous substances or materials at various sites,
chemical constituents in medical equipment and end-of-life disposal and take-back programs, and the health and safety of our
employees. Our operations involve the use of substances regulated under such laws and regulations, primarily those used in
manufacturing and sterilization processes. If we violate these environmental laws and regulations, we could be fined, criminally
charged or otherwise sanctioned by regulators. Furthermore, environmental laws outside of the U.S. are becoming more
stringent, resulting in increased costs and compliance burdens.

In addition, certain environmental laws assess liability on current or previous owners or operators of real property for the costs
of investigation, removal or remediation of hazardous substances or materials at their properties or at properties which they have
disposed of hazardous substances. Liability for investigative, removal and remedial costs under certain U.S. federal and state
laws are retroactive, strict and joint and several. In addition to cleanup actions brought by governmental authorities, private
parties could bring personal injury or other claims due to the presence of, or exposure to, hazardous substances. The ultimate
cost of site cleanup and timing of future cash outflows is difficult to predict, given the uncertainties regarding the extent of the
required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup methods.

We may in the future be subject to additional environmental claims for personal injury or cleanup based on our, Medtronic, Inc.
and Covidien’s past, present or future business activities. The costs of complying with current or future environmental
protection and health and safety laws and regulations, or liabilities arising from past or future releases of, or exposures to,
hazardous substances, may exceed our estimates, or have a material adverse effect on our business, consolidated earnings,
financial condition, and/or cash flow.

Our failure to comply with laws and regulations relating to reimbursement of health care goods and services may subject us
to penalties and adversely impact our reputation, business, financial condition and cash flows.

Our devices, products and therapies are purchased principally by hospitals or physicians that typically bill various third-party
payors, such as governmental programs (e.g., Medicare, Medicaid and comparable foreign programs), private insurance plans
and managed care plans, for the healthcare services provided to their patients. The ability of our customers to obtain appropriate
reimbursement for products and services from third-party payors is critical because it affects which products customers

purchase and the prices they are willing to pay. As a result, our devices, products and therapies are subject to regulation
regarding quality and cost by HHS, including the Centers for Medicare & Medicaid Services (CMS) as well as comparable state
and non-U.S. agencies responsible for reimbursement and regulation of health care goods and services. The principal U.S.
federal laws implicated include those that prohibit (i) the filing of false or improper claims for federal payment, known as the
false claims laws, (ii) unlawful inducements for the referral of business reimbursable under federally-funded health care
programs, known as the anti-kickback laws, and (iii) health care service providers from seeking reimbursement for providing
certain services to a patient who was referred by a physician who has certain types of direct or indirect financial relationships
with the service provider, known as the Stark law. Many states have similar laws that apply to reimbursement by state Medicaid
and other funded programs as well as in some cases to all payors. Insurance companies can also bring a private cause of action
for treble damages against a manufacturer for causing a false claim to be filed under the federal Racketeer Influenced and
Corrupt Organizations Act, RICO.

Our profitability and international operations are subject to risks relating to changes in U.S. and foreign medical government
and private reimbursement programs and policies and changes in U.S. and foreign legal
regulatory requirements.
Implementation of further legislative or administrative reforms to the reimbursement system in the U.S. and abroad, or adverse
decisions relating to our products by administrators of these systems in coverage or reimbursement, could significantly reduce
reimbursement or result in the denial of coverage, which could have an impact on the acceptance of and demand for our
products and the prices that our customers are willing to pay for them.

The laws and regulations of health care goods and services that are applicable to us, including those described above, are subject
to evolving interpretations. If a governmental authority were to conclude that we are not in compliance with applicable laws and
regulations, we and our officers and employees could be subject to severe criminal and civil penalties, including, for example,
exclusion from participation as a supplier of product to beneficiaries covered by CMS. Any failure to comply with laws and
regulations relating to reimbursement and health care goods and services could adversely affect our reputation, business,
financial condition and cash flows.

We are substantially dependent on patent and other proprietary rights and failing to protect such rights or to be successful in
litigation related to our rights or the rights of others may result in our payment of significant monetary damages and/or
royalty payments, negatively impact our ability to sell current or future products, or prohibit us from enforcing our patent
and other proprietary rights against others.

We are substantially dependent on patent and other proprietary rights and rely on a combination of patents, trade secrets, and
non-disclosure and non-competition agreements to protect our proprietary intellectual property. We also operate in an industry
characterized by extensive patent litigation. Patent litigation against us can result in significant damage awards and injunctions
that could prevent our manufacture and sale of affected products or require us to pay significant royalties in order to continue to
manufacture or sell affected products. At any given time, we are generally involved as both a plaintiff and a defendant in a
number of patent infringement actions, the outcomes of which may not be known for prolonged periods of time. While it is not
possible to predict the outcome of patent litigation, we believe the results associated with any such litigation could result in our
payment of significant monetary damages and/or royalty payments, negatively impact our ability to sell current or future
products, or prohibit us from enforcing our patent and proprietary rights against others, which would generally have a material
adverse impact on our consolidated earnings, financial condition, and/or cash flows.

While we intend to defend against any threats to our intellectual property, our patents, trade secrets, or other agreements may
not adequately protect our intellectual property. Further, pending patent applications owned by us may not result in patents
being issued to us, patents issued to or licensed by us in the past or in the future may be challenged or circumvented by
competitors and such patents may be found invalid, unenforceable or insufficiently broad to protect our technology or to provide
us with any competitive advantage. Third parties could obtain patents that may require us to negotiate licenses to conduct our
business, and the required licenses may not be available on reasonable terms or at all. We also rely on non-disclosure and non-
competition agreements with certain employees, consultants, and other parties to protect, in part, trade secrets and other
proprietary rights. We cannot be certain that these agreements will not be breached, that we will have adequate remedies for any
breach, that others will not independently develop substantially equivalent proprietary information, or that third parties will not
otherwise gain access to our trade secrets or proprietary knowledge.

In addition, the laws of certain countries in which we market some of our products do not protect our intellectual property rights
to the same extent as the laws of the U.S., which could make it easier for competitors to capture market position in such
countries by utilizing technologies that are similar to those developed or licensed by us. Competitors also may harm our sales by

designing products that mirror the capabilities of our products or technology without infringing our intellectual property rights.
If we are unable to protect our intellectual property in these countries, it could have a material adverse effect on our business,
financial condition or results of operations.

Quality problems with, and product liability claims in connection with, our processes, goods, and services, could lead to
recalls or safety alerts, harm our reputation and have a material adverse effect on our business, results of operations,
financial condition and our cash flows.

Quality is extremely important to us and our customers due to the serious and costly consequences of product failure and our
business exposes us to potential product liability risks that are inherent in the design, manufacture, and marketing of medical
devices. In addition, many of our products are often used in intensive care settings with seriously ill patients and some of the
medical devices we manufacture and sell are designed to be implanted in the human body for long periods of time or
indefinitely. Component failures, manufacturing defects, design flaws, off-label use, or inadequate disclosure of product-related
risks or product-related information with respect to our products could result in an unsafe condition or injury to, or death of, a
patient. These problems could lead to recall of, or issuance of a safety alert relating to, our products, and could result in product
liability claims and lawsuits, including class actions, which could ultimately result, in certain cases, in the removal from the
body of such products and claims regarding costs associated therewith. Due to the strong name recognition of the Medtronic and
Covidien brands, a material adverse event involving one of our products could result in reduced market acceptance and demand
for all products within that brand, and could harm our reputation and ability to market products in the future.

In addition, our quality certifications are critical to the marketing success of our goods and services. If we fail to meet these
standards and our products are the subject of recalls or safety alerts, our reputation could be damaged, we could lose customers,
and our revenue and results of operations could decline. Our success also depends generally on our ability to manufacture to
tolerances precision-engineered components, subassemblies, and finished devices from multiple materials. If our
exact
components fail to meet these standards or fail to adapt to evolving standards, our reputation, competitive advantage and market
share could be harmed. In certain situations, we also may undertake a voluntary recall of products or temporarily shut down
production lines based on performance relative to our own internal safety and quality monitoring and testing data.

Further, we have elected to self-insure with respect to product liability risks and any product liability claim brought against us,
with or without merit, could be costly to defend. See “Our self-insurance program may not be adequate to cover future losses.”
Any of the foregoing problems, including product liability claims or product recalls in the future, regardless of their ultimate
outcome, could harm our reputation and have a material adverse effect on our business, results of operations, financial
condition, and cash flows.

Health care policy changes, including U.S. health care reform legislation, signed in 2010, may have a material adverse effect
on us.

In response to perceived increases in health care costs in recent years, there have been and continue to be proposals by the
federal government, state governments, regulators, and third-party payers to control these costs and, more generally, to reform
the U.S. health care system. Certain of these proposals could limit the prices we are able to charge for our products or the
amounts of reimbursement available for our products and could limit the acceptance and availability of our products. The
adoption of some or all of these proposals could have a material adverse effect on our financial condition and results of
operations.

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act and the Health Care and
Education Affordability Reconciliation Act of 2010. Certain provisions of the law will not be effective for a number of years
and there are many programs and requirements for which the details have not yet been fully established or consequences not
fully understood, and it is unclear what the full impacts will be from the law. The legislation imposes significant new taxes on
medical device makers in the form of a 2.3 percent excise tax on all U.S. medical device sales that commenced in January 2013.
Under the legislation, the total cost to the medical device industry is expected to be approximately $20 billion over 10 years.
The law also focuses on a number of Medicare provisions aimed at improving quality and decreasing costs. It is uncertain at this
point what negative unintended consequences these provisions will have on patient access to new technologies. The Medicare
provisions include value-based payment programs, increased funding of comparative effectiveness research, reduced hospital
payments for avoidable readmissions and hospital acquired conditions, and pilot programs to evaluate alternative payment
methodologies that promote care coordination (such as bundled physician and hospital payments). Additionally, the law
includes a reduction in the annual rate of inflation for Medicare payments to hospitals that began in 2011 and the establishment
of an independent payment advisory board to recommend ways of reducing the rate of growth in Medicare spending. We cannot

predict what health care programs and regulations will be ultimately implemented at the federal or state level, or the effect of
any future legislation or regulation. However, any changes that lower reimbursement for our products or reduce medical
procedure volumes could adversely affect our business and results of operations.

Our self-insurance program may not be adequate to cover future losses.

We have elected to self-insure most of our insurable risks. We made this decision based on conditions in the insurance
marketplace that have led to increasingly higher levels of self-insurance retentions, increasing numbers of coverage limitations,
and dramatically higher insurance premium rates. We maintain a directors and officers policy providing limited coverage and
continue to monitor the insurance marketplace to evaluate the value to us of obtaining insurance coverage for other categories of
losses in the future. While based on historical loss trends we believe that our self-insurance program accruals and our existing
insurance coverage will be adequate to cover future losses, we cannot guarantee that this will remain true. Historical trends may
not be indicative of future losses. The fact that we do not maintain third-party insurance coverage for all categories of losses
increases our exposure to unanticipated claims and these losses could have a material adverse impact on our consolidated
earnings, financial condition, and/or cash flows.

If we experience decreasing prices for our goods and services and we are unable to reduce our expenses, our results of
operations will suffer.

We may experience decreasing prices for our goods and services due to pricing pressure experienced by our customers from
managed care organizations and other third-party payers, increased market power of our customers as the medical device
industry consolidates, and increased competition among medical engineering and manufacturing services providers. If the prices
for our goods and services decrease and we are unable to reduce our expenses, our results of operations will be adversely
affected.

We may experience higher costs to produce our products as a result of changes in prices for oil, gas and other commodities.

We use resins, other petroleum-based materials and pulp as raw materials in some of our products. Prices of oil and gas also
significantly affect our costs for freight and utilities. Oil, gas and pulp prices are volatile and may increase, resulting in higher
costs to produce and distribute our products. New laws or regulations adopted in response to climate change could also increase
energy costs and the costs of certain raw materials and components. Due to the highly competitive nature of the healthcare
industry and the cost-containment efforts of our customers and third-party payers, we may be unable to pass along cost increases
through higher prices. If we are unable to fully recover these costs through price increases or offset these increases through cost
reductions, we could experience lower margins and profitability and our business, results of operations, financial condition and
cash flows could be materially and adversely affected.

Continuing worldwide economic instability could adversely affect our revenues, financial condition or results of operations.

Since fiscal year 2008, the global economy has been impacted by the sequential effects of an ongoing global financial crisis.
This global financial crisis continues to cause disruption in the financial markets, including diminished liquidity and credit
availability, during certain periods. There can be no assurance that there will not be further deterioration in the global economy.
Our customers and vendors may experience financial difficulties or be unable to borrow money to fund their operations which
may adversely impact their ability to purchase our products or to pay for our products on a timely basis, if at all. As with our
customers and vendors, these economic conditions make it more difficult for us to accurately forecast and plan our future
business activities. In addition, a significant amount of our trade receivables are with national health care systems in many
countries. Repayment of these receivables is dependent upon the financial stability of the economies of those countries.

In light of these global economic fluctuations, we continue to monitor the creditworthiness of customers located outside the U.S.
Failure to receive payment of all or a significant portion of these receivables could adversely affect our results of operations.

We are subject to a variety of market and financial risks due to our international operations that could adversely affect those
operations or our profitability and operating results.

Operations in countries outside of the U.S., accounting for approximately 44 percent of our net sales for the fiscal year ended
April 24, 2015, are accompanied by certain financial and other risks. We intend to continue to pursue growth opportunities in

sales outside the U.S., especially in emerging markets, which could expose us to greater risks associated with international sales
and operations. Our profitability and international operations are, and will continue to be, subject to a number of risks and
potential costs, including:

(cid:129)

fluctuations in foreign currency exchange rates,
healthcare reform legislation,
multiple non-U.S. regulatory requirements that are subject to change and that could restrict our ability to
manufacture and sell our products,
local product preferences and product requirements,
longer-term receivables than are typical in the U.S.,
trade protection measures and import or export licensing requirements,
less intellectual property protection in some countries outside the U.S. than exists in the U.S.,
different labor regulations and workforce instability,
political and economic instability,
the potential payment of U.S. income taxes on earnings of certain controlled foreign subsidiaries subject
to U.S. taxation upon repatriation,
the expiration and non-renewal of foreign tax rulings and/or grants,
potentially negative consequences from changes in or interpretations of tax laws, and
economic instability and inflation, recession or interest rate fluctuations.

In particular, the Obama administration has announced potential legislative proposals to tax profits of U.S. companies earned
abroad. While it is impossible for us to predict whether these and other proposals will be implemented, or how they will
ultimately impact us, they may materially impact our results of operations if, for example, our profits earned abroad are subject
to U.S. income tax, or we are otherwise disallowed deductions as a result of these profits.

Finally, changes in foreign currency exchange rates may reduce the reported value of our foreign currency revenues, net of
expenses, and cash flows. We cannot predict changes in currency exchange rates, the impact of exchange rate changes, nor the
degree to which we will be able to manage the impact of currency exchange rate changes.

The failure to comply with U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws in non-U.S.
jurisdiction could materially adversely affect our business and result in civil and/or criminal sanctions.

The U.S. Foreign Corrupt Practices Act (FCPA) and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally prohibit
companies and their intermediaries from making improper payments to non-U.S. government officials for the purpose of obtaining or
retaining business. Because of the predominance of government-sponsored healthcare systems around the world, most of our customer
relationships outside of the U.S. are with governmental entities and are therefore potentially subject to such anti-bribery laws.

Global enforcement of anti-corruption laws has increased substantially in recent years, with more frequent voluntary self-
disclosures by companies, aggressive investigations and enforcement proceedings by U.S. and foreign governmental agencies,
and assessment of significant fines and penalties against companies and individuals. Our international operations create the risk
of unauthorized payments or offers of payments by one of our employees, consultants, sales agents, or distributors, because
these parties are not always subject to our control. It is our policy to implement safeguards to educate our employees and agents
on these legal requirements and discourage improper practices. However, our existing safeguards and any future improvements
may prove to be less than effective, and our employees, consultants, sales agents, or distributors may engage in conduct for
which we might be held responsible. In addition, the government may seek to hold us liable for successor liability FCPA
violations committed by any companies in which we invest or that we acquire. Any alleged or actual violations of these
regulations may subject us to government scrutiny, severe criminal or civil sanctions and other liabilities, including exclusion
from government contracting, and could disrupt our business, and result in a material adverse effect on our reputation, results of
operations, financial condition, and cash flows.

Laws and regulations governing the export of our products could adversely impact our business.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the Bureau of Industry and Security at
the U.S. Department of Commerce (BIS), administer certain laws and regulations that restrict U.S. persons and, in some
instances, non-U.S. persons, in conducting activities, transacting business with or making investments in certain countries,
governments, entities and individuals subject to U.S. economic sanctions. Due to our international operations, we are subject to

such laws and regulations, which are complex, restrict our business dealings with certain countries and individuals, and are
constantly changing. Further restrictions may be enacted, amended, enforced or interpreted in a manner that materially impacts
our operations.

From time to time, certain of our subsidiaries have limited business dealings in countries subject to comprehensive sanctions,
including Iran, Sudan, Syria, Cuba and those in the region of Crimea. Certain of our subsidiaries sell medical devices and
surgical tools, and may provide related services, to distributors and other purchasing bodies in such countries. These business
dealings represent an insignificant amount of our consolidated revenues and income, but expose us to a heightened risk of
violating applicable sanctions regulations. Violations of these regulations are punishable by civil penalties, including fines,
denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of
licenses, as well as criminal fines and imprisonment. We have established policies and procedures designed to assist with our
compliance with such laws and regulations. However, there can be no assurance that our policies and procedures will effectively
prevent us from violating these regulations in every transaction in which we may engage, and such a violation could adversely
affect our reputation, business, financial condition, results of operations and cash flows.

Consolidation in the health care industry could have an adverse effect on our revenues and results of operations.

Many health care industry companies, including health care systems, are consolidating to create new companies with greater
market power. As the health care industry consolidates, competition to provide goods and services to industry participants will
become more intense. These industry participants may try to use their market power to negotiate price concessions or reductions
for medical devices that incorporate components produced by us. If we are forced to reduce our prices because of consolidation
in the health care industry, our revenues would decrease and our consolidated earnings, financial condition, and/or cash flows
would suffer.

Our business is indirectly subject to health care industry cost-containment measures that could result in reduced sales of
medical devices and medical devices containing our components.

Most of our customers, and the health care providers to whom our customers supply medical devices, rely on third-party payers,
including government programs and private health insurance plans, to reimburse some or all of the cost of the procedures in
which medical devices that
incorporate components we manufacture or assemble are used. The continuing efforts of
governmental authorities, insurance companies, and other payers of health care costs to contain or reduce these costs could lead
to patients being unable to obtain approval for payment from these third-party payers. If third-party payer payment approval
cannot be obtained by patients, sales of finished medical devices that include our components may decline significantly and our
customers may reduce or eliminate purchases of our components. The cost-containment measures that health care providers are
instituting, both in the U.S. and internationally, could harm our ability to operate profitably. For example, managed care
organizations have successfully negotiated volume discounts for pharmaceuticals.

In an effort to reduce costs, many existing and potential customers for our products within the U.S. have become members of
group purchase organizations (GPOs) and integrated delivery networks (IDNs). GPOs and IDNs negotiate pricing arrangement
with healthcare product manufacturers and distributors and offer the negotiated prices to affiliated hospitals and other members.
GPOs and IDNs typically award contracts on a category-by-category basis through a competitive bidding process. Bids are
generally solicited from multiple manufacturers with the intention of driving down pricing. Due to the highly competitive nature
of the GPO and IDN contracting processes, we may not be able to obtain or maintain contract positions with major GPOs and
IDNs across our product portfolio. Furthermore, the increasing leverage of organized buying groups may reduce market prices
for our products, thereby reducing our profitability.

While having a contract with a GPO and IDN for a given product category can facilitate sales to members of that GPO or IDN,
such contract positions can offer no assurance that sales volumes of those products will be maintained. GPOs and IDNs
increasingly are awarding contracts to multiple suppliers for the same product category. Even when we are the sole contracted
supplier of a GPO or IDN for a certain product category, members of the GPO or IDN generally are free to purchase from other
suppliers. Furthermore, GPO and IDN contracts typically are terminable without cause upon 60 to 90 days’ notice. Accordingly,
although we have multiple contracts with many major GPOs and IDNs, the members of such groups may choose to purchase
from our competitors due to the price or quality offered by such competitors, which could result in a decline in our sales and
profitability.

Our research and development efforts rely upon investments and investment collaborations, and we cannot guarantee that
any previous or future investments or investment collaborations will be successful.

Our strategy to provide a broad range of therapies to restore patients to fuller, healthier lives requires a wide variety of
technologies, products, and capabilities. The rapid pace of technological development
industry and the
specialized expertise required in different areas of medicine make it difficult for one company alone to develop a broad portfolio
of technological solutions. In addition to internally generated growth through our research and development efforts, historically
we have relied, and expect to continue to rely, upon investments and investment collaborations to provide us access to new
technologies both in areas served by our existing businesses as well as in new areas.

in the medical

We expect to make future investments where we believe that we can stimulate the development or acquisition of new
technologies and products to further our strategic objectives and strengthen our existing businesses. Investments and investment
collaborations in and with medical technology companies are inherently risky, and we cannot guarantee that any of our previous
or future investments or investment collaborations will be successful or will not materially adversely affect our consolidated
earnings, financial condition, and/or cash flows.

The continuing development of many of our products depends upon us maintaining strong relationships with health care
professionals.

If we fail to maintain our working relationships with health care professionals, many of our products may not be developed and
marketed in line with the needs and expectations of the professionals who use and support our products, which could cause a
decline in our earnings and profitability. The research, development, marketing, and sales of many of our new and improved
products is dependent upon our maintaining working relationships with health care professionals. We rely on these professionals
to provide us with considerable knowledge and experience regarding the development, marketing, and sale of our products.
Physicians assist us as researchers, marketing and product consultants, inventors, and public speakers. If we are unable to
maintain our strong relationships with these professionals and continue to receive their advice and input, the development and
marketing of our products could suffer, which could have a material adverse effect on our consolidated earnings, financial
condition, and/or cash flows.

We are increasingly dependent on sophisticated information technology systems to operate our business and if we fail to
properly maintain the integrity of our data or if our products do not operate as intended or we experience a cyber-attack or
other breach of these systems, our business could be materially affected.

We are increasingly dependent on sophisticated information technology for our products and infrastructure. We rely on
information technology systems to process, transmit and store electronic information in our day-today operations. The size and
complexity of our information technology systems makes them vulnerable to increasingly sophisticated cyber-attacks, malicious
intrusion, breakdown, destruction, loss of data privacy, or other significant disruption. Our information systems require an
ongoing commitment of significant resources to maintain, protect, and enhance existing systems and develop new systems to
keep pace with continuing changes in information processing technology, evolving systems and regulatory standards, the
increasing need to protect patient and customer information, and changing customer patterns. As a result of technology
initiatives, recently enacted regulations, changes in our system platforms and integration of new business acquisitions, we have
been consolidating and integrating the number of systems we operate and have upgraded and expanded our information systems
capabilities.

In addition, third parties may attempt to hack into our products or systems and may obtain data relating to patients with our
products or the Company’s proprietary information. If we fail to maintain or protect our information systems and data integrity
effectively, we could lose existing customers, have difficulty attracting new customers, have problems in determining product
cost estimates and establishing appropriate pricing, have difficulty preventing, detecting, and controlling fraud, have disputes
with customers, physicians, and other health care professionals, have regulatory sanctions or penalties imposed, have increases
in operating expenses, incur expenses or lose revenues as a result of a data privacy breach, or suffer other adverse consequences.
There can be no assurance that our process of consolidating the number of systems we operate, upgrading and expanding our
information systems capabilities, protecting and enhancing our systems and developing new systems to keep pace with
continuing changes in information processing technology will be successful or that additional systems issues will not arise in the
future. Any significant breakdown, intrusion, interruption, corruption, or destruction of these systems, as well as any data
breaches, could have a material adverse effect on our business.

Negative conditions in the global credit market may impair our commercial paper program, our auction rate securities, and
our other fixed income securities, which may cause us losses and liquidity issues.

We have investments in marketable debt securities that are classified and accounted for as available-for-sale. Our debt securities
include U.S. and foreign government and agency securities, corporate debt securities, certificates of deposit, debt funds, and
mortgage-backed and other asset-backed securities, including auction rate securities. Market conditions over the past several
years have included periods of significant economic uncertainty and at times general market distress, especially in the banking
and financial services sector. During these periods of economic uncertainty, we may experience reduced liquidity across the
fixed-income investment market, including the securities in which we invest. In the event we need to sell these securities, we
may not be able to do so in a timely manner or for a value that is equal to the underlying principal. In addition, we may be
required to adjust the carrying value of the securities and record an impairment charge. If we determine that the fair value of
such securities is temporarily impaired, we would record a temporary impairment as a component of accumulated other
comprehensive loss within shareholders’ equity. If it is determined that the fair value of these securities is other-than-
temporarily impaired, we would record a loss in our consolidated statements of earnings, which could materially adversely
impact our results of operations and financial condition.

Negative market conditions may also impair our ability to access the capital markets through the issuance of commercial paper
or debt securities, or may impact our ability to sell such securities at a reasonable price and may negatively impact our ability to
borrow from financial institutions.

Our products are continually the subject of clinical trials conducted by us, our competitors, or other third parties, the results
of which may be unfavorable, or perceived as unfavorable, and could have a material adverse effect on our business,
financial condition, and results of operations.

As a part of the regulatory process of obtaining marketing clearance for new products and new indications for existing products,
we conduct and participate in numerous clinical trials with a variety of study designs, patient populations, and trial endpoints.
Unfavorable or inconsistent clinical data from existing or future clinical trials conducted by us, by our competitors, or by third
parties, or the market’s or U.S. FDA’s perception of this clinical data, may adversely impact our ability to obtain product
approvals, our position in, and share of, the markets in which we participate, and our business, financial condition, and results of
operations.

Failure to integrate acquired businesses into our operations successfully could adversely affect our business.

As part of our strategy to develop and identify new products and technologies, we have made several acquisitions in recent
years, including the recent acquisition of Covidien, and may make additional acquisitions in the future. Our integration of the
operations of acquired businesses requires significant efforts, including the coordination of information technologies, research
and development, sales and marketing, operations, manufacturing, and finance. These efforts result in additional expenses and
involve significant amounts of management’s time that cannot then be dedicated to other projects. Our failure to manage and
coordinate the growth of the combined company successfully could also have an adverse impact on our business. In addition, we
cannot be certain that the businesses we acquire will become profitable or remain so. Factors that will affect the success of our
acquisitions include:

(cid:129)

the presence or absence of adequate internal controls and/or significant fraud in the financial systems of
acquired companies,
adverse developments arising out of investigations by governmental entities of the business practices of
acquired companies, including potential liability imposed by FCPA,
any decrease in customer loyalty and product orders caused by dissatisfaction with the combined
companies’ product lines and sales and marketing practices, including price increases,
our ability to retain key employees, and
the ability of the combined company to achieve synergies among its constituent companies, such as
increasing sales of the combined company’s products, achieving cost savings, and effectively combining
technologies to develop new products.

We also could experience negative effects on our results of operations, cash flows, and financial condition from acquisition-
related charges, amortization of intangible assets and asset impairment charges. These effects, individually or in the aggregate,
could cause a deterioration of our credit rating and result in increased borrowing costs and interest expense.

The medical device industry is the subject of numerous governmental investigations into marketing and other business
practices. These investigations could result in the commencement of civil and/or criminal proceedings, substantial fines,
penalties, and/or administrative remedies, divert the attention of our management, and have an adverse effect on our
financial condition and results of operations.

We are subject to rigorous regulation by the U.S. FDA and numerous other federal, state, and foreign governmental authorities.
These authorities have been increasing their scrutiny of our industry. We occasionally receive subpoenas or other requests for
information from state and federal governmental agencies, including, among others, the U.S. DOJ and the Office of Inspector
General of HHS. These investigations typically relate primarily to financial arrangements with health care providers, regulatory
compliance, and product promotional practices.

We cooperate with these investigations and respond to such requests. However, when an investigation begins, we cannot predict
when it will be resolved, the outcome of the investigation, or its impact on us. An adverse outcome in one or more of these
investigations could include the commencement of civil and/or criminal proceedings, substantial fines, penalties, and/or
administrative remedies,
including exclusion from government reimbursement programs, entry into Corporate Integrity
Agreements (CIAs) with governmental agencies and amendments to existing CIAs. In addition, resolution of any of these
matters could involve the imposition of additional and costly compliance obligations. Finally, if these investigations continue
over a long period of time, they could divert the attention of management from the day-to-day operations of our business and
impose significant administrative burdens, including cost, on us. These potential consequences, as well as any adverse outcome
from these investigations or other investigations initiated by the government at any time, could have a material adverse effect on
our financial condition and results of operations.

Our substantial leverage and debt service obligations could adversely affect our business.

As of April 24, 2015, our total consolidated external debt was approximately $36.2 billion. We may also incur additional
indebtedness in the future. Our substantial indebtedness could have adverse consequences, including:

(cid:129)

making it more difficult for us to satisfy our financial obligations;
increasing our vulnerability to adverse economic, regulatory and industry conditions, and placing us at a
disadvantage compared to our competitors that are less leveraged;
limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business
and the industry in which we operate;
limiting our ability to borrow additional funds for working capital, capital expenditures, acquisitions and
general corporate or other purposes; and
exposing us to greater interest rate risk.

Our debt service obligations will require us to use a portion of our operating cash flow to pay interest and principal in
indebtedness instead of for other corporate purposes, including funding future expansion of our business and ongoing capital
expenditures, which could impede our growth. Our ability to make payments on, and to refinance, our indebtedness, and to fund
capital expenditures will depend on our ability to generate cash in the future. This is subject to general economic, financial,
competitive, legislative, regulatory and other factors, many of which are beyond our control.

Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition
and results of operations.

We are subject to income taxes as well as non-income based taxes, in both the U.S. and various jurisdictions outside the U.S.
We are subject to ongoing tax audits in various jurisdictions. Tax authorities may disagree with certain positions we have taken
and assess additional taxes. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of
our tax provision. However, there can be no assurance that we will accurately predict the outcomes of these audits, and the
actual outcomes of these audits could have a material impact on our consolidated earnings and financial condition. Additionally,
changes in tax laws or tax rulings could materially impact our effective tax rate. For example, legislation in 2010 imposed a 2.3
percent excise tax on medical device manufacturers for U.S. sales of medical devices beginning in January 2013. Proposals for
fundamental U.S. corporate tax reform, if enacted, could have a material impact on our financial condition and results of
operations.

Medtronic, Inc. tax court proceeding outcome could have an adverse impact on our financial condition.

In March 2009, the IRS issued its audit report for Medtronic Inc.’s fiscal years 2005 and 2006. Medtronic, Inc. reached
agreements with the IRS on some, but not all matters related to these fiscal years. On December 23, 2010, the IRS issued a
statutory notice of deficiency with respect to the remaining issues. Medtronic, Inc. filed a Petition with the U.S. Tax Court on
March 21, 2011 objecting to the deficiency. During October and November 2012, Medtronic, Inc. reached a resolution with the
IRS on various matters, including the deductibility of a settlement payment. Medtronic, Inc. and the IRS agreed to hold one
issue, the calculation of amounts eligible for the one-time repatriation holiday, because such issue was being addressed by other
taxpayers in litigation with the IRS. The remaining unresolved issue relates to the allocation of income between Medtronic, Inc.
and its wholly-owned subsidiary operating in Puerto Rico, which is one of the Company’s key manufacturing sites. The Tax
Court proceeding with respect to this issue began on February 3, 2015 and ended on March 12, 2015. The Company expects a
ruling from the Tax Court during fiscal year 2017.

Examination and audits by tax authorities, and Covidien’s tax sharing agreement with Tyco International plc and TE
Connectivity Ltd., could result in additional tax payments, which could have a material adverse effect on our and Covidien’s
business, results of operations, financial condition and cash flow.

On June 29, 2007, Covidien entered into a tax sharing agreement with Tyco International plc (Tyco International) and TE
Connectivity Ltd. (TE Connectivity) pursuant to which Covidien, Tyco International and TE Connectivity agreed to share 42%,
27% and 31%, respectively, of U.S. income tax liabilities that arise from adjustments made by tax authorities to Covidien’s,
Tyco International’s and TE Connectivity’s U.S. income tax returns, certain income tax liabilities arising from adjustments
made by tax authorities to intercompany transactions or similar adjustments, and certain taxes attributable to internal
transactions undertaken in anticipation of Covidien’s 2007 separation from Tyco International (2007 separation). Under the tax
sharing agreement, Tyco International currently has the right to administer, control and settle all U.S. income tax audits for
periods prior to and including June 29, 2007. The timing, nature and amount of any settlement agreed to by Tyco International
may not be in our or Covidien’s best interests. The other parties to the tax sharing agreement can remove Tyco International as
the controlling party only under limited circumstances, including a change of control or bankruptcy of Tyco International, or by
a majority vote of the parties.

In connection with the 2007 separation, all tax liabilities associated with Covidien’s business became Covidien’s tax liabilities.
Following Covidien’s spin-off of its Pharmaceuticals business to Covidien shareholders through a distribution of all the
outstanding ordinary shares of Mallinkrodt (2013 separation), Mallinckrodt became the primary obligor to the taxing authorities
for the tax liabilities attributable to its subsidiaries, a significant portion of which relate to periods prior to the 2007 separation.
However, Covidien remains the sole party subject to the tax sharing agreement with Tyco International and TE Connectivity.
Accordingly, Mallinckrodt does not share in Covidien’s liability to Tyco International and TE Connectivity, nor in the
receivable that Covidien has from Tyco International and TE Connectivity. Although Covidien shares certain tax liabilities with
Tyco International and TE Connectivity pursuant to the tax sharing agreement, if Tyco International and TE Connectivity
default on their obligations to Covidien under the tax sharing agreement, Covidien would be liable for the entire amount of these
liabilities.

Further, if any party to the tax sharing agreement were to default in its obligation to another party to pay its share of the
distribution taxes that arise as a result of no party’s fault, each non-defaulting party would be required to pay, equally with any
other non-defaulting party, the amounts in default. In addition, if another party to the tax sharing agreement that is responsible
for all or a portion of an income tax liability were to default in its payment of such liability to a taxing authority, Covidien could
be legally liable under applicable tax law for such liabilities and be required to make additional tax payments. Accordingly,
under certain circumstances, Covidien may be obligated to pay amounts in excess of the agreed upon share of Covidien’s, Tyco
International’s and TE Connectivity’s tax liabilities.

On September 28, 2012, Tyco International spun-off two of its businesses to its shareholders, with Tyco International remaining
as a publicly-traded company. This could have a material adverse impact on Tyco International’s ability to fulfill its obligations
to us under the tax sharing agreement.

In addition, the IRS has concluded its field examination of certain of Tyco International’s U.S. federal income tax returns for the
years 1997 through 2000 and proposed tax adjustments, several of which also affect Covidien’s income tax returns for years
after 2000. Tyco International has appealed certain of the tax adjustments proposed by the IRS and has resolved all but one of
the matters associated with the proposed tax adjustments. With respect to the outstanding issue that remains in dispute, on
June 20, 2013, Tyco International advised Covidien that it had received Notices of Deficiency from the IRS asserting that

several of Tyco International’s former U.S. subsidiaries owe additional taxes of $914 million plus penalties of $154 million
based on audits of the 1997 through 2000 tax years of Tyco International and its subsidiaries as they existed at that time. These
amounts exclude interest and do not reflect the impact on subsequent periods if the position taken by the IRS is ultimately
proved correct. The IRS has asserted in the Notices of Deficiency that substantially all of Tyco International’s intercompany
debt originating during the years 1997 through 2000 should not be treated as debt for U.S. federal income tax purposes, and has
disallowed interest deductions related to the intercompany debt and certain tax attribute adjustments recognized on Tyco
International’s U.S. income tax returns totaling approximately $3.0 billion. On July 22, 2013, Tyco International filed a petition
with the U.S. Tax Court contesting the IRS assessment. The outcome of any such litigation is uncertain and could result in a
significant increase in liability for taxes arising during these periods. In particular, if the IRS is successful in asserting its claim,
it would likely assert that approximately $6.6 billion of interest deductions with respect to Tyco International’s intercompany
debt in subsequent time periods should also be disallowed.

The Company has provided reserves for potential payments of tax to various tax authorities related to uncertain tax positions.
However, the calculation of such tax liabilities involves the application of complex tax regulations in many jurisdictions.
Therefore, any dispute with a tax authority may result in a payment that is significantly different from current estimates. If
payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities generally would
result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. If the Company’s
estimate of tax liabilities proves to be less than the amount for which it is ultimately liable, we would incur additional charges to
expense and such charges could have a material adverse effect on our business, results of operations, financial condition and
cash flows.

If the distribution of Mallinckrodt ordinary shares to Covidien shareholders in 2013, the distribution of Covidien and TE
Connectivity common shares by Tyco International to its shareholders in 2007 or certain internal transactions undertaken in
anticipation of either the 2013 or the 2007 separation are determined to be taxable for U.S. federal income tax purposes, we
and Covidien could incur significant U.S. federal income tax liabilities.

Covidien received an IRS ruling substantially to the effect that, for U.S. federal income tax purposes, (i) certain transactions
effected in connection with its 2013 separation of Mallinckrodt qualify as transactions under Sections 355 and/or 368(a) of the
Code, and (ii) the distribution qualifies as a transaction under Sections 355 and 368(a)(1)(D) of the Code. In addition to
obtaining the IRS ruling, Covidien received a tax opinion from Skadden, Arps, Slate, Meagher & Flom LLP, in form and
substance acceptable to Covidien, which relied on the effectiveness of the IRS ruling, substantially to the effect that, for U.S.
federal income tax purposes, the distribution and certain transactions entered into in connection with the distribution qualify as
transactions under Sections 355 and/or 368(a) of the Code.

Tyco International has received private letter rulings from the IRS regarding the U.S. federal income tax consequences of the
distribution of Covidien and TE Connectivity common shares by Tyco International to its shareholders, substantially to the
effect that the distribution, except for cash received in lieu of a fractional share, of Covidien shares and the TE Connectivity
common shares, qualifies as tax-free under Sections 368(a)(1)(D) and 355 of the Code. The private letter rulings also provided
that certain internal transactions undertaken in anticipation of the separation from Tyco International qualify for favorable
treatment under the Code. In addition to obtaining the private letter rulings, Tyco International obtained tax opinions from the
law firm of McDermott Will & Emery LLP confirming the tax-free status of the distribution and certain internal transactions.

The private letter rulings and the opinions relied on certain facts and assumptions, and certain representations and undertakings
(a) in the case of the 2013 separation, from Covidien and Mallinckrodt, and (b) in the case of the 2007 separation, from
Covidien, TE Connectivity and Tyco International, regarding the past and future conduct of their respective businesses and
other matters. Notwithstanding the private letter rulings and the tax opinions, the IRS could determine on audit that the 2013
distribution or the 2007 distribution or the related internal transactions should be treated as taxable transactions if it determines
that any of the respective facts, assumptions, representations or undertakings is not correct or has been violated, or that the
distributions should be taxable for other reasons, including as a result of significant changes in stock or asset ownership after the
distributions, or if the IRS were to disagree with the conclusions of the tax opinions that are not covered by the IRS rulings.

We could incur significant U.S. federal income tax liabilities or tax indemnification obligations, whether under applicable law
or the tax matters agreement that was entered into with Mallinckrodt, if it is ultimately determined that certain related
transactions undertaken in anticipation of the 2013 distribution are taxable. We could also incur significant U.S. federal income
tax liabilities if it ultimately is determined that certain internal transactions undertaken in anticipation of Covidien’s separation
from Tyco International should be treated as taxable transactions.

Our tax position may be adversely affected by changes in tax law relating to multinational corporations.

Recent legislative proposals have aimed to expand the scope of U.S. corporate tax residence, limit the ability of foreign-owned
corporations to deduct interest expense, tax the accumulated unrepatriated earnings of foreign subsidiaries of U.S. corporations,
impose a minimum tax on the future offshore earnings of U.S. multinational groups, and to make other changes in the taxation
of multinational corporations.

Additionally, the U.S. Congress, government agencies in non-U.S. jurisdictions where we and our affiliates do business, and the
Organisation for Economic Co-operation and Development have recently focused on issues related to the taxation of
multinational corporations. One example is in the area of “base erosion and profit shifting,” where profits are claimed to be
earned for tax purposes in low-tax jurisdictions, or payments are made between affiliates from a jurisdiction with high tax rates
to a jurisdiction with lower tax rates. The Organisation for Economic Co-operation and Development has released several
components of its comprehensive plan to create an agreed set of international rules for fighting base erosion and profit shifting.
As a result, the tax laws in the U.S., Ireland and other countries in which we and our affiliates do business could change on a
prospective or retroactive basis, and any such changes could materially adversely affect our business.

Moreover, U.S. and foreign tax authorities may carefully scrutinize companies that result from a cross-border business
combination (such as us), which may lead such authorities to assert that we owe additional taxes, which could have a material
adverse effect on our business, results of operations, financial condition, and cash flows.

Risks Relating to Our Jurisdiction of Incorporation

Irish law differs from the laws in effect in the U.S. and may afford less protection to holders of our securities.

It may not be possible to enforce court judgments obtained in the U.S. against us in Ireland based on the civil liability provisions
of the U.S. federal or state securities laws. In addition, there is some uncertainty as to whether the courts of Ireland would
recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities
provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. We have
been advised that the U.S. currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement
of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any U.S.
federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not
automatically be enforceable in Ireland.

As an Irish company, we are governed by the Irish Companies Acts, which differ in some material respects from laws generally
applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer
transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to
the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers
of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly,
holders of our securities may have more difficulty protecting their interests than would holders of securities of a corporation
incorporated in a jurisdiction of the U.S.

A transfer of our shares, other than ones effected by means of the transfer of book-entry interests in the Depository Trust
Company, may be subject to Irish stamp duty.

Transfers of our shares effected by means of the transfer of book entry interests in the Depository Trust Company (DTC) will
not be subject to Irish stamp duty. However, if you hold our shares directly rather than beneficially through DTC, any transfer of
your shares could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of
the shares acquired). Payment of Irish stamp duty is generally a legal obligation of the transferee. The potential for stamp duty
could adversely affect the price of your shares.

In certain limited circumstances, dividends we pay may be subject to Irish dividend withholding tax and dividends received
by Irish residents and certain other shareholders may be subject to Irish income tax.

In certain limited circumstances, dividend withholding tax (currently at a rate of 20%) may arise in respect of dividends paid on
our shares. A number of exemptions from dividend withholding tax exist such that shareholders resident in the U.S. and other
specified countries may be entitled to exemptions from dividend withholding tax.

Shareholders resident in the U.S. that hold their shares through DTC will not be subject to dividend withholding tax, provided
the addresses of the beneficial owners of such shares in the records of the brokers holding such shares are recorded as being in
the U.S. (and such brokers have further transmitted the relevant information to a qualifying intermediary appointed by us).
However, other shareholders may be subject to dividend withholding tax, which could adversely affect the price of their shares.

Shareholders entitled to an exemption from Irish dividend withholding tax on dividends received from us will not be subject to
Irish income tax in respect of those dividends unless they have some connection with Ireland other than their shareholding in
our Company (for example, they are resident in Ireland). Shareholders who receive dividends subject to Irish dividend
withholding tax will generally have no further liability to Irish income tax on those dividends.

Our shares received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.

Irish capital acquisitions tax (CAT) could apply to a gift or inheritance of our shares irrespective of the place of residence,
ordinary residence or domicile of the parties. This is because our shares will be regarded as property situated in Ireland. The
person who receives the gift or inheritance has primary liability for CAT. Gifts and inheritances passing between spouses are
exempt from CAT. Children have a tax-free threshold of €225,000 in respect of taxable gifts or inheritances received from their
parents.

Risks Relating to the Covidien Acquisition (the Transactions)

We may not realize all of the anticipated benefits of the Transactions or those benefits may take longer to realize than
expected. We may also encounter significant unexpected difficulties in integrating Medtronic, Inc. and Covidien.

Our ability to realize the anticipated benefits of the Transactions will depend, to a large extent, on our ability to integrate the
Medtronic, Inc. and Covidien businesses. The combination of two independent businesses is a complex, costly and time-
consuming process. As a result, we will be required to devote significant management attention and resources to integrating the
business practices and operations of Medtronic, Inc. and Covidien. The integration process may disrupt the businesses and, if
implemented ineffectively or if impacted by unforeseen negative economic or market conditions or other factors, we may not
realize the full anticipated benefits of the transaction. Our failure to meet the challenges involved in integrating the two
businesses to realize the anticipated benefits of the transaction could cause an interruption or a loss of momentum in, our
activities and could adversely affect our results of operations.

In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities,
competitive responses, loss of customer relationships, and diversion of management’s attention. The difficulties of combining
the operations of the companies include, among others:

(cid:129)

the diversion of management’s attention to integration matters;
difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects
from combining the businesses;
difficulties in the integration of operations and systems;
difficulties in the assimilation of employees;
difficulties in managing the expanded operations of a significantly larger and more complex company;
challenges in keeping existing customers and obtaining new customers; and
challenges in attracting and retaining key personnel.

Many of these factors will be outside of our control and any one of them could result in increased costs, decreases in the amount
of expected revenues and diversion of management’s time and energy, which could materially impact our business, financial
condition and results of operations. In addition, even if the operations of the businesses of Medtronic, Inc. and Covidien are
integrated successfully, we may not realize the full benefits of the transaction, including the synergies, cost savings or sales or
growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all.
Furthermore, additional unanticipated costs may be incurred in the integration of the businesses of Medtronic, Inc. and
Covidien. All of these factors could negatively impact our earnings per share, decrease or delay the expected accretive effect of
the transaction, and negatively impact the price of our ordinary shares. As a result, we cannot assure you that the combination of
the Medtronic, Inc. and Covidien businesses will result in the realization of the full benefits anticipated from the transaction.

Future potential changes to the U.S. tax laws could result in us being treated as a U.S. corporation for U.S. federal tax
purposes, and the IRS may not agree with the conclusion that we should be treated as a foreign corporation for U.S federal
income tax purposes.

Because we are an Irish incorporated entity, we would generally be classified as a foreign corporation under the general rule that
a corporation is considered tax resident in the jurisdiction of its organization or incorporation for U.S. federal income tax
purposes. Even so, the IRS may assert that we should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for
U.S. federal income tax purposes pursuant to Section 7874 of the U.S. Internal Revenue Code of 1986, as amended (the Code).

Under Section 7874 of the Code, if Medtronic Inc.’s shareholders immediately prior to the Transaction hold 80% or more of the
vote or value of our shares by reason of holding stock in Medtronic, Inc. immediately after the Transaction (the ownership test),
and our expanded affiliated group after the Transaction does not have substantial business activities in Ireland relative to its
worldwide activities (the substantial business activities test), we would be treated as a U.S. corporation for U.S. federal income
tax purposes. Based on the rules for determining share ownership under Section 7874 of the Code, Medtronic, Inc.’s
shareholders received approximately 70% of our ordinary shares (by both vote and value) by reason of holding stock in
Medtronic, Inc. Therefore, under current law, we should not be treated as a U.S. corporation for U.S. federal income tax
purposes. However, there is limited guidance regarding the application of Section 7874, including the application of the
ownership test.

In addition, changes to Section 7874 or the U.S. Treasury regulations promulgated thereunder could affect our status as a
foreign corporation for U.S. federal tax purposes. Any such changes could have prospective or retroactive application.

Since Section 7874 was enacted, there have been various legislative proposals to broaden its scope. Such proposals could,
among other things, treat a foreign acquiring corporation as a U.S. corporation under Section 7874 if the former shareholders of
the U.S. corporation own more than 50% of the shares of the foreign acquiring corporation after the transaction, or if the foreign
corporation’s affiliated group has substantial business activities in the U.S. and the foreign corporation is primarily managed
and controlled in the U.S. Accordingly, if enacted in their present form and retroactively effective to apply to the Transactions,
such proposals could cause us to be treated as a U.S. corporation for U.S. federal tax purposes.

If we were to be treated as a U.S. corporation for federal tax purposes, based on our existing expected cash flows, we could be
subject to substantially greater U.S. tax liability than currently contemplated as a non-U.S. corporation.

Specifically, if we were to be treated as a U.S. corporation for federal tax purposes, we would be subject to U.S. corporate
income tax on our worldwide income, and the income of our foreign subsidiaries would be subject to U.S. tax when repatriated
or when deemed recognized under the U.S. tax rules for controlled foreign corporations (CFC’s). Additionally, Covidien’s
foreign corporations, which are not currently CFC’s, would become CFC’s making them potentially subject to current or future
U.S. taxation, which could have a material adverse effect on our results of operations, financial condition, and cash flows.

The U.S. Treasury Department and the IRS may promulgate rules that would adversely affect our tax position.

The U.S. Treasury Department has announced that it is examining possible changes in the regulatory rules affecting companies
that move their tax domicile outside the U.S. In the event the U.S. Treasury Department and the IRS were to change the
applicable regulatory rules, we could face potentially substantial tax costs as a result of the Transactions. We are unable to
assess the potential impact of any such possible changes, if adopted, until they are announced.

On September 22, 2014, the U.S. Treasury Department and the IRS issued new guidance announcing their intention to issue
regulations interpreting multiple sections of the Code, including Section 7874, to address inversion transactions and transactions
that Treasury and the IRS characterize as “post-inversion tax avoidance transactions” (the IRS Notice). When issued, such
regulations would apply to transactions completed on or after September 22, 2014. The regulations described in the IRS Notice
would expand the set of circumstances under which Section 7874 applies to cause the foreign acquirer of a U.S. corporation to
be treated as a U.S. corporation for U.S. federal income tax purposes. Such regulations would also impose additional U.S. taxes
on certain transactions involving the acquired U.S. corporation’s CFC’s.

The regulations interpreting Section 7874 of the Code announced in the IRS Notice are not expected to cause us to be treated as
a U.S. corporation for U.S. federal tax purposes. However, if ultimately upheld by a reviewing court, the regulations announced
in the IRS Notice would be expected to limit our ability to engage in various intercompany transactions involving non-U.S.
subsidiaries.

In addition, in the IRS Notice, the U.S. Treasury Department and the IRS announced their intention to issue additional guidance
in the future intended to restrict our ability to undertake certain transactions which could reduce our U.S. tax liability. According
to the IRS Notice, such guidance may include, among other things, limitations on our ability to deduct interest on certain
intercompany debt for U.S federal income tax purposes. We are unable to predict the likelihood that any such guidance will be
issued, the nature of regulations that may be promulgated thereunder or the effect such guidance may have on our business.

The Transaction may not allow us to maintain competitive global cash management and a low effective corporate tax rate.

While we believe that being incorporated in Ireland should help us maintain a competitive worldwide effective corporate tax
rate and provide flexible global cash management, we cannot give any assurance as to what our effective tax rate will be,
however, because of, among other things, uncertainty regarding the tax policies of the jurisdictions where we will operate.
Additionally, the tax laws of Ireland and other jurisdictions could change in the future, and such changes could cause a material
change in our effective tax rate.

Legislative or other governmental action relating to the denial of U.S. federal or state governmental contracts to U.S.
companies that redomicile abroad could adversely affect our business.

Various U.S. federal and state legislative proposals that would deny governmental contracts to U.S. companies that move their
corporate location abroad may affect us. We are unable to predict the likelihood that, or final form in which, any such proposed
legislation might become law, the nature of the regulations that may be promulgated under any future legislative enactments, or
the effect such enactments and increased regulatory scrutiny may have on our business.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our principal executive office is located in Ireland and leased by us. Our main operational offices are owned by us and located
in the Minneapolis, Minnesota metropolitan area. Manufacturing or research facilities are located in Ireland, the U.S. (in sixteen
states), Puerto Rico, Brazil, Canada, Costa Rica, Denmark, Dominican Republic, France, Germany, India, Israel, Italy, Japan,
Malaysia, Mexico, The Netherlands, The People’s Republic of China, Singapore, South Korea, Switzerland, Thailand, Turkey,
United Kingdom, and Vietnam. Our total manufacturing and research space is approximately 12.8 million square feet, of which
approximately 60 percent are located within the U.S. Approximately 50 percent of the manufacturing or research facilities are
owned by us and the balance is leased.

We also maintain sales and administrative offices in the U.S. at 70 locations in 28 states or jurisdictions and outside the U.S. at
275 locations in 67 countries. Most of these locations are leased. We are using substantially all of our currently available
productive space to develop, manufacture, and market our products. Our facilities are in good operating condition, suitable for
their respective uses, and adequate for current needs. We currently are evaluating our properties for additional cost savings and
efficiencies, due to the acquisition of Covidien during fiscal year 2015, and our ongoing cost savings initiatives.

Item 3. Legal Proceedings

A discussion of the Company’s legal proceedings is contained in Note 16 to the consolidated financial statements in “Item 8.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Medtronic’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities

The Company’s ordinary shares are listed on the New York Stock Exchange under the symbol “MDT.”

In January 2015, the Company’s Board of Directors authorized, subject to the ongoing existence of sufficient distributable
reserves, the adoption of the existing Medtronic, Inc. share redemption program. As of April 24, 2015, the Company had used
50.3 million of the 80 million shares authorized under the January 2015 share redemption program. In June 2015, the
Company’s Board of Directors authorized, subject to the ongoing existence of sufficient distributable reserves, the redemption
of an additional 80 million of the Company’s ordinary shares. As authorized by the Board of Directors, our share redemption
program expires when the total number of authorized shares have been redeemed.

The following table provides information about shares redeemed by the Company during the fourth quarter of fiscal year 2015:

Fiscal Period

1/24/2015-2/20/2015
2/21/2015-3/27/2015
3/28/2015-4/24/2015

Total

Total Number of
Shares Purchased

Average Price
Paid per Share

Total Number of Shares
Purchased as a Part of
Publicly Announced
Program

Maximum Number
of Shares that May
Yet Be Purchased
Under the Program

— $

2,572,700
1,275,619

3,848,319

—
77.96
77.96

77.96

—
2,572,700
1,275,619

3,848,319

33,506,669
30,933,969
29,658,350

29,658,350

On June 16, 2015, there were approximately 53,730 shareholders of record of the Company’s ordinary shares. Ordinary cash
dividends declared and paid totaled 30.5 cents per share for each quarter of fiscal year 2015 and 28 cents per share for each
quarter of fiscal year 2014. The following prices are the high and low market sales quotations per share of the Company’s
ordinary shares for the quarters indicated:

Fiscal

2015 High
2015 Low
2014 High
2014 Low

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

65.50
57.81
55.63
46.17

67.11
59.83
57.88
51.22

77.39
65.51
60.93
55.56

79.50
70.91
62.90
53.33

Stock Performance Graph

The following graph compares the cumulative total shareholder return on Medtronic’s ordinary shares with the cumulative total
shareholder return on the Standard & Poor’s (S&P) 500 Index and the S&P 500 Health Care Equipment Index for the last five
fiscal years. The graph assumes that $100 was invested at market close on April 30, 2010 in Medtronic’s ordinary shares, the
S&P 500 Index, and the S&P 500 Health Care Equipment Index and that all dividends were reinvested.

$250

$200

$150

$100

$50

April 2010

April 2011

April 2012

April 2013

April 2014

April 2015

Medtronic. Inc. / Medtronic plc

S&P 500 Index

S&P 500 Health Care Equipment Index

Company/Index

April 2010

April 2011

April 2012

April 2013

April 2014

April 2015

Medtronic, Inc. / Medtronic plc
S&P 500 Index
S&P 500 Health Care
Equipment Index

100.00
100.00

97.93
117.22

90.77
123.27

114.39
142.16

146.53
170.97

198.87
198.28

100.00

111.20

108.37

125.65

149.64

197.07

For information on our equity compensation plans, see “Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Shareholder Matters” in this Annual Report on Form 10-K.

Irish Restrictions on Import and Export of Capital

The Financial Transfers Act 1992 provides that the Irish Minister for Finance can make provision for the restriction of financial
transfers between Ireland and other countries. For the purposes of this Act, “financial transfers” include all transfers which
would be movements of capital or payments within the meaning of the treaties governing the European Communities if they had
been made between Member States of the Communities. This Act has been used by the Minister for Finance to implement
European Council Directives, which provide for the restriction of financial transfers to certain countries, organizations and
people including the Al-Qaeda network and the Taliban, Afghanistan, Belarus, Burma (Myanmar), Democratic People’s
Republic of Korea, Democratic Republic of Congo, Egypt, Eritrea, Iran, Iraq, Ivory Coast, Lebanon, Liberia, Libya, Republic of
Guinea, Somalia, Sudan, and Syria.

Irish Taxes Applicable to U.S. Holders

Dividends paid by Medtronic will generally be subject to Irish dividend withholding tax at the standard rate of income tax
(currently 20 percent) unless an exemption applies.

Dividends paid to U.S. residents will not be subject to Irish dividend withholding tax provided that:

(cid:129)

in the case of a beneficial owner of Medtronic shares held in the Depository Trust Company (DTC), the address
of the beneficial owner in the records of his or her broker is in the United States and this information is provided
by the broker to the Company’s qualifying intermediary; or

in the case of a record owner, the record owner has provided to the Company’s transfer agent a valid U.S
Certification of Residence (Form 6166) or valid Irish Non-Resident Form V2.

Irish income tax may also arise with respect to dividends paid on Medtronic’s ordinary shares. A U.S. resident who meets one of
the exemptions from dividend withholding tax described above and who does not hold Medtronic shares through a branch or
agency in Ireland through which a trade is carried on generally will not have any Irish income tax liability on a dividend paid by
Medtronic. In addition, if a U.S. shareholder is subject to the dividend withholding tax, the withholding payment discharges any
Irish income tax liability, provided the shareholder furnishes to the Irish Revenue authorities a statement of the dividend
withholding tax imposed.

While the U.S./Ireland Double Tax Treaty contains provisions regarding withholding, due to the wide scope of the exemptions
from dividend withholding tax available under Irish domestic law, it would generally be unnecessary for a U.S. resident
shareholder to rely on the treaty provisions.

Item 6. Selected Financial Data

(in millions, except per share data and additional information)
Operating Results for the Fiscal Year:
Net sales
Cost of products sold
Research and development expense
Selling, general, and administrative expense
Special (gains) charges, net
Restructuring charges, net
Certain litigation charges, net
Acquisition-related items
Amortization of intangible assets
Other expense, net

Operating profit
Operating profit margin percentage
Interest expense, net

Income from continuing operations before income
taxes
Provision for income taxes

Income from continuing operations
Income from discontinued operations, net of tax

Net income

Per Ordinary Share:
Basic - Income from continuing operations
Basic - Net income
Diluted - Income from continuing operations
Diluted - Net income
Cash dividends declared per ordinary share
Financial Position at Fiscal Year-end:
Working capital
Current ratio
Total assets
Long-term debt
Shareholders’ equity
Additional Information:(2)
Full-time employees at year-end
Full-time equivalent employees at year-end

2015(1)

2014

Fiscal Year

2013

2012

2011

20,261
6,309
1,640
6,904
(38)
237
42
550
733
118

3,766

18.6%
280

3,486
811

2,675
—

2,675

2.44
2.44
2.41
2.41
1.22

21,671
3.4:1.0
$ 106,685
33,752
53,230

85,573
92,500

17,005
4,333
1,477
5,847
40
78
770
117
349
181

3,813

22.4%
108

3,705
640

3,065
—

3,065

3.06
3.06
3.02
3.02
1.12

15,651
3.8:1.0
37,943
10,315
19,443

43,305
49,247

16,590
4,126
1,557
5,698
—
172
245
(49)
331
108

4,402

26.5%
151

4,251
784

3,467
—

3,467

3.40
3.40
3.37
3.37
1.04

13,902
4.5:1.0
34,900
9,741
18,671

42,466
46,659

16,184
3,889
1,490
5,623
—
87
90
12
335
364

4,294

15,508
3,700
1,472
5,427
—
259
245
14
339
110

3,942

26.5%
149

25.4%
278

4,145
730

3,415
202

3,617

3.24
3.43
3.22
3.41
0.97

10,409
2.8:1.0
32,818
7,359
17,113

40,601
44,944

3,664
609

3,055
41

3,096

2.84
2.87
2.82
2.86
0.90

9,437
3.0:1.0
30,662
8,112
15,968

40,346
44,315

(1) Covidien was acquired on January 26, 2015. For further information, see the section entitled “Understanding our Financial
Information” contained in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”

(2) Employee counts include continuing operations only.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Understanding Our Financial Information

The following discussion and analysis provides information management believes to be relevant to understanding the financial
condition and results of operations of the Company and its subsidiaries. The Company became the successor registrant to
Medtronic, Inc. subsequent to the Transactions described below. You should read this discussion and analysis along with our
consolidated financial statements and related notes thereto as of April 24, 2015 and April 25, 2014 and for each of the three
fiscal years ended April 24, 2015, April 25, 2014, and April 26, 2013.

On January 26, 2015, pursuant
the Company acquired Covidien and Medtronic, Inc.
(collectively, the Transactions). Following the consummation of the Transactions, Medtronic, Inc. and Covidien became
subsidiaries of the Company. In connection with the consummation of the Transactions, the Company re-registered as a public
limited company organized under the laws of Ireland.

to the Transaction Agreement,

On January 26, 2015, (a) each Covidien ordinary share was converted into the right to receive $35.19 in cash and 0.956 of a
newly issued ordinary share of the Company, and (b) each share of Medtronic, Inc. common stock was converted into the right
to receive one newly issued ordinary share of the Company. The total cash and stock value of the Transactions was
approximately $50 billion.

This Annual Report on Form 10-K relates to Medtronic’s fiscal year ended April 24, 2015. Due to the timing of the
Transactions, the results of operations of Covidien are only reflected in Medtronic’s results of operations for the fourth quarter
of fiscal year 2015, which will affect comparability to the prior year historical operations of Medtronic, Inc. throughout this
Annual Report on Form 10-K. In addition, we incurred $550 million in acquisition-related expenses in fiscal year 2015,
primarily related to the Covidien acquisition.

For further information regarding the Acquisition, see the section entitled “Acquisition and Investments — Acquisition of
Covidien” contained in “Item 1. Business” and Note 2 to the consolidated financial statements in “Item 8. Financial Statements
and Supplementary Data” in this Annual Report on Form 10-K.

Organization of Financial Information Management’s discussion and analysis, presented on pages 39 to 64 of this report,
provides material historical and prospective disclosures designed to enable investors and other users to assess our financial
condition and results of operations.

Statements that are forward-looking and not historical in nature are subject to risks and uncertainties. See “Item 1A. Risk
Factors” in this Annual Report on Form 10-K and “Cautionary Factors That May Affect Future Results” in this management’s
discussion and analysis for more information.

The consolidated financial statements are presented on pages 67 to 142 of this report, and include the consolidated statements of
income, consolidated statements of comprehensive income, consolidated balance sheets, consolidated statements of
shareholders’ equity, consolidated statements of cash flows, and the related notes, which are an integral part of the consolidated
financial statements.

Financial Trends Throughout this management’s discussion and analysis, you will read about transactions or events that
materially contribute to or reduce earnings and materially affect financial trends, but which includes charges or benefits that
results from facts and circumstances that vary in frequency and/or impact to our operations. We refer to these transactions and
events as Non-GAAP Adjustments. Management uses Non-GAAP Adjustments to assist in comparing business trends from
period to period on a consistent basis without regard to the impact of such Non-GAAP Adjustments and believes that these Non-
GAAP Adjustments are useful to investors in evaluating operating performance by providing better comparability between
reporting periods. Investors should not consider results reflecting Non-GAAP Adjustments in isolation from, or as a substitute
for, financial information prepared in accordance with generally accepted accounting principles in the U.S. (U.S. GAAP), and
are cautioned that Medtronic may calculate results reflecting Non-GAAP Adjustments in a manner that is different from other
companies. Please refer to “Net Income GAAP to Non-GAAP Reconciliation” for a reconciliation of our results of operations
prepared in accordance with U.S. GAAP to those adjusted results considered by management.

Our fiscal year-end is the last Friday in April, and therefore, the total weeks in a fiscal year can fluctuate between 52 and 53
weeks. Fiscal years 2015, 2014, and 2013 were 52-week years. Fiscal year 2016 is a 53-week year, with the additional week
occurring in the first quarter.

Executive Level Overview

Medtronic is the global leader in medical technology — alleviating pain, restoring health, and extending life for millions of
people around the world. We develop, manufacture, and market our medical devices and technologies in approximately
160 countries. Our primary products prior to the Covidien acquisition included those for cardiac rhythm disorders,
cardiovascular disease, neurological disorders, spinal conditions and musculoskeletal trauma, urological and digestive disorders,
and ear, nose, and throat and diabetes conditions. As a result of the Covidien acquisition, our products were expanded to include
advanced and general surgical care and patient care products, including respiratory and monitoring solutions.

Net income for the fiscal year ended April 24, 2015 was $2.675 billion, $2.41 per diluted share, as compared to net income of
$3.065 billion, $3.02 per diluted share, for the fiscal year ended April 25, 2014, representing a decrease of 13 percent and
20 percent, respectively.

The table below illustrates net sales by operating segment for fiscal years 2015 and 2014:

(dollars in millions; NM — Not Meaningful)

Cardiac and Vascular Group
Minimally Invasive Therapies Group
Restorative Therapies Group
Diabetes Group

Total Net Sales

Net Sales

Fiscal Year

2015

2014

% Change

9,361
2,387
6,751
1,762

8,847
—
6,501
1,657

20,261

17,005

6%
NM(1)
4
6

19%

(1)

Revenue growth rate versus the prior year is not meaningful, as the Minimally Invasive Therapies Group is a new group
that contains the majority of Covidien’s former operations.

Net sales in fiscal year 2015 were $20.261 billion, an increase of 19 percent from the prior fiscal year. Foreign currency
translation had an unfavorable impact of $666 million on net sales compared to the prior fiscal year. Net sales growth for fiscal
year 2015 was driven by 6 percent growth in our Cardiac and Vascular Group, 4 percent growth in our Restorative Therapies
Group, and 6 percent growth in our Diabetes Group compared to the prior fiscal year and the addition of $2.387 billion of
revenue during the fourth quarter from our Minimally Invasive Therapies Group due to the acquisition of Covidien, which
closed on January 26, 2015. The Cardiac and Vascular Group’s performance was primarily a result of strong net sales in Aortic
and Peripheral with the addition of a portion of Covidien’s Peripheral business, and growth in Cardiac Rhythm & Heart Failure
and Coronary & Structural Heart. The Restorative Therapies Group’s performance was a result of solid growth in Surgical
Technologies and growth in Neuromodulation, partially offset by a decline in Spine. The Diabetes Group’s performance was
due to solid growth in the U.S driven by the ongoing launch of the MiniMed 530G System. Within the Minimally Invasive
Therapies Group, the Surgical Solutions and Patient Monitoring & Recovery divisions contributed $1.293 billion and $1.094
billion of revenue, respectively. See our discussion in the “Net Sales” section of this management’s discussion and analysis for
more information on the results of our operating segments.

Acquisition of Covidien On January 26, 2015, pursuant to the Transaction Agreement, we acquired Covidien to continue in
our mission to create a medical technology and services company with a comprehensive product portfolio and a broad global
reach that is better able to improve healthcare outcomes. Covidien meaningfully accelerates our core strategies of therapy
innovation, globalization and economic value. The transaction was accounted for as a business combination using the
acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized
at their fair values at the Acquisition Date.

For further information regarding the Acquisition, see the section entitled “Acquisition and Investments — Acquisition of
Covidien” contained in “Item 1. Business,” and Note 2 to the consolidated financial statements in “Item 8. Financial Statements
and Supplementary Data” in this Annual Report on Form 10-K. The full text of the Transaction Agreement, was filed as Exhibit
2.1 to our Amendment No. 5 to the Registration Statement on Form S-4 filed with the SEC on November 20, 2014.

Net Income GAAP to Non-GAAP Reconciliation The following is a reconciliation of our results of operations prepared in
accordance with U.S. GAAP to those results after giving effect to adjustments relating to items or charges considered by
management to be unusual or infrequent. Refer to our discussion in the “Cost and Expenses” section of this management’s
discussion and analysis for more information on these reconciling items.

(in millions)

GAAP
Non-GAAP Adjustments:

Impact of inventory step-up
Impact of product technology upgrade commitment
Special gains, net
Restructuring charges, net
Certain litigation charges, net
Acquisition-related items
Amortization of intangible assets
Impact of acquisition on interest expense
Certain tax adjustments

Fiscal year ended April 24, 2015

Net Sales

Cost of
Products
Sold

Operating
Profit

Income from
Operations
Before Taxes Net Income

$ 20,261

6,309

3,766

3,486

2,675

—
—
—
—
—
—
—
—
—

(623)
(74)
—
(15)
—
—
—
—
—

623
74
(38)
252
42
550
733
—
—

623
74
(38)
252
42
550
733
77
—

455
61
(23)
180
27
433
538
49
349

Non-GAAP

$ 20,261

5,597

6,002

5,799

4,744

Critical Accounting Estimates

The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to use judgment
in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These
estimates reflect managements’ best judgment about economic and market conditions and their potential effects on the valuation
and/or carrying value of assets and liabilities based upon relevant information available. We base our estimates on historical
experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
See also Note 1 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this
Annual Report on Form 10-K, which discusses our most significant accounting policies.

Our critical accounting estimates include the following:

Revenue Recognition The Company records price adjustment rebates as a reduction of net sales in the same period revenue is
recognized. We estimate rebates based on sales terms, historical experience, and trend analyses. Subsequent to the January 26,
2015 acquisition of Covidien, we reevaluated the judgments used by management of the Company in making estimates and
assumptions that affect the reported amounts for revenues, expenses, assets, and liabilities related to revenue recognition. Based
upon the lag time between the original sale to distributors at list price and the related distributor rebate claim earned at time of
sale to the end customer, and the judgments involved in estimating such rebates, we consider price adjustment rebates for
Covidien to be a critical accounting estimate. We adjust reserves to reflect differences between estimated and actual experience,
and record such adjustment as a reduction of sales in the period of adjustment. Adjustments to recorded reserves have not been
significant. Covidien price adjustment rebates charged against gross sales in the fourth quarter of fiscal year 2015 were $679
million.

Legal Proceedings We are involved in a number of legal actions involving product liability, intellectual property disputes,
shareholder derivative actions, securities class actions, other class actions, income tax matters, and environmental matters. The
outcomes of these legal actions are not within our complete control and may not be known for prolonged periods of time. In
some actions, the claimants seek damages, as well as other relief (including injunctions barring the sale of products that are the
subject of the lawsuit), that could require significant expenditures or result in lost revenues. Estimates of probable losses
resulting from litigation, governmental proceedings, and income tax matters involving the Company are inherently difficult to
predict, particularly when the matters are in early procedural stages, with incomplete scientific facts or legal discovery; involve
unsubstantiated or indeterminate claims for damages; potentially involve penalties, fines, or punitive damages; or could result in
a change in business practice. Our significant legal proceedings are discussed in Note 16 to the consolidated financial statements
in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. While it is not possible to

predict the outcome for most of the matters discussed in Note 16 to the consolidated financial statements, we believe it is
possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position,
or cash flows.

Income Taxes Our effective tax rate is based on income, statutory tax rates, and tax planning opportunities available to us in
the various jurisdictions in which we operate. We establish reserves when, despite our belief that our tax return positions are
fully supportable, we believe that certain positions are likely to be challenged and that we may or may not prevail. These
reserves are established and adjusted in accordance with the principles of U.S. GAAP. Under U.S. GAAP, if we determine that a
tax position is more likely than not of being sustained upon audit, based solely on the technical merits of the position, we
recognize the benefit. We measure the benefit by determining the amount that is greater than 50 percent likely of being realized
upon settlement. We presume that all tax positions will be examined by a taxing authority with full knowledge of all relevant
information. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax
regulations in a multitude of jurisdictions across our global operations. We regularly monitor our tax positions and tax
liabilities. We reevaluate the technical merits of our tax positions and recognize an uncertain tax benefit, or derecognize a
previously recorded tax benefit, when (i) there is a completion of a tax audit, (ii) there is a change in applicable tax law
including a tax case or legislative guidance, or (iii) there is an expiration of the statute of limitations. Significant judgment is
required in accounting for tax reserves. Although we believe that we have adequately provided for liabilities resulting from tax
assessments by taxing authorities, positions taken by these tax authorities could have a material impact on our effective tax rate,
consolidated earnings, financial position or cash flows.

In the event there is a Non-GAAP Adjustment recognized in our operating results, the tax cost or benefit attributable to that item
is separately calculated and recorded. Because the effective rate can be significantly impacted by these discrete items that take
place in the period, we often refer to our tax rate using both the effective rate and the non-GAAP nominal tax rate. The non-
GAAP nominal tax rate is defined as the income tax provision as a percentage of income before income taxes, excluding Non-
GAAP Adjustments. We believe this resulting non-GAAP financial measure provides useful information to investors because it
excludes the effect of these discrete items so that investors can compare our recurring results over multiple periods. Investors
should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in
accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same or similar to measures
presented by other companies.

Tax regulations require certain items to be included in the tax return at different times than when those items are required to be
recorded in the consolidated financial statements. As a result, our effective tax rate reflected in our consolidated financial
statements is different than that reported in our tax returns. Some of these differences are permanent, such as expenses that are
not deductible on our tax return, and some are temporary differences, such as depreciation expense. Temporary differences
create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or
credit in our tax return in future years for which we have already recorded the tax benefit in our consolidated statements of
income. We establish valuation allowances for our deferred tax assets when the amount of expected future taxable income is not
likely to support the use of the deduction or credit. Deferred tax liabilities generally represent tax expense recognized in our
consolidated financial statements for which payment has been deferred or expense has already been taken as a deduction on our
tax return but has not yet been recognized as an expense in our consolidated statements of income.

The Company’s overall tax rate from continuing operations including the tax impact of Non-GAAP Adjustments resulted in an
effective tax rate of 23.3 percent for fiscal year 2015. Excluding the impact of the Non-GAAP Adjustments, our operational and
tax strategies have resulted in a non-GAAP nominal tax rate of 18.2 percent versus the U.S. federal statutory rate of 35.0
percent. An increase in our non-GAAP nominal tax rate of 1 percent would result in an additional income tax provision for the
fiscal year ended April 24, 2015 of approximately $58 million. See discussion of our tax rate and the tax adjustments in the
“Income Taxes” section of this management’s discussion and analysis.

Intangible assets include patents, trademarks, tradenames, customer relationships, purchased
Valuation of Intangible Assets
technology, and IPR&D. When we acquire a business, the assets acquired and liabilities assumed are recorded at their respective
fair values as of the acquisition date. IPR&D represents the fair value of those R&D projects for which the related products have
not received regulatory approval and have no alternative future use. Determining the fair value of intangible assets acquired as
part of a business combination requires us to make significant estimates. These estimates include the amount and timing of
projected future cash flows of each project or technology, the discount rate used to discount those cash flows to present value,
the assessment of the asset’s life cycle, and the consideration of legal, technical, regulatory, economic, and competitive risks.
The fair value assigned to IPR&D is determined by estimating the future cash flows of each project or technology and
discounting the net cash flows back to their present values. The discount rate used is determined at the time of measurement in

accordance with accepted valuation methodologies. There is risk that actual results will differ materially from the original cash
flow projections, due to the uncertainty associated with R&D projects. In addition, there are risks associated with achieving
product commercialization. These risks include, but are not limited to, delays or failure to obtain regulatory approvals to
conduct clinical trials, delays or failure to obtain required market clearances, or delays or issues with patent issuance, validity,
and litigation.

Our impairment reviews of other intangible assets are based on a discounted future cash flow approach that requires significant
judgment with respect to future revenue and expense growth rates, appropriate discount rate, asset groupings, and other
assumptions and estimates. We use estimates that are consistent with our business plans and a market participant view of the
assets being evaluated. The results of our annual impairment test are discussed in Note 6 to the consolidated financial statements
in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. Actual results may differ from
our estimates due to a number of factors including, among others, changes in competitive conditions, timing of regulatory
approval, results of clinical trials, changes in worldwide economic conditions, and fluctuations in foreign currency exchange
rates. These risk factors are discussed in “Item 1A. Risk Factors” in this Annual Report on Form 10-K. Other intangible assets,
net of accumulated amortization, were $28.101 billion and $2.286 billion as of April 24, 2015 and April 25, 2014, respectively.

Goodwill Goodwill is the excess of the purchase price consideration over the estimated fair value of net assets of acquired
businesses. The test for goodwill impairment requires us to make several estimates about fair value, most of which are based on
projected future cash flows. Our estimates associated with the goodwill impairment test are considered critical due to the
amount of goodwill recorded on our consolidated balance sheets and the judgment required in determining fair value, including
projected future cash flows. The results of annual impairment test are discussed in Note 6 to the consolidated financial
statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. Goodwill was
$40.530 billion and $10.593 billion as of April 24, 2015 and April 25, 2014, respectively.

Contingent Consideration Contingent consideration is recorded at the acquisition date at estimated fair value. The fair value
of the contingent consideration is remeasured each reporting period with the change in fair value recognized as income or
expense within acquisition-related items in our consolidated statements of income. Changes to the fair value of contingent
consideration can result from changes in discount rates, the timing and amount of revenue estimates, or in the timing or
probability of achieving the milestones which trigger payment. The fair value of contingent consideration was $264 million and
$68 million as of April 24, 2015 and April 25, 2014, respectively.

Net Sales

In the fourth quarter of fiscal year 2015, we amended the way in which we evaluate performance and allocate resources with the
acquisition of Covidien. As a result, we began to operate under four reportable segments and four operating segments, the
Cardiac and Vascular Group (composed of Cardiac Rhythm & Heart Failure, Coronary & Structural Heart and Aortic &
the Minimally Invasive Therapies Group (composed of Surgical Solutions and Patient
Peripheral Vascular businesses),
Monitoring & Recovery), the Restorative Therapies Group (composed of the Spine, Neuromodulation, Surgical Technologies,
Neurovascular businesses), and the Diabetes Group. See Note 18 to the consolidated financial statements in “Item 8. Financial
Statements and Supplementary Data” in this Annual Report on Form 10-K for additional discussion related to our segment
reporting.

The table below illustrates net sales by operating segment and division for fiscal years 2015, 2014, and 2013:

(dollars in millions; NM — Not Meaningful)

2015

2014

% Change

2014

2013

% Change

Net Sales

Fiscal Year

Net Sales

Fiscal Year

Cardiac Rhythm & Heart Failure
Coronary & Structural Heart
Aortic & Peripheral Vascular

TOTAL CARDIAC AND VASCULAR
GROUP

Surgical Solutions
Patient Monitoring & Recovery

TOTAL MINIMALLY INVASIVE
THERAPIES GROUP

Spine
Neuromodulation
Surgical Technologies
Neurovascular

TOTAL RESTORATIVE THERAPIES
GROUP
DIABETES GROUP

5,245
3,038
1,078

9,361

1,293
1,094

2,387

2,971
1,977
1,671
132

6,751
1,762

4,996
2,956
895

8,847

—
—

—

3,041
1,898
1,562
—

6,501
1,657

5% $
3
20

4,996
2,956
895

4,922
2,906
867

NM
NM

(2)
4
7
NM

4
6

8,847

8,695

—
—

—

3,041
1,898
1,562
—

6,501
1,657

—
—

—

3,131
1,812
1,426
—

6,369
1,526

TOTAL

$ 20,261

$ 17,005

19% $ 17,005

$ 16,590

2%
2
3

—
—

—

(3)
5
10
—

2
9

The increase in net sales for fiscal year 2015 was primarily attributable to the Covidien acquisition. In fiscal years 2015 and
2014, net sales were unfavorably impacted by foreign currency translation of $666 million and $175 million, respectively. The
primary exchange rate movements that impacted our consolidated net sales growth were the U.S. dollar as compared to the Euro
and the Japanese Yen. The impact of foreign currency fluctuations on net sales was not indicative of the impact on net income
due to the offsetting foreign currency impact on operating costs and expenses and our hedging activities. See “Item 7A.
Qualitative and Quantitative Disclosures about Market Risk” and Note 9 to the consolidated financial statements in “Item 8.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further details on foreign currency
instruments and our related risk management strategies.

include pacemakers,

Cardiac and Vascular Group The Cardiac and Vascular Group is composed of the Cardiac Rhythm & Heart Failure,
Coronary & Structural Heart, and Aortic & Peripheral Vascular divisions. The Cardiac and Vascular Group’s products, with
specific focus on comprehensive disease management,
insertable and external cardiac monitors,
implantable defibrillators, leads and delivery systems, ablation products, electrophysiology catheters, products for the treatment
of atrial fibrillation, information systems for the management of patients with Cardiac Rhythm & Heart Failure devices,
products designed to reduce surgical site infections, coronary and peripheral stents and related delivery systems, endovascular
stent graft systems, heart valve replacement technologies, cardiac tissue ablation systems, and open heart and coronary bypass
grafting surgical products. The Cardiac and Vascular Group also includes Cardiocom and Cath Lab Managed Services (CLMS).
The Cardiac and Vascular Group’s net sales for fiscal year 2015 were $9.361 billion, an increase of 6 percent compared to the
prior fiscal year. Foreign currency translation had an unfavorable impact on net sales of $296 million compared to the prior
fiscal year. The Cardiac and Vascular Group’s performance was primarily a result of strong net sales in Cardiac Rhythm &
Heart Failure and Aortic & Peripheral Vascular and solid growth in Coronary & Structural Heart. See the more detailed
discussion of each business’s performance below.

Cardiac Rhythm & Heart Failure net sales for fiscal year 2015 were $5.245 billion, an increase of 5 percent compared to the
prior fiscal year. The increase in Cardiac Rhythm & Heart Failure net sales was driven by the ongoing acceptance of the Reveal
LINQ insertable cardiac monitor and the launches of the Viva XT CRT-D with Attain Performa quadripolar CRT-D lead system
in the U.S. in September 2014 and Evera MRI SureScan ICD in Japan in November 2014. Net sales of the Cardiac Rhythm &
Heart failure division were also driven by the continued global acceptance of the Arctic Front Advance Cardiac CryoAblation
Catheter (Arctic Front) system, net sales from Cardiocom and our CLMS business, which includes the August 2014 acquisition
of NGC. Net sales were negatively impacted by unfavorable foreign currency translation.

Coronary & Structural Heart net sales for fiscal year 2015 were $3.038 billion, an increase of 3 percent compared to the prior
fiscal year. The increase in Coronary & Structural Heart net sales was driven by ongoing success of the CoreValve transcatheter
aortic heart valve in the U.S., the launch of the CoreValve Evolute R recapturable system in international markets, and the
international launch of the Resolute Onyx drug-eluting stent in November 2014. Net sales were partially offset by unfavorable
foreign currency translation and continued pricing pressures in the U.S., Western Europe, Japan, and India in our Coronary
business.

Aortic & Peripheral Vascular net sales for fiscal year 2015 were $1.078 billion, an increase of 20 percent compared to the prior
fiscal year. The Aortic & Peripheral Vascular division includes a portion of the Covidien Peripheral business, which contributed
strong performance during the fourth quarter of fiscal year 2015 on the strength of its chronic venous insufficiency products.
The increase in Aortic & Peripheral Vascular net sales was driven by IN.PACT Admiral drug-coated balloons in the U.S. and
international markets. Aortic & Peripheral Vascular net sales were also driven by strong sales of our Valiant Captivia Thoracic
Stent Graft System, and growth from the Endurant 2S Abdominal Aortic Aneurysm (AAA) Stent Graft System in the U.S. and
Western Europe. Net sales for the Aortic & Peripheral Vascular division were impacted by unfavorable foreign currency
translation and increased competitive and pricing pressures in the U.S., Western Europe, and Japan.

The Cardiac and Vascular Group’s net sales for fiscal year 2014 were $8.847 billion, an increase of 2 percent compared to the
prior fiscal year. Foreign currency translation had an unfavorable impact on net sales of $118 million compared to the prior
fiscal year. The Cardiac and Vascular Group’s performance was primarily a result of solid growth in Aortic & Peripheral
Vascular and growth in Cardiac Rhythm & Heart Failure and Coronary & Structural Heart. Additionally, the Cardiac and
Vascular Group’s performance was favorably affected by new products and the August 2013 acquisition of Cardiocom and
January 2014 acquisition of TYRX. See the more detailed discussion of each business’s performance below.

Cardiac Rhythm & Heart Failure net sales for fiscal year 2014 were $4.996 billion, an increase of 2 percent compared to the
prior fiscal year. The increase in Cardiac Rhythm & Heart Failure net sales were driven by continued global acceptance of the
Arctic Front system and the launches of our Advisa DR MRI SureScan in the U.S. and Japan in the fourth and second quarters
of fiscal year 2013, respectively. Net sales of Cardiac Rhythm & Heart Failure were also impacted by the continued acceptance
of our shock reduction and lead integrity alert technologies, and our Viva/Brava family of CRT-D devices and Evera family of
ICDs. A strong launch of Reveal LINQ in Western Europe and the U.S. in the second half of fiscal year 2014 and net sales from
the acquisition of Cardiocom and CLMS also contributed to the increase in net sales. Net sales for the Cardiac Rhythm & Heart
Failure were partially offset by unfavorable foreign currency translation, declines in the U.S. High Power and Low Power
markets, and pricing pressures in certain international markets.

Coronary & Structural Heart net sales for fiscal year 2014 were $2.956 billion, an increase of 2 percent compared to the prior
fiscal year. The increase in Coronary & Structural Heart net sales were driven by strong sales of the CoreValve transcatheter
aortic heart valves in Western Europe and of our perfusion system and blood management products in emerging markets.
Growth was also driven by a strong initial U.S. launch of CoreValve transcatheter aortic heart valves for extreme risk patients in
the fourth quarter of fiscal year 2014. The increase in net sales was also due to worldwide share gains in drug-eluting stents,
driven by the continued strength of our Resolute Integrity drug-eluting coronary stent. Growth was partially offset by
unfavorable foreign currency translation, pricing pressures, and declines in our cardiopulmonary product lines driven principally
by a competitor’s full reentry into the market following a supply disruption and by unfavorable foreign currency translation.

Aortic & Peripheral Vascular net sales for fiscal year 2014 were $895 million, an increase of 3 percent compared to the prior
fiscal year. The increase in Aortic & Peripheral Vascular net sales was driven by strong sales of our Valiant Captivia Thoracic
Stent Graft System, as well as the launch of the Endurant II AAA Stent Graft System in Japan in the first quarter of fiscal year
2014. Growth was partially offset by the divestiture of a reentry catheter product line in the second quarter of fiscal year 2014,
the removal of a peripheral below-the-knee product from the market, unfavorable foreign currency translation, and increased
competitive and pricing pressures in the U.S., Western Europe, and Japan.

Looking ahead, we expect our Cardiac and Vascular Group could be impacted by the following:

(cid:129)

Increasing competition, fluctuations in foreign currency, and continued pricing pressures.

Continued future growth from Reveal LINQ, our next-generation insertable cardiac monitor launched in
international and U.S. markets in the third and fourth quarters of fiscal year 2014, respectively.

Continued acceptance and future growth from the Viva/Brava family of CRT-D devices and the Attain
Performa portfolio of quadripolar leads. The Viva/Brava family of CRT-D devices utilizes a new algorithm,
called AdaptivCRT, which improves patients’ response rates to CRT-D therapy by preserving the patients’

normal heart rhythms and continually adapts to individual patient needs. Our Viva/Brava CRT-D devices
received CE Mark approval in August 2012, received U.S. FDA approval in May 2013, and launched in Japan
in the third quarter of fiscal year 2014. Paired with Viva/Brava Quad CRT-D, Attain Performa leads provide
additional options for physicians to optimize patient therapy. Our Attain Performa quadripolar lead system
received CE Mark approval in March 2013 and launched in Japan in the third quarter of fiscal year 2014. In
the second quarter of fiscal year 2015, we received U.S. FDA approval of our Attain Performa quadripolar
lead, Viva Quad XT CRT-D, and Viva Quad S CRT-D.

Continued acceptance and future growth from the Evera family of ICDs. The Evera family of ICDs has
increased battery longevity, advanced shock reduction technology, and a contoured shape with thin, smooth
edges that better fits inside the body. Our Evera MRI SureScan ICD received CE Mark approval late in the
fourth quarter of fiscal year 2014 and launched in Japan in November 2014. U.S. launch is expected in fiscal
year 2016.

Continued acceptance and future growth from the Advisa DR MRI SureScan pacing system. The Advisa DR
MRI SureScan is our second-generation MRI pacing system and is the first system to combine advanced
pacing technology with proven MRI access. In the third quarter of fiscal year 2014, we received expanded
labeling for full-body MRI scans from the U.S. FDA.

Acceptance of our Micra transcatheter pacing system, which received CE Mark approval in April 2015. Micra
is a miniaturized single chamber pacemaker system that is delivered through the femoral vein and is implanted
in the right ventricle of the heart. The system does not use a lead and does not have a subcutaneous device
pocket underneath the skin as with conventional pacemaker systems.

Continued future growth from the Arctic Front system, including the second generation Arctic Front Advance
Cardiac Cryoballoon. The Arctic Front system is a cryoballoon indicated for the treatment of drug refractory
paroxysmal atrial fibrillation. The cryoballoon treatment
involves a minimally invasive procedure that
efficiently creates circumferential lesions around the pulmonary vein, which studies have indicated is the
source of erratic electrical signals that cause irregular heartbeat. We received U.S. FDA approval in May 2015
for the Arctic Front Advance ST Cryoablation Catheter.

Continued and future growth from TYRX’s proprietary anti-infection envelope technology to reduce
infections that may result from device implants. Currently, we are leveraging this technology in the Cardiac
Rhythm & Heart Failure division, and ultimately we intend to leverage this technology in other divisions such
as Neuromodulation.

Integration of Corventis into the Cardiac and Vascular Group. Corventis was acquired in June 2014.

Continued acceptance and future growth from Cardiocom’s remote telemonitoring solutions business for the
management of chronic diseases such as heart failure, diabetes, and hypertension. Cardiocom has a
readmission reduction program focused on minimizing heart failure readmission penalties for U.S. hospitals.

Acceptance of our CLMS business. CLMS provides a unique service offering, whereby we enter into long-
term contracts with hospitals, both within Europe and in certain other regions around the world, to upgrade
and more effectively manage their cath lab and hybrid operating rooms. As of the end of fiscal year 2015, we
had fifty agreements. We expect net sales trends to also be impacted by the integration of NGC into the CLMS
business. NGC brings expertise in material management and managed equipment services, infrastructure
design, and turnkey installation. NGC was acquired in August 2014.

Continued acceptance of our CoreValve transcatheter heart valve technologies for the replacement of the
aortic valve. We received U.S. FDA approval for our CoreValve transcatheter aortic heart valve for extreme
risk patients in the U.S in the third quarter of fiscal year 2014. We received U.S. FDA approval for high risk
patients in June 2014. We continue to add new sites, with a presence now in over 275 U.S. sites. We received
U.S. FDA approval for valve-in-valve implantation in March 2015.

Continued international acceptance of CoreValve Evolut R, our next-generation self-expanding valve with
differentiated 14-French equivalent delivery system. We have received CE Mark approval for the 26 and 29
millimeter sizes of the valves in the fourth quarter of fiscal year 2015.

(cid:129)

Acceptance of the Resolute Onyx drug-eluting coronary stent which received CE Mark approval in November
2014. Resolute Onyx builds on the Resolute Integrity drug-eluting coronary stent with thinner struts to
improve deliverability and is the first stent to feature our CoreWire technology, allowing greater visibility
during the procedure.

Continued acceptance of the Resolute Integrity drug-eluting coronary stent and the Integrity bare metal stent.
The global stent market continues to experience pricing pressure resulting from government austerity
programs and reimbursement cuts in Western Europe, Japan, and India.

Continued worldwide growth of the Valiant Captivia Thoracic Stent Graft System.

Continued and future acceptance of the Endurant family of AAA stent graft products. We received CE Mark
and U.S. FDA approval of the Endurant 2S stent graft late in the second quarter of fiscal year 2015.

Acceptance of the IN.PACT Admiral drug-coated balloon for the treatment of peripheral artery disease in the
upper leg. The IN.PACT Admiral drug-coated balloon was launched in the U.S. early in the fourth quarter of
fiscal year 2015. We broadened this launch by utilizing our Covidien peripheral sales force in April 2015.

Future growth in the U.S. from the integration of the legacy Covidien U.S. sales force to maximize cross-
selling opportunities with complementary products.

Minimally Invasive Therapies Group The Minimally Invasive Therapies Group is composed of the Surgical Solutions and
Patient Monitoring & Recovery divisions. With a focus on diseases of the gastrointestinal tract, lungs, pelvic region, kidneys,
obesity, and preventable complications, the group looks to enhance patient outcomes through minimally invasive solutions. The
Minimally Invasive Therapies Group’s products include those for advanced and general surgical care, such as stapling, vessel
sealing, and other surgical
instruments; sutures; electrosurgery products; hernia mechanical devices; mesh implants;
gastrointestinal (GI), interventional lung, and advanced ablation solutions; products for patient monitoring and recovery, such as
ventilators, capnography, and other airway products; sensors; monitors; compression and dialysis products; enteral feeding;
wound care; and medical surgical products, including operating room supply products, electrodes, needles, syringes, and sharps
disposals. Minimally Invasive Therapies Group’s net sales from January 26, 2015, the date of the Covidien acquisition, through
April 24, 2015 were $2.387 billion. Revenue growth rates versus the prior year are not meaningful, as the Minimally Invasive
Therapies Group is a new group that contains the majority of Covidien’s former operations.

Net sales contributions in Surgical Solutions included strong performance in both stapling and energy. Stapling results
benefitted from the rollout of new products, including the Endo GIA Reinforced Reload, while energy results included strong
procedural volumes in vessel sealing. GI solutions, advanced ablation, and interventional lung solutions results in Early
Technologies also contributed to net sales.

Net sales contributions in Patient Monitoring & Recovery were led by solid performance in patient monitoring as a result of the
U.S. flu season, which drove pulse oximetry sales.

Looking ahead, we expect Minimally Invasive Therapies Group could be impacted by the following:

(cid:129)

Changes in procedural volumes, competitive pressure, reimbursement challenges, impacts from changes in the
mix of our product offerings, fluctuations in foreign currency and pricing pressure, particularly in developed
markets.

Integration of Minimally Invasive Therapies Group into Medtronic. We believe the combined company will
allow us to treat more patients, in more ways, and in more places around the world.

Minimally Invasive Therapies Group’s goals, across a patient’s continuum of care, are to diagnose and
intervene earlier, improve treatments, and help patients recover faster. Our technologies and products span the
entire continuum. We expect a significant amount of our sales growth from the following key growth drivers:

(cid:129)

Accelerating access to and adoption of less invasive surgical techniques to help patients recover
faster and at less overall cost to the healthcare system. Opportunities exist to provide advanced
solutions that minimize complications and increase efficiency. Our goal is to create localized

solutions to improve surgical approaches and increase access to care, address economic and clinical
challenges, and advance minimally invasive surgery by minimizing complications, thereby reducing
surgical variability and increasing efficiency.

(cid:129)

Elevating the standard of care for respiratory compromise, a progressive condition impacting a
patient’s ability to breathe effectively. This common, costly, and potentially deadly condition can
affect a patient throughout treatment and recovery if not properly monitored and managed.

Creating less invasive standards of care in diseases and conditions of the gastrointestinal tract and
lung to enable earlier diagnosis and intervention.

Expanding access to care in emerging markets to help patients access solutions and technologies that
improve their standard of care and meet each market’s unique needs. The emerging markets represent
the fastest-growing markets in the world. They present a significant opportunity for the Minimally
Invasive Therapies Group. We plan to continue to invest in R&D, infrastructure, and partnerships in
these markets to help more patients get access to better healthcare.

Continued and future acceptance of advanced and general surgical care products from both physicians and
patients of open and minimally invasive procedures in Surgical Solutions, including stapling, vessel sealing,
and other surgical instruments. Key recently launched products include the Endo GIA Reinforced Reload
Stapler,
the LigaSure Maryland jaw laparoscopic sealer and divider, and three additional sizes of the
Sonicision Cordless Ultrasonic Dissection Device and the GastriSail gastric positioning system.

Continued and future acceptance of Early Technologies, including the areas of GI solutions, advanced
ablation, and interventional lung solutions. Recently launched products include the PillCam COLON capsule
endoscopy, Emprint ablation system with Thermosphere Technology which maintains predictable spherical
ablation zones throughout procedures reducing procedure time and cost, and the GenCut core biopsy system
lung tissue biopsy tools for use with the
and the superDimension Triple Needle Cytology Brush,
superDimension navigation system. The superDimension system enables a minimally invasive approach to
accessing difficult-to-reach areas of the lung, which can aid in the diagnosis of lung cancer.

Continued acceptance and growth in respiratory care, ventilation and airway management, patient monitoring,
and homecare. Key products in this area include the Puritan Bennett 980 ventilator, Capnostream 20p bedside
capnography monitor with Microstream technology, Vital Sync virtual patient monitoring platform, the
Nellcor pulse oximetry system with OxiMax technology and the Nellcor Bedside SpO2 Patient Monitoring
System with Respiratory Rate.

Our ability to create markets and drive product and procedures into emerging markets. We have high quality
and cost-effective surgical products designed for customers in emerging markets such as the ReliaMax
Reusable stapler, which is reposable (part reusable, part disposable), and the ValleyLab LS10 single channel
vessel sealing generator, which is compatible with our line of LigaSure instruments and designed for
simplified use and affordability.

(cid:129)

Restorative Therapies Group The Restorative Therapies Group is composed of the Spine, Neuromodulation, Surgical
Technologies, and Neurovascular divisions. The Restorative Therapies Group includes products for various areas of the spine,
bone graft substitutes, biologic products, trauma, implantable neurostimulation therapies and drug delivery systems for the
treatment of chronic pain, movement disorders, obsessive-compulsive disorder (OCD), overactive bladder, urinary retention,
fecal incontinence and gastroparesis, products to treat conditions of the ear, nose, and throat, and systems that incorporate
advanced energy surgical instruments. Additionally, this group manufactures and sells image-guided surgery and intra-operative
imaging systems. With the addition of the Neurovascular division through the January 2015 Covidien acquisition, the group
manufactures and markets products and therapies to treat diseases of the vasculature in and around the brain and includes sales
of coils, neurovascular stents and flow diversion products. The Restorative Therapies Group’s net sales for fiscal year 2015
were $6.751 billion, an increase of 4 percent over the prior fiscal year. Foreign currency translation had an unfavorable impact
on net sales of approximately $127 million when compared to the prior fiscal year. The Restorative Therapies Group’s
performance for fiscal year 2015 was favorably impacted by the addition of the Neurovascular division, formerly part of
Covidien, and growth in Surgical Technologies and Neuromodulation, partially offset by declines in Spine. See the more
detailed discussion of each business’s performance below.

Spine net sales for fiscal year 2015 were $2.971 billion, a decrease of 2 percent over the prior fiscal year. The decrease in
Spine’s net sales for fiscal year 2015 was driven by declines in Core Spine and Interventional, partially offset by growth in BMP
(composed of INFUSE bone graft (InductOs in the EU)). Both the global and U.S. Core Spine markets grew in the low-single
digits, with modest procedural growth offset by continued pricing pressures. During fiscal year 2015, the Core Spine business
continued to focus on differentiating itself over the long-term through portfolio updates, procedural innovation, and continued
development and deployment of the its Surgical Synergy program that integrates imaging, navigation, and powered surgical
instruments. Fiscal year 2015 included several new product launches, including our Prestige LP cervical disc and Pure Titanium
Coated (PTC) interbodies spacers, which partially offset declines in Core Spine. Interventional Spine net sales decline was
driven by a decline in European sales, where the business faced pricing pressures in Germany and unfavorable foreign currency
translation. Underlying demand for BMP stabilized and returned to slight growth in the latter half of fiscal year 2015.

Neuromodulation net sales for fiscal year 2015 were $1.977 billion, an increase of 4 percent over the prior fiscal year. The
increase in net sales was primarily due to strong growth in Gastro/Uro and growth in DBS and Pain Stimulation. Our global
focus on our neurologist referral programs, and the strength of the EARLYSTIM data in international markets, continues to
drive solid growth of DBS systems. Implant growth of our InterStim Therapy for overactive bladder, urinary retention, and
bowel incontinence continued in the U.S. throughout fiscal year 2015. The increase in net sales for fiscal year 2015 was also due
to global growth of our RestoreSensor SureScan MRI system. While the U.S. pain stimulation market has weakened as a result
of reimbursement changes, net sales of our SureScan MRI system for the fiscal year demonstrate our continued strength in the
market.

Surgical Technologies net sales for fiscal year 2015 were $1.671 billion, an increase of 7 percent over the prior fiscal year. The
increase in net sales was driven by continued worldwide net sales growth across the portfolio of Advanced Energy, ENT, and
Neurosurgery, partially offset by unfavorable foreign currency translation. Performance was driven by strong growth of power
systems, Aquamantys Transcollation, and PEAK PlasmaBlade technologies, as well as solid growth of Midas Rex products,
monitoring, and O-arm imaging systems. Additionally, net sales growth was positively impacted by launch of our NuVent sinus
balloons in the second quarter of fiscal year 2015 and the acquisition of Visualase during the first quarter of fiscal year 2015,
adding a MRI-guided laser ablation technology to our broad suite of neuroscience solutions for neurosurgery. The increase in
revenue from Visualase and our NuVent sinus balloons was partially offset by our divestiture of the MicroFrance product line
during the third quarter of fiscal year 2015.

Neurovascular net sales for fiscal year 2015 were $132 million. The division, formerly part of Covidien, contributed revenue
from the strength of its coils, stents, flow diversion, and access product lines. The New England Journal of Medicine published
several positive clinical trials on our Solitaire FR revascularization device, resulting in continued customer adoption of the
product. Additionally, net sales were positively impacted by the U.S. launch of the Pipeline Flex embolization device, which
was launched during the third quarter of fiscal year 2015.

The Restorative Therapies Group’s net sales for fiscal year 2014 were $6.501 billion, an increase of 2 percent over the prior
fiscal year. Foreign currency translation had an unfavorable impact on net sales of approximately $58 million when compared to
the prior fiscal year. The Restorative Therapies Group’s performance for fiscal year 2014 was favorably impacted by strong net
sales in Surgical Technologies and growth in Neuromodulation, partially offset by declines in Spine, primarily driven by BMP
and balloon kyphoplasty (BKP). See the more detailed discussion of each business’s performance below.

Spine net sales for fiscal year 2014 were $3.041 billion, a decrease of 3 percent over the prior fiscal year. The decrease in
Spine’s net sales for fiscal year 2014 was primarily driven by declines in BMP and BKP, and unfavorable foreign currency
translation. Net sales in BKP for fiscal year 2014 declined compared to the prior fiscal year due to increased competition,
pricing pressures, and reimbursement challenges with select payers. Significant declines in U.S. sales of INFUSE bone graft
resulted from the June 2011 articles in The Spine Journal. In addition, some surgeons reduced their usage through both patient
selection and the use of smaller kits. Core Spine’s low-single digit decline for fiscal year 2014 compared to the same period in
the prior fiscal year was primarily due to unfavorable foreign currency translation and negative performance in BKP as
discussed above, which were substantially offset by recent launches of our new products and therapies, including product line
extensions to our Vertex platform and BRYAN artificial cervical disc, as well as the continued adoption of other biologics
products. The global Core Spine markets were relatively flat on a year-over-year basis. During fiscal year 2014, Core Spine
benefited from our focus on enabling technologies, including the O-Arm imaging system, StealthStation navigation, and
Powerease powered surgical instruments.

Neuromodulation net sales for fiscal year 2014 were $1.898 billion, an increase of 5 percent over the prior fiscal year. The
increase in net sales was primarily due to 8 percent growth in international markets, strong global growth of our Activa DBS
systems for movement disorders driven by new implant growth, and strong performance from our conditionally safe SureScan

MRI system. We received U.S. FDA approval for our conditionally safe SureScan MRI system earlier than anticipated and
transitioned manufacturing in the first quarter of fiscal year 2014 to the SureScan MRI system, resulting in supply constraints
which continued through early in the second fiscal quarter of 2014. Growth in sales of our InterStim Therapy for overactive
bladder, urinary retention, and bowel incontinence continued during fiscal year 2014, although at a slower rate compared to the
prior fiscal year as a result of increased competition from non-device therapies.

Surgical Technologies net sales for fiscal year 2014 were $1.562 billion, an increase of 10 percent over the prior fiscal year. The
increase in net sales was driven by continued worldwide net sales growth across the portfolio of ENT, Neurosurgery, and
Advanced Energy, partially offset by unfavorable foreign currency translation. Growth was driven by strong sales of navigation,
power systems, monitoring, Aquamantys Transcollation, PEAK PlasmaBlade technologies, and Strata adjustable valves.
Additionally, net sales growth was positively impacted by the late fiscal year 2013 launches of the Trivantage EMG tube in the
U.S. and Indigo high-speed otologic drill internationally.

Looking ahead, we expect our Restorative Therapies Group could be affected by the following:

(cid:129)

Changes in procedural volumes, competitive and pricing pressure, reimbursement challenges, impacts from
changes in the mix of our product offerings, the timing of product registration approvals, and fluctuations in
foreign currency.

Integration of the Neurovascular division into the Restorative Therapies Group. Neurovascular was formerly part
of Covidien and develops, manufactures, and markets products and therapies to treat diseases of the vasculature
in and around the brain.

Market acceptance and continued adoption of innovative new products, such as our recent Cervical product
introductions, our OLIF procedural solutions, and other biologics products,
including MAGNIFUSE and
GRAFTON products, and POWEREASE, a powered instrument solution for Solera.

Market acceptance of BKP. We remain focused on communicating the clinical and economic benefits for BKP.
We will continue to tailor this product offering to meet market needs and respond to competitive challenges. We
anticipate additional continued pricing pressures and competitive alternatives in the U.S. and European markets.
Additionally, opportunities for growth may exist in vertebroplasty and other vertebral compression fractures
(VCF) treatments. We continue to evaluate global markets and specific therapies for ways to treat more patients
with VCF.

Acceptance of Kanghui’s broad portfolio of trauma, spine, and large-joint reconstruction products focused on the
growing global value segment.

Adoption rates of stimulators and leads approved for full-body MRI scans to treat chronic pain in major markets
around the world.

Continued acceptance of the pain stimulators to treat chronic pain, including RestoreSensor, which is currently
available in the U.S. and certain international markets. RestoreSensor is a neurostimulator for chronic pain that
automatically adjusts to the patients’ position changes.

Continued and future acceptance of our current indications for Medtronic DBS Therapy for the treatment of
movement disorders, epilepsy (approved in Europe), and OCD. The DBS Therapy portfolio includes Activa PC,
our small and advanced primary cell battery, and Activa RC, a rechargeable DBS device.

Continued acceptance of InterStim Therapy for the treatment of the symptoms of overactive bladder, urinary
retention, and bowel incontinence.

Continued growth from Advanced Energy products and strategies to focus on its four core markets of orthopedic,
spine, breast surgery, and CRDM replacements.

Continued acceptance of the Surgical Technologies StealthStation S7 and O-Arm Imaging Systems.

(cid:129)

Continued acceptance and growth of intraoperative nerve monitoring during surgical procedures utilizing the
NIM-Response 3.0 during head and neck surgical procedures. Additionally, continued growth in nerve
monitoring utilizing the NIM Eclipse system during spinal surgical procedures.

Acceptance of the recently launched NuVent sinus balloon, with built-in surgical EM navigation, used for
chronic sinusitis to restore sinus drainage in a minimally invasive way.

Continued acceptance and growth in use of the ENT power systems using the newly launched M5 Microdebrider
hand piece.

Acceptance of Neurovascular therapies, including the Solitare FR revascularization device for treatment of acute
ischemic stroke and the Pipeline Embolization Devices, endovascular treatments for large or giant wide-necked
brain aneurysms.

Diabetes Group The Diabetes Group products include insulin pumps, CGM systems, insulin pump consumables, and therapy
management software. The Diabetes Group’s net sales for fiscal year 2015 were $1.762 billion, an increase of 6 percent over the
prior fiscal year. The Diabetes Group’s performance was primarily the result of 9 percent growth in the U.S. compared to the
prior fiscal year, driven by the ongoing launch of the MiniMed 530G System with Enlite Sensor. Approval was obtained late in
the second quarter of fiscal year 2014. Net sales in the international markets increased 2 percent compared to the prior fiscal
year. Performance in international markets was favorably affected by the launch of our next-generation MiniMed 640G System
with the Enhanced Enlite CGM sensor in Australia and Europe, partially offset by unfavorable foreign currency.

The Diabetes Group’s net sales for fiscal year 2014 were $1.657 billion, an increase of 9 percent over the prior fiscal year. The
increase in net sales was driven by U.S sales of the MiniMed 530G System with Enlite Sensor, as well as $23 million of revenue
recognized that was deferred in fiscal year 2013 as some customers upgraded to the MiniMed 530G System after it was released
in the U.S. Net sales in the international markets increased 9 percent compared to the prior fiscal year. Performance in
international markets was favorably affected by the continued adoption and use of the Veo insulin pump with low-glucose
suspend and Enlite CGM sensor.

Looking ahead, we expect our Diabetes Group could be impacted by the following:

(cid:129)

Potential risk of pricing pressures, reduction in reimbursement rates, and fluctuations in foreign currency.

Changes in medical reimbursement policies and programs. Continued acceptance and improved reimbursement
of CGM technologies.

Continued acceptance from both physicians and patients of insulin-pump and CGM therapy.

Continued and future growth of the MiniMed 530G System, available in the U.S., which includes the insulin
pump and Enlite sensor. This is the first system in the U.S. that assists in protecting against the risk of
hypoglycemia by automatically suspending insulin delivery when glucose falls below a specified threshold.

Acceptance and future growth from our next-generation pump systems, the MiniMed 640G and MiniMed 620G.
Internationally, we began a launch of our MiniMed 640G pump system with predictive low-glucose management
in Australia and Europe. We continue to make progress in bringing this technology to the U.S. and plan to submit
the pre-market approval for this system during calendar year 2015. In the fourth quarter of fiscal year 2015, we
also began a full market release in Japan of the MiniMed 620G system, the first integrated system customized for
the Japanese market.

Operations by Market Geography

The graph below illustrates net sales by market geography for fiscal years 2015, 2014, and 2013:

Fiscal Year 2015
(dollars in millions)

Fiscal Year 2014
(dollars in millions)

Fiscal Year 2013
(dollars in millions)

Emerging Markets
$2,584

13%

U.S.
$11,305

Emerging Markets
$2,106

13%

U.S.
$9,247

Emerging Markets
$1,861

11%

31%

56%

33%

54%

34%

U.S.
$9,095

55%

Non-U.S.
Developed
$6,372

Consolidated Net Sales
$20,261

Non-U.S.
Developed
$5,652

Consolidated Net Sales
$17,005

Non-U.S.
Developed
$5,634

Consolidated Net Sales
$16,590

The table below illustrates net sales by market geography for each of our operating segments for fiscal years 2015 and 2014:

(in millions)

Cardiac and Vascular Group
Minimally Invasive Therapies Group
Restorative Therapies Group
Diabetes Group

U.S.

4,435
1,230
4,569
1,071

Fiscal Year 2015
Non-U.S.
Developed
Markets

Emerging
Markets

U.S.

Fiscal Year 2014
Non-U.S.
Developed
Markets

Emerging
Markets

3,412
856
1,556
548

1,514
301
626
143

3,877
—
4,389
981

3,540
—
1,564
548

1,430
—
548
128

2,106

Total

11,305

6,372

2,584

9,247

5,652

For fiscal year 2015, net sales for the U.S. increased 22 percent, developed markets outside the U.S. increased 13 percent and
emerging markets increased 23 percent compared to the prior fiscal year. Foreign currency had an unfavorable impact of $666
million on net sales for fiscal year 2015. Net sales growth in non-U.S. developed markets was driven by the addition of the
Minimally Invasive Therapies Group in the fourth quarter, as a result of the Covidien acquisition, offset by unfavorable foreign
currency translation. Emerging markets growth was led by strong growth in the Restorative Therapies Group and Diabetes, solid
growth in the Cardiac and Vascular Group, and the addition of the Minimally Invasive Therapies Group in the fourth quarter as
a result of the Covidien acquisition, partially offset by unfavorable foreign currency translation.

For fiscal year 2014, net sales for the U.S increased 2 percent, non-U.S. developed markets remained flat, and emerging markets
increased 13 percent over the prior fiscal year. Foreign currency had an unfavorable impact of $175 million on net sales for
fiscal year 2014. Net sales growth outside of the U.S. was led by strong emerging market growth in Diabetes, the Restorative
Therapies Group, and the Cardiac & Vascular Group, partially offset by unfavorable foreign currency translation.

Net sales outside the U.S. are accompanied by certain financial risks, such as changes in foreign currency exchange rates and
collection of receivables, which typically have longer payment terms. We monitor the creditworthiness of our customers to
which we grant credit terms in the normal course of business. However, a significant amount of our outstanding accounts
receivable are with international customers. We continue to monitor the economic conditions in many countries outside the U.S.
and the average length of time it takes to collect on our outstanding accounts receivable in these countries. Although we do not
currently foresee a significant credit risk associated with a material portion of these receivables, repayment is dependent upon
the financial stability of the economies of those countries.

Costs and Expenses

The following is a summary of major costs and expenses as a percent of net sales:

Fiscal Year

2015

2014

2013

Cost of products sold
Research and development expense
Selling, general, and administrative expense
Special (gains) charges, net
Restructuring charges, net
Certain litigation charges, net
Acquisition-related items
Amortization of intangible assets
Other expense, net
Interest expense, net

31.1% 25.5% 24.9%
8.7
34.4
0.2
0.5
4.5
0.7
2.1
1.1
0.6

9.4
34.3
—
1.0
1.5
(0.3)
2.0
0.7
0.9

8.1
34.1
(0.2)
1.2
0.2
2.7
3.6
0.6
1.4

Cost of Products Sold Cost of products sold was $6.309 billion in fiscal year 2015, representing 31.1 percent of net sales,
reflecting an increase of 5.6 of a percentage points from fiscal year 2014. The increase is primarily related to the acquisition of
Covidien during the fourth quarter of fiscal year 2015 and the related inventory fair value adjustment amortization, which
totaled $623 million, and Covidien’s lower average margin for its products. Additionally, the increase was also attributable to a
technology upgrade commitment, which totaled $74 million, related to a CRHF global comprehensive program for home based
monitors due to industry conversion from analog to digital technology, and a $15 million restructuring charge for inventory
write-offs of discontinued product
lines. We anticipate an additional $208 million of inventory fair value adjustment
amortization in the first quarter of fiscal year 2016.

Cost of products sold was $4.333 billion in fiscal year 2014, representing 25.5 percent of net sales, reflecting an increase of 0.6
of a percentage point from fiscal year 2013. Cost of products sold as a percent of net sales was negatively impacted primarily by
unfavorable foreign currency, additional spending to address quality issues in the Neuromodulation business and Diabetes
Group, and $10 million of expense recorded within cost of products sold during fiscal year 2014 related to the fiscal year 2014
restructuring initiative for inventory write-offs of discontinued product lines.

Research and Development During fiscal year 2015, we continued to invest in new technologies to drive future growth.
Research and development expense for fiscal year 2015 was $1.640 billion, representing 8.1 percent of net sales, a decrease of
0.6 of a percentage point from fiscal year 2014. Due to the acquisition of Covidien, the Company expects research and
development as a percentage of net sales to range between 7 and 8 percent in fiscal year 2016.

Research and development expense for fiscal year 2014 was $1.477 billion, representing 8.7 percent of net sales, a decrease of
0.7 of a percentage point from fiscal year 2013. The decrease for fiscal year 2014 was driven by a shift in research and
development resources to investment in product support to enhance our quality systems in the Neuromodulation business and
Diabetes Group.

We remain committed to developing technological enhancements and new indications for existing products, and less invasive
and new technologies for new and emerging markets to address unmet medical needs. That commitment leads to our initiation
and participation in many clinical trials each fiscal year as the demand for clinical and economic evidence remains high.
Furthermore, we expect our development activities to help reduce patient care costs and the length of hospital stays in the future.
In addition to our investment in research and development, we continue to access new technologies in areas served by our
existing businesses, as well as in new areas, through acquisitions, licensing agreements, alliances, and certain strategic equity
investments.

Selling, General, and Administrative Fiscal year 2015 selling, general, and administrative expense was $6.904 billion,
representing 34.1 percent of net sales, reflecting a decrease of 0.3 of a percentage point from fiscal year 2014. This decrease was
primarily driven by several initiatives focused on leveraging our expenses.

Fiscal year 2014 selling, general, and, administrative expense was $5.847 billion, representing 34.4 percent of net sales,
reflecting an increase of 0.1 of a percentage point from fiscal year 2013. This increase was primarily driven by unfavorable
foreign currency translation.

Special (Gains) Charges, Net During fiscal year 2015, we recognized special gains of $138 million, which consisted of a $41
million gain on the sale of a product line in the Surgical Technologies division and a $97 million gain on the sale of an equity
method investment.

During fiscal years 2015 and 2014, consistent with our commitment to improving the health of people and communities
throughout the world, we made charitable contributions of $100 million and $40 million, respectively, to the Medtronic
Foundation, which is a related party non-profit organization.

During fiscal year 2013, there were no special (gains) charges, net.

Restructuring Charges, Net We incur restructuring charges in connection with our cost-reduction and productivity initiatives
or with acquisitions when we implement plans to restructure and integrate the acquired operations. Amounts recognized as
restructuring charges result from a series of judgments and estimates about future events and uncertainties and rely heavily on
assumptions upon implementation of the initiative programs. Restructuring programs will affect the comparability of our
operating results between periods. Currently, we have several initiative programs in various states of progress with total
restructuring liabilities of $233 million and $99 million at April 24, 2015 and April 25, 2014, respectively. During fiscal year
2015, we incurred $286 million in restructuring charges, which were partially offset by a $34 million reversal of excess
restructuring reserves.

We began our restructuring program related to the acquisition of Covidien in the fourth quarter of fiscal year 2015. We
anticipate approximately $850 million in cost synergies to be achieved as a result of the Covidien acquisition through fiscal year
2018, including administrative office optimization, manufacturing and supply chain infrastructure, and certain general and
administrative savings. Restructuring charges are expected to be incurred on a quarterly basis throughout fiscal year 2016 as
restructuring programs are finalized. Restructuring charges are expected to be primarily related to employee termination costs
and costs related to manufacturing/building site closures. No assurance can be provided that such cost synergies will be
achieved on such timing or at all. See “Item 1A. Risk Factors. We may not realize all of the anticipated benefits of the
Transactions or those benefits may take longer to realize than expected. We may also encounter significant unexpected
difficulties in integrating Medtronic, Inc. and Covidien.”

For additional
Supplementary Data” in this Annual Report on Form 10-K.

information, see Note 3 to the consolidated financial statements in “Item 8. Financial Statements and

Certain Litigation Charges, Net We classify material litigation charges and gains recognized as certain litigation charges,
net. During fiscal year 2015, we recorded certain litigation charges, net of $42 million, which primarily relates to additional
accounting charges for probable and reasonably estimable INFUSE product liability litigation, which were recorded as a result
of additional filed and unfiled claims, and other matters. See Note 16 to the consolidated financial statements in “Item 8.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information.

During fiscal year 2014, we recorded certain litigation charges, net of $770 million, which primarily included the global patent
settlement agreement with Edwards of $589 million and accounting charges for probable and reasonably estimable INFUSE
product liability litigation of $140 million.

During fiscal year 2013, we recorded certain litigation charges, net of $245 million related to probable and reasonably estimated
damages resulting from patent litigation with Edwards.

Acquisition-Related Items During fiscal year 2015, we recorded charges from acquisition-related items of $550 million,
primarily related to costs incurred in connection with the Covidien acquisition. The charges incurred in connection with the
Covidien acquisition include $275 million of professional services and integration costs, $189 million of accelerated or
incremental stock compensation expense, and $69 million of incremental officer and director excise tax.

During fiscal year 2014, we recorded net charges from acquisition-related items of $117 million, primarily including IPR&D
and long-lived asset impairment charges of $236 million related to the Ardian, Inc. acquisition recorded in the third quarter of
fiscal year 2014. The impairment charges were partially offset by income of $138 million related to the change in fair value of
contingent consideration associated with acquisitions subsequent to April 29, 2009.

During fiscal year 2013, we recorded net income from acquisition-related items of $49 million, primarily including income of
$62 million related to the change in fair value of contingent consideration associated with acquisitions subsequent to April 29,
2009. The change in fair value of contingent consideration primarily related to the reduction in fair value of contingent
consideration associated with Ardian. Additionally, we recorded transaction-related expenses of $13 million.

See Note 2 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual
Report on Form 10-K for further discussion on IPR&D charges.

In fiscal year 2015, we recorded certain tax adjustments of $349 million, of which $329 million
Certain Tax Adjustments
related to the expected resolution of the Kyphon Inc. (Kyphon) acquisition-related issues with the U.S. Internal Revenue Service
(IRS). We are currently working with the IRS on a closing agreement to resolve all outstanding Kyphon related issues. In
addition, certain tax adjustments includes $20 million related to a taxable gain associated with the Covidien acquisition. The
$349 million certain tax adjustment was recorded in the provision for income taxes in the consolidated statement of income for
fiscal year 2015.

In fiscal year 2014, we recorded a $63 million certain tax benefit associated with the resolution of certain issues in the fourth
quarter of fiscal year 2014 with the IRS relating to their review of our fiscal year 2009 through 2011 domestic income tax
returns. The $63 million certain tax benefit was recorded in the provision for income taxes in the consolidated statement of
income for fiscal year 2014.

In fiscal year 2013, there were no certain tax adjustments.

See the “Income Taxes” section of this management’s discussion and analysis for further discussion of the certain tax
adjustments.

Amortization of Intangible Assets Amortization of intangible assets includes the amortization expense of our definite-lived
intangible assets consisting of purchased patents, trademarks, tradenames, purchased technology, and other intangible assets. In
fiscal year 2015, amortization expense was $733 million as compared to $349 million in fiscal year 2014. The $384 million
increase in amortization expense in fiscal year 2015 was primarily due to the fourth quarter fiscal year 2015 acquisition of
Covidien, which added $379 million in amortization expense and fiscal year 2014 acquisitions of TYRX, Corventis, Inc. and
Visualase, Inc., partially offset by reduced ongoing amortization expense from certain intangible assets that became fully
amortized.

In fiscal year 2014, amortization expense was $349 million, an increase of $18 million from $331 million in fiscal year 2013.
The increase was primarily due to the third quarter fiscal year 2013 acquisition of Kanghui and the second quarter fiscal year
2014 acquisition of Cardiocom, partially offset by reduced ongoing amortization expense from certain intangible assets that
became fully amortized.

Other Expense, Net Other expense, net includes royalty income and expense, realized equity security gains and losses,
realized foreign currency transaction and derivative gains and losses, impairment charges on equity securities, the Puerto Rico
excise tax, and the U.S. medical device excise tax. In fiscal year 2015, other expense, net was $118 million, a decrease of $63
million from $181 million in the prior fiscal year. The decrease was primarily due to an increase in net realized foreign currency
gains partially offset by increased royalties in our Structural Heart business and increased U.S. medical device excise tax, which
for fiscal year 2015 was $135 million compared to $112 million in the prior fiscal year. Total net realized foreign currency gains
recorded in other expense, net were $196 million in fiscal year 2015 compared to gains of $43 million in the prior fiscal year.

In fiscal year 2014, other expense, net was $181 million, an increase of $73 million from $108 million in the prior fiscal year.
The increase was primarily due to the full year impact of the U.S. medical device excise tax that went into effect January 1,
2013, partially offset by net realized foreign currency gains. In addition, the increase in fiscal year 2014 was partially offset by
income from a license related to our Aortic & Peripheral Vascular business. The U.S. medical device excise tax in fiscal year
2014 was $112 million compared to $21 million in the prior fiscal year. Total net realized foreign currency gains recorded in
other expense, net were $43 million in fiscal year 2014, compared to gains of $27 million in the prior fiscal year.

Interest Expense, Net
Interest expense, net includes interest earned on our cash, cash equivalents and investments, interest
incurred on our outstanding borrowings, amortization of debt issuance costs and debt discounts, 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. In fiscal year 2015, interest expense, net was $280 million, as compared
to $108 million in fiscal year 2014. For fiscal year 2015, the increase in interest expense, net was primarily due to the impact of
the incremental interest expense resulting from the incurrence of $17 billion of debt to fund the Covidien acquisition and the $3
billion term loan funded in January 2015. The $17 billion debt resulted in $77 million of incremental interest expense in the
third quarter prior to the close of the Covidien transaction. The Company treats this interest expenses as a Non-GAAP
Adjustment. See the table included in the “Executive Level Overview” section of this management’s discussion and analysis.
The increase in interest expense, net during fiscal year 2015 was partially offset by increased interest income earned on higher
investment balances, as compared to fiscal year 2014.

In fiscal year 2014, interest expense, net was $108 million, as compared to $151 million in fiscal year 2013. In fiscal year 2014,
the decrease in interest expense, net was the result of decreased interest expense due to reduced amortization of debt discount as
a result of the April 2013 repayment of $2.200 billion of Senior Convertible Notes, partially offset by increased debt. The
decrease in interest expense, net was also due to increased interest income from higher investment balances, as compared to
fiscal year 2013.

See our discussion in the “Liquidity and Capital Resources” section of this management’s discussion and analysis for more
information regarding our investment portfolio.

Income Taxes

(dollars in millions)

Provision for income taxes
Effective tax rate
Non-GAAP adjustments

Non-GAAP nominal tax rate(1)

Fiscal Year

Percentage Point
Increase (Decrease)

2015

2014

2013

FY15/14

FY14/13

811
23.3%
(5.1)

18.2%

640
17.3%
1.9

19.2%

784
18.4%
0.6

N/A
6.0
(7.0)

N/A
(1.1)
1.3

19.0% (1.0)

0.2

(1)

Non-GAAP nominal tax rate is defined as the income tax provision as a percentage of income before income taxes,
excluding Non-GAAP Adjustments, as defined in the Executive Summary of this management discussion and analysis.
We believe that the resulting non-GAAP financial measure provides useful information to investors because it excludes
the effect of these discrete items so that investors can compare our recurring results over multiple periods. Investors
should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures
prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same or similar
to measures presented by other companies.

Our effective tax rate from continuing operations of 23.3 percent increased by 6.0 percentage points from fiscal year 2014 to
fiscal year 2015. The increase in our effective tax rate was due to the net tax impact of special (gains) charges, net, restructuring
charges, net, certain litigation charges, net, acquisition-related items, certain tax adjustments, the impact from the acquisition of
Covidien, and the operational tax benefits described below.

Our non-GAAP nominal tax rate for fiscal year 2015 was 18.2 percent compared to 19.2 percent in the prior fiscal year. The
decrease in our non-GAAP nominal tax rate for fiscal year 2015 as compared to the prior fiscal year was primarily due to the
impact of the Covidien acquisition, operational tax benefits, and year-over-year changes in operational results by jurisdiction.

During fiscal year 2015, we recorded $33 million in operational tax benefits. The retroactive renewal and extension of the U.S.
federal research and development tax credit resulted in a $12 million operational tax benefit for fiscal year 2015. In addition, we
recorded a $9 million benefit associated with foreign dividend distributions, and a $12 million net benefit associated with the
resolution of U.S. federal, state, and foreign income tax audits, finalization of certain tax returns, and changes to uncertain tax
position reserves.

The fiscal year 2014 effective tax rate from continuing operations of 17.3 percent decreased by 1.1 percentage points from fiscal
year 2013. The decrease in our effective tax rate was primarily due to the tax impact of special charges, restructuring charges,
net, certain litigation charges, net, acquisition-related items, the certain tax adjustments recorded during fiscal year 2014, and
other factors impacting our non-GAAP nominal tax rate as discussed below.

Our non-GAAP nominal tax rate for fiscal year 2014 was 19.2 percent compared to 19.0 percent in the prior fiscal year. The
increase in our non-GAAP nominal tax rate for fiscal year 2014 as compared to the prior fiscal year was primarily due to the
impact of the extension of the U.S. federal research and development tax credit on January 2, 2013 for calendar years 2012 and
2013 and the expiration of such extension on December 31, 2013, the finalization of certain income tax returns, changes to
uncertain tax position reserves, the restoration of tax basis on certain assets for which depreciation and amortization deductions
were previously limited, the tax impact of foreign dividend distributions, and year-over-year changes in operational results by
jurisdiction.

During fiscal year 2014, we recorded $42 million in operational tax benefits. This included a $23 million benefit associated with
the restoration of tax basis on certain assets for which depreciation and amortization deductions were previously limited and a
$19 million net benefit associated with the resolution of certain foreign and state income tax audits, finalization of certain tax
returns, and changes to uncertain tax position reserves.

See Notes 12 and 16 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this
Annual Report on Form 10-K for additional information.

Liquidity and Capital Resources

(dollars in millions)

Working capital
Current ratio*
Cash, cash equivalents, and current investments
Short-term borrowings and long-term debt

Net cash position**

Total shareholder’s equity

Debt-to-total capital ratio***

Fiscal Year

2015

2014

21,671
3.4:1.0
19,480
36,186

(16,706)

53,230

15,651
3.8:1.0
14,241
11,928

2,313

19,443

40%

38%

Current ratio is the ratio of current assets to current liabilities.

*
** Net cash position is the sum of cash, cash equivalents, and current investments less short-term borrowings and long-term

***

debt and excludes non-current investments that are not considered readily available to fund current operations.
Debt-to-total capital ratio is the ratio of total debt (short-term borrowings and long-term debt) to total capitalization
(total debt and total shareholder’s equity).

As of April 24, 2015, we believe our balance sheet and liquidity provide us with flexibility in the future. We believe our existing
cash and investments, as well as our new $3.500 billion Amended and Restated Revolving Credit Facility dated as of
January 26, 2015, and related $3.500 billion 2015 commercial paper program entered into on January 26, 2015 (no commercial
paper outstanding as of April 24, 2015), will satisfy our foreseeable working capital requirements for at least the next 12
months. We regularly review our capital needs and consider various investing and financing alternatives to support our
requirements. From time to time, we also may consider repayments, redemptions or repurchases for cash of our outstanding
indebtedness, by means of one or more tender offers or otherwise. Subsequent to April 24, 2015, we retired $1.000 billion of
maturing debt using existing cash.

On December 10, 2014, Medtronic, Inc. issued seven tranches of Senior Notes (collectively the 2015 Senior Notes) with an
aggregate face value of $17 billion which are guaranteed by the Company. In addition, on January 26, 2015, the Company
borrowed $3.000 billion for a term of three years under the Term Loan Credit Agreement. The Company used these combined
proceeds to fund the approximately $16 billion cash consideration portion of the January 26, 2015 estimated $50 billion acquisition
of Covidien and to pay certain transaction and financing expenses, and for working capital and general corporate purposes, which
may include repayment of indebtedness. See Note 8 to the consolidated financial statements in “Item 8. Financial Statements and
Supplementary Data” in this Annual Report on Form 10-K for additional information regarding the Company’s long-term debt.

Standard & Poor’s (S&P) Ratings Services

Long-term debt
Short-term debt

Moody’s Investors Service (Moody’s)

Long-term debt
Short-term debt

Rating for Fiscal Year Ended(1)

April 24, 2015 April 25, 2014

A
A-1

A3
P-2

AA-
A-1+

A2
P-1

(1)

Agency ratings are subject to change, and there can be no assurance that a ratings agency will continue to provide ratings
and/or maintain its current ratings. A security rating is not a recommendation to buy, sell or hold securities, and may be
subject to revision or withdrawal at any time by the rating agency, and each rating should be evaluated independently of
any other rating.

As expected, subsequent to the closing of our acquisition of Covidien, on January 26, 2015 and January 27, 2015, S&P Ratings
Services and Moody’s, respectively, lowered Medtronic’s short-term debt rating and long-term debt rating, due to the increase
in net leverage as a result of the Covidien transaction and related financing.

We do not expect Moody’s and S&P Ratings Services’ rating downgrades to have a significant impact on our liquidity or future
flexibility to access additional liquidity given our balance sheet, our $3.500 billion Amended and Restated Revolving Credit
Facility and related $3.500 billion 2015 Commercial Paper Program discussed above and within the “Debt and Capital” section
of this management’s discussion and analysis.

Our net cash position in fiscal year 2015 decreased by $19.019 billion as compared to fiscal year 2014 and resulted primarily
from the $17 billion 2015 Senior Notes and $3 billion borrowed under the Term Loan Credit Agreement to fund the
approximately $16 billion cash consideration portion of the acquisition of Covidien, to pay certain transaction and financing
expenses, and for working capital and general corporate purposes, which may include repayment of indebtedness. See the
“Summary of Cash Flows” section of this management’s discussion and analysis for further information.

We have future contractual obligations and other minimum commercial commitments that are entered into in the normal course
of business. We believe our off-balance sheet arrangements do not have a material current or anticipated future effect on our
consolidated earnings, financial position, or cash flows. See the “Off-Balance Sheet Arrangements and Long-Term Contractual
Obligations” section of this management’s discussion and analysis for further information.

Notes 1 and 16 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this
Annual Report on Form 10-K provide information regarding amounts we have accrued related to significant legal proceedings.
In accordance with U.S. GAAP, we record a liability in our consolidated financial statements for these actions when a loss is
known or considered probable and the amount can be reasonably estimated. For the fiscal year ended April 24, 2015, we have
made payments related to certain legal proceedings. For information regarding these charges, please see the “Special (Gains)
Charges, Net, Restructuring Charges, Net, Certain Litigation Charges, Net, Acquisition-Related Items, and Certain Tax
Adjustments” section of this management’s discussion and analysis.

As of April 24, 2015 and April 25, 2014, approximately $17.7 billion and $14.0 billion, respectively, of cash, cash equivalents,
and investments in marketable debt and equity securities were held by our non-U.S. subsidiaries. As we continue to focus on
goals to grow our business globally, and emerging markets continue to be a significant driver of this growth, this has resulted in
us permanently reinvesting our non-U.S. cash in our non-U.S. operations. Although our current intent remains that these funds
be indefinitely reinvested in non-U.S. subsidiaries, from time to time we evaluate our legal entity structure supporting our
business operations. To the extent such evaluation results in a change to our overall business structure, we may be required to
accrue for additional tax obligations. If the portion of these funds held by U.S. controlled non-U.S. subsidiaries were repatriated
to the U.S., the amounts would generally be subject to U.S. tax. We provide for tax liabilities in our financial statements with
respect to amounts that we expect to repatriate; however, no tax liabilities are recorded for amounts that we consider to be
permanently reinvested outside of Ireland. Our current plans do not foresee a need to repatriate earnings that are designated as
permanently reinvested in order to fund our operations or meet currently anticipated liquidity and capital investment needs.

We have investments in marketable debt securities that are classified and accounted for as available-for-sale. Our debt securities
include U.S. government and agency securities, foreign government and agency securities, corporate debt securities, certificates
of deposit, mortgage-backed securities, other asset-backed securities, debt funds, and auction rate securities. Some of our
investments may experience reduced liquidity due to changes in market conditions and investor demand. Our auction rate
security holdings have experienced reduced liquidity in recent years due to changes in investor demand. Although our auction
rate securities are currently illiquid and other securities could become illiquid, we believe we could liquidate a substantial
amount of our portfolio without incurring a material impairment loss.

For the fiscal year ended April 24, 2015, the total other-than-temporary impairment losses on available-for-sale debt securities
were not significant. Based on our assessment of the credit quality of the underlying collateral and credit support available to
each of the remaining securities in which we are invested, we believe we have recorded all necessary other-than-temporary
impairments as we do not have the intent to sell, nor is it more likely than not that we will be required to sell, before recovery of
the amortized cost. However, as of April 24, 2015, we have $174 million of gross unrealized losses on our aggregate short-term
and long-term available-for-sale debt securities of $14.666 billion; if market conditions deteriorate, some of these holdings may
experience other-than-temporary impairment in the future which could have a material impact on our financial results.
Management is required to use estimates and assumptions in its valuation of our investments, which requires a high degree of
judgment, and therefore, actual results could differ materially from those estimates. See Note 6 to the consolidated financial
statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional
information regarding fair value measurements.

Summary of Cash Flows

(in millions)

Cash provided by (used in):

Operating activities
Investing activities
Financing activities

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

2015

Fiscal Year

2014

2013

4,902
(17,058)
15,949
(353)

4,959
(3,594)
(918)
37

4,942
(3,101)
(2,101)
7

3,440

484

(253)

Operating Activities Our net cash provided by operating activities was $4.902 billion, decreasing $57 million for the fiscal
year ended April 24, 2015 compared to $4.959 billion for the prior year. The slight year-over-year decrease is primarily the
result of certain Covidien acquisition impacts, including acquisition-related items, accrued liabilities, and deferred income taxes,
offset by the $750 million settlement payment made to Edwards in May 2014.

Our net cash provided by operating activities was $4.959 billion for the fiscal year ended April 25, 2014 increasing $17 million
compared to $4.942 billion for the fiscal year ended April 26, 2013.

Investing Activities Our net cash used in investing activities was $17.058 billion for the fiscal year ended April 24, 2015
compared to $3.594 billion for the prior year. The $13.464 billion increase in net cash used in investing activities was primarily
attributable to higher levels of cash used in the current year for acquisitions, primarily related to the Covidien acquisition net of
cash acquired, partially offset by a decrease in net purchases and sales and maturities of marketable securities.

Our net cash provided in investing activities was $3.594 billion for the fiscal year ended April 25, 2014 compared to $3.101
billion for the prior year. The $493 million increase in cash used in investing activities was primarily attributable to increased
net purchases of marketable securities compared to the prior fiscal year partially offset by higher levels of cash used in the prior
year for acquisitions, primarily related to Kanghui.

Financing Activities We had net cash provided by financing activities of $15.949 billion for the fiscal year ended April 24,
2015 compared to $918 million used in financing activities the prior year. The $16.867 billion increase in financing activities
primarily resulted from a net increase in issuances of long-term debt net of payments on long-term debt and short-term
borrowings, partially offset by a decrease in net issuance and repurchases of ordinary shares compared to the prior fiscal year.

We had net cash used in financing activities of $918 million for the fiscal year ended April 25, 2014 compared to $2.101 billion
for the prior fiscal year. The $1.183 billion decrease in cash used in financing activities primarily resulted from a $1.457 billion
decrease in net payments in excess of issuances on long-term debt and short-term borrowings, partially offset by a $266 million
increase in ordinary share repurchases net of issuances compared to the prior fiscal year.

Free Cash Flow

Free cash flow represents the cash that we have available to pursue opportunities that we believe enhance shareholder value.
Management uses this non-GAAP financial measure, in addition to U.S. GAAP financial measures to evaluate our operating
results. Free cash flow is a non-GAAP financial measure, which should be considered supplemental to, and not a substitute for,
our reported financial results prepared in accordance with U.S. GAAP. Reconciliations between net cash provided by operating
activities (the most comparable U.S. GAAP measure) and free cash flow are as follows:

(in millions)

Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Net cash provided by operating activities
Additions to property, plant, and equipment

Free cash flow

Dividends to shareholders
Repurchase of ordinary shares
Issuances of ordinary shares

Return to shareholders

Return of operating cash flow percentage
Return of free cash flow percentage

Fiscal Year

2015

2014

2013

4,902
(17,058)
15,949
4,902
(571)

4,331

1,337
1,920
(649)

4,959
(3,594)
(918)
4,959
(396)

4,563

1,116
2,553
(1,307)

4,942
(3,101)
(2,101)
4,942
(457)

4,485

1,055
1,247
(267)

2,608

2,362

2,035

53%
60%

48%
52%

41%
45%

We returned 53 percent, 48 percent, and 41 percent of our operating cash flow to shareholders in fiscal years 2015, 2014, and
2013, respectively, through a combination of share repurchases and dividend payments. Free cash flow returned to shareholders
was 60 percent, 52 percent, and 45 percent in fiscal years 2015, 2014, and 2013, respectively.

Debt and Capital

Our capital structure consists of equity and interest-bearing debt. Interest-bearing debt as a percentage of total interest-bearing
debt and equity was 40 percent as of April 24, 2015 and 38 percent as of April 25, 2014.

As part of our focus on returning value to our shareholders, shares are repurchased from time to time. In January 2015, the
Company’s Board of Directors authorized, subject to the ongoing existence of sufficient distributable reserves, the adoption of
the existing Medtronic, Inc. share redemption program. During fiscal years 2015 and 2014, we repurchased a total of
29.8 million and 47.8 million shares at an average price of $64.53 and $53.37, respectively. As of April 24, 2015, we have
approximately 29.7 million shares remaining under the current Board authorization. In June 2015, the Company’s Board of
Directors authorized, subject to the ongoing existence of sufficient distributable reserves, the redemption of an additional
80 million of the Company’s ordinary shares.

We use a combination of bank borrowings and commercial paper issuances to fund our short-term financing needs. Short-term
debt, including the current portion of our long-term debt and capital lease obligations, as of April 24, 2015, was $2.434 billion
compared to $1.613 billion as of April 25, 2014.

We maintain a commercial paper program for short term financing, which allows us to issue unsecured commercial paper notes
on a private placement basis up to a maximum aggregate amount outstanding at any time of $3.500 billion. We previously
maintained a commercial paper program that allowed us to have a maximum of $2.250 billion in commercial paper outstanding,
with maturities up to 364 days from the date of issuance. No amounts were outstanding under either of these programs as of
April 24, 2015 and April 25, 2014, respectively.

During fiscal years 2015 and 2014,
the weighted average original maturity of the commercial paper outstanding was
approximately 52 and 53 days, respectively, and the weighted average interest rate was 0.13 percent and 0.09 percent,
respectively. The issuance of commercial paper reduces the amount of credit available under our existing line of credit, as
explained below.

We also have a $3.500 billion syndicated line of credit facility ($3.500 Billion Revolving Credit Facility) which expires in
January 2020. The current $3.500 Billion Revolving Credit Facility was amended and restated from a previous $2.250 billion
line of credit facility upon the close of the Transaction. The $3.500 Billion Revolving Credit Facility provides backup funding
for the commercial paper program and may also be used for general corporate purposes. The $3.500 Billion Revolving Credit
Facility provides us with the ability to increase its borrowing capacity by an additional $500 million at any time during the term
of the agreement. At each anniversary date of the $3.500 Billion Revolving Credit Facility, but not more than twice prior to the
maturity date, the Company could also request a one-year extension of the maturity date. As of April 24, 2015 and April 25,
2014, no amounts were outstanding on the committed line of credits.

Interest rates on advances on our $3.500 Billion Revolving Credit Facility are determined by a pricing matrix, based on our
long-term debt ratings assigned by S&P Ratings Services and Moody’s. For additional information on our credit ratings status
by S&P Ratings Services and Moody’s refer to “Liquidity and Capital Resources” section of this Management’s Discussion and
Analysis. Facility fees are payable on the credit facility and are determined in the same manner as the interest rates. The
agreements also contain customary covenants, all of which we remain in compliance with as of April 24, 2015.

We utilize Senior Notes that are unsecured, senior obligations that rank equally with all other secured and unsubordinated
indebtedness to meet our long-term financing needs. We use the net proceeds from the sale of the Senior Notes primarily for
working capital and general corporate purposes and in the case of Senior Notes issued on December 10, 2014, to finance the
Covidien acquisition and related expenses. Long-term debt as of April 24, 2015 was $33.752 billion compared to $10.315
billion as of April 25, 2014. The indentures under which the Senior Notes have been issued contain customary covenants, all of
which we remain in compliance with as of April 24, 2015.

As of January 26, 2015, Covidien had $5.000 billion aggregate principal amount of senior notes issued and outstanding, on
which the Company recorded a fair value adjustment, as required upon acquisition, which resulted in a premium totaling $607
million.

On December 10, 2014, we issued seven tranches of the 2015 Senior Notes with an aggregate face value of $17 billion. In
addition, on January 26, 2015, we also borrowed $3.000 billion for a term of three years under a term loan agreement. We used
these combined proceeds to fund the approximately $16 billion cash consideration portion of the approximately $50 billion
acquisition of Covidien, to pay certain transaction and financing expenses, and for working capital and general corporate
purposes, which may include repayment of indebtedness.

In February 2014, the Company issued four tranches of Senior Notes (collectively, the 2014 Senior Notes) with an aggregate
face value of $2.000 billion. The Company used the net proceeds from the sale of the 2014 Senior Notes for working capital and
general corporate purposes, including repayment of our indebtedness.

For additional information regarding our debt agreements, refer to Note 8 of the consolidated financial statements in “Item 8.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

Off-Balance Sheet Arrangements and Long-Term Contractual Obligations

We acquire assets still in development, enter into research and development arrangements, and sponsor certain clinical trials that
often require milestone and/or royalty payments to a third-party, contingent upon the occurrence of certain future events.
Milestone payments may be required contingent upon the successful achievement of an important point in the development life
cycle of a product or upon certain pre-designated levels of achievement in clinical trials. In addition, if required by the
arrangement, we may have to make royalty payments based on a percentage of sales related to the product under development
or in the event that regulatory approval for marketing is obtained. In situations where we have no ability to influence the
achievement of the milestone or otherwise avoid the payment, we have included those milestone or minimum royalty payments
in the following table. However, the majority of these arrangements give us the discretion to unilaterally make the decision to
stop development of a product or cease progress of a clinical trial, which would allow us to avoid making the contingent
payments. Although we are unlikely to cease development if a device successfully achieves clinical testing objectives, these
payments are not included in the table of contractual obligations because of the contingent nature of these payments and our
ability to avoid them if we decided to pursue a different path of development or testing. See Note 2 to the consolidated financial
statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional
information regarding contingent consideration.

In the normal course of business, we periodically enter into agreements that require us to indemnify customers or suppliers for
specific risks, such as claims for injury or property damage arising out of our products or the negligence of our personnel or
claims alleging that our products infringe third-party patents or other intellectual property. Our maximum exposure under these

indemnification provisions cannot be estimated, and we have not accrued any liabilities within our consolidated financial
statements or included any indemnification provisions in our commitments table. Historically, we have not experienced
significant losses on these types of indemnification obligations.

We believe our off-balance sheet arrangements do not have a material current or anticipated future effect on our consolidated
earnings, financial position, or cash flows. Presented below is a summary of contractual obligations and other minimum
commercial commitments as of April 24, 2015. See Notes 8 and 14 to the consolidated financial statements in “Item 8. Financial
Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information regarding long-term debt
and lease obligations, respectively. Additionally, see Note 12 to the consolidated financial statements in “Item 8. Financial
Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information regarding accrued income
tax obligations, which are not reflected in the table below.

(in millions)

Total

2016

2017

2018

2019

2020

Thereafter

Maturity by Fiscal Year

Contractual obligations related
to off-balance sheet
arrangements:
Operating leases(1)
Commitments to fund minority
investments/contingent
acquisition consideration(2)
Interest payments(3)
Other(4)

Contractual obligations related
to off-balance sheet
arrangements subtotal

Contractual obligations
reflected in the balance sheet:
Long-term debt, including
current portion(5)
Capital leases

Contractual obligations
reflected in the balance sheet
subtotal

Total contractual obligations

624

196

138

494
16,680
415

58
1,175
265

54
1,156
63

144
1,113
32

41
998
19

40
978
18

157
11,260
18

18,213

1,694

1,411

1,382

1,124

1,079

11,523

35,445
145

2,404
15

35,590

2,419

53,803

$ 4,113

506
32

538

1,949

6,154
19

6,173

7,555

403
20

423

1,547

4,253
20

4,273

5,352

21,725
39

21,764

33,287

(1)

(2)

(3)

Certain leases require us to pay real estate taxes, insurance, maintenance, and other operating expenses associated with
the leased premises. These future costs are not included in the schedule above.
Certain commitments related to the funding of cost or equity method investments and/or previous acquisitions are
contingent upon the achievement of certain product-related milestones and various other favorable operational
conditions, and estimated royalty obligations. While it is not certain if and/or when these payments will be made, the
maturity dates included in this table reflect our best estimates.
Interest payments in the table above reflect the contractual interest payments on our outstanding debt, and exclude the
impact of the debt discount amortization and impact of interest rate swap agreements. See Note 8 to the consolidated
financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for
additional information regarding our debt agreements.

(4) We have included inventory purchase commitments which are legally binding and specify minimum purchase quantities.
These purchase commitments do not exceed our projected requirements and are in the normal course of business. These
commitments do not include open purchase orders. These obligations also include certain research and development
arrangements.
Long-term debt in the table above includes the $3.000 billion Term Loan Credit Agreement, $5.000 billion of CIFSA
Senior Notes, $17.000 billion of 2015 Senior Notes, $2.000 billion of 2014 Senior Notes, $3.000 billion of 2013 Senior
Notes, $1.075 billion of 2012 Senior Notes, $1.000 billion of 2011 Senior Notes, $1.750 billion of 2010 Senior Notes,

(5)

$700 million of 2009 Senior Notes, and $600 million of 2005 Senior Notes. The table above excludes the debt premium
and discount, the fair value impact of outstanding interest rate swap agreements, and the unamortized gains from
terminated interest rate swap agreements. See Notes 8 and 9 to the consolidated financial statements in “Item 8.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information
regarding the interest rate swap agreements.

Acquisitions

Information regarding acquisitions is included in Note 2 to the consolidated financial statements in “Item 8. Financial
Statements and Supplementary Data” in this Annual Report on Form 10-K.

We periodically acquire certain tangible or intangible assets from enterprises that do not otherwise qualify for accounting as a
business combination. These transactions are reflected in the consolidated statements of cash flows as a component of investing
activities under other investing activities, net.

New Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note 1 to the consolidated financial statements in “Item 8.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

Cautionary Factors That May Affect Future Results

This Annual Report, and other written reports and oral statements made by or with the approval of one of the Company’s
executive officers from time to time, may include “forward-looking” statements. Forward-looking statements broadly include
our current expectations or forecasts of future results. Our forward-looking statements generally relate to our growth and growth
strategies, financial results, product development, research and development strategy, regulatory approvals, competitive
strengths, restructuring initiatives, intellectual property rights, litigation and tax matters, government investigations, mergers
and acquisitions (including matters related to our recently completed acquisition of Covidien), divestitures, market acceptance
of our products, accounting estimates, financing activities, ongoing contractual obligations, working capital adequacy, our
effective tax rate, and sales efforts. Such statements can be identified by the use of terminology such as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “forecast,” “intend,” “looking ahead,” “may,” “plan,” “possible,” “potential,” “project,”
“should,” “will,” and similar words or expressions. Forward-looking statements in this Annual Report include, but are not
limited to, statements regarding our ability to drive long-term shareholder value, development and future launches of products
and continued or future acceptance of products in our operating segments; expected timing for completion of research studies
relating to our products; market positioning and performance of our products, including stabilization of certain product markets;
unanticipated issues that may affect U.S. FDA and non-U.S. regulatory approval of new products; increased presence in new
markets, including markets outside the U.S.; changes in the market and our market share; acquisitions and investment
initiatives, as well as integration of acquired companies into our operations; the resolution of tax matters; the effectiveness of
our development activities in reducing patient care costs and hospital stay lengths; our approach towards cost containment; our
expectations regarding health care costs; the elimination of certain positions or costs related to restructuring initiatives;
outcomes in our litigation matters and government investigations; general economic conditions; the adequacy of available
working capital and our working capital needs; the continued strength of our balance sheet and liquidity; our accounts
receivable exposure; and the potential impact of our compliance with governmental regulations and accounting guidance. One
must carefully consider forward-looking statements and understand that such statements may be affected by inaccurate
assumptions and may involve a variety of risks and uncertainties, known and unknown, including, among others, those
discussed in the sections entitled “Government Regulation and Other Considerations” within “Item 1. Business” and “Item 1A.
Risk Factors” in this Annual Report on Form 10-K, as well as those related to competition in the medical device industry,
reduction or interruption in our supply, quality problems, liquidity, decreasing prices, changes in applicable tax rates, adverse
regulatory action, litigation results, self-insurance, commercial insurance, health care policy changes, international operations,
or failure to achieve the intended benefits of the Covidien acquisition or disruption of our current plans and operations.

Consequently, no forward-looking statement can be guaranteed and actual results may vary materially. We intend to take
advantage of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding our forward-looking
statements, and are including this sentence for the express purpose of enabling us to use the protections of the safe harbor with
respect to all forward-looking statements.

We undertake no obligation to update any statement we make, but investors are advised to consult all other disclosures by us in
our filings with the Securities and Exchange Commission, especially on Forms 10-K, 10-Q, and 8-K, in which we discuss in

more detail various important factors that could cause actual results to differ from expected or historical results. In addition,
actual results may differ materially from those anticipated due to a number of factors, including, among others, those discussed
in the section entitled “Item 1A. Risk Factors” in this Annual Report on Form 10-K. It is not possible to foresee or identify all
such factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks,
uncertainties, or potentially inaccurate assumptions.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Risk

Due to the global nature of our operations, we are exposed to currency exchange rate changes. In a period where the U.S. dollar
is strengthening/weakening as compared to other currencies, our revenues and expenses denominated in foreign currencies are
translated into U.S. dollars at a lower/higher value than they would be in an otherwise constant currency exchange rate
environment.

We use operational and economic hedges, as well as currency exchange rate derivative instruments, to manage the impact of
currency exchange rate fluctuations on earnings and cash flows. In order to minimize earnings and cash flow volatility resulting
from currency exchange rate fluctuations, we enter into derivative instruments, principally forward currency exchange rate
contracts. These contracts are designed to hedge anticipated foreign currency transactions and changes in the value of specific
assets and liabilities. At inception of the contract, the derivative instrument is designated as either a freestanding derivative or a
cash flow hedge. The primary currencies of the derivative instruments are the Euro and Japanese Yen. Fluctuations in the
currency exchange rates of currency exposures that are unhedged, such as in certain emerging markets, may result in future
earnings and cash flow volatility. We do not enter into currency exchange rate derivative instruments for speculative purposes.

The gross notional amount of all currency exchange rate derivative instruments outstanding at April 24, 2015 and April 26,
2014 was $9.782 billion and $8.051 billion, respectively. At April 24, 2015, these contracts were in an unrealized gain position
of $599 million. A sensitivity analysis of changes in the fair value of all foreign currency exchange rate derivative contracts at
April 24, 2015 indicates that, if the U.S. dollar uniformly strengthened/weakened by 10 percent against all currencies, the fair
value of these contracts would increase/decrease by approximately $586 million. Any gains and losses on the fair value of
derivative contracts would generally be offset by gains and losses on the underlying transactions. These offsetting gains and
losses are not reflected in the above analysis.

Interest Rate Risk

We are subject to interest rate risk on our investments and our borrowings. We manage interest rate risk in the aggregate, while
focusing on our immediate and intermediate liquidity needs. Our debt portfolio as of April 24, 2015, was comprised of debt
predominately denominated in U.S. dollars. Our debt portfolio was comprised of approximately 90% fixed rate debt and
approximately 10% floating-rate debt as of April 24, 2015. We are also exposed to interest rate changes affecting our
investments in interest rate sensitive instruments, which include our marketable debt securities, fixed-to-floating interest rate
swap agreements, and forward starting interest rate swap agreements.

A sensitivity analysis of the impact on our investments in interest rate sensitive financial instruments of a hypothetical 10 basis
point change in interest rates, compared to interest rates as of April 24, 2015, indicates that the fair value of these instruments
would correspondingly change by $76 million.

For a discussion of current market conditions and the impact on our financial condition and results of operations, please see the
“Liquidity and Capital Resources” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in this Annual Report on Form 10-K. For additional discussion of market risk, see Notes 5 and 9 to the
consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on
Form 10-K.

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Medtronic plc:

the accompanying consolidated balance sheets and the related consolidated statements of

In our opinion,
income,
comprehensive income, shareholders’ equity and cash flows present fairly, in all material respects, the financial position of
Medtronic plc and its subsidiaries (the Company) at April 24, 2015 and April 25, 2014, and the results of their operations and
their cash flows for each of the three years in the period ended April 24, 2015 in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the
index appearing under Item 15(a)(1) presents fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of April 24, 2015, based on criteria established in Internal
Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.
Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the
Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and
whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial
statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures
as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded
Covidien plc from its assessment of internal control over financial reporting as of April 24, 2015 because it was acquired by the
Company in a purchase business combination during 2015. We have also excluded Covidien plc from our audit of internal
control over financial reporting. Covidien plc is a wholly-owned subsidiary whose total assets and total revenues represent 8
percent and 13 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended
April 24, 2015.

PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 23, 2015

Medtronic plc
Consolidated Statements of Income

(in millions, except per share data)
Net sales

Costs and expenses:

Operating profit
Interest income
Interest expense

Interest expense, net

Income from operations before income taxes
Provision for income taxes

Net income

Basic earnings per share

Diluted earnings per share

Basic weighted average shares outstanding
Diluted weighted average shares outstanding

Cash dividends declared per ordinary share

2015

Fiscal Year

2014

2013

20,261

17,005

16,590

6,309
1,640
6,904
(38)
237
42
550
733
118

3,766
(386)
666

280

3,486
811

2,675

2.44

2.41

4,333
1,477
5,847
40
78
770
117
349
181

3,813
(271)
379

108

3,705
640

3,065

3.06

3.02

4,126
1,557
5,698
—
172
245
(49)
331
108

4,402
(237)
388

151

4,251
784

3,467

3.40

3.37

1,095.5
1,109.0

1,002.1
1,013.6

1,019.3
1,027.5

1.22

1.12

1.04

The accompanying notes are an integral part of these consolidated financial statements.

Medtronic plc
Consolidated Statements of Comprehensive Income

(in millions)
Net income

Other comprehensive loss, net of tax:
Unrealized gain (loss) on available-for-sale securities, net of tax expense (benefit)
of $11, $(58), and $(19), respectively
Translation adjustment
Net change in retirement obligations, net of tax (benefit) expense of $(173), $72,
and $(4), respectively
Unrealized gain (loss) on derivatives, net of tax expense (benefit) of $146, $(60),
and $30, respectively

Other comprehensive loss

Comprehensive income

2015

Fiscal Year

2014

2013

2,675

3,065

3,467

20
(495)

(366)

254

(587)

(103)
13

(102)

(105)

(33)
(21)

(18)

(19)

2,088

2,960

3,448

The accompanying notes are an integral part of these consolidated financial statements.

Medtronic plc
Consolidated Balance Sheets

(in millions, except per share data)
ASSETS
Current assets:

Cash and cash equivalents
Investments
Accounts receivable, less allowances of $144 and $115, respectively
Inventories
Tax assets
Prepaid expenses and other current assets

Total current assets

Property, plant, and equipment, net
Goodwill
Other intangible assets, net
Long-term tax assets
Other assets

Total assets

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:

Short-term borrowings
Accounts payable
Accrued compensation
Accrued income taxes
Deferred tax liabilities
Other accrued expenses

Total current liabilities

Long-term debt
Long-term accrued compensation and retirement benefits
Long-term accrued income taxes
Long-term deferred tax liabilities
Other long-term liabilities

Total liabilities

Commitments and contingencies (Notes 2, 14, and 16)
Shareholders’ equity:

Ordinary shares — par value $0.0001, $0.10; 2.6 billion, 1.6 billion shares authorized,
1,421,648,005 and 998,999,125 shares issued and outstanding, respectively
Retained earnings
Accumulated other comprehensive loss

Total shareholders’ equity

Total liabilities and shareholders’ equity

The accompanying notes are an integral part of these consolidated financial statements.

April 24,
2015

April 25,
2014

4,843
14,637
5,112
3,463
1,335
1,454

30,844
4,699
40,530
28,101
774
1,737

1,403
12,838
3,811
1,725
736
697

21,210
2,392
10,593
2,286
300
1,162

106,685

37,943

2,434
1,610
1,611
935
119
2,464

9,173
33,752
1,535
2,476
4,700
1,819

53,455

1,613
742
1,015
164
19
2,006

5,559
10,315
662
1,343
386
235

18,500

—
54,414
(1,184)

53,230

100
19,940
(597)

19,443

106,685

37,943

Medtronic plc
Consolidated Statements of Shareholders’ Equity

(in millions)
Balance as of April 27, 2012

Net income

Other comprehensive loss

Dividends to shareholders

Issuance of shares under stock purchase and award plans

Repurchase of ordinary shares

Tax deficit from exercise of stock-based awards

Stock-based compensation

Balance as of April 26, 2013

Net income

Other comprehensive loss

Dividends to shareholders

Issuance of shares under stock purchase and award plans
Repurchase of ordinary shares

Tax benefit from exercise of stock-based awards

Stock-based compensation

Balance as of April 25, 2014

Net income

Other comprehensive loss

Ordinary shares issued in connection with the Covidien plc
acquisition, net of taxes

Result of contribution of Medtronic, Inc. to Medtronic plc

Dividends to shareholders

Issuance of shares under stock purchase and award plans

Repurchase of ordinary shares

Tax benefit from exercise of stock-based awards

Stock-based compensation

Balance as of April 24, 2015

Ordinary Shares

Number

Par Value

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Shareholders’
Equity

1,037

104

—

(31)

—

(3)

—

1,016

102

—

31
(48)

—

3
(5)

—

999

100

—

436

—

(30)

—

1,422

—

(99)

—

(3)

—

17,482

3,467

—

(1,055)

266

(1,244)

(7)

152

19,061

3,065

—

(1,116)

1,304
(2,548)

145

19,940

2,675

—

33,787

(1,337)

647

(1,917)

439

(473)

—

(19)

—

(492)

—

(105)

—

—
—

—

(597)

—

(587)

—

17,113

3,467

(19)

(1,055)

267

(1,247)

(7)

152

18,671

3,065

(105)

(1,116)

1,307
(2,553)

145

19,443

2,675

(587)

33,787

—

(1,337)

649

(1,920)

439

54,414

(1,184)

53,230

The accompanying notes are an integral part of these consolidated financial statements.

Medtronic plc
Consolidated Statements of Cash Flows

(in millions)
Operating Activities:

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Amortization of debt discount and issuance costs

Acquisition-related items

Provision for doubtful accounts

Deferred income taxes

Stock-based compensation

Other, net

Change in operating assets and liabilities, net of acquisitions:

Accounts receivable, net

Inventories

Accounts payable and accrued liabilities

Other operating assets and liabilities

Certain litigation charges, net

Certain litigation payments

Net cash provided by operating activities

Investing Activities:

Acquisitions, net of cash acquired

Additions to property, plant, and equipment

Purchases of marketable securities

Sales and maturities of marketable securities

Other investing activities, net

Net cash used in investing activities

Financing Activities:

Acquisition-related contingent consideration

Change in short-term borrowings, net

Repayment of short-term borrowings (maturities greater than 90 days)

Proceeds from short-term borrowings (maturities greater than 90 days)

Issuance of long-term debt

Payments on long-term debt

Dividends to shareholders

Issuance of ordinary shares

Repurchase of ordinary shares

Other financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental Cash Flow Information

Cash paid for:

Income taxes

Interest

The accompanying notes are an integral part of these consolidated financial statements.

Fiscal Year

2015

2014

2013

2,675

3,065

3,467

1,306

634

(926)

439

(134)

(413)

(282)

1,616

643

(809)

4,902

(14,884)

(571)

(7,582)

5,890

(17,058)

(85)

(1)

(150)

150

19,942

(1,268)

(1,337)

649

(1,920)

(31)

15,949

(353)

3,440

1,403

4,843

632

578

850

110

(207)

145

(28)

(70)

(39)

(117)

444

770

(15)

819

104

(74)

(7)

152

—

481

(215)

245

(175)

4,959

4,942

(385)

(396)

(10,895)

8,111

(29)

(3,594)

(1)

127

(1,301)

1,176

1,994

(565)

(1,116)

1,307

(2,553)

(918)

484

919

(820)

(457)

(12,321)

10,511

(14)

(3,101)

(18)

(720)

(2,700)

2,628

2,980

(2,214)

(1,055)

267

(1,247)

(22)

(2,101)

(253)

1,172

1,403

919

521

394

537

333

Medtronic plc
Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Nature of Operations Medtronic plc (Medtronic plc, Medtronic or the Company), the successor registrant to Medtronic, Inc.,
a Minnesota corporation, was incorporated in Ireland on June 12, 2014 as a private limited company, and was re-registered
effective January 26, 2015 as a public limited company. The Company was established for the purpose of facilitating the
acquisition of Covidien plc, a public limited company organized under the laws of Ireland (Covidien), which closed on
January 26, 2015 (Acquisition Date). Upon completion of this transaction, Medtronic replaced Medtronic, Inc., as the ultimate
parent company of the Medtronic group. This part of the transaction was accounted for in the consolidated financial statements
as a merger between entities under common control; accordingly, the historical consolidated financial statements of Medtronic,
Inc. for periods prior to this transaction are considered to be the historical financial statements of the Company.

Principles of Consolidation The consolidated financial statements include the accounts of Medtronic plc and its consolidated
subsidiaries. All significant intercompany transactions and accounts have been eliminated. The preparation of the consolidated
financial statements in conformity with generally accepted accounting principles in the United States (U.S. GAAP) requires
management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent
assets and liabilities, and the reported amounts of revenues and expenses in the consolidated financial statements and
accompanying notes. Actual results could differ materially from those estimates.

Fiscal Year-End The Company utilizes a 52/53-week fiscal year, ending the last Friday in April. The Company’s fiscal years
2015, 2014, and 2013 ended on April 24, 2015, April 25, 2014, and April 26, 2013, respectively, all of which were 52-week
years. Fiscal year 2016 is a 53-week year, with the extra week occurring during the first quarter.

Cash Equivalents The Company considers highly liquid investments with maturities of three months or less from the date of
purchase to be cash equivalents. These investments are carried at cost, which approximates fair value.

Investments
Investments in marketable equity securities and certain debt securities are classified and accounted for as
available-for-sale. Debt securities include corporate debt securities, U.S. and foreign government and agency securities,
certificates of deposit, mortgage-backed securities, other asset-backed securities, debt funds, and auction rate securities. These
investments are recorded at fair value in the consolidated balance sheets. The change in fair value for available-for-sale
securities is recorded, net of taxes, as a component of accumulated other comprehensive loss on the consolidated balance sheets.
Management determines the appropriate classification of its investments in debt and equity securities at the time of purchase
and reevaluates such determinations at each balance sheet date. The classification of marketable securities as current or long-
term is based on the nature of the securities and their availability for use in current operations consistent with how the Company
manages its capital structure and liquidity.

Investments in securities that are classified and accounted for as trading securities primarily include exchange-traded funds and
are recorded at fair value on the consolidated balance sheets. The Company seeks to offset changes in liabilities related to equity
and other market risks of certain deferred compensation arrangements. The change in fair value for trading securities is recorded
as a component of interest expense, net on the consolidated statements of income.

Certain of the Company’s investments in equity and other securities are long-term, strategic investments in companies that are
in varied stages of development. These investments are included in other assets on the consolidated balance sheets. The
Company accounts for these investments under the cost or the equity method of accounting, as appropriate. Certain of these
investments are publicly traded companies and are therefore accounted for as available for sale. The valuation of equity and
other securities accounted for under the cost method considers all available financial information related to the investee,
including valuations based on recent third-party equity investments in the investee. If an unrealized loss for any investment is
considered to be other-than-temporary, the loss is recognized in the consolidated statements of income in the period the
determination is made. Equity securities accounted for under the equity method are initially recorded at the amount of the
Company’s investment and are adjusted each period for the Company’s share of the investee’s income or loss and dividends
paid. Equity securities accounted for under both the cost and equity methods are reviewed quarterly for changes in circumstance
or the occurrence of events that suggest the Company’s investment may not be recoverable. See Note 5 for discussion of the
gains and losses recognized on equity and other securities.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Inventories
Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out basis. The
Company reduces the carrying value of inventories for those items that are potentially excess, obsolete or slow-moving based on
changes in customer demand, technology developments or other economic factors. Inventory balances are as follows:

(in millions)

Finished goods
Work in-process
Raw materials

Total

April 24,
2015

April 25,
2014

2,268
509
686

3,463

1,196
247
282

1,725

Property, Plant, and Equipment Property, plant, and equipment is stated at cost. Additions and improvements that extend
the lives of the assets are capitalized while expenditures for repairs and maintenance are expensed as incurred. Depreciation is
provided using the straight-line method over the estimated useful lives of the various assets. Property, plant, and equipment
balances and corresponding lives are as follows:

(in millions)

Land and land improvements
Buildings and leasehold improvements
Equipment
Construction in progress

Subtotal
Less: Accumulated depreciation

Property, plant, and equipment, net

April 24,
2015

April 25,
2014

Lives
(in years)

217
2,314
5,649
683

8,863
(4,164)

4,699

Up to 20
152
1,565
Up to 40
4,409 Generally 3-7, up to 15
—

313

6,439
(4,047)

2,392

Depreciation expense of $573 million, $501 million, and $488 million was recognized in fiscal years 2015, 2014, and 2013,
respectively.

Goodwill and Intangible Assets Goodwill is the excess of the purchase price over the estimated fair value of net assets of
acquired businesses. In accordance with U.S. GAAP, goodwill is not amortized. The Company assesses the impairment of
goodwill annually in the third quarter and whenever an event occurs or circumstances change that would indicate the carrying
amount may be impaired. Impairment testing for goodwill is done at a reporting unit level. An impairment loss is recognized
when the carrying amount of the reporting unit’s net assets exceed the estimated fair value of the reporting unit. The estimated
fair value is determined using a discounted future cash flow analysis.

trademarks,

Intangible assets include patents,
tradenames, customer relationships, purchased technology, and in-process
research and development (IPR&D). Intangible assets with a definite life are amortized on a straight-line or accelerated basis, as
appropriate, with estimated useful lives ranging from three to 20 years. Intangible assets with a definite life are tested for
impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset (asset group)
may not be recoverable. Indefinite-lived intangible assets are tested for impairment annually in the third quarter and whenever
events or changes in circumstances indicate that the carrying amount may be impaired. Impairment is calculated as the excess of
the asset’s carrying value over its fair value. Fair value is generally determined using a discounted future cash flow analysis.

IPR&D acquired in a business combination is initially capitalized at its fair value as an indefinite-lived intangible asset. IPR&D
has an indefinite life and is not amortized until regulatory approval is received and the product is launched, at which time the
IPR&D becomes an amortizable asset.

IPR&D represents the fair value of those research and development (R&D) projects for which the related products have not
received regulatory approval and have no alternative future use. Determining the fair value of IPR&D requires the Company to
make significant estimates. The fair value of IPR&D is determined by estimating the future cash flows of each R&D project or
technology and discounting the net cash flows back to their present values. The discount rate used is determined at the time of
measurement in accordance with accepted valuation methodologies.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

At the time of acquisition, the Company expects that all acquired IPR&D will reach technological feasibility, but there can be
no assurance that the commercial viability of these products will actually be achieved. The nature of the efforts to develop the
acquired technologies into commercially viable products consists principally of planning, designing, and conducting clinical
trials necessary to obtain regulatory approvals. The risks associated with achieving commercialization include, but are not
limited to, delays or failure to obtain regulatory approvals to conduct clinical trials, delays or failure to obtain required market
clearances, or delays or issues with patent issuance, validity, and litigation. If commercial viability were not achieved, the
Company would likely look to other alternatives to provide these therapies. If the related R&D project is not completed in a
timely manner or the R&D project is terminated or abandoned, the Company may have an impairment related to the IPR&D,
calculated as the excess of the asset’s carrying value over its fair value.

Contingent Consideration The Company recognizes contingent consideration at fair value at the date of acquisition based on
the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present
value. The discount rate used is determined at the time of measurement in accordance with accepted valuation methodologies.
The fair value of the contingent consideration is remeasured each reporting period with the change in fair value, including
accretion for the passage of time, recognized as income or expense within acquisition-related items in the consolidated
statements of income. Changes in the fair value will impact the Company’s earnings in such reporting period thereby resulting
in potential variability in the Company’s earnings until contingencies are resolved.

Derivatives U.S. GAAP requires companies to recognize all derivatives as assets and liabilities on the balance sheet and to
measure the instruments at fair value through earnings unless the derivative qualifies for hedge accounting. If the derivative
qualifies for hedge accounting, depending on the nature of the hedge and hedge effectiveness, changes in the fair value of the
derivative will either be recognized immediately in earnings or recorded in other comprehensive income (loss) until the hedged
item is recognized in earnings upon settlement/termination. The changes in the fair value of the derivative are intended to offset
the change in fair value of the hedged asset, liability, or probable commitment. The Company evaluates hedge effectiveness at
inception and on an ongoing basis. If a derivative is no longer expected to be highly effective, hedge accounting is discontinued.
Hedge ineffectiveness, if any, is recorded in earnings. Cash flows from derivative contracts are reported as operating activities
in the consolidated statements of cash flows.

The Company uses operational and economic hedges, as well as currency exchange rate derivative contracts and interest rate
derivative instruments, to manage the impact of currency exchange and interest rate changes on earnings and cash flows. In
order to minimize earnings and cash flow volatility resulting from currency exchange rate changes, the Company enters into
derivative instruments, principally forward currency exchange rate contracts. These contracts are designed to hedge anticipated
foreign currency transactions and changes in the value of specific assets and liabilities. At inception of the forward contract, the
derivative is designated as either a freestanding derivative or a cash flow hedge. The Company does not enter into currency
exchange rate derivative contracts for speculative purposes. All derivative instruments that qualify for hedge accounting are
recorded at fair value on the consolidated balance sheets, as a component of prepaid expenses and other current assets, other
assets, other accrued expenses, or other long-term liabilities depending upon the gain or loss position of the contract and
contract maturity date.

Forward contracts designated as cash flow hedges are designed to hedge the variability of cash flows associated with forecasted
transactions denominated in a foreign currency that will take place in the future. For derivative instruments that are designated
and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a
component of accumulated other comprehensive loss. The effective portion of the gain or loss on the derivative instrument is
reclassified into earnings and is included in other expense, net or cost of products sold in the consolidated statements of income,
depending on the underlying transaction that is being hedged, in the same period or periods during which the hedged transaction
affects earnings.

The Company uses freestanding derivative forward contracts to offset its exposure to the change in value of specific foreign
currency denominated assets and liabilities and to offset variability of cash flows associated with forecasted transactions
denominated in a foreign currency. These derivatives are not designated as hedges, and therefore, changes in the value of these
forward contracts are recognized in earnings, thereby offsetting the current earnings effect of the related change in value of
foreign currency denominated assets and liabilities.

The Company uses forward starting interest rate derivative instruments designated as cash flow hedges to manage the exposure
to interest rate volatility with regard to future issuances of fixed-rate debt. The effective portion of the gains or losses on the

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

forward starting interest rate derivative instruments that are designated and qualify as cash flow hedges are reported as a
component of accumulated other comprehensive loss. Beginning in the period in which the planned debt issuance occurs and the
related derivative instruments are terminated, the effective portion of the gains or losses are then reclassified into interest
expense, net over the term of the related debt. Any portion of the gains or losses that are determined to be ineffective are
immediately recognized in interest expense, net.

The Company uses interest rate derivative instruments designated as fair value hedges to manage the exposure to interest rate
movements and to reduce borrowing costs by converting fixed-rate debt into floating-rate debt. Under these agreements, the
Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by
reference to agreed-upon notional principal amounts. Changes in the fair value of the derivative instrument are recorded in
interest expense, net, and are offset by changes in the fair value of the underlying debt instrument. The gains (losses) from
terminated interest rate swap agreements are recorded in long-term debt, increasing (decreasing) the outstanding balances of the
debt, and amortized as a reduction of (addition to) interest expense, net over the remaining life of the related debt. The cash
flows from the termination of the interest rate swap agreements are reported as operating activities in the consolidated
statements of cash flows.

In addition, the Company has collateral credit agreements with its primary derivative counterparties. Under these agreements,
either party is required to post eligible collateral when the market value of transactions covered by the agreement exceeds
specific thresholds, thus limiting credit exposure for both parties.

Fair Value Measurements The Company follows the authoritative guidance on fair value measurements and disclosures with
respect to assets and liabilities that are measured at fair value on both a recurring and nonrecurring basis. Under this guidance,
fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants as of the measurement date. The authoritative guidance also establishes a
hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market
participants would use in valuing the asset or liability, based on market data obtained from sources independent of the
Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would
use in valuing the asset or liability developed based upon the best information available in the circumstances. The categorization
of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. The hierarchy is broken down into three levels defined as follows:

(cid:129)

Level 1 — Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for
identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that
are observable for the asset or liability, either directly or indirectly.
Level 3 — Inputs are unobservable for the asset or liability.

Financial assets that are classified as Level 1 securities include highly liquid government bonds within U.S. government and
agency securities, marketable equity securities, and exchange-traded funds for which quoted market prices are available. In
addition, the Company classifies foreign currency forward contracts as Level 1 since they are valued using quoted market prices
in active markets which have identical assets or liabilities.

The valuation for most fixed maturity securities are classified as Level 2. Financial assets that are classified as Level 2 include
corporate debt securities, U.S. government and agency securities, foreign government and agency securities, certificates of
deposit, other asset-backed securities, debt funds, and certain mortgage-backed securities whose value is determined using
inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data such as
pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In
addition, interest rate swaps are included in Level 2 as the Company uses inputs other than quoted prices that are observable for
the asset. The Level 2 derivative instruments are primarily valued using standard calculations and models that use readily
observable market data as their basis.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow
methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. Level 3 financial

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

assets also include certain investment securities for which there is limited market activity such that the determination of fair
value requires significant judgment or estimation. Level 3 investment securities include certain corporate debt securities, auction
rate securities, and certain mortgage-backed securities. With the exception of auction rate securities, these securities were
valued using third-party pricing sources that incorporate transaction details such as contractual terms, maturity, timing, and
amount of expected future cash flows, as well as assumptions about liquidity and credit valuation adjustments by market
participants. The fair value of auction rate securities is estimated by the Company using a discounted cash flow model, which
incorporates significant unobservable inputs. The significant unobservable inputs used in the fair value measurement of the
Company’s auction rate securities are years to principal recovery and the illiquidity premium that is incorporated into the
discount rate. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher)
fair value of the securities.

Warranty Obligation The Company offers a warranty on various products. The Company estimates the costs that may be
incurred under its warranties and records a liability in the amount of such costs at the time the product is sold. The amount of
the reserve recorded is equal to the net costs to repair or otherwise satisfy the claim. The Company includes the warranty
obligation in other accrued expenses and other long-term liabilities on the consolidated balance sheets. The Company includes
the covered costs associated with field actions, if any, in cost of products sold in the consolidated statements of income.

Changes in the Company’s product warranty obligations during the years ended April 24, 2015 and April 25, 2014 consisted of
the following:

(in millions)
Balance as of April 26, 2013
Warranty claims provision
Settlements made

Balance as of April 25, 2014
Fair value of warranty obligation acquired from Covidien
Technology upgrade commitment
Warranty claims provision
Settlements made

Balance as of April 24, 2015

35
25
(28)

32
23
74
30
(24)

135

Self-Insurance With the exception of insurance that Covidien currently holds for certain risks, it is the Company’s policy to
self-insure the vast majority of its insurable risks including medical and dental costs, disability coverage, physical loss to
property, business interruptions, workers’ compensation, comprehensive general, and product liability. Insurance coverage is
obtained for those risks required to be insured by law or contract. The Company uses claims data and historical experience, as
applicable, to estimate liabilities associated with the exposures that the Company has self-insured. Based on historical loss
trends, the Company believes that its self-insurance program accruals and its existing insurance coverage will be adequate to
cover future losses. Historical trends, however, may not be indicative of future losses. These losses could have a material
adverse impact on the Company’s consolidated financial statements.

Retirement Benefit Plan Assumptions The Company sponsors various retirement benefit plans, including defined benefit
pension plans (pension benefits), post-retirement medical plans (post-retirement benefits), defined contribution savings plans,
and termination indemnity plans, covering substantially all U.S. employees and many employees outside the U.S. Pension
benefit costs include assumptions for the discount rate, retirement age, compensation rate increases, and the expected return on
plan assets. Post-retirement medical benefit costs include assumptions for the discount rate, retirement age, expected return on
plan assets, and health care cost trend rate assumptions.

Revenue Recognition The Company sells its products through direct sales representatives and independent distributors. The
Company recognizes revenue when title to the goods and risk of loss transfers to customers, which may be upon shipment or
upon delivery to the customer site, based on the contract terms or legal requirements in non-U.S. jurisdictions, provided there
are no material remaining performance obligations required of the Company or any matters requiring customer acceptance. In

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

cases where the Company utilizes distributors or ships product directly to the end user, it generally recognizes revenue upon
shipment provided all revenue recognition criteria have been met. A portion of the Company’s revenue is generated from
inventory maintained at hospitals or with field representatives. For these products, revenue is recognized at the time the product
has been used or implanted. The Company records estimated sales returns, discounts, and rebates as a reduction of net sales in
the same period revenue is recognized.

Provisions for rebates, as well as sales discounts and returns, are accounted for as a reduction of sales when revenue is
recognized. Rebates are estimated based on sales terms, historical experience, and trend analysis. In estimating rebates, the
Company considers the lag time between the point of sale and the payment of the rebate claim, contractual commitments,
including stated rebate rates, and other relevant information. The Company adjusts reserves to reflect differences between
estimated and actual experience, and records such adjustment as a reduction of sales in the period of adjustment.

In certain circumstances, the Company enters into arrangements in which it provides multiple deliverables to its customers.
Agreements with multiple deliverables are divided into separate units of accounting. Total revenue is first allocated among the
deliverables based upon their relative fair values. Revenue is then recognized for each deliverable in accordance with the
principles described above. Fair values are determined based on the prices at which the individual deliverables are regularly sold
to other third parties.

Shipping and Handling Shipping and handling costs incurred were $284 million, $194 million, and $182 million in fiscal
years 2015, 2014, and 2013, respectively, and are included in selling, general, and administrative expense in the consolidated
statements of income.

Research and Development Research and development costs are expensed when incurred. Research and development costs
include costs of all basic research activities as well as other research, engineering, and technical effort required to develop a new
product or service or make significant improvement to an existing product or manufacturing process. Research and development
costs also include pre-approval regulatory and clinical trial expenses.

Costs Associated with Exit Activities The Company accrues employee termination costs associated with ongoing benefit
arrangements, including benefits provided as part of the Company’s U.S. severance policy or provided in accordance with non-
U.S. statutory requirements, if the obligation is attributed to prior services rendered, the rights to the benefits have vested, the
payment is probable, and the amount can be reasonably estimated. Other costs associated with exit activities may include
distributor cancellation fees, costs related to leased facilities to be abandoned or subleased, and asset impairments.

Contingencies The Company records a liability in the consolidated financial statements for loss contingencies when a loss is
known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable
loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued.
If a loss is reasonably possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is
disclosed. In accordance with U.S. GAAP, income tax liabilities are not accounted for under the loss contingency rules, but
rather specific accounting guidance. Insurance recoveries related to potential claims are recognized up to the amount of the
recorded liability when coverage is confirmed and the estimated recoveries are probable of payment. These recoveries are not
netted against the related liabilities for financial statement presentation.

Accrued Certain Litigation Charges The Company accrues for legal and environmental matters that are probable and
estimable and includes certain estimated costs of settlement and damages for legal matters and cleanup and remediation for
environmental matters. Legal costs of defending legal claims are generally expensed as incurred. As of April 24, 2015 and
April 25, 2014, accrued certain litigation charges involving product liability, intellectual property disputes, shareholder related
matters, environmental proceedings, and other matters were $879 million and $917 million, respectively. The Company
includes accrued certain litigation and environmental charges in other accrued expenses and other long-term liabilities on the
Company’s consolidated balance sheets.

Tax Guarantees As a result of the recent acquisition of Covidien,
the Company has guarantee commitments and
indemnifications with Tyco International plc (Tyco International) and TE Connectivity Ltd. (TE Connectivity) which relate to
certain contingent tax liabilities as part of a tax sharing agreement. These commitments and indemnifications were recorded at

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

their respective fair values as of the Acquisition Date. Each reporting period, the Company evaluates the potential loss that it
believes is probable. This guarantee currently has not been amortized into income because there has been no predictable pattern
of performance. As a result, the liability generally will be reduced upon the Company’s release from its obligations or as
payments are made. As of April 24, 2015, current and non-current liabilities related to guarantee commitments associated with
Tyco International’s and TE Connectivity’s tax obligations totaled $481 million and are included in other accrued expenses and
other long-term liabilities on the Company’s consolidated balance sheet.

The Company also has current and non-current receivables due from Tyco International and TE Connectivity as a result of the
tax sharing agreement. As of April 24, 2015, current and non-current receivables from Tyco International and TE Connectivity
totaled $296 million and are included in prepaid expenses and other current assets and other assets on the Company’s
consolidated balance sheet. See Note 16 for additional background on the tax sharing agreement.

Foreign Currency Translation Assets and liabilities of non-U.S. dollar functional currency entities are translated to U.S.
dollars at period-end exchange rates, and the resulting gains and losses arising from the translation of those net assets are
recorded as a cumulative translation adjustment, a component of accumulated other comprehensive loss on the consolidated
balance sheets. Elements of the consolidated statements of income are translated at the average monthly currency exchange rates
in effect during the period and foreign currency transaction gains and losses are included in other expense, net in the
consolidated statements of income.

Comprehensive Income and Accumulated Other Comprehensive Loss
In addition to net income, comprehensive income
includes changes in currency exchange rate translation adjustments, unrealized gains and losses on currency exchange rate
derivative contracts and interest rate derivative instruments qualifying and designated as cash flow hedges, net changes in
retirement obligation funded status, and unrealized gains and losses on available-for-sale marketable securities. Taxes are not
provided on cumulative translation adjustments as substantially all translation adjustments relate to earnings that are intended to
be indefinitely reinvested outside the U.S.

Presented below is a summary of activity for each component of accumulated other comprehensive loss for fiscal year 2013:

(in millions)

Balance as of April 27, 2012
Other comprehensive (loss) income
Correction of classification

Balance as of April 26, 2013

Unrealized
Gain (Loss)
on
Available-for-
Sale Securities

Cumulative
Translation
Adjustments

Net Change
in
Retirement
Obligations

Unrealized
(Loss) Gain
on
Derivatives

Accumulated
Other
Comprehensive
Loss

130
(33)
—

306
(21)
(80)

205

(834) $
(18)
—

(852) $

(75) $
53
80

(473)
(19)
—

(492)

Included in cumulative translation adjustments is translation on certain foreign exchange rate derivatives held by non-U.S.
dollar functional currency entities. In the first quarter of fiscal year 2014, the Company prospectively adopted guidance issued
that requires additional disclosure related to the impact of reclassification adjustments out of accumulated other comprehensive
loss on net income. The required disclosures are included in Note 15.

Refer to the consolidated statements of comprehensive income for additional information.

Earnings Per Share Earnings per share is calculated using the two-class method, as the Company’s A Preferred Shares,
issued as part of the Transaction, are considered a participating security. Accordingly, earnings are allocated to both ordinary
shares and participating securities in determining earnings per ordinary share. Due to the limited number of A Preferred Shares
outstanding, this allocation had no effect on ordinary earnings per share; therefore, it is not presented below. Basic earnings per
share is computed based on the weighted average number of ordinary shares outstanding. Diluted earnings per share is

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

computed based on the weighted average number of ordinary shares outstanding, increased by the number of additional shares
that would have been outstanding had the potentially dilutive ordinary shares been issued, and reduced by the number of shares
the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. Potentially dilutive
ordinary shares include stock options and other stock-based awards granted under stock-based compensation plans and shares
committed to be purchased under the employee stock purchase plan.

The table below sets forth the computation of basic and diluted earnings per share:

(in millions, except per share data)

Numerator:
Net income attributable to ordinary shareholders
Denominator:
Basic - weighted average shares outstanding

Effect of dilutive securities:
Employee stock options
Employee restricted stock units
Other

2015

Fiscal Year

2014

2013

2,675

3,065

3,467

1,095.5

1,002.1

1,019.3

9.1
4.3
0.1

7.1
4.3
0.1

2.8
5.3
0.1

Diluted - weighted average shares outstanding

1,109.0

1,013.6

1,027.5

Basic earnings per share
Diluted earnings per share

$
$

2.44
2.41

$
$

3.06
3.02

$
$

3.40
3.37

The calculation of weighted average diluted shares outstanding excludes options to purchase approximately 2 million, 5 million,
and 38 million ordinary shares in fiscal years 2015, 2014, and 2013, respectively, because their effect would be anti-dilutive on
the Company’s earnings per share.

New Accounting Standards

Recently Adopted

In March 2013, the Financial Accounting Standards Board (FASB) issued amended guidance on a parent company’s accounting
for the CTA recorded in AOCI associated with a foreign entity. The amendment requires a parent to release into net income the
CTA related to its investment in a foreign entity when it either sells a part or all of its investment, or no longer holds a
controlling financial interest, in a subsidiary or group of assets within a foreign entity. This accounting guidance was effective
for the Company beginning in the first quarter of fiscal year 2015. This amended guidance has not had a material impact on the
Company’s consolidated financial position or consolidated results of operations.

In July 2013, the FASB issued amended guidance on the financial statement presentation of an unrecognized tax benefit when a
net operating loss carryforward, similar tax loss, or tax credit carryforward exists. The guidance requires an unrecognized tax
benefit, or a portion of an unrecognized tax benefit, to be presented as a reduction of a deferred tax asset when a net operating
loss carryforward, similar tax loss, or tax credit carryforward exists, with certain exceptions. The Company prospectively
adopted this accounting guidance in the first quarter of fiscal year 2015 and its adoption did not have a material impact on the
Company’s consolidated financial statements.

Not Yet Adopted

In April 2014, the FASB issued amended guidance for reporting discontinued operations. The amended guidance changes the
criteria for determining when the results of operations are to be reported as discontinued operations and expands the related
disclosure requirements. The guidance defines a discontinued operation as a component or group of components that is disposed
of or classified as held for sale which is a strategic shift that has, or will have, a major effect on financial position and results of
operations. This accounting guidance is effective prospectively for the Company beginning in the first quarter of fiscal year
2016. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

In May 2014, the FASB issued amended revenue recognition guidance to clarify the principles for recognizing revenue from
contracts with customers. The guidance requires an entity to recognize revenue in an amount that reflects the consideration to
which an entity expects to be entitled in exchange for the transfer of goods or services. The guidance also requires expanded
disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with
customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments
and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance is
effective for the Company beginning in the first quarter of fiscal year 2018 using one of two prescribed retrospective methods.
However, the FASB has recently proposed a one-year deferral of the effective date, which is currently subject to approval. The
Company is evaluating the impact of the amended revenue recognition guidance on the Company’s consolidated financial
statements.

2. Acquisitions and Acquisition-Related Items

The Company had various acquisitions and other acquisition-related activity during fiscal years 2015, 2014, and 2013. Certain
acquisitions were accounted for as business combinations as noted below. In accordance with authoritative guidance on business
combination accounting, the assets and liabilities of the companies acquired were recorded as of the acquisition date, at their
respective fair values, and consolidated. With the exception of the Covidien acquisition and unless otherwise disclosed, the pro
forma impact of these acquisitions was not significant, either individually or in the aggregate, to the results of the Company for
the fiscal years ended April 24, 2015, April 25, 2014, or April 26, 2013. The results of operations related to each company
acquired have been included in the Company’s consolidated statements of income since the date each company was acquired.

Fiscal Year 2015

Covidien public limited company

On January 26, 2015, pursuant to the transaction agreement, dated as of June 15, 2014 (the Transaction Agreement), by and
among Medtronic, Inc., Covidien, Medtronic plc (formerly known as Medtronic Limited, Medtronic Holdings Limited and
Kalani I Limited), Makani II Limited, a private limited company organized under the laws of Ireland and a wholly-owned
subsidiary of Medtronic (IrSub), Aviation Acquisition Co., Inc., a Minnesota corporation (U.S. AcquisitionCo), and Aviation
Merger Sub, LLC, a Minnesota limited liability company and a wholly-owned subsidiary of U.S. AcquisitionCo (MergerSub),
(i) Medtronic and IrSub acquired Covidien (the Acquisition) pursuant to the Irish Scheme of Arrangement under Section 201
(the Arrangement), and a capital reduction under Sections 72 and 74, of the Irish Companies Act of 1963 and (ii) MergerSub
merged with and into Medtronic Inc., with Medtronic Inc. as the surviving corporation in the merger (the Merger and, together
with the Acquisition, the Transactions). Following the consummation of the Transactions on January 26, 2015, Medtronic Inc.
and Covidien became subsidiaries of Medtronic. In connection with the consummation of the Transactions, Medtronic re-
registered as a public limited company organized under the laws of Ireland.

On January 26, 2015, (a) each Covidien ordinary share was converted into the right to receive $35.19 in cash and 0.956 of a
newly issued Medtronic plc share (the Arrangement Consideration) in exchange for each Covidien share held by such
shareholders, and (b) each share of Medtronic, Inc. common stock was converted into the right to receive one Medtronic plc
ordinary share. Based on the number of outstanding shares of Medtronic, Inc. and Covidien as of January 23, 2015 (the last
business day prior to the close of the transaction), former Medtronic, Inc. and Covidien shareholders held approximately 69
percent and 31 percent, respectively, of the Company’s ordinary shares after giving effect to the acquisition.

Covidien is a global leader in the development, manufacture, and sale of healthcare products for use in clinical and home
settings. The operating results for Covidien are included in the Minimally Invasive Therapies Group, Cardiac and Vascular
Group and Restorative Therapies Group segments.

The acquisition of Covidien continues the Company’s mission to create a medical technology and services company with a
comprehensive product portfolio and a broad global reach that is better able to improve healthcare outcomes. Medtronic’s
management believes the acquisition of Covidien will provide substantial synergies including, but not limited to, enhanced
operational cost efficiencies, incremental revenue opportunities, acceleration of long-term growth potential through broader
geographic reach, and increased earnings and cash flow.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Fair Value of Consideration Transferred

Total consideration was approximately $50 billion, consisting of $16 billion cash and $34 billion of non-cash consideration.
Total consideration is comprised of the equity value of the shares that were outstanding as of January 23, 2015 and the portion
of Covidien’s share awards and share options earned as of January 23, 2015 ($559 million). Share awards and share options not
earned ($496 million) as of January 23, 2015 will be expensed over the remaining future vesting period, including $189 million
and $70 million recognized in acquisition-related items and restructuring charges, net, respectively, for the fiscal year ended
April 24, 2015.

The following table summarizes the total fair value of consideration transferred:

(in millions, except $ per share data)

Cash consideration paid to Covidien shareholders ($35.19 per share)
Cash consideration paid for vested Covidien share awards ($35.19 per share)

Total cash consideration

Covidien shares outstanding as of January 23, 2015
Exchange ratio per share

Total Medtronic shares issued to Covidien shareholders(a)

Medtronic per share value as of January 23, 2015

Fair value of Medtronic shares issued to Covidien shareholders

Fair value of shares issued to Covidien share award holders(a)
Fair value of share options and awards issued to Covidien share option and award holders

Total fair value of consideration transferred

(a)

1 million ordinary shares were issued, net, to Covidien share award holders.

Fair Value of Assets Acquired and Liabilities Assumed

15,994
33

16,027
455
0.956

435
76.95

33,435
70
456

49,988

The Company accounted for the acquisition of Covidien as a business combination using the acquisition method of accounting.
The assets acquired and liabilities assumed were recorded at their respective fair values as of the Acquisition Date. Based upon
a preliminary acquisition valuation, the Company acquired $18.3 billion of customer-related intangible assets, $7.1 billion of
technology-based intangible assets, $0.5 billion of tradenames, with weighted average estimated useful lives of 18, 16, and 3
years, respectively, $0.4 billion of IPR&D, and $29.6 billion of goodwill.

As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments will be
recorded during the measurement period in fiscal year 2016. Fair value estimates are based on a complex series of judgments
about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the
estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially
impact the Company’s results of operations. The finalization of the purchase accounting assessment will result in a change in
the valuation of assets acquired and liabilities assumed and may have a material impact on the Company’s results of operations
and financial position.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The preliminary fair values of the assets acquired and liabilities assumed are as follows:

(estimated in millions)
Accounts receivable
Inventories
Other current assets
Property, plant, and equipment
Goodwill
Intangible assets
Other assets

Total assets acquired

Short-term borrowings
Other current liabilities
Long-term debt
Long-term deferred tax liabilities
Other long-term liabilities

Total liabilities assumed

Net assets acquired

1,349
2,222
2,949
2,354
29,586
26,265
747

65,472

1,011
2,331
4,623
4,736
2,783

15,484

49,988

Goodwill has been allocated to the Minimally Invasive Therapies Group, Cardiac and Vascular Group, Restorative Therapies
Group, and Diabetes Group. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized
and represents the expected revenue and cost synergies of the combined company, which are further described above. Goodwill
recognized as a result of the acquisition is not deductible for tax purposes. See Note 7 for additional information about goodwill
and other intangible assets.

Contingent liabilities assumed as part of the Acquisition total $2.2 billion and are included in accrued income taxes, other
accrued expenses, long-term accrued income taxes, and other long-term liabilities. These contingent liabilities include $1.5
billion related to income taxes (including uncertain tax positions and guarantee commitments), $0.5 billion related to legal
claims (including product liability), and $0.2 billion related to environmental matters. Contingent liabilities are recorded at their
estimated fair values, aside from those pertaining to uncertainty in income taxes which are an exception to the fair value basis of
accounting. Legal matters and certain environmental matters that are legal in nature are recorded at their respective probable and
estimable amounts. See Note 16 for additional background on contingent liabilities. The estimated fair values noted above are
preliminary and are subject to change upon finalization of the purchase accounting assessment and may have a material impact
on the Company’s results of operations and financial position.

Actual and Pro Forma Impact

The Company’s consolidated financial statements for the fiscal year ended April 24, 2015 include Covidien’s results of
operations from the Acquisition Date through April 24, 2015. Net sales and operating loss attributable to Covidien during this
period and included in Medtronic’s consolidated financial statements for the fiscal year ended April 24, 2015 total $2.683
billion and $423 million, respectively. The $423 million operating loss includes $623 million of amortization from the step-up
in fair value of inventory acquired, $379 million of intangible asset amortization, $218 million of acquisition-related charges,
and $142 million of restructuring charges, net, all of which relate to the Covidien acquisition.

The following unaudited pro forma information gives effect to Medtronic’s acquisition of Covidien as if the acquisition had
occurred on April 27, 2013, the first day of fiscal year 2014, and had been included in the Company’s consolidated statements
of income for fiscal years 2015 and 2014.

(in millions)

Pro forma net sales
Pro forma net income

2015

2014

$
$

28,369
3,944

$
$

27,380
3,280

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The historical consolidated financial information of the Company and Covidien has been adjusted in the pro forma information
to give effect to pro forma events that are (1) directly attributable to the transaction, (2) factually supportable, and (3) expected
to have a continuing impact on the combined results. In order to reflect the occurrence of the acquisition on April 27, 2013 as
required, the unaudited pro forma results include adjustments to reflect, among other things, the amortization of the inventory
step-up, the incremental intangible asset amortization to be incurred based on the preliminary values of each identifiable
intangible asset, and interest expense from debt financing obtained to fund the cash consideration transferred. Pro forma
adjustments were tax-effected at the Company’s statutory rate. These pro forma amounts are not necessarily indicative of the
results that would have been obtained if the acquisition had occurred as of the beginning of the period presented or that may
occur in the future, and does not reflect future synergies, integration costs, or other such costs or savings.

Other Fiscal Year 2015 Acquisitions

The fair values of the assets acquired and liabilities assumed from other acquisitions during fiscal year 2015 are as follows:

(in millions)

Other current assets
Property, plant, and equipment
IPR&D
Other intangible assets
Goodwill
Other assets

Total assets acquired

Current liabilities
Long-term deferred tax liabilities, net
Other liabilities

Total liabilities assumed

Net assets acquired

Sophono, Inc.

NGC Medical
S.p.A.

Sapiens Steering
Brain
Stimulation

All Other

Total

55
15
—
159
197
3

429

34
51
4

3
1
30
—
170
3

207

4
—
—

12
2
41
157
105
50

367

6
66
—

340

203

295

70
18
71
316
472
56

1,003

44
117
4

165

838

Diabeter

NGC Medical S.p.A

On August 26, 2014, the Company acquired NGC Medical S.p.A. (NGC), a privately-held Italian company that offers a broad
suite of hospital managed services. Total consideration for this transaction was approximately $340 million. Medtronic had
previously invested in NGC and held a 30 percent ownership position in that company. Net of this ownership position, the

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

transaction value was approximately $238 million. Based upon a preliminary acquisition valuation, the Company acquired $159
million of customer-related intangible assets and tradenames with an estimated useful life of 20 years at the time of acquisition
and $197 million of goodwill. The acquired goodwill is not deductible for tax purposes. During fiscal year 2015, the Company
recorded adjustments to goodwill, other intangible assets, net, and long-term deferred tax liabilities.

Sapiens Steering Brain Stimulation

On August 25, 2014, the Company acquired Sapiens Steering Brain Stimulation (Sapiens), a privately-held developer of deep
brain stimulation technologies. Total consideration for the transaction was approximately $203 million. Based upon a
preliminary acquisition valuation, the Company acquired $30 million of IPR&D and $170 million of goodwill. The acquired
goodwill is not deductible for tax purposes.

Visualase, Inc.

On July 25, 2014, the Company acquired Visualase, Inc. (Visualase), a privately-held developer of minimally invasive MRI
guided laser ablation for surgical applications. Total consideration for the transaction was approximately $97 million. Based
upon a preliminary acquisition valuation, the Company acquired $66 million of technology-based intangible assets with an
estimated useful life of 10 years at the time of acquisition and $43 million of goodwill. The acquired goodwill is not deductible
for tax purposes. During fiscal year 2015, the Company recorded minor adjustments to goodwill and other assets.

Corventis, Inc.

On June 20, 2014, the Company acquired Corventis, Inc. (Corventis), a privately-held developer of wearable, wireless
technologies for cardiac disease. Total consideration for the transaction was approximately $131 million, including settlement of
outstanding debt to Medtronic of $50 million. Based upon the acquisition valuation, the Company acquired $80 million of
technology-based intangible assets with an estimated useful life of 16 years at the time of acquisition and $48 million of
goodwill. The acquired goodwill is not deductible for tax purposes. During fiscal year 2015, the Company recorded minor
adjustments to goodwill and long-term deferred tax liabilities.

The Company accounted for the acquisitions of Sophono, Diabeter, NGC, Sapiens, Visualase, and Corventis as business
combinations using the acquisition method of accounting.

Subsequent Acquisitions

On June 18, 2015, the Company acquired CardioInsight Technologies, Inc (CardioInsight), a privately-held medical device
company that has developed a new approach to improve the mapping of electrical disorders of the heart. Consideration
consisted of an initial cash payment of $75 million, and retirement of a Medtronic loan outstanding to CardioInsight in the
amount of $25 million, plus performance-based contingent consideration that may be paid post-closing.

On June 19, 2015, the Company acquired Aptus Endosystems, Inc. (Aptus), a privately-held medical device company focused
on developing advanced technology for endovascular aneurysm repair and thoracic endovascular aneurysm repair. The total
consideration for the transaction was approximately $110 million.

Other Acquisitions and Acquisition-Related Items

On December 19, 2014, the Company acquired a business in the Neuromodulation division. Total consideration for the
transaction was approximately $39 million, which included an upfront payment of $33 million and the estimated fair value of
revenue-based contingent consideration of $6 million. Based upon a preliminary acquisition valuation, the Company acquired
$39 million of IPR&D. The Company accounted for the acquisition as a business combination using the acquisition method of
accounting.

During fiscal year 2015, the Company recorded charges from acquisition-related items of $550 million, primarily related to
costs incurred in connection with the Covidien acquisition. The charges incurred in connection with the Covidien acquisition
include $275 million of professional services and integration costs, $189 million of accelerated or incremental stock
compensation expense, and $69 million of incremental officer and director excise tax. These amounts are included within
acquisition-related items in the consolidated statements of income.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Fiscal Year 2014

The fair values of the assets acquired and liabilities assumed during fiscal year 2014 are as follows:

(in millions)

Current assets
Property, plant, and equipment
Intangible assets
Goodwill

Total assets acquired

Current liabilities
Long-term deferred tax liabilities, net

Total liabilities assumed

Net assets acquired

TYRX, Inc.

Cardiocom,
LLC

6
1
94
132

233

4
7

14
7
61
123

205

12
—

222

193

On December 30, 2013, the Company acquired TYRX, Inc. (TYRX), a privately-held developer of antibiotic drug and
implanted medical device combinations. TYRX’s products include those designed to reduce surgical site infections associated
with implantable pacemakers, defibrillators, and spinal cord neurostimulators. Under the terms of the agreement, the transaction
included an initial up-front payment of $159 million, representing a purchase price amount that was net of acquired cash,
including the assumption and settlement of existing TYRX debt and direct acquisition costs. Total consideration for the
transaction was approximately $222 million, which included estimated fair values for product development-based and revenue-
based contingent consideration of $25 million and $35 million, respectively. The product development-based contingent
consideration includes a future potential payment of $40 million upon achieving certain milestones, and the revenue-based
contingent consideration payments equal TYRX’s actual annual revenue growth for the Company’s fiscal years 2015 and 2016.
Based upon the acquisition valuation, the Company acquired $94 million of technology-based intangible assets with an
estimated useful life of 14 years and $132 million of goodwill. The acquired goodwill is not deductible for tax purposes.

Cardiocom, LLC

On August 7, 2013, the Company acquired Cardiocom, LLC (Cardiocom), a privately-held developer and provider of integrated
solutions for the management of chronic diseases such as heart failure, diabetes, and hypertension. Cardiocom’s products and
services include remote monitoring and patient-centered software to enable efficient care coordination and specialized telehealth
nurse support. Total consideration for the transaction was approximately $193 million. Based upon the acquisition valuation, the
Company acquired $61 million of customer-related intangible assets with an estimated useful life of 7 years and $123 million of
goodwill. The acquired goodwill is deductible for tax purposes.

The Company accounted for the acquisitions of TYRX and Cardiocom as business combinations using the acquisition method
of accounting.

Acquisition-Related Items

During fiscal year 2014, the Company recorded net charges from acquisition-related items of $117 million, primarily including
IPR&D and long-lived asset impairment charges of $236 million related to the Ardian, Inc. (Ardian) acquisition recorded in the
third quarter of fiscal year 2014. The impairment charges were partially offset by income of $138 million related to the change
in fair value of contingent consideration associated with acquisitions subsequent to April 29, 2009. These amounts are included
within acquisition-related items in the consolidated statements of income.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Fiscal Year 2013

The fair values of the assets acquired and liabilities assumed for acquisitions accounted for as business combinations during
fiscal year 2013 are as follows:

(in millions)

Current assets
Property, plant, and equipment
Intangible assets
Goodwill
Other assets

Total assets acquired

Current liabilities
Long-term deferred tax liabilities, net
Other long-term liabilities

Total liabilities assumed

Net assets acquired

China Kanghui Holdings

China Kanghui
Holdings

106
56
341
409
11

923

29
77
1

107

816

On November 1, 2012, the Company acquired China Kanghui Holdings (Kanghui). Kanghui is a Chinese manufacturer and
distributor of orthopedic products in trauma, spine, and joint reconstruction. Total consideration for the transaction was
approximately $816 million. The total value of the transaction, net of Kanghui’s cash, was approximately $797 million. Based
on the acquisition valuation, the Company acquired $288 million of technology-based assets and $53 million of tradenames and
customer-related intangible assets that each had a weighted average estimated useful life of 11 years and $409 million of
goodwill. The acquired goodwill is not deductible for tax purposes.

The Company accounted for the acquisition of Kanghui as business combinations using the acquisition method of accounting.

Acquisition-Related Items

During fiscal year 2013, the Company recorded net income from acquisition-related items of $49 million, primarily including
income of $62 million related to the change in fair value of contingent consideration associated with acquisitions subsequent to
April 29, 2009. The change in fair value of contingent consideration primarily related to adjustments in Ardian contingent
consideration. Additionally, the Company recorded transaction-related expenses of $13 million. These amounts are included
within acquisition-related items in the consolidated statements of income.

Contingent Consideration

Certain of the Company’s business combinations and purchases of intellectual property involve the potential for the payment of
future contingent consideration upon the achievement of certain product development milestones and/or various other favorable
operating conditions. Payment of the additional consideration is generally contingent on the acquired company reaching certain
performance milestones, including attaining specified revenue levels or achieving product development targets. For business
combinations subsequent to April 24, 2009, a liability is recorded for the estimated fair value of the contingent consideration on
the acquisition date. The fair value of the contingent consideration is remeasured at each reporting period with the change in fair
value recognized as income or expense within acquisition-related items in the consolidated statements of income. The Company
measures the liability on a recurring basis using Level 3 inputs. See Note 6 for further information regarding fair value
measurements.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The fair value of contingent consideration is measured using projected payment dates, discount rates, probabilities of payment,
and projected revenues (for revenue-based considerations). Projected contingent payment amounts are discounted back to the
current period using a discounted cash flow model. Projected revenues are based on the Company’s most recent internal
operational budgets and long-range strategic plans. Increases (decreases) in projected revenues, probabilities of payment,
discount rates, or projected payment dates may result in higher (lower) fair value measurements. Fluctuations in any of the
inputs may result in a significantly lower (higher) fair value measurement.

The recurring Level 3 fair value measurements of contingent consideration include the following significant unobservable
inputs:

($ in millions)

Fair Value at
April 24, 2015

Valuation
Technique

Revenue-based payments

Product development-based
payments

159 Discounted cash flow

105 Discounted cash flow

Unobservable Input

Range

Discount rate
Probability of payment
Projected fiscal year of payment

0% - 27%
70% - 100%
2016 - 2025

0.5% - 5.5%
75% - 100%
2016 - 2020

At April 24, 2015, the estimated maximum potential amount of undiscounted future contingent consideration that the Company
is expected to make associated with all completed business combinations or purchases of intellectual property prior to April 24,
2009 was approximately $193 million. The Company estimates the milestones or other conditions associated with the
contingent consideration will be reached in fiscal year 2016 and thereafter.

The fair value of contingent consideration associated with acquisitions subsequent to April 24, 2009, as of April 24, 2015 and
April 25, 2014, was $264 million and $68 million, respectively. As of April 24, 2015, $242 million was reflected in other long-
term liabilities and $22 million was reflected in other accrued expenses in the consolidated balance sheets. As of April 25,
2014, $51 million was reflected in other long-term liabilities and $17 million was reflected in other accrued expenses in the
consolidated balance sheets. The portion of the contingent consideration related to the acquisition date fair value is reported as
financing activities in the consolidated statements of cash flows. Amounts paid in excess of the original acquisition date fair
value are reported as operating activities in the consolidated statements of cash flows. The following table provides a
reconciliation of the beginning and ending balances of contingent consideration:

(in millions)

Beginning Balance
Acquired contingent consideration
Purchase price contingent consideration
Contingent consideration payments
Change in fair value of contingent consideration

Ending Balance

3. Restructuring Charges, Net

Fiscal Year 2015 Initiative

Fiscal Year

2015

2014

68
236
40
(85)
5

264

142
—
65
(1)
(138)

In the fourth quarter of fiscal year 2015, the Company recorded a $248 million restructuring charge, which consisted of
employee termination costs of $213 million, asset write-downs of $28 million, contract termination costs of $6 million, and
other related costs of $1 million. Of the $28 million of asset write-downs, $15 million related to inventory write-offs of
discontinued product lines and production-related asset impairments, and therefore, was recorded within cost of products sold in
the consolidated statements of income. The fiscal year 2015 initiative primarily relates to the Covidien acquisition, strategic
alignment of certain manufacturing processes, certain inventory rationalizations, and certain program cancellations.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The fiscal year 2015 initiative is scheduled to be substantially complete by the end of the fourth quarter of fiscal year 2016. The
fiscal year 2015 initiative was the beginning of our restructuring program related to the acquisition of Covidien which is
expected to contribute to the approximately $850 million in cost synergies expected to be achieved as a result of the Covidien
acquisition through fiscal year 2018,
including administrative office optimization, manufacturing and supply chain
infrastructure, and certain general and administrative savings. Restructuring charges are expected to be incurred on a quarterly
basis throughout fiscal year 2016.

A summary of the activity related to the fiscal year 2015 initiative is presented below:

(in millions)

Balance as of April 25, 2014
Restructuring charges
Payments/write-downs

Balance as of April 24, 2015

Covidien Initiative

Fiscal Year 2015 Initiative

Employee
Termination
Costs

Asset
Write-downs

Other
Costs

Total

— $
213
(77)

136

— $
28
(28)

— $

7
—

—
248
(105)

143

Covidien’s pre-acquisition restructuring program is designed to improve Covidien’s cost structure. The program consists of
reducing corporate expenses, expanding shared services, consolidating manufacturing locations, and optimizing distribution
centers. The Covidien restructuring initiative is scheduled to be substantially complete by the end of fiscal year 2018.

In the fourth quarter of fiscal year 2015, the Company recorded a reversal of excess restructuring reserves related to the
Covidien initiative of $5 million. The reversal was primarily a result of early lease termination negotiations and certain
employees identified for elimination finding other positions within the Company.

A summary of the activity related to the Covidien initiative is presented below:

(in millions)

Balance as of January 26, 2015 (Acquisition Date)
Restructuring charges
Payments/write-downs
Reversal of excess accrual

Balance as of April 24, 2015

Fiscal Year 2014 Initiative

Employee
Termination
Costs

Covidien Initiative

Other
Costs

27
—
(10)
—

76
—
(10)
(5)

Total

103
—
(20)
(5)

In the fourth quarter of fiscal year 2014, the Company recorded a $116 million restructuring charge, which consisted of
employee termination costs of $65 million, asset write-downs of $26 million, contract termination costs of $3 million, and other
related costs of $22 million. Of the $26 million of asset write-downs, $10 million related to inventory write-offs of discontinued
product lines and production-related asset impairments, and therefore, was recorded within cost of products sold in the
consolidated statements of income. The fiscal year 2014 initiative primarily relates to the Company’s renal denervation
business, certain manufacturing shut-downs, and a reduction of back-office support functions in Europe. In the first quarter of
fiscal year 2015, the Company recorded a $38 million restructuring charge, which was the final charge related to the fiscal year
2014 initiative and consisted primarily of contract termination and other related costs of $28 million. As of April 24, 2015, the
fiscal year 2014 initiative was substantially complete.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

In fiscal year 2015, the Company recorded a reversal of excess restructuring reserves related to the fiscal year 2014 initiative
of $17 million. The reversal was primarily a result of result of revisions to particular strategies and certain employees identified
for elimination finding other positions within the Company.

A summary of the activity related to the fiscal year 2014 initiative is presented below:

(in millions)

Balance as of April 26, 2013
Restructuring charges
Payments/write-downs

Balance as of April 25, 2014
Restructuring charges
Payments/write-downs
Reversal of excess accrual

Balance as of April 24, 2015

Fiscal Year 2013 Initiative

Fiscal Year 2014 Initiative

Employee
Termination
Costs

Asset
Write-downs

Other
Costs

Total

— $
65
(1)

64
1
(44)
(14)

— $
26
(26)

— $

9
(9)
—

— $
25
(14)

11
28
(34)
(3)

— $

—
116
(41)

75
38
(87)
(17)

The fiscal year 2013 initiative was designed to scale back the Company’s infrastructure in slower growing areas of the business,
while continuing to invest in geographies, businesses, and products where faster growth is anticipated. A number of factors have
contributed to ongoing challenging market dynamics, including increased pricing pressure, various governmental austerity
measures, and the U.S. medical device excise tax. In the fourth quarter of fiscal year 2013, the Company recorded a $192
million restructuring charge, which consisted of employee termination costs of $150 million, asset write-downs of $13 million,
contract termination costs of $18 million, and other related costs of $11 million. Of the $13 million of asset write-downs, $10
million related to inventory write-offs of discontinued product lines and production-related asset impairments, and therefore,
was recorded within cost of products sold in the consolidated statements of income. In the first quarter of fiscal year 2014, the
Company recorded an $18 million restructuring charge, which was the final charge related to the fiscal year 2013 initiative and
consisted primarily of contract termination costs of $14 million and other related costs of $4 million. As of April 24, 2015, the
fiscal year 2013 initiative was substantially complete.

In fiscal year 2015 and 2014, the Company recorded a reversal of excess restructuring reserves related to the fiscal year 2013
initiative of $10 million and $46 million, respectively. The reversal was primarily a result of revisions to particular strategies
and certain employees identified for elimination finding other positions within the Company.

4. Special (Gains) Charges, Net and Certain Litigation Charges, Net

Special (Gains) Charges, Net

During fiscal year 2015, the Company recognized a $138 million gain, which consisted of a $41 million gain on the sale of a
product line in the Surgical Technologies division and a $97 million gain on the sale of an equity method investment. In
addition, continuing with the Company’s commitment to improving the health of people and communities throughout the world,
the Company made a $100 million charitable contribution to the Medtronic Foundation, a related party non-profit organization.

During fiscal year 2014, the Company made a $40 million charitable contribution to the Medtronic Foundation. There were no
special (gains) charges during fiscal year 2013.

Certain Litigation Charges, Net

The Company classifies material litigation charges and gains recognized as certain litigation charges, net. During fiscal year
2015, the Company recorded certain litigation charges, net of $42 million, which primarily relates to additional accounting
charges for probable and reasonably estimable INFUSE product liability litigation, which were recorded as a result of additional
filed and unfiled claims, and other matters litigation. Refer to Note 16 for additional information.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

During fiscal year 2014, the Company recorded certain litigation charges, net of $770 million, which primarily includes the
global patent settlement agreement with Edwards Lifesciences Corporation (Edwards) of $589 million, accounting charges for
probable and reasonably estimable INFUSE product liability litigation of $140 million, and other litigation.

During fiscal year 2013, the Company recorded certain litigation charges, net of $245 million related to probable and reasonably
estimated damages related to the patent litigation with Edwards.

5. Investments

The Company holds investments consisting primarily of marketable debt and equity securities.

Information regarding the Company’s investments at April 24, 2015 is as follows:

(in millions)

Available-for-sale securities:
Corporate debt securities
Auction rate securities
Mortgage-backed securities
U.S. government and agency securities
Foreign government and agency securities
Certificates of deposit
Other asset-backed securities
Debt funds
Marketable equity securities

Trading securities:

Exchange-traded funds

Cost method, equity method, and other investments

Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

6,283
109
1,462
3,122
85
44
504
3,061
64

58
520

105
—
22
21
—
—
3
19
35

19
—

(10) $
(4)
(6)
(4)
—
—
—
(150)
(19)

—
—

6,378
105
1,478
3,139
85
44
507
2,930
80

77
NA

Total investments

15,312

224

(193) $

14,823

Information regarding the Company’s investments at April 25, 2014 is as follows:

(in millions)

Trading securities:

Exchange-traded funds

Cost method, equity method, and other investments

Cost

Unrealized
Gains

Unrealized
Losses

Fair Value

5,504
109
1,337
3,138
67
54
540
2,143
47

54
666

55
—
7
7
—
—
2
9
15

13
—

(17) $
(12)
(8)
(29)
—
—
—
(29)
(13)

—
—

5,542
97
1,336
3,116
67
54
542
2,123
49

67
NA

Total investments

13,659

108

(108) $

12,993

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Information regarding the Company’s consolidated balance sheets presentation at April 24, 2015 and April 25, 2014 is as follows:

(in millions)

Available-for-sale securities
Trading securities
Cost method, equity method, and other investments

Total

April 24, 2015

April 25, 2014

Investments

Other Assets

Investments

Other Assets

14,560
77
—

14,637

186
—
520

706

12,771
67
—

12,838

155
—
666

821

The following tables show the gross unrealized losses and fair values of the Company’s available-for-sale securities that have
been in a continuous unrealized loss position deemed to be temporary, aggregated by investment category as of April 24, 2015
and April 25, 2014:

(in millions)

Corporate debt securities
Auction rate securities
Mortgage-backed securities
U.S. government and agency securities
Debt funds
Marketable equity securities

Total

(in millions)

Corporate debt securities
Auction rate securities
Mortgage-backed securities
U.S. government and agency securities
Debt funds
Marketable equity securities

April 24, 2015

Less than 12 Months

More than 12 Months

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

944
—
346
356
1,291
4

2,941

(9) $
—
(3)
(1)
(109)
(19)

(141) $

April 25, 2014

34
105
206
267
559
—

1,171

(1)
(4)
(3)
(3)
(41)
—

(52)

Less than 12 Months

More than 12 Months

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

1,601
—
682
1,500
1,224
25

(14) $
—
(7)
(27)
(29)
(13)

(90) $

(3)
(12)
(1)
(2)
—
—

(18)

50
97
28
46
—
—

221

2013

Total

5,032

Activity related to the Company’s investment portfolio is as follows:

2015

Fiscal Year

2014

(in millions)

Proceeds from sales

Gross realized gains

Gross realized losses

Impairment losses recognized

Debt(a)

Equity(b)(c)

Debt(a)

Equity(b)

Debt(a)

Equity(b)

5,640

(19) $

— $

250

164

— $

(29) $

7,991

(12) $

(1) $

120

— $

(9) $

10,350

(17) $

— $

161

—

(21)

(a)
(b)
(c)

Includes available-for-sale debt securities.
Includes marketable equity securities, cost method, equity method, exchange-traded funds, and other investments.
As a result of certain acquisitions that occurred during fiscal year 2015, the Company recognized a non-cash realized
gain of $41 million on its previously-held minority investments included in other expense, net on the consolidated
statement of income. Also, a realized gain on an equity method investment totaling $97 million is included in special
(gains) charges, net on the consolidated statement of income.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Credit losses represent the difference between the present value of cash flows expected to be collected on certain mortgage-
backed securities and auction rate securities and the amortized cost of these securities. Based on the Company’s assessment of
the credit quality of the underlying collateral and credit support available to each of the remaining securities in which invested,
the Company believes it has recorded all necessary other-than-temporary impairments as the Company does not have the intent
to sell, nor is it more likely than not that the Company will be required to sell, before recovery of the amortized cost.

As of April 24, 2015, the credit loss portion of other-than temporary impairments on debt securities was not significant. As of
April 25, 2014 and April 26, 2013, the credit loss portion of other-than-temporary impairments on debt securities was $4 million
and $9 million, respectively. The total reductions for available-for-sale debt securities sold for the fiscal years ended April 24,
2015 and April 25, 2014 were $4 million and $5 million, respectively. The total other-than-temporary impairment losses on
available-for-sale debt securities for the fiscal years ended April 24, 2015 and April 25, 2014 were not significant.

The April 24, 2015 balance of available-for-sale debt securities, excluding debt funds which have no single maturity date, by
contractual maturity is shown in the following table. Within the table, maturities of mortgage-backed securities have been
allocated based upon timing of estimated cash flows, assuming no change in the current interest rate environment. Actual
maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations
without prepayment penalties.

(in millions)

Due in one year or less
Due after one year through five years
Due after five years through 10 years
Due after 10 years

Total debt securities

April 24, 2015

1,812
6,646
3,097
182

11,737

As of April 24, 2015 and April 25, 2014, the aggregate carrying amount of equity and other securities without a quoted market
price and accounted for using the cost or equity method was $520 million and $666 million, respectively. The total carrying
value of these investments is reviewed quarterly for changes in circumstance or the occurrence of events that suggest the
Company’s investment may not be recoverable. The value of cost or equity method investments is not adjusted if there are no
identified events or changes in circumstances that may have a material adverse effect on the fair value of the investment.

Gains and losses realized on trading securities and available-for-sale debt securities are recorded in interest expense, net in the
consolidated statements of income. Gains and losses realized on marketable equity securities, cost method, equity method, and
other investments are recorded in other expense, net in the consolidated statements of income. In addition, unrealized gains and
losses on available-for-sale debt securities are recorded in other comprehensive loss in the consolidated statements of
comprehensive income and unrealized gains and losses on trading securities are recorded in interest expense, net in the
consolidated statements of income. Gains and losses from the sale of investments are calculated based on the specific
identification method.

6. Fair Value Measurements

Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis

The authoritative guidance is principally applied to financial assets and liabilities such as marketable equity securities and debt
and equity securities that are classified and accounted for as trading, available-for-sale, and derivative instruments and
contingent consideration associated with acquisitions subsequent to April 24, 2009. Derivatives include cash flow hedges,
freestanding derivative forward contracts, and fair value hedges. These items are marked-to-market at each reporting period.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis:

(in millions)

Assets:

Corporate debt securities
Auction rate securities
Mortgage-backed securities
U.S. government and agency securities
Foreign government and agency securities
Certificates of deposit
Other asset-backed securities
Debt funds
Marketable equity securities
Exchange-traded funds
Derivative assets

Total assets

Liabilities:

Derivative liabilities
Contingent consideration associated with acquisitions
subsequent to April 24, 2009

Total liabilities

(in millions)

Assets:

Total assets

Liabilities:

Derivative liabilities
Contingent consideration associated with acquisitions
subsequent to April 24, 2009

Total liabilities

Fair Value
as of
April 24, 2015

Fair Value Measurements
Using Inputs Considered as

Level 1

Level 2

Level 3

6,378
105
1,478
3,139
85
44
507
2,930
80
77
733

— $
—
—
1,541
—
—
—
—
80
77
644

6,377
—
1,478
1,598
85
44
507
2,930
—
—
89

15,556

2,342

13,108

116

264

380

—

Fair Value
as of
April 25, 2014

Fair Value Measurements
Using Inputs Considered as

Level 1

Level 2

Level 3

5,542
97
1,336
3,116
67
54
542
2,123
49
67
175

— $
—
—
1,251
—
—
—
—
49
67
89

5,533
—
1,336
1,865
67
54
542
2,123
—
—
86

13,168

1,456

11,606

106

127

116

—

195

116

—

1
105
—
—
—
—
—
—
—
—
—

106

—

264

9
97
—
—
—
—
—
—
—
—
—

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The following table represents the range of the unobservable inputs utilized in the fair value measurement of the auction rate
securities classified as Level 3 as of April 24, 2015:

Auction rate securities

Discounted cash flow

Years to principal recovery
Illiquidity premium

2 yrs. - 12 yrs. (3 yrs.)
6%

Valuation
Technique

Unobservable Input

Range
(Weighted Average)

The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation
inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company’s policy is to
recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal quarter in which the actual event
or change in circumstances that caused the transfer occurs. There were no transfers between Level 1, Level 2, or Level 3 during
the fiscal years ended April 24, 2015 or April 25, 2014. When a determination is made to classify an asset or liability within
Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement.

The following tables provide reconciliations of the beginning and ending balances of items measured at fair value on a recurring
basis that used significant unobservable inputs (Level 3):

(in millions)

Balance as of April 25, 2014
Total realized losses and other-than-temporary
impairment losses included in earnings
Total unrealized gains included in other comprehensive
income
Settlements

Balance as of April 24, 2015

(in millions)

Balance as of April 26, 2013
Total realized losses and other-than-temporary
impairment losses included in earnings
Total unrealized gains included in other comprehensive
income
Settlements

Balance as of April 25, 2014

Total Level 3
Investments

Corporate debt
securities

Auction rate
securities

Mortgage-
backed securities

106

(5)

10
(5)

(5)

2
(5)

—

8
—

106

105

—

—
—

—

Total Level 3
Investments

Corporate debt
securities

Auction rate
securities

Mortgage-
backed securities

127

103

(5)

4
(20)

—

—
(1)

(5)

3
(4)

106

—

1
(15)

—

Assets and Liabilities That Are Measured at Fair Value on a Nonrecurring Basis

Non-financial assets such as equity and other securities that are accounted for using the cost or equity method, goodwill and
IPR&D, intangible assets, and property, plant, and equipment are measured at fair value when there is an indicator of
impairment and recorded at fair value only when impairment is recognized.

The Company holds investments in equity and other securities that are accounted for using the cost or equity method, which are
classified as other assets in the consolidated balance sheets. The aggregate carrying amount of these investments was $520
million and $666 million as of April 24, 2015 and April 25, 2014, respectively. These cost or equity method investments are
measured at fair value on a nonrecurring basis. The fair value of the Company’s cost or equity method investments is not
estimated if there are no identified events or changes in circumstance that may have a significant adverse effect on the fair value
of these investments. During fiscal years 2015, 2014, and 2013, the Company determined that the fair values of certain cost

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

method investments were below their carrying values and that the carrying values of these investments were not expected to be
recoverable within a reasonable period of time. As a result, the Company recognized $7 million, $10 million, and $21 million in
impairment charges in fiscal years 2015, 2014, and 2013, respectively. These investments fall within Level 3 of the fair value
hierarchy, due to the use of significant unobservable inputs to determine fair value, as the investments are held in privately-held
entities without quoted market prices. To determine the fair value of these investments, the Company used all pertinent financial
information available related to the entities, including financial statements and market participant valuations from recent and
proposed equity offerings.

The Company assesses goodwill for impairment annually in the third quarter and whenever an event occurs or circumstances
change that would indicate that the carrying amount may be impaired. The aggregate carrying amount of goodwill was $40.530
billion and $10.593 billion as of April 24, 2015 and April 25, 2014, respectively.

Impairment testing for goodwill is performed at the reporting unit level. During fiscal year 2015, the Company reassessed the
level for which it has aggregated its reporting units in connection with the annual assessment performed in the third quarter.
Based on the determination of the similar economic characteristics, the components of the Cardiac and Vascular Group were
aggregated into one reporting unit for the annual impairment assessment. Similarly, the components of the Restorative
Therapies Group were aggregated into one reporting unit for the annual impairment assessment. The test for impairment of
goodwill requires the Company to make several estimates about fair value, most of which are based on projected future cash
flows. The Company calculated the excess of each reporting unit’s fair value over its carrying amount, including goodwill,
utilizing a discounted cash flow analysis. As a result of the analysis performed, the fair value of each reporting unit’s goodwill
was deemed to be greater than the carrying value. The Company did not record any goodwill impairments during fiscal years
2015, 2014, or 2013.

The Company assesses IPR&D for impairment annually in the third quarter and whenever an event occurs or circumstances
change that would indicate that the carrying amount may be impaired. The aggregate carrying amount of IPR&D was $470
million and $119 million as of April 24, 2015 and April 25, 2014, respectively. Similar to the goodwill impairment test, the
IPR&D impairment test requires the Company to make several estimates about fair value, most of which are based on projected
future cash flows. The Company calculated the excess of IPR&D asset fair values over their carrying values utilizing a
discounted future cash flow analysis. As a result of the analysis performed during fiscal year 2015, the fair value of certain
IPR&D assets were deemed to be less than their carrying value, resulting in an impairment loss of $5 million, which was
recorded in acquisition-related items in the consolidated statements of income. As a result of the analysis performed during
fiscal years 2014 and 2013, the fair value of IPR&D assets were deemed to be less than the carrying value, resulting in a pre-tax
impairment loss of $207 million and $5 million, respectively. In 2014, the pre-tax impairment loss primarily related to the
Ardian acquisition and was recorded in acquisition-related items in the consolidated statements of income. See discussion
below for additional information on impairments recorded on the Ardian long-lived asset group. Due to the nature of IPR&D
projects, the Company may experience future delays or failures to obtain regulatory approvals to conduct clinical trials, failures
of such clinical trials, delays or failures to obtain required market clearances or other failures to achieve a commercially viable
product, and as a result, may record impairment losses in the future.

The Company assesses intangible assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of an intangible asset (asset group) may not be recoverable. The aggregate carrying amount of intangible assets,
excluding IPR&D and tradenames, was $27.381 billion and $2.167 billion as of April 24, 2015 and April 25, 2014, respectively.
When events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable, the
Company calculates the excess of an intangible asset’s carrying value over its undiscounted future cash flows. If the carrying
value is not recoverable, an impairment loss is recorded based on the amount by which the carrying value exceeds the fair value.
The inputs used in the fair value analysis fall within Level 3 of the fair value hierarchy due to the use of significant
unobservable inputs to determine fair value. The Company did not record any intangible asset impairments during fiscal year
2015. During fiscal year 2014 and 2013, the Company determined that a change in events and circumstances indicated that the
carrying amount of certain intangible assets, representing less than five percent of the total aggregate carrying amount of
intangible assets, may not be fully recoverable. During fiscal year 2014, the carrying amount of Ardian intangible assets was
less than the undiscounted future cash flows, therefore, the Company assessed the fair value of the assets and recorded an
impairment of $41 million that was included in acquisition-related items in the consolidated statements of income. During fiscal
year 2013, the carrying amount of one intangible asset was less than the undiscounted future cash flows, therefore, the Company
assessed the asset’s fair value and there were no material impairments recorded.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The Company assesses property, plant, and equipment for impairment whenever events or changes in circumstances indicate
that the carrying amount of property, plant, and equipment assets may not be recoverable. As part of the Company’s
restructuring initiatives, the Company recorded property, plant, and equipment impairments of $8 million, $16 million, and $6
million during fiscal years 2015, 2014, and 2013, respectively, in restructuring charges, net in the consolidated statements of
income. During fiscal year 2014, the Company determined that a change in events and circumstances indicated that the carrying
amount of Ardian property, plant, and equipment may not be fully recoverable and recorded an impairment of $3 million that
was recorded in acquisition-related items in the consolidated statements of income. For further discussion of the restructuring
initiatives, refer to Note 3.

Financial Instruments Not Measured at Fair Value

The estimated fair value of the Company’s long-term debt, including the short-term portion, as of April 24, 2015 was $34.637
billion compared to a principal value of $32.125 billion. As of April 25, 2014 the estimated fair value was $11.856 billion
compared to a principal value of $11.375 billion. Fair value was estimated using quoted market prices for the publicly registered
senior notes, classified as Level 2 within the fair value hierarchy. The fair values and principal values consider the terms of the
related debt and exclude the impacts of debt discounts and derivative/hedging activity.

7. Goodwill and Other Intangible Assets, Net

The changes in the carrying amount of goodwill for fiscal years 2015 and 2014 are as follows:

(in millions)

Balance as of April 26, 2013
Goodwill as a result of acquisitions
Other adjustments, net
Currency adjustment, net

Balance as of April 25, 2014
Goodwill as a result of Covidien acquisition
Goodwill as a result of other acquisitions
Other adjustments, net
Currency adjustment, net

Cardiac and
Vascular Group

Minimally
Invasive
Therapies Group

Restorative
Therapies
Group

Diabetes Group

Total

2,624
279
(8)
(14)

2,881
2,795
245
—
(66)

— $
—
—
—

— $

23,399
—
—
—

6,361
—
7
—

6,368
2,892
218
(9)
(45)

1,344
—
—
—

1,344
500
9
—
(1)

10,329
279
(1)
(14)

10,593
29,586
472
(9)
(112)

Balance as of April 24, 2015

5,855

23,399

9,424

1,852

40,530

The gross carrying amount and accumulated amortization of intangible assets at the end of fiscal years 2015 and 2014 are as
follows:

(in millions)

Amortizable:
Customer-related
Purchased technology and patents
Trademarks and tradenames
Other

Total

Non-Amortizable:
IPR&D
Tradenames

Total

Fiscal Year 2015

Fiscal Year 2014

Gross Carrying
Amount

Accumulated
Amortization

Gross Carrying
Amount

Accumulated
Amortization

18,492
11,118
640
79

(273)
(2,268)
(363)
(44)

30,329

(2,948)

470
250

720

76
3,857
408
124

(6)
(1,878)
(332)
(82)

4,465

(2,298)

119
—

119

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Based upon a preliminary acquisition valuation, in connection with the Covidien acquisition, the Company acquired $18.3
billion of customer-related intangible assets, $7.1 billion of technology-based intangible assets, $0.5 billion of tradenames, and
$0.4 billion of IPR&D. Refer to Note 2 for additional information.

Amortization expense for fiscal years 2015, 2014, and 2013 was $733 million, $349 million, and $331 million, respectively.

Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets, excluding any
possible future amortization associated with acquired IPR&D, which has not met technological feasibility, is as follows:

(in millions)
Fiscal Year

2016
2017
2018
2019
2020

8. Financing Arrangements

Short-term debt consisted of the following:

(in millions)

Capital lease obligations
Bank borrowings
3.000 percent five-year 2010 senior notes
2.625 percent five-year 2011 senior notes
4.750 percent ten-year 2005 senior notes
1.350 percent 2012 CIFSA senior notes
2.800 percent 2010 CIFSA senior notes
Interest rate swaps
Debt premium

Amortization
Expense

1,911
1,889
1,858
1,765
1,717

April 24, 2015 April 25, 2014

Payable

16
303
—
500
600
600
400
10
5

14
337
1,250
—
—
—
—
12
—

Total Short-Term Borrowings

2,434

1,613

Commercial Paper On January 26, 2015, Medtronic Global Holdings S.C.A., an entity organized under the laws of
Luxembourg (Medtronic Luxco), entered into various agreements pursuant to which Medtronic Luxco may issue unsecured
commercial paper notes (the 2015 Commercial Paper Program) on a private placement basis up to a maximum aggregate
amount outstanding at any time of $3.500 billion. The Company and Medtronic, Inc. have guaranteed the obligations of
Medtronic Luxco under the 2015 Commercial Paper Program. In connection with entry into the 2015 Commercial Paper
Program, Medtronic, Inc. and Covidien terminated their respective existing commercial paper programs. Medtronic, Inc’s
previous commercial paper program allowed a maximum aggregate amount outstanding at any time of $2.250 billion. No
amounts were outstanding as of April 24, 2015.

During fiscal years 2015 and 2014, the weighted average original maturity of the commercial paper outstanding was approximately
52 and 53 days, respectively, and the weighted average interest rate was 0.13 percent and 0.09 percent, respectively. The issuance
of commercial paper reduces the amount of credit available under the Company’s existing line of credit.

Bank Borrowings Outstanding bank borrowings as of April 24, 2015 were short-term advances to certain non-U.S.
subsidiaries under credit agreements with various banks. Bank borrowings consist primarily of borrowings at interest rates
considered favorable by management ranging from 0.28% to 0.29% and the borrowing is a natural hedge of foreign currency
and exchange exchange rate risk.

Line of Credit On January 26, 2015, the Company amended and restated its existing Credit Facility and entered into the Amended
and Restated Credit Agreement (the Amended and Restated Revolving Credit Agreement), by and among Medtronic, Medtronic,

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Inc., Medtronic Luxco, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and issuing
bank. The Amended and Restated Revolving Credit Agreement provides for a $3.500 billion Five Year Revolving Credit Facility
($3.500 billion Five Year Revolving Credit Facility) and provides the Company with the ability to increase its borrowing capacity by
an additional $500 million at any time during the term of the agreement. At each anniversary date of the $3.500 billion Five Year
Revolving Credit Facility, but not more than twice prior to the maturity date, the Company could also request a one-year extension
of the maturity date. The Company, Medtronic Luxco, and Medtronic, Inc. guarantee the obligations under the Amended and
Restated Revolving Credit Agreement. As of April 24, 2015, no amounts were outstanding on the committed line of credit.

Interest rates are determined by a pricing matrix, based on the Company’s long-term debt ratings, assigned by Standard &
Poor’s Ratings Services and Moody’s Investors Service. Facility fees are payable on the Credit Facility and are determined in
the same manner as the interest rates. The agreement also contains customary covenants, all of which the Company remains in
compliance with as of April 24, 2015.

The Company had a $2.250 billion syndicated credit facility which was scheduled to expire on December 17, 2017 (Credit
Facility). The Credit Facility provided backup funding for the commercial paper program. As of April 25, 2014, no amounts
were outstanding on the committed line of credit.

Long-term debt consisted of the following:

(in millions, except interest rates)

4.750 percent ten-year 2005 senior notes
2.625 percent five-year 2011 senior notes
Floating rate three-year 2014 senior notes
0.875 percent three-year 2014 senior notes
6.000 percent ten-year 2008 CIFSA senior notes
1.375 percent five-year 2013 senior notes
1.500 percent three-year 2015 senior notes
5.600 percent ten-year 2009 senior notes
4.450 percent ten-year 2010 senior notes
4.200 percent ten-year 2010 CIFSA senior notes
2.500 percent five-year 2015 senior notes
Floating rate five-year 2015 senior notes
4.125 percent ten-year 2011 senior notes
3.125 percent ten-year 2012 senior notes
3.200 percent ten-year 2012 CIFSA senior notes
3.150 percent seven-year 2015 senior notes
2.750 percent ten-year 2013 senior notes
2.950 percent ten-year 2013 CIFSA senior notes
3.625 percent ten-year 2014 senior notes
3.500 percent ten-year 2015 senior notes
4.375 percent twenty-year 2015 senior notes
6.550 percent thirty-year 2007 CIFSA senior notes
6.500 percent thirty-year 2009 senior notes
5.550 percent thirty-year 2010 senior notes
4.500 percent thirty-year 2012 senior notes
4.000 percent thirty-year 2013 senior notes
4.625 percent thirty-year 2014 senior notes
4.625 percent thirty-year 2015 senior notes
Three-year term loan
Interest rate swaps
Deferred gains from interest rate swap terminations, net
Capital lease obligations
Bank borrowings
Debt premium (discount)

April 24, 2015

April 25, 2014

Maturity by
Fiscal Year

Payable

Effective
Interest
Rate

Payable

Effective
Interest
Rate

2016
2016
2017
2017
2018
2018
2018
2019
2020
2020
2020
2020
2021
2022
2022
2022
2023
2023
2024
2025
2035
2037
2039
2040
2042
2043
2044
2045
2018
2016-2022
—
2016-2025
2021
2017-2045

—
—
250
250
1,150
1,000
1,000
400
1,250
600
2,500
500
500
675
650
2,500
1,250
750
850
4,000
2,500
850
300
500
400
750
650
4,000
3,000
79
3
129
17
499

— $
—
0.32%
0.91%
1.41%
1.41%
1.59%
5.61%
4.47%
2.22%
2.52%
1.04%
4.19%
3.16%
2.66%
3.18%
2.78%
2.67%
3.65%
3.61%
4.44%
3.75%
6.52%
5.56%
4.51%
4.12%
4.67%
4.64%
1.12%
—
—
3.52%
—
—

600
500
250
250
—
1,000
—
400
1,250
—
—
—
500
675
—
—
1,250
—
850
—
—
—
300
500
400
750
650
—
—
56
20
139
—
(25)

4.76%
2.72%
0.32%
0.91%
—
1.41%
—
5.61%
4.47%
—
—
—
4.19%
3.16%
—
—
2.78%
—
3.65%
—
—
—
6.52%
5.56%
4.51%
4.12%
4.67%
—
—
—
—
3.62%
—
—

Total Long-Term Debt

33,752

10,315

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Senior Notes Senior Notes are unsecured, senior obligations of the Company and rank equally with all other unsecured and
unsubordinated indebtedness of the Company. The indentures under which the Senior Notes were issued contain customary
covenants, all of which the Company remains in compliance with as of April 24, 2015. The Company used the net proceeds
from the sale of the Senior Notes primarily for working capital and general corporate uses, which includes the repayment of
other indebtedness of the Company.

On January 26, 2015, Medtronic and Medtronic Luxco each provided a full and unconditional guarantee of the Senior Note
obligations of Medtronic, Inc. and of Covidien International Finance S.A., a Luxembourg company (“CIFSA”).

On December 10, 2014, the Company issued seven tranches of Senior Notes (collectively the 2015 Senior Notes) with an
aggregate face value of $17.000 billion, resulting in cash proceeds of approximately $16.8 billion, net of discounts and issuance
costs. The first tranche consisted of $1.000 billion of 1.500 percent Senior Notes due 2018. The second tranche consisted
of $2.500 billion of 2.500 percent Senior Notes due 2020. The third tranche consisted of $500 million of floating rate Senior
Notes due 2020 (the 2020 floating rate notes). The 2020 floating rate notes bear interest at the three-month London InterBank
Offered Rate (LIBOR) plus 80 basis points. The fourth tranche consisted of $2.500 billion of 3.150 percent Senior Notes due
2022. The fifth tranche consisted of $4.000 billion of 3.500 percent Senior Notes due 2025. The sixth tranche consisted
of $2.500 billion of 4.375 percent Senior Notes due 2035. The seventh tranche consisted of $4.000 billion of 4.625 percent
Senior Notes due 2045. Interest on the 2020 floating rate notes is payable quarterly and interest on each series of the fixed rate
notes is payable semi-annually. The Company used the combined proceeds from the 2015 Senior Notes and the $3.000
billion borrowed for a term of three years under the Term Loan Credit Agreement (as defined below) to fund the
approximately $16 billion cash consideration portion of the January 26, 2015 estimated $50 billion acquisition of Covidien, to
pay certain transaction and financing expenses, and for working capital and general corporate purposes, which may include
repayment of indebtedness.

In February 2014, the Company issued four tranches of Senior Notes (collectively, the 2014 Senior Notes) with an aggregate
face value of $2.000 billion. The first tranche consisted of $250 million of floating rate Senior Notes due 2017. The 2017
floating rate notes bear interest at the three-month London InterBank Offered Rate (LIBOR) plus 9 basis points. The second
tranche consisted of $250 million of 0.875 percent Senior Notes due 2017. The third tranche consisted of $850 million of 3.625
percent Senior Notes due 2024. The fourth tranche consisted of $650 million of 4.625 percent Senior Notes due 2044. Interest
on the 2017 floating rate notes is payable quarterly and interest on the other 2014 Senior Notes are payable semi-annually. The
Company used the net proceeds for working capital and general corporate purposes, including repayment of indebtedness.

As of January 26, 2015, Covidien had $5.000 billion aggregate principal amount issued and outstanding consisting of $750
million aggregate principal amount of 2.950 percent senior notes due 2023, $600 million aggregate principal amount of 1.350
percent senior notes due 2015, $650 million aggregate principal amount of 3.200 percent senior notes due 2022, $400
million aggregate principal amount of 2.800 percent senior notes due 2015, $600 million aggregate principal amount of 4.200
percent senior notes due 2020, $1.150 billion aggregate principal amount of 6.000 percent senior notes due 2018 and $850
million aggregate principal amount of 6.550 percent senior notes due 2037 (collectively, the “Covidien Outstanding Notes”).
The Company recorded a fair value adjustment as required upon acquisition and subsequently recorded a premium totaling $607
million related to Covidien Outstanding Notes.

As of April 24, 2015 and April 25, 2014, the Company had interest rate swap agreements designated as fair value hedges of
certain underlying fixed-rate obligations including the Company’s $600 million 4.750 percent 2005 Senior Notes, $500 million
2.625 percent 2011 Senior Notes, $500 million 4.125 percent 2011 Senior Notes, and $675 million 3.125 percent 2012 Senior
Notes. As of April 25, 2014, the Company also had an interest rate swap agreement designated as a fair value hedge underlying
the fixed rate obligation related to the Company’s $1.250 billion 3.000 percent 2010 Senior Notes, which were due during fiscal
year 2015. For additional information regarding the interest rate swap agreements, refer to Note 9.

Term Loan On January 26, 2015, Medtronic, Inc. borrowed $3.000 billion for a term of three years under that certain Senior
Unsecured Term Loan Credit Agreement (the “Term Loan Credit Agreement”), among Medtronic, Inc., Medtronic, Medtronic
Luxco, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, to finance, in part, the
cash component of the Arrangement Consideration and certain transaction expenses. Medtronic and Medtronic Luxco have
guaranteed the obligations of Medtronic, Inc. under the Term Loan Credit Agreement.

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Contractual maturities of debt for the next five fiscal years and thereafter, excluding the debt premium and discount, the fair
value of outstanding interest rate swap agreements, and the remaining deferred gains from terminated interest rate swap
agreements are as follows:

(in millions)
Fiscal Year
2016
2017
2018
2019
2020
Thereafter

Total debt
Less: Current portion of debt

Long-term portion of debt

2,419
538
6,173
423
4,273
21,764

35,590
2,419

33,171

9. Derivatives and Foreign Exchange Risk Management

The Company enters into derivative instruments, principally forward currency exchange rate contracts, in order to minimize
earnings and cash flow volatility resulting from currency exchange rate changes. These contracts are designed to hedge
anticipated foreign currency transactions and changes in the value of specific assets and liabilities. The primary currencies of
these derivative instruments are the Euro and Japanese Yen. The gross notional amount of all currency exchange rate derivative
instruments outstanding at April 24, 2015 and April 25, 2014 was $9.782 billion and $8.051 billion, respectively. The aggregate
currency exchange rate gains (losses) were $131 million, $(1) million, and $25 million, in fiscal years 2015, 2014, and 2013,
respectively.

The information that follows explains the various types of derivatives and financial instruments used by the Company, how and
why the Company uses such instruments, how such instruments are accounted for, and how such instruments impact the
Company’s consolidated balance sheets, statements of income, and statements of cash flows.

Freestanding Derivative Forward Contracts

Freestanding derivative forward contracts are used to offset the Company’s exposure to the change in value of specific foreign
currency denominated assets and liabilities and to offset variability of cash flows associated with forecasted transactions
denominated in a foreign currency. The gross notional amount of these contracts, not designated as hedging instruments,
outstanding at April 24, 2015 and April 25, 2014 was $4.713 billion and $2.202 billion, respectively.

The amount and location of the gains in the consolidated statements of income related to derivative instruments, not designated
as hedging instruments, for fiscal years 2015, 2014, and 2013 are as follows:

(in millions)

Fiscal Year

Derivatives Not Designated as Hedging Instruments

Location

2015

2014

2013

Foreign currency exchange rate contracts

Other expense, net

210

Cash Flow Hedges

Foreign Currency Exchange Rate Risk Forward contracts designated as cash flow hedges are designed to hedge the
variability of cash flows associated with forecasted transactions denominated in a foreign currency that will take place in the
future. No gains or losses relating to ineffectiveness of cash flow hedges were recognized in earnings during fiscal years 2015,
2014, or 2013. No components of the hedge contracts were excluded in the measurement of hedge ineffectiveness and no hedges
were derecognized or discontinued during fiscal years 2015, 2014, or 2013. The gross notional amount of these contracts,
designated as cash flow hedges, outstanding at April 24, 2015 and April 25, 2014 was $5.069 billion and $5.849 billion,
respectively, and will mature within the subsequent two-year period.

100

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The amount of gains (losses) and location of the gains (losses) in the consolidated statements of income and other
comprehensive income (OCI) related to foreign currency exchange rate contract derivative instruments designated as cash flow
hedges for the fiscal years ended April 24, 2015, April 25, 2014, and April 26, 2013 are as follows:

April 24, 2015

(in millions)

Derivatives in Cash Flow Hedging
Relationships

Foreign currency exchange
rate contracts

Total

April 25, 2014

(in millions)
Derivatives in Cash Flow Hedging
Relationships

Foreign currency exchange
rate contracts

Total

April 26, 2013

(in millions)

Derivatives in Cash Flow Hedging
Relationships

Foreign currency exchange
rate contracts

Total

Gross Gains Recognized in OCI
on Effective Portion of Derivative

Effective Portion of Gains (Losses) on Derivative Reclassified
from AOCI into Income

Amount

Location

Amount

707

Other expense, net
Cost of products sold

221
(65)

156

Gross Losses Recognized in OCI
on Effective Portion of Derivative

Effective Portion of Gains (Losses) on Derivative Reclassified
from AOCI into Income

Amount

Location

Amount

(152)

Other expense, net
Cost of products sold

94
(43)

Gross Gains Recognized in OCI
on Effective Portion of Derivative

Effective Portion of Gains (Losses) on Derivative Reclassified
from AOCI into Income

Amount

Location

Amount

121

Other expense, net
Cost of products sold

103
(2)

101

Forecasted Debt Issuance Interest Rate Risk Forward starting interest rate derivative instruments designated as cash flow
hedges are designed to manage the exposure to interest rate volatility with regard to future issuances of fixed-rate debt. In
connection with the closing of the 2015 Senior Notes, the Company entered into forward starting interest rate derivatives with a
notional amount of $5.850 billion, these swaps were terminated upon the issuance of the 2015 Senior Notes. Upon termination,
there was no material ineffectiveness on the contracts which were in a net liability position, resulting in cash payment of $79
million. In February 2014, the Company terminated forward starting interest rate derivative instruments with a consolidated
notional amount of $250 million in conjunction with the issuance of the 2014 Senior Notes. Upon termination, there was no
material ineffectiveness on the contracts which were in a net liability position, resulting in cash payments of $8 million. As of
April 24, 2015, the Company had $800 million of fixed pay, forward starting interest rate swaps with a weighted average fixed
rate of 2.99 percent in anticipation of planned debt issuances.

For the fiscal years ended April 24, 2015 and April 25, 2014, the Company reclassified $11 million and $8 million, respectively,
of the effective portion of the net losses on forward starting interest rate derivative instruments from accumulated other
comprehensive loss to interest expense, net.

The market value of outstanding forward starting interest rate swap derivative instruments at April 24, 2015 and April 25, 2014
was an unrealized (loss) gain of $(71) million and $7 million, respectively.

101

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

As of April 24, 2015 and April 25, 2014, the Company had $210 million and $(44) million, respectively, in after-tax net
unrealized gains (losses) associated with cash flow hedging instruments recorded in accumulated other comprehensive loss. The
Company expects that $230 million of after-tax net unrealized gains as of April 24, 2015 will be reclassified into the
consolidated statements of earnings over the next 12 months.

Fair Value Hedges

Interest rate derivative instruments designated as fair value hedges are designed to manage the exposure to interest rate
movements and to reduce borrowing costs by converting fixed-rate debt into floating-rate debt. Under these agreements, the
Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by
reference to an agreed-upon notional principal amount.

As of April 24, 2015 and April 25, 2014, the Company had interest rate swaps in gross notional amounts of $2.025 billion and
$2.625 billion, respectively, designated as fair value hedges of underlying fixed rate obligations. As of April 24, 2015 and
April 25, 2014, the Company had interest rate swap agreements designated as fair value hedges of underlying fixed rate
obligations including the Company’s, $600 million 4.750 percent 2005 Senior Notes due 2016, the $500 million 2.625 percent
2011 Senior Notes due 2016, the $500 million 4.125 percent 2011 Senior Notes due 2021, and the $675 million 3.125 percent
2012 Senior Notes due 2022. As of April 25, 2014, the Company also had an interest rate swap agreement designated as a fair
value hedge underlying the fixed rate obligation related to the Company’s $1.250 billion 3.000 percent 2010 Senior Notes,
which were due during fiscal year 2015.

As of April 24, 2015 and April 25, 2014, the market value of outstanding interest rate swap agreements was an unrealized gain
of $18 million and $68 million, respectively, and the market value of the hedged items was an unrealized loss of $18 million and
$68 million, respectively, which was recorded in other assets, prepaid expenses and other current assets, and other long-term
liabilities with the offsets recorded in long-term debt and short-term borrowings on the consolidated balance sheets. No
significant hedge ineffectiveness was recorded as a result of these fair value hedges for fiscal year 2015, 2014, and 2013.

During fiscal years 2015, 2014, and 2013, the Company did not have any ineffective fair value hedging instruments. In addition,
the Company did not recognize any gains or losses during fiscal years 2015, 2014, or 2013 on firm commitments that no longer
qualify as fair value hedges.

Balance Sheet Presentation

The following tables summarize the location and fair value amounts of derivative instruments reported in the consolidated
balance sheets as of April 24, 2015 and April 25, 2014. The fair value amounts are presented on a gross basis and are segregated
between derivatives that are designated and qualify as hedging instruments and those that are not, and are further segregated by
type of contract within those two categories.

April 24, 2015

(in millions)

Asset Derivatives

Liability Derivatives

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair
Value

Derivatives designated as hedging
instruments

Interest rate contracts

Foreign currency exchange rate contracts

Prepaid expenses and
other current assets
Prepaid expenses and
other current assets

Interest rate contracts

Other assets

Foreign currency exchange rate contracts

Other assets

Total derivatives designated as hedging
instruments

102

10 Other accrued expenses

382 Other accrued expenses
Other long-term
liabilities
Other long-term
liabilities

143

614

—

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

(in millions)

Derivatives not designated as hedging
instruments

Foreign currency exchange rate contracts

Total derivatives not designated as hedging
instruments

Total derivatives

April 25, 2014

(in millions)

Derivatives designated as hedging
instruments

Interest rate contracts

Foreign currency exchange rate contracts

Asset Derivatives

Liability Derivatives

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair
Value

Prepaid expenses and
other current assets

119 Other accrued expenses

119

733

116

Asset Derivatives

Liability Derivatives

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair
Value

Prepaid expenses and
other current assets
Prepaid expenses and
other current assets

13 Other accrued expenses

81 Other accrued expenses
Other long-term
liabilities
Other long-term
liabilities

—

Interest rate contracts

Other assets

Foreign currency exchange rate contracts

Other assets

Total derivatives designated as hedging
instruments

Derivatives not designated as hedging
instruments

Foreign currency exchange rate contracts

Total derivatives not designated as hedging
instruments

Total derivatives

175

125

Prepaid expenses and
other current assets

— Other accrued expenses

—

175

127

103

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The Company has elected to present the fair value of derivative assets and liabilities within the consolidated balance sheets on a
gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net
presentation. The following table provides information as if the Company had elected to offset the asset and liability balances of
derivative instruments, netted in accordance with various criteria as stipulated by the terms of the master netting arrangements
with each of the counterparties. Derivatives not subject to master netting arrangements are not eligible for net presentation.

April 24, 2015

(in millions)

Derivative Assets

Foreign currency exchange rate contracts
Interest rate contracts

Derivative Liabilities

Foreign currency exchange rate contracts
Interest rate contracts

Total

April 25, 2014

(in millions)

Derivative Assets

Foreign currency exchange rate contracts
Interest rate contracts

Derivative Liabilities

Foreign currency exchange rate contracts
Interest rate contracts

Total

Concentrations of Credit Risk

Gross Amount Not Offset on the
Balance Sheet

Gross Amount of
Recognized Assets
(Liabilities)

Financial
Instruments

Cash Collateral
(Received) or
Posted

Net Amount

644
89

733

(45) $
(71)

(116) $

617

(61) $
(10)

(71) $

31
40

(325) $
(13)

(338) $

— $
8

— $

(330) $

Gross Amount Not Offset on the
Balance Sheet

258
66

324

(14)
(23)

(37)

287

Gross Amount of
Recognized Assets
(Liabilities)

Financial
Instruments

Cash Collateral
(Received) or
Posted

Net Amount

89
86

175

(116) $
(11)

(127) $

(64) $
(31)

(95) $

84
11

— $

— $
—

— $

— $
—

— $

25
55

(32)
—

(32)

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of
interest-bearing investments, forward exchange derivative contracts, and trade accounts receivable.

The Company maintains cash and cash equivalents, investments, and certain other financial instruments (including currency
exchange rate and interest rate derivative contracts) with various major financial institutions. The Company performs periodic
evaluations of the relative credit standings of these financial institutions and limits the amount of credit exposure with any one
institution. In addition, the Company has collateral credit agreements with its primary derivatives counterparties. Under these
agreements, either party is required to post eligible collateral when the market value of transactions covered by the agreement
exceeds specific thresholds, thus limiting credit exposure for both parties. As of April 24, 2015, the Company received net cash
collateral of $330 million from its counterparties. As of April 25, 2014, no collateral was posted by either the Company or its
counterparties. The collateral received was recorded in cash and cash equivalents, with the offset recorded as an increase in
other accrued expenses on the consolidated balance sheets.

104

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

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. may continue to increase the average length of time it takes the Company to collect on its outstanding trade
receivables in these countries as certain payment patterns have been impacted. 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.

10. Shareholders’ Equity

Share Capital

On January 26, 2015, the Company consummated a reorganization pursuant to which Medtronic plc domiciled in Ireland
became the publicly traded parent of Medtronic, Inc. In connection with the reorganization, all issued and outstanding
Medtronic, Inc. common shares were canceled and ceased to exist and each Medtronic, Inc. common stock share was converted
into one Medtronic plc ordinary share. Subsequent to the reorganization, Medtronic plc is authorized to issue 2.600 billion
Ordinary Shares, $0.0001 par value; 40 thousand Euro Deferred Shares, €1.00 par value; 128 million Preferred Shares, $0.20
par value; and 500 thousand A Preferred Shares, $1.00 par value.

Euro Deferred Shares

During the Transactions, the Company issued 40 thousand Euro Deferred Shares at their par value of €1.00 per share. The
holders of the Euro Deferred Shares are not entitled to receive any dividend or distribution and are not entitled to receive notice
of, nor attend, speak or vote at any general meeting of the Company. On a return of assets, whether on liquidation or otherwise,
the Euro Deferred Shares are entitled to only the repayment of the amounts paid up on such shares, after repayment of the
capital paid up on the ordinary shares. Euro Deferred shareholders are not entitled to any further participation in the assets or
profits of the Company.

A Preferred Shares

The Company issued 624 A Preferred Shares, par value $1.00, each to three of its advisors in connection with the Transactions,
for a total of 1,872 A Preferred Shares outstanding with an aggregate consideration of $75 thousand. The holders of A Preferred
Shares are entitled to payment of dividends prior to any other class of shares in the Company equal to twice the dividend to be
paid per Company ordinary share. On a return of assets, whether on liquidation or otherwise, the A Preferred Shares are entitled
to repayment of the capital paid up thereon in priority to any repayment of capital to the holders of any other shares and the
holders of the A Preferred Shares shall not be entitled to any further participation in the assets or profits of the Company. The
holders of the A Preferred Shares are not entitled to receive notice of, nor to attend, speak, or vote at any general meeting of the
Company.

Dividends

The timing, declaration and payment of future dividends to holders of our ordinary and A Preferred shares falls within the
discretion of the Company’s Board of Directors and depends upon many factors, including the statutory requirements of Irish
law, the Company’s earnings and financial condition, the capital requirements of our businesses, industry practice and any other
factors the Board of Directors deems relevant.

Ordinary Share Repurchase Program

Shares are repurchased from time to time to support the Company’s stock-based compensation programs and to return capital to
shareholders. In January 2015, the Company’s Board of Directors authorized, subject to the ongoing existence of sufficient
distributable reserves, the adoption of the existing Medtronic, Inc. share redemption program. During fiscal years 2015 and
2014, the Company repurchased approximately 29.8 million and 47.8 million shares at an average price of $64.53 and $53.37,
respectively. As of April 24, 2015, the Company had used 50.3 million of the 80 million shares authorized under the repurchase

105

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

program, leaving 29.7 million shares available for future repurchases. In June 2015, the Company’s Board of Directors
authorized, subject to the ongoing existence of sufficient distributable reserves, the redemption of an additional 80 million of the
Company’s ordinary shares. The Company accounts for repurchases of ordinary shares using the par value method and shares
repurchased are canceled.

11. Stock Purchase and Award Plans

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.

In January 2015, the Company’s Board of Directors approved an amendment to and assumption of the existing Medtronic, Inc.
2013 Stock Award and Incentive Plan. In fiscal year 2015, the Company granted stock awards under the Medtronic plc 2013
Stock Award and Incentive Plan (2013 Plan). The 2013 Plan was approved by the Company’s shareholders in August 2013 and
amended in January 2015. The 2013 Plan provides for the grant of non-qualified and incentive stock options, stock appreciation
rights, restricted stock, restricted stock units, performance awards, and other stock and cash-based awards. As of April 24, 2015,
there were approximately 41 million shares available for future grants under the 2013 Plan.

Share Options Options are granted at the exercise price equal to the closing price of the Company’s ordinary share on the
grant date. The majority of the Company’s options are non-qualified options with a 10-year life and a 4-year ratable vesting
term. In fiscal year 2015, the Company granted share options under the 2013 Plan.

Restricted Stock Awards Restricted stock and restricted stock units (collectively referred to as restricted stock awards) are
granted to officers and key employees. Restricted stock awards are subject to forfeiture if employment terminates prior to the
lapse of the restrictions. The Company grants restricted stock awards that typically cliff vest after four years. Restricted stock
awards are expensed over the vesting period. The Company also grants shares of performance-based restricted stock awards that
typically cliff vest after three years only if the Company has also achieved certain performance objectives. Performance awards
are expensed over the performance period based on the probability of achieving the performance objectives. Shares of restricted
stock are considered issued and outstanding shares of the Company at the grant date and have the same dividend and voting
rights as other ordinary shares. Restricted stock units are not considered issued or outstanding ordinary shares of the Company.
Dividend equivalent units are accumulated on restricted stock units during the vesting period. In fiscal year 2015, the Company
granted restricted stock units under the 2013 Plan. As of April 24, 2015, all restricted stock awards outstanding were restricted
stock units.

Employees Stock Purchase Plan The Medtronic plc Amended and Restated 2014 Employees Stock Purchase Plan (ESPP)
allows participating employees to purchase the Company’s ordinary shares at a discount through payroll deductions. Employees
can contribute up to the lesser of 10 percent of their wages or the statutory limit under the U.S. Internal Revenue Code toward
the purchase the Company’s ordinary shares at 85 percent of its market value at the end of the calendar quarter purchase period.
Employees purchased 1 million shares at an average price of $57.66 per share in the fiscal year ended April 24, 2015. As of
April 24, 2015, plan participants have had approximately $11 million withheld to purchase the Company’s ordinary shares at 85
percent of its market value on June 30, 2015, the last trading day before the end of the calendar quarter purchase period. At
April 24, 2015, approximately 22 million ordinary shares were available for future purchase under the ESPP.

Valuation Assumptions The Company uses the Black-Scholes option pricing model (Black-Scholes model) to determine the
fair value of stock options as of the grant date. The fair value of stock options under the Black-Scholes model requires
management to make assumptions regarding projected employee stock option exercise behaviors, risk-free interest rates,
volatility of the Company’s stock price, and expected dividends.

The expense recognized for shares purchased under the Company’s ESPP is equal to the 15 percent discount the employee
receives at the end of the calendar quarter purchase period. The expense recognized for restricted stock awards is equal to the
grant date fair value, which is equal to the closing stock price on the date of grant.

106

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The following table provides the weighted average fair value of options granted to employees and the related assumptions used
in the Black-Scholes model:

Weighted average fair value of options granted
Assumptions used:

Expected life (years)(a)
Risk-free interest rate(b)
Volatility(c)
Dividend yield(d)

2015

Fiscal Year

2014

2013

25.39

12.00

7.42

4.24
0.99%
21.29%
1.66%

6.40
1.88%
25.20%
2.02%

6.50
0.94%
26.22%
2.64%

(a)

(b)

(c)

(d)

Expected life: The Company analyzes historical employee stock option exercise and termination data to estimate the
expected life assumption. The Company calculates the expected life assumption using the midpoint scenario, which
combines historical exercise data with hypothetical exercise data, as the Company believes this data currently represents
the best estimate of the expected life of a new employee option. The Company also stratifies its employee population
into two groups based upon distinctive exercise behavior patterns.
Risk-free interest rate: The rate is based on the grant date yield of a zero-coupon U.S. Treasury bond whose maturity
period equals the expected term of the option.
Volatility: Expected volatility is based on a blend of historical volatility and an implied volatility of the Company’s
ordinary shares. Implied volatility is based on market traded options of the Company’s ordinary shares.
Dividend yield: The dividend yield rate is calculated by dividing the Company’s annual dividend, based on the most
recent quarterly dividend rate, by the closing stock price on the grant date.

Stock-Based Compensation Expense 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.

The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are
ultimately expected to vest. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and
revises those estimates in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the total expense
recognized over the vesting period will equal the fair value of awards that actually vest.

Pursuant to the Transaction Agreement, unvested restricted stock units held by Covidien employees that were granted prior to
June 15, 2014 accelerated and became vested upon the close of the Covidien acquisition, whereby each share was converted in a
manner consistent with the Arrangement Consideration discussed in Note 2. The accelerated vesting and share conversion
constituted a modification under the authoritative guidance for accounting for stock compensation and resulted in $91 million of
incremental costs on the date of acquisition and is included in acquisition-related items.

Also pursuant to the Transaction Agreement, unvested performance share units held by Covidien employees accelerated and
vested upon the close of the Covidien acquisition based on performance achieved through January 15, 2015. The modification
made to the market-based condition of unvested performance share units as a result of the Covidien acquisition also constituted
a modification similar to the modification described above. As a result, the modification resulted in incremental compensation
cost of $72 million on the date of the acquisition and is included in acquisition-related items.

Additionally, pursuant to the Transaction Agreement, outstanding stock option awards held by Covidien employees upon
transaction close were converted into options to acquire the Company’s ordinary shares in a manner designed to preserve the
intrinsic value of such awards. In addition, pursuant to the Transaction Agreement, unvested restricted stock units granted on or
after June 15, 2014 which were held by Covidien employees upon close of the Covidien acquisition were converted into
restricted stock units of the Company in a manner designed to preserve the intrinsic value of such awards. The modifications
made to the restricted stock units granted on or after June 15, 2014 and all outstanding share options pursuant to the Transaction
Agreement that converted such awards constituted modifications under the authoritative guidance for accounting for stock
compensation. This guidance requires the Company to revalue the award upon the transaction close and allocate the revised fair

107

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

value between consideration paid and continuing expense based on the ratio of service performed through the transaction date
over the total service period of the award. The revised fair value allocated to post-combination services resulted in incremental
expense which is recognized over the remaining service period of the award. The Company recognized $26 million of
incremental expense related to these modifications from the date of the acquisition through the end of fiscal year 2015 and is
included in acquisition-related items. Except for the conversion of share options and restricted stock units discussed herein, the
material terms of these awards remained unchanged.

The following table presents the components and classification of stock-based compensation expense,
including the
modification expense related to the Transaction Agreement, for stock options, restricted stock awards, and ESPP shares
recognized for fiscal years 2015, 2014, and 2013:

(in millions)

Stock options
Restricted stock awards
Employees stock purchase plan

Total stock-based compensation expense

Cost of products sold
Research and development expense
Selling, general, and administrative expense
Restructuring charges
Acquisition-related items

Total stock-based compensation expense
Income tax benefits

2015

Fiscal Year

2014

2013

140
284
15

439

23
29
128
70
189

439
(138)

34
98
13

145

14
27
104
—
—

145
(40)

Total stock-based compensation expense, net of tax

301

105

44
96
12

152

12
31
109
—
—

152
(43)

109

Stock Options The following table summarizes all stock option activity, including activity from options assumed or issued as
a result of acquisitions, during fiscal year 2015:

Outstanding at April 25, 2014
Granted
Exercised
Expired/Forfeited

Outstanding at April 24, 2015

Vested and expected to vest at April 24, 2015

Exercisable at April 24, 2015

Options (in
thousands)

35,577
40,952
(13,503)
(1,005)

62,021

55,649

28,272

Wtd. Avg.
Exercise
Price

Wtd. Avg.
Remaining
Contractual
Term (in years)

Aggregate
Intrinsic Value
(dollars in
millions)

44.78
57.96
45.32
50.43

53.27

51.27

39.91

7.03

1,351

6.75

4.53

1,314

981

The following table summarizes the total cash received from the issuance of new shares upon stock option award exercises, the
total intrinsic value of options exercised and the related tax benefit during fiscal years 2015, 2014, and 2013:

(in millions)

Cash proceeds from options exercised
Intrinsic value of options exercised
Tax benefit related to options exercised

2015

2014

2013

609
329
106

1,273
249
78

230
39
12

108

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Unrecognized compensation expense related to outstanding stock options as of April 24, 2015 was $403 million and is expected
to be recognized over a weighted average period of 2.0 years.

Restricted Stock Awards The following table summarizes restricted stock award activity, including activity from restricted
stock awards assumed or issued as a result of acquisitions, during fiscal year 2015:

Nonvested at April 25, 2014
Granted
Vested
Forfeited

Nonvested at April 24, 2015

Awards (in
thousands)

Wtd. Avg.
Grant
Price

9,558
3,515
(2,442)
(609)

10,022

44.06
69.30
39.53
46.22

53.88

The following table summarizes the weighted-average grant date fair value of restricted stock awards granted, total fair value of
restricted stock awards vested and related tax benefit during fiscal years 2015, 2014, and 2013:

(in millions, except per share data)

2015

2014

2013

Weighted-average grant-date fair value per restricted stock award
Fair value of restricted stock awards vested
Tax benefit related to restricted stock awards vested

69.30
174
50

55.62
142
40

39.53
116
34

Unrecognized compensation expense related to restricted stock awards as of April 24, 2015 was $252 million and is expected to
be recognized over a weighted average period of 2.2 years.

12. Income Taxes

The provision for income taxes is based on income before income taxes reported for financial statement purposes. The
components of income from continuing operations before income taxes, based on tax jurisdiction, are as follows:

(in millions)

U.S.
International

Income from continuing operations before income taxes

The provision for income taxes from continuing operations consists of the following:

2015

Fiscal Year

2014

2013

639
2,847

3,486

2015

1,128
502

1,630

(705)
(114)

(819)

1,690
2,015

3,705

Fiscal Year

2014

532
248

780

(175)
35

(140)

1,806
2,445

4,251

2013

509
219

728

46
10

784

811

640

109

(in millions)

Current tax expense:

U.S.
International

Total current tax expense
Deferred tax (benefit) expense:

U.S.
International

Net deferred tax (benefit) expense

Total provision for income taxes

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Deferred taxes arise because of the different treatment of transactions for financial statement accounting and income tax
accounting, known as “temporary differences.” The Company records the tax effect of these temporary differences as “deferred
tax assets” and “deferred tax liabilities.” Deferred tax assets generally represent items that can be used as a tax deduction or
credit in a tax return in future years for which the Company has already recorded the tax benefit in the consolidated statements
of income. The Company establishes valuation allowances for deferred tax assets when the amount of expected future taxable
income is not likely to support the use of the deduction or credit. Deferred tax liabilities generally represent tax expense
recognized in the consolidated financial statements for which payment has been deferred or expense has already been taken as a
deduction on the Company’s tax return but has not yet been recognized as an expense in the consolidated statements of income.
Tax assets (liabilities), shown before jurisdictional netting of deferred tax assets (liabilities), are comprised of the following:

April 24, 2015

April 25, 2014

(in millions)

Deferred tax assets:

Net operating loss, capital loss, and credit carryforwards
Other accrued liabilities
Accrued compensation
Pension and post-retirement benefits
Stock-based compensation
Other
Inventory
Federal and state benefit on uncertain tax positions

Gross deferred tax assets
Valuation allowance

Total deferred tax assets
Deferred tax liabilities:

Intangible assets
Basis impairment
Realized loss on derivative financial instruments
Other
Accumulated depreciation
Unrealized gain on available-for-sale securities and derivative financial instruments

Total deferred tax liabilities
Prepaid income taxes
Income tax receivables

Tax (liabilities)/assets, net

Reported as (after valuation allowance and jurisdictional netting):

Tax assets
Long-term tax assets
Deferred tax liabilities
Long-term deferred tax liabilities

Tax (liabilities)/assets, net

5,912
585
330
449
418
303
171
296

8,464
(5,607)

2,857

(5,393)
(204)
(112)
(96)
(217)
(160)

(6,182)
427
188

487
205
201
194
171
171
118
79

1,626
(397)

1,229

(652)
(225)
(110)
(24)
(20)
—

(1,031)
320
113

(2,710) $

631

1,335
774
(119)
(4,700)

(2,710) $

736
300
(19)
(386)

631

At April 24, 2015, the Company had approximately $26.794 billion of net operating loss carryforwards in certain non-U.S.
jurisdictions, of which $20.827 billion have no expiration, and the remaining $5.967 billion will expire in future years through
2035. Included in these net operating loss carryforwards are $17.058 billion of net operating losses related to a subsidiary of the
Company, substantially all of which were recorded in fiscal 2008 as a result of the receipt of a favorable tax ruling from certain
non-U.S. taxing authorities. The Company has recorded a full valuation allowance against these net operating losses as
management does not believe that it is more likely than not that these net operating losses will be utilized. Certain of the

110

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

remaining non-US net operating loss carryforwards of $9.736 billion have a valuation allowance recorded against
carryforwards as management does not believe that it is more likely than not that these net operating losses will be utilized.

the

At April 24, 2015, the Company had $759 million of U.S. federal net operating loss carryforwards, which will expire during
fiscal 2018 through 2035. For U.S. state purposes, the Company had $1.267 billion of net operating loss carryforwards at
April 24, 2015, which will expire during fiscal 2016 through 2035.

At April 24, 2015, the Company also had $183 million of tax credits available to reduce future income taxes payable, of which
$102 million have no expiration, and the remaining credits begin to expire during fiscal 2016. The Company has recorded a
valuation allowance against a significant portion of these tax credits as management does not believe that it is more likely than
not that they will be utilized.

The Company has established valuation allowances of $5.607 billion and $397 million at April 24, 2015 and April 25, 2014,
respectively, primarily related to the uncertainty of the utilization of certain deferred tax assets, primarily tax loss and credit
carryforwards in various jurisdictions. These valuation allowances would result in a reduction to the provision for income taxes
in the consolidated statements of income, if they are ultimately not required.

At April 24, 2015, the Company had certain potential non-U.S. tax attributes that had not been recorded in the consolidated
financial statements, including $12.587 billion of non-U.S. special deductions with an indefinite carryforward period. The
Company has treated these amounts as special deductions for financial statement purposes since utilization is contingent upon
the annual performance of certain economic factors. The Company intends to recognize the applicable portion of the special
deduction annually at an estimated tax rate of between 1% and 3% when and if these economic factors are met.

The Company’s effective income tax rate from continuing operations varied from the U.S. federal statutory tax rate as follows:

U.S. federal statutory tax rate
Increase (decrease) in tax rate resulting from:
U.S. state taxes, net of federal tax benefit
Research and development credit
Domestic production activities
International
Puerto Rico Excise Tax
Impact of non-recurring adjustments(a)
Reversal of excess tax accruals
Other, net

Effective tax rate

2015

Fiscal Year

2014

2013

35.0%

0.8
(0.7)
(0.4)
(24.3)
(1.7)
13.3
—
1.3

0.6
(0.5)
(0.4)
(17.7)
(1.6)
5.6
(1.9)
(1.8)

0.5
(1.1)
(0.3)
(16.7)
(1.3)
2.0
—
0.3

23.3%

17.3%

18.4%

(a)

Non-recurring adjustments include the impact of inventory step-up, impact of product technology upgrade commitment,
restructuring charges, net, certain litigation charges, net, acquisition-related items, amortization of intangible assets, and
certain tax adjustments.

During the fourth quarter of fiscal year 2015, a tentative settlement was reached with the IRS for the Kyphon acquisition-related
matters. As a result, the Company recorded a $329 million certain tax adjustment associated with the proposed settlement. In
addition, the certain tax adjustments includes a $20 million charge related to a taxable gain associated with the Covidien
acquisition. The $349 million net tax cost was recorded in the provision for income taxes in the consolidated statement of
income for fiscal year 2015.

In fiscal year 2014, the Company recorded a $71 million net tax benefit associated with the reversal of excess tax accruals. This
net tax benefit included $63 million related to the settlement of certain issues reached with the IRS involving the review of the

111

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Company’s fiscal years 2009 through 2011 domestic income tax returns and the remaining amount related to the resolution of
various state and foreign audit proceedings covering multiple years and issues. The $71 million net tax benefit was recorded in
the provision for income taxes in the consolidated statement of income for fiscal year 2014.

At April 24, 2015, no deferred taxes have been provided for any portion of the approximately $27.837 billion of undistributed
earnings of the Company’s subsidiaries, since these earnings have been, and under current plans will continue to be,
permanently reinvested in these subsidiaries. The Company has not provided U.S. income taxes on approximately $20.529
billion, and $18.123 billion of undistributed earnings, net, from non-U.S. subsidiaries as of April 25, 2014 and April 26, 2013,
respectively. Due to the number of legal entities and jurisdictions involved and the complexity of the legal entity structure of the
Company, the complexity of the tax laws in the relevant jurisdictions, including, but not limited to the rules pertaining to the
utilization of foreign tax credits in the United States and the impact of projections of income for future years to any calculations,
the Company believes it is not practicable to estimate, within any reasonable range, the amount of additional taxes which may
be payable upon distribution of these earnings.

Currently, the Company’s operations in Puerto Rico, Switzerland, Singapore, Dominican Republic, Costa Rica, and Israel have
various tax incentive grants. The tax reductions as compared to the local statutory rate favorably impacted earnings per diluted
share by $0.37 in fiscal year 2015, $0.42 in fiscal year 2014, and $0.42 in fiscal year 2013. Unless these grants are extended,
they will expire between fiscal years 2016 and 2027. The Company’s historical practice has been to renew, extend, or obtain
new tax incentive grants upon expiration of existing tax incentive grants. If the Company is not able to renew, extend, or obtain
new tax incentive grants, the expiration of existing tax incentive grants could have a material impact on the Company’s financial
results in future periods.

The Company had $2.860 billion, $1.172 billion, and $1.068 billion of gross unrecognized tax benefits as of April 24, 2015,
April 25, 2014, and April 26, 2013, respectively. A reconciliation of the beginning and ending amount of unrecognized tax
benefits for fiscal years 2015, 2014, and 2013 is as follows:

(in millions)

Gross unrecognized tax benefits at beginning of fiscal year
Gross increases:

2015

Fiscal Year

2014

2013

1,172

1,068

Prior year tax positions
Current year tax positions
Acquisitions
Gross decreases:

Prior year tax positions
Settlements
Statute of limitation lapses

331
231
1,199

(40)
(33)
—

64
166
—

(58)
(66)
(2)

917

12
169
—

(21)
(6)
(3)

Gross unrecognized tax benefits at end of fiscal year

Cash advance paid in connection with proposed settlements

Gross unrecognized tax benefits at end of fiscal year, net of cash advance

2,860
(378)

2,482

1,172
—

1,172

1,068
—

1,068

If all of the Company’s unrecognized tax benefits as of April 24, 2015, April 25, 2014, and April 26, 2013 were recognized,
$2.233 billion, $1.104 billion, and $1.028 billion would impact the Company’s effective tax rate, respectively. Although the
Company believes that it has adequately provided for liabilities resulting from tax assessments by taxing authorities, positions
taken by these tax authorities could have a material impact on the Company’s effective tax rate in future periods. The Company
has recorded $267 million of gross unrecognized tax benefits as a current liability, and $2.593 billion as a long-term liability.

The Company recognizes interest and penalties related to income tax matters in the provision for income taxes in the
consolidated statements of income and records the liability in the current or long-term accrued income taxes in the consolidated
balance sheets, as appropriate. The Company had $656 million, $141 million, and $88 million of accrued gross interest and
penalties as of April 24, 2015, April 25, 2014, and April 26, 2013, respectively. During the fiscal years ended April 24, 2015,
April 25, 2014, and April 26, 2013, the Company recognized gross interest expense of approximately $142 million, $36 million,
and $33 million in the provision for income taxes in the consolidated statements of income, respectively.

112

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The Company’s reserves for uncertain tax positions relate to unresolved matters with the IRS and other taxing authorities. These
reserves are subject to a high degree of estimation and management judgment. Resolution of these significant unresolved
matters, or positions taken by the IRS or foreign tax authorities during future tax audits, could have a material impact on the
Company’s financial results in future periods. The Company continues to believe that its reserves for uncertain tax positions are
appropriate and that it has meritorious defenses for its tax filings and will vigorously defend them during the audit process,
appellate process, and through litigation in courts, as necessary.

The major tax jurisdictions where the Company conducts business which remain subject to examination are as follows:

Jurisdiction

United States — federal and state
Brazil
Canada
China
Costa Rica
Dominican Republic
France
Germany
India
Ireland
Israel
Italy
Japan
Luxembourg
Mexico
Puerto Rico
Singapore
Switzerland
United Kingdom

Earliest Year Open

1996
2009
2005
2009
2012
2011
2007
2010
2002
2010
2009
2005
2009
2009
2005
2005
2009
2004
2010

See Note 16 for additional information regarding the status of current tax audits and proceedings.

13. Retirement Benefit Plans

The Company sponsors various retirement benefit plans, including defined benefit pension plans (pension benefits), post-
retirement medical plans (post-retirement benefits), defined contribution savings plans, and termination indemnity plans,
covering substantially all U.S. employees and many employees outside the U.S. The expense related to these plans was $433
million, $419 million, and $419 million in fiscal years 2015, 2014, and 2013, respectively.

In the U.S., the Company maintains a qualified pension plan designed to provide guaranteed minimum retirement benefits to all
eligible U.S. employees. Pension coverage for non-U.S. employees is provided, to the extent deemed appropriate, through
separate plans. In addition, U.S. and Puerto Rico employees are also eligible to receive specified Company paid health care and
life insurance benefits through the Company’s post-retirement benefits. In addition to the benefits provided under the qualified
pension plan, retirement benefits associated with wages in excess of the IRS allowable limits are provided to certain employees
under a non-qualified plan.

As of April 24, 2015 and April 25, 2014, the net underfunded status of the Company’s benefit plans was $1.274 billion and
$488 million, respectively.

113

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Defined Benefit Pension Plans The change in benefit obligation and funded status of the Company’s U.S. and Non-U.S.
pension benefits are as follows:

U.S. Pension Benefits

Non-U.S. Pension Benefits

Fiscal Year

2015

2014

2015

2014

2,699

2,203
104
105
214
—
—
391
(61)
—

1,996

2,154
107
97
—
—
—
(104)
(51)
—

1,462

1,031
60
33
472
16
(35)
354
(34)
(250)

871

811
54
29
—
16
(2)
88
(27)
62

2,956

2,203

1,647

1,031

1,917
69
188
91
—
—
(61)
—

1,717
163
—
88
—
—
(51)
—

889
162
262
80
16
(1)
(34)
(185)

2,204

1,917

1,189

2,204
2,956

(752)

21
(11)
(762)

1,917
2,203

(286)

1,189
1,647

(458)

— $
(10)
(276)

2
(48)
(412)

(752)

(286)

(458)

4
1,253

1,257

4
837

841

(2)
372

370

733
61
—
48
16
—
(27)
58

889

889
1,031

(142)

17
(4)
(155)

(142)

(2)
254

252

(in millions)

Accumulated benefit obligation at end of year:

Change in projected benefit obligation:
Projected benefit obligation at beginning of year
Service cost
Interest cost
Benefit obligations assumed in Covidien acquisition
Employee contributions
Plan curtailments and settlements
Actuarial (gain) loss
Benefits paid
Foreign currency exchange rate changes and other

Projected benefit obligation at end of year

Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Plan assets acquired in Covidien acquisition
Employer contributions
Employee contributions
Plan settlements
Benefits paid
Foreign currency exchange rate changes

Fair value of plan assets at end of year

Funded status at end of year:
Fair value of plan assets
Benefit obligations

Underfunded status of the plans

Recognized liability

Amounts recognized on the consolidated balance sheets consist of:
Non-current assets
Current liabilities
Non-current liabilities

Recognized liability

Amounts recognized in accumulated other comprehensive (loss) income:
Prior service cost (benefit)
Net actuarial loss

Ending balance

114

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

In certain countries outside the U.S., fully funding pension plans is not a common practice, as funding provides no income tax
benefit. Consequently, certain pension plans were partially funded as of April 24, 2015 and April 25, 2014. U.S. and non-U.S.
plans with accumulated benefit obligations in excess of plan assets consist of the following:

(in millions)

Accumulated benefit obligation
Projected benefit obligation
Plan assets at fair value

Plans with projected benefit obligations in excess of plan assets consist of the following:

(in millions)

Projected benefit obligation
Plan assets at fair value

Fiscal Year

2015

2014

3,678
4,032
2,823

2,426
2,703
2,268

Fiscal Year

2015

2014

4,319
3,086

2,864
2,419

The net periodic benefit cost of the plans include the following components:

U.S. Pension Benefits

Fiscal Year

Non-U.S. Pension Benefits

Fiscal Year

(in millions)

2015

2014

2013

2015

2014

2013

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost (credit)
Amortization of net actuarial loss

104
105
(160)
—
65

107
97
(141)
1
85

104
94
(128)
(1)
71

60
33
(41)
—
12

54
29
(35)
1
11

Net periodic benefit cost

114

149

140

43
27
(33)
1
8

The other changes in plan assets and projected benefit obligations recognized in accumulated other comprehensive loss for
fiscal year 2015 are as follows:

(in millions)

Net actuarial loss
Amortization of prior service cost
Amortization of net actuarial gain
Effect of exchange rates

Total recognized in accumulated other comprehensive loss

Total recognized in net periodic benefit cost and accumulated other comprehensive loss

U.S. Pension
Benefits

Non-U.S.
Pension
Benefits

481
—
(65)
—

416

530

199
(1)
(12)
(68)

118

182

The estimated net actuarial loss that will be amortized from accumulated other comprehensive loss into net periodic benefit
cost, before tax, in fiscal year 2016 for U.S. and non-U.S. pension benefits is expected to be $98 million and $22 million,
respectively.

115

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The actuarial assumptions are as follows:

Weighted average assumptions - projected benefit obligation:
Discount rate
Rate of compensation increase
Weighted average assumptions - net periodic benefit cost:
Discount rate
Expected return on plan assets
Rate of compensation increase

U.S. Pension Benefits

Non-U.S. Pension Benefits

Fiscal Year

2015

2014

2013

2015

2014

2013

4.20% 4.75% 4.55% 1.88% 3.32% 3.52%
3.90% 3.90% 3.90% 2.92% 2.80% 2.78%

4.75% 4.55% 5.05% 3.32% 3.52% 3.98%
8.25% 8.25% 8.25% 4.77% 4.76% 5.19%
3.90% 3.90% 3.80% 2.80% 2.78% 2.85%

The Company’s discount rates are determined by considering current yield curves representing high quality, long-term fixed
income instruments. The resulting discount rates are consistent with the duration of plan liabilities.

The expected long-term rate of return on plan assets assumptions are determined using a building block approach, considering
historical averages and real returns of each asset class. In certain countries, where historical returns are not meaningful,
consideration is given to local market expectations of long-term returns.

Retirement Benefit Plan Investment Strategy The Company has an account that holds the assets for both the U.S. pension
plan and other U.S. post-retirement benefits, primarily retiree medical benefits. For investment purposes, the plans are managed
in an identical way, as their objectives are similar.

The Company has a Qualified Plan Committee (the Plan Committee) that sets investment guidelines for U.S. pension plan and
other U.S. post-retirement benefits with the assistance of an external consultant. These guidelines are established based on
market conditions, risk tolerance, funding requirements, and expected benefit payments. The Plan Committee also oversees the
investment allocation process, selects the investment managers, and monitors asset performance. As pension liabilities are long-
term in nature, the Company employs a long-term total return approach to maximize the long-term rate of return on plan assets
for a prudent level of risk. An annual analysis on the risk versus the return of the investment portfolio is conducted to justify the
expected long-term rate of return assumption.

The investment portfolio contains a diversified portfolio of investment categories, including equities, fixed income securities,
hedge funds, and private equity. Securities are also diversified in terms of domestic and international securities, short- and long-
term securities, growth and value styles, large cap and small cap stocks, active and passive management, and derivative-based
styles.

Outside the U.S., pension plan assets are typically managed by decentralized fiduciary committees. There is significant variation
local funding rules, and local financial and tax
in policy asset allocation from country to country. Local regulations,
considerations are part of the funding and investment allocation process in each country.

The Plan did not hold any investments in the Company’s ordinary shares as of April 24, 2015 or April 25, 2014.

The Company’s pension plan target allocations at April 24, 2015 and April 25, 2014, by asset category, are as follows:

U.S. Plans

Asset Category
Equity securities
Debt securities
Other

Total

Target Allocation

2015

2014

49%
23
28

100%

50%
20
30

100%

116

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Non-U.S. Plans

Asset Category
Equity securities
Debt securities
Other

Total

Target Allocation

2015

2014

35%
29
36

100%

41%
22
37

100%

Retirement Benefit Plan Asset Fair Values The following is a description of the valuation methodologies used for
retirement benefit plan assets measured at fair value.

Short-term investments: Valued at the closing price reported in the active markets in which the individual security is traded.

U.S. government securities: Certain U.S. government securities are valued at the closing price reported in the active markets in
which the individual security is traded. Other U.S. government securities are valued based on inputs other than quoted prices
that are observable.

Corporate debt securities: Valued based on inputs other than quoted prices that are observable.

Common stock: Valued at the closing price reported in the active markets in which the individual security is traded.

Equity Mutual Funds/Commingled Trusts: Valued based on the year-end net asset values of the investment vehicles. The net
asset values of the investment vehicles are based on the fair values of the underlying investments of the partnerships valued at
the closing price reported in the active markets in which the individual security is traded. Equity mutual funds have a daily
reported net asset value and the Company classifies these investments as Level 2. Commingled trusts do not have a daily
reported net asset value and the Company classifies these investments as Level 3.

Fixed Income Mutual Funds: Valued based on the year-end net asset values of the investment vehicles. The net asset values of
the investment vehicles are based on the fair values of the underlying investments of the partnerships valued based on inputs
other than quoted prices that are observable.

Partnership Units: Valued based on the year-end net asset values of the underlying partnerships. The net asset values of the
partnerships are based on the fair values of the underlying investments of the partnerships. Quoted market prices are used to
value the underlying investments of the partnerships, where the partnerships consist of the investment pools which invest
primarily in common stocks. Partnership units include partnerships, private equity investments, and real asset investments.
Partnerships primarily include long/short equity and absolute return strategies. These investments can be redeemed monthly
with notice periods ranging from 45 to 95 days. As of April 24, 2015, there are two absolute return strategy funds totaling $4
million that are in the process of liquidation. The Company expects to receive the proceeds over the next five years. Private
equity investments consist of common stock and debt instruments of private companies. For private equity funds, the sum of the
unfunded commitments as of April 24, 2015 is $59 million and the estimated liquidation period of these funds is expected to be
one to 15 years. Real asset investments consist of commodities, derivatives, Real Estate Investment Trusts, and illiquid real
estate holdings. These investments have redemption and liquidation periods ranging from 30 days to 10 years. If a quoted
market price is not available for a partnership investment, other valuation procedures are utilized to arrive at fair value.

Registered Investment Companies: Valued at the quoted market prices of shares held by the plan at year-end in the active
market on which the individual securities are traded.

Insurance Contracts: Comprised of investments in collective (group) insurance contracts, consisting of individual insurance
policies. The policyholder is the employer and each member is the owner/beneficiary of their individual insurance policy. These
policies are a part of the insurance company’s general portfolio and participate in the insurer’s profit-sharing policy on an
excess yield basis.

117

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The methods described above may produce fair values that may not be indicative of net realizable value or reflective of future
fair values. Furthermore, while the Company believes its valuation methodologies are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments
could result in a different fair value measurement at the reporting date.

There were no transfers between Level 1, Level 2, or Level 3 during fiscal years 2015, 2014, or 2013.

The following tables provide information by level for the retirement benefit plan assets that are measured at fair value, as
defined by U.S. GAAP. See Note 1 for discussion of the fair value measurement terms of Levels 1, 2, and 3.

U.S. Pension Benefits

(in millions)

Short-term investments
U.S. government securities
Corporate debt securities
Equity mutual funds/commingled trusts
Fixed income mutual funds
Partnership units

(in millions)

Short-term investments
U.S. government securities
Corporate debt securities
Other common stock
Equity mutual funds/commingled trusts
Fixed income mutual funds
Partnership units

Fair Value
as of
April 24, 2015

Fair Value Measurements
Using Inputs Considered as

Level 1

Level 2

Level 3

247
155
5
951
374
472

247
109
—
—
—
—

— $
46
4
751
374
—

2,204

356

1,175

—
—
1
200
—
472

673

Fair Value
as of
April 25, 2014

Fair Value Measurements
Using Inputs Considered as

Level 1

Level 2

Level 3

157
158
60
125
578
166
673

157
108
—
125
—
—
—

1,917

390

— $
50
59
—
293
166
—

568

—
—
1
—
285
—
673

959

The following tables provide a reconciliation of the beginning and ending balances of U.S. pension benefit assets measured at
fair value that used significant unobservable inputs (Level 3):

(in millions)

Balance as of April 25, 2014
Total realized gains included in income
Total unrealized losses included in accumulated other
comprehensive loss
Purchases and sales, net

Balance as of April 24, 2015

Total Level 3
Investments

Corporate Debt
Securities

Commingled
Trusts

Partnership Units

959
162

(130)
(318)

673

1
—

—
—

285
65

(31)
(119)

200

673
97

(99)
(199)

472

118

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

(in millions)

Balance as of April 26, 2013
Total realized gains included in income
Total unrealized gains included in accumulated other
comprehensive loss
Purchases and sales, net

Balance as of April 25, 2014

Total Level 3
Investments

Corporate Debt
Securities

Commingled
Trusts

Partnership Units

851
23

86
(1)

959

1
—

—
—

227
—

58
—

285

623
23

28
(1)

673

Non-U.S. Pension Benefits

(in millions)

Registered investment companies
Insurance contracts
Partnership units

(in millions)

Registered investment companies
Insurance contracts
Partnership units

Fair Value
as of
April 24, 2015

1,113
60
16

1,189

Fair Value Measurements
Using Inputs Considered as

Level 1

Level 2

Level 3

— $
—
—

— $

1,113
—
—

1,113

Fair Value
as of
April 25, 2014

Fair Value Measurements
Using Inputs Considered as

Level 1

Level 2

Level 3

868
11
10

889

— $
—
—

— $

868
—
—

868

—
60
16

—
11
10

The following tables provide a reconciliation of the beginning and ending balances of non-U.S. pension benefit assets measured
at fair value that used significant unobservable inputs (Level 3):

(in millions)

Balance as of April 25, 2014
Total unrealized gains included in accumulated other comprehensive loss
Purchases and sales, net
Foreign currency exchange

Balance as of April 24, 2015

(in millions)

Balance as of April 26, 2013
Total unrealized gains included in accumulated other comprehensive loss
Purchases and sales, net
Foreign currency exchange

Balance as of April 25, 2014

Total Level 3
Investments

Insurance
Contracts

Partnership
Units

21
1
63
(9)

Total Level 3
Investments

18
1
1
1

11
(1)
56
(6)

Insurance
Contracts

10
—
—
1

10
2
7
(3)

Partnership
Units

8
1
1
—

Retirement Benefit Plan Funding It is the Company’s policy to fund retirement costs within the limits of allowable tax
deductions. During fiscal year 2015, the Company made discretionary contributions of approximately $91 million to the U.S.
pension plan. Internationally, the Company contributed approximately $80 million for pension benefits during fiscal year 2015.

119

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

The Company anticipates that it will make contributions of $79 million to its pension benefits in fiscal 2016. Based on the
guidelines under the U.S. Employee Retirement Income Security Act of 1974 and the various guidelines which govern the plans
outside the U.S., the majority of anticipated fiscal year 2015 contributions will be discretionary. The Company believes that,
along with pension assets, the returns on invested pension assets, and Company contributions, the Company will be able to meet
its pension and other post-retirement obligations in the future.

Retiree benefit payments, which reflect expected future service, are anticipated to be paid as follows:

(in millions)

Fiscal Year

2016
2017
2018
2019
2020
2021 - 2025

Total

U.S. Pension
Benefits

Non-U.S. Pension
Benefits

Gross Payments Gross Payments

96
93
103
114
125
792

1,323

160
38
40
39
41
239

557

Post-retirement Benefit Plans The net periodic benefit cost associated with the Company’s post-retirement benefit plans was
$14 million, $15 million, and $20 million in fiscal years 2015, 2014, and 2013, respectively. The Company’s projected benefit
obligation for all post-retirement benefit plans was $352 million and $327 million at April 24, 2015 and April 25, 2014,
respectively. The Company’s fair value of plan assets for all post-retirement benefit plans was $288 million and $267 million at
April 24, 2015 and April 25, 2014, respectively. The activity during fiscal 2015 and 2014 related to both the change in projected
benefit obligations and the fair value of plan assets was not material.

Defined Contribution Savings Plans The Company has defined contribution savings plans that cover substantially all U.S.
employees and certain non-U.S. employees. The general purpose of these plans is to provide additional financial security during
retirement by providing employees with an incentive to make regular savings. Company contributions to the plans are based on
employee contributions and Company performance and since fiscal year 2006, the entire match has been made in cash. Expense
under these plans was $188 million, $145 million, and $163 million in fiscal years 2015, 2014, and 2013, respectively.

Effective May 1, 2005, the Company froze participation in the existing defined benefit pension plan in the U.S. and
implemented two new plans including an additional defined benefit pension plan and a new defined contribution pension plan,
respectively: the Personal Pension Account (PPA) and the Personal Investment Account (PIA). Employees in the U.S. hired on
or after May 1, 2005 have the option to participate in either the PPA or the PIA. Participants in the PPA receive an annual
allocation of their salary and bonus on which they will receive an annual guaranteed rate of return which is based on the ten-
year Treasury bond rate. Participants in the PIA also receive an annual allocation of their salary and bonus; however, they are
allowed to determine how to invest their funds among identified fund alternatives. The cost associated with the PPA is included
in U.S. Pension Benefits in the tables presented earlier. The defined contribution cost associated with the PIA was
approximately $53 million, $50 million, and $50 million in fiscal years 2015, 2014, and 2013, respectively.

14. Leases

The Company leases office, manufacturing, and research facilities and warehouses, as well as transportation, data processing,
and other equipment under capital and operating leases. A substantial number of these leases contain options that allow the
Company to renew at the fair rental value on the date of renewal.

120

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Future minimum payments under capitalized leases and non-cancelable operating leases at April 24, 2015 are:

(in millions)
Fiscal Year

2016
2017
2018
2019
2020
Thereafter
Total minimum lease payments
Less amounts representing interest
Present value of net minimum lease payments

Capitalized
Leases

Operating
Leases

20
37
23
22
22
43
167
(22)
145

196
138
93
66
43
88
624
N/A
N/A

Rent expense for all operating leases was $195 million, $150 million, and $140 million in fiscal years 2015, 2014, and 2013,
respectively. The increase in fiscal year 2015 rent expense is primarily related to the January 26, 2015 Covidien acquisition.

15. Accumulated Other Comprehensive Loss

Changes in AOCI by component are as follows:

(in millions)

Unrealized
Gain (Loss) on
Available-for-
Sale Securities

Cumulative
Translation
Adjustments(a)

Net Change in
Retirement
Obligations

Unrealized
Gain (Loss) on
Derivatives

Total
Accumulated
Other
Comprehensive
Loss (Income)

Balance as of April 26, 2013, net of tax

205

(852)

(492)

Other comprehensive (loss) income before
reclassifications, before tax
Tax benefit (expense)

Other comprehensive (loss) income before
reclassifications, net of tax

Reclassifications, before tax
Tax benefit (expense)

Reclassifications, net of tax

Other comprehensive (loss) income, net of tax

Balance as of April 25, 2014, net of tax

Other comprehensive income (loss) before
reclassifications, before tax
Tax (expense) benefit

Other comprehensive income (loss) before
reclassifications, net of tax

Reclassifications, before tax
Tax benefit (expense)

Reclassifications, net of tax

Other comprehensive income (loss), net of tax

Balance as of April 24, 2015, net of tax

(89)
32

(57)
(72)
26

(46)(b)

(103)

(6)

169
(60)

109
(138)
49

(89)(b)

13
—

13
—
—

—

218

(495)
—

(495)
—
—

—

(495)

(277)

60
(37)

23
99
(35)

64(c)

(765)

(617)
198

(419)
78
(25)

53(c)

(366)

$ (1,131)

(120)
44

(76)
(42)
16

(26)(d)

(102)

(44)

545
(199)

346
(145)
53

(92)(d)

254

210

(136)
39

(97)
(15)
7

(8)

(105)

(597)

(398)
(61)

(459)
(205)
77

(128)

(587)

(1,184)

(a)

(b)

Taxes are not provided on CTA as substantially all translation adjustments relate to earnings that are intended to be
indefinitely reinvested outside the U.S.
Represents net realized gains on sales of available-for-sale securities that were reclassified from AOCI to other expense,
net (see Note 5).

121

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note 13).
Relates to foreign currency cash flow hedges that were reclassified from AOCI to other expense, net or cost of products
sold and forward starting interest rate derivative instruments that were reclassified from AOCI to interest expense, net
(see Note 9).

16. Commitments and Contingencies

The Company and its affiliates are involved in a number of legal actions involving product liability, intellectual property
disputes, shareholder related matters, environmental proceedings, income tax disputes, and other matters. The outcomes of these
legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some
actions, the claimants seek damages, as well as other relief (including injunctions barring the sale of products that are the
subject of the lawsuit), that could require significant expenditures or result in lost revenues. When determining the estimated
loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. Estimates of
probable losses resulting from litigation and governmental proceedings involving the Company are inherently difficult to
predict, particularly when the matters are in early procedural stages, with incomplete scientific facts or legal discovery; involve
unsubstantiated or indeterminate claims for damages; potentially involve penalties, fines or punitive damages; or could result in
a change in business practice. In addition to the litigation contingencies referenced below, the Company also has certain
guarantee obligations that may potentially result in future costs. While it is not possible to predict the outcome for most of the
matters discussed below, the Company believes it is possible that costs associated with them could have a material adverse
impact on the Company’s consolidated earnings, financial position, or cash flows.

Product Liability Matters

Sprint Fidelis

In 2007, a putative class action was filed in the Ontario Superior Court of Justice in Canada seeking damages for personal
injuries allegedly related to Medtronic, Inc.’s Sprint Fidelis family of defibrillation leads. On October 20, 2009, the court
certified a class proceeding but denied class certification on plaintiffs’ claim for punitive damages. Pretrial proceedings are
underway. The Company has not recorded an expense related to damages in connection with this matter because any potential
loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally, the Company cannot reasonably estimate
the range of loss, if any, that may result from this matter.

INFUSE Litigation

As of June 1, 2015, plaintiffs had filed approximately 800 lawsuits against Medtronic in the U.S. state and federal courts,
reflecting approximately 1,500 individual personal injury claims from the INFUSE bone graft product. Certain law firms have
advised Medtronic that they represent a large number of similar claimants against Medtronic. The Company estimates those law
firms represent approximately 4,600 unfiled claimants. Medtronic recorded expenses of $37 million and $140 million in fiscal
years 2015 and 2014, respectively, related to probable and reasonably estimated damages and expenses in connection with these
matters. See “Accrued Certain Litigation Charges” within Note 1 for additional discussion.

Other INFUSE Litigation

On June 5, 2014, Humana, Inc. filed a lawsuit for unspecified monetary damages in the U.S. District Court for the Western
District of Tennessee, alleging that Medtronic, Inc. violated federal racketeering (RICO) law and various state laws, by
conspiring with physicians to promote unapproved uses of INFUSE. The Company has not recorded an expense related to
damages in connection with this matter because any potential loss is not currently probable or reasonably estimable under U.S.
GAAP. Additionally, the Company cannot reasonably estimate the range of loss, if any, that may result from this matter.

Pelvic Mesh Litigation

Covidien currently is involved in litigation in various state and federal courts against manufacturers of pelvic mesh products
alleging personal injuries resulting from the implantation of those products. Two subsidiaries of Covidien supplied pelvic mesh
products to one of the manufacturers named in the litigation and Covidien is indemnifying that manufacturer on certain claims.

122

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

In addition, the Company believes that this manufacturer has an obligation to indemnify Covidien with respect to the promotion
of the pelvic mesh products. The litigation includes a federal multi-district litigation in the United States District Court for the
Northern District of West Virginia and cases in various state courts and jurisdictions outside the United States. Generally,
complaints allege design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer
protection laws and loss of consortium claims. As of June 1, 2015, approximately 11,300 pending cases or claims were filed or
estimated to be filed involving products manufactured by Covidien’s subsidiaries. See “Accrued Certain Litigation Charges”
within Note 1 for additional discussion.

Patent Litigation

Ethicon

On March 28, 2013, the federal court ruled in favor of Covidien in a patent infringement suit against Ethicon Endo-Surgery, Inc.
(Ethicon), a Johnson & Johnson company, relating to Ethicon’s Harmonic® line of ultrasonic surgical products. The federal
court awarded Covidien $177 million in damages upon ruling that several of Covidien’s patents were valid, enforceable and
infringed by Ethicon. Ethicon appealed the decision. On December 4, 2014, the U.S. Court of Appeals for the Federal Circuit
reversed the $177 million judgment against Ethicon and ruled that the infringed patent claims were invalid. On June 24, 2014,
Covidien filed a lawsuit in the U.S. District Court for the District of Connecticut against Ethicon alleging that Ethicon’s
ultrasonic surgical product, the Harmonic ACE®+7, infringes three of the Company’s patents. Covidien asked the court to
enjoin Ethicon from continuing to make and sell the Harmonic ACE®+7 device and to grant damages for the patent
infringement. On October 17, 2014, the district court granted a preliminary injunction against Ethicon, which prevents Ethicon
from making and selling the Harmonic ACE®+7 device. Ethicon obtained a temporary stay and appealed this preliminary
injunction ruling. On March 25, 2015, the U.S. Court of Appeals for the Federal Circuit reversed the preliminary injunction
entered against the Harmonic ACE®+7 and remanded for further proceedings. On May 8, 2015, pursuant to a stipulation of the
parties, the U.S. District Court for the District of Connecticut dismissed that case involving the Harmonic ACE®+7.

Ethicon Endo-Surgery, Inc., et al. v. Covidien, Inc., et al. is a patent infringement action filed on December 14, 2011 in the
United States District Court for the Southern District of Ohio, Western Division. The complaint alleges that Covidien’s
Sonicision product infringes several of Ethicon’s design and utility patents. Ethicon is seeking monetary damages and injunctive
relief. On January 22, 2014, the district court entered summary judgment in Covidien’s favor, ruling that Covidien does not
infringe any of the seven Ethicon patents in dispute and declaring five of Ethicon’s patents invalid. Ethicon has appealed the
district court’s decision. Oral argument before the U.S. Court of Appeals for the Federal Circuit was held March 6, 2015.

The Company has not recorded an expense related to damages in connection with the patent litigation matters because any
potential
the Company cannot
reasonably estimate the range of loss, if any, that may result from these matters.

loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally,

Shareholder Related Matters

INFUSE

On March 12, 2012, Charlotte Kokocinski filed a shareholder derivative action against both Medtronic, Inc. and certain of its
current and former officers and members of its Board of Directors in the U.S. District Court for the District of Minnesota,
setting forth certain allegations, including a claim that defendants violated various purported duties in connection with the
INFUSE bone graft product and otherwise. On March 25, 2013, the Court dismissed the case without prejudice. On March 30,
2015, the Court granted defendants’ motion to dismiss the Amended Complaint, dismissing the case with prejudice.

In May 2012, Daniel Himmel and the Saratoga Advantage Trust commenced two other separate shareholder derivative actions
in Hennepin County, Minnesota, District Court against the same defendants, making allegations similar to those in the
Kokocinski case. On July 1, 2014, Road Carriers Local 707 Welfare & Pension Funds filed a shareholder derivative action in
Hennepin County, Minnesota, District Court against the same defendants making allegations similar to those in the Kokocinski,
Himmel, and Saratoga Advantage Trust cases. On July 24, 2014, Anne Shirley Cutler filed a shareholder derivative action in
Hennepin County, Minnesota, District Court against certain of the same defendants making allegations similar to those in the
Kokocinski, Himmel, and Saratoga Advantage Trust cases as well as allegations that defendants violated purported duties in

123

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

connection with the Synchromed pain pump system. On May 26, 2015, the Himmel, Saratoga Advantage Trust, Road Carriers
Local 707, and Cutler plaintiffs filed Voluntary Stipulations of Dismissal with Prejudice or statements of non-opposition to
dismissal of all INFUSE-related claims and allegations. On June 4, 2015, the Court preliminarily approved the INFUSE-related
dismissals with prejudice subject to shareholder notice and an opportunity to intervene. On June 9, 2015, the Company provided
notice of the Court’s order in a Form 8-K filing.

On September 26, 2014, Richard Hockstein filed an INFUSE-related shareholder derivative action against both Medtronic, Inc.
and certain of its current and former officers and members of its Board of Directors in the United States District Court for the
District of Minnesota making allegations similar to those in the Kokocinski case. West Virginia Pipe Trades and Phil Pace, on
June 27, 2013 and July 3, 2013, respectively, filed putative class action complaints against Medtronic, Inc. and certain of its
officers in the U.S. District Court for the District of Minnesota, alleging that the defendants made false and misleading public
statements regarding the INFUSE Bone Graft product during the period of December 8, 2010 through August 3, 2011.

Shareholder Related Matters Resulting from the Covidien Acquisition

On July 2, 2014, Lewis Merenstein filed a putative shareholder class action in Hennepin County, Minnesota, District Court
seeking to enjoin the then-potential acquisition of Covidien. The lawsuit named Medtronic, Inc., Covidien, and each member of
the Medtronic, Inc. board at the time as defendants, and alleged that the directors breached their fiduciary duties to shareholders
with regard to the then-potential acquisition. On August 21, 2014, Kenneth Steiner filed a putative shareholder class action in
Hennepin County, Minnesota, District Court, also seeking an injunction to prevent the potential Covidien acquisition. In
September of 2014, the Merenstein and Steiner matters were consolidated and in December of 2014, the plaintiffs filed a
preliminary injunction motion seeking to enjoin the Covidien transaction. On December 30, 2014, a hearing was held on
plaintiffs’ motion for preliminary injunction and on defendants’ motion to dismiss. On January 2, 2015, the Court denied the
plaintiffs’ motion for preliminary injunction and on January 5, 2015 issued its opinion. On March 20, 2015, the Court issued its
order and opinion granting Medtronic’s motion to dismiss the case. In May of 2015, the plaintiffs filed an appeal with the
Minnesota State Court of Appeals.

In connection with the then-potential acquisition of Covidien, on September 19, 2014, William A. Houston filed a putative
shareholder class action in the United States District Court for the District of Minnesota and on October 3, 2014, Marilyn Clark
filed a complaint in the United States District Court for the District of Minnesota that is nearly identical to the Houston
complaint. These actions named as defendants certain members of Medtronic, Inc.’s board of directors at the time and certain of
Medtronic, Inc.’s officers, and also named Medtronic, Inc. as a nominal defendant. The Houston and Clark complaints asserted
various causes of action under Minnesota law, including that the individual defendants allegedly breached fiduciary duties in
providing for excise tax reimbursements to certain individuals who were and/or are directors and executive officers of
Medtronic, Inc. in connection with the then-potential acquisition of Covidien. In October of 2014, the Houston and Clark
matters were consolidated and the plaintiffs filed a preliminary injunction motion seeking to enjoin the Company from the
payment of the excise tax reimbursements. On December 16, 2014, the Court heard the preliminary injunction motion and on
December 22, 2014, the Court denied the preliminary injunction motion. On January 6, 2015, the Company consented to
plaintiffs’ request to voluntarily dismiss the matter without prejudice. On January 7, 2015, the Court entered its order of
dismissal, bringing these matters to a conclusion.

Putative shareholder class action complaints have been filed in the United States District Court for the District of Massachusetts
by purported shareholders of Covidien under the captions Taxman v. Covidien plc, et al., 14-cv-12949, Lipovich v. Covidien plc,
et al., 14-cv-13308 and Rosenfeld Family Foundation v. Covidien plc, et al., 14-cv-13490. On October 20, 2014, the plaintiff in
the Rosenfeld action and another purported shareholder of Covidien filed a motion seeking to consolidate
the Taxman, Lipovich and Rosenfeld actions, and on November 14, 2014, the United States District Court for the District of
Massachusetts granted that motion consolidating the actions (the Consolidated Action). On December 23, 2014, the defendants
reached an agreement in principle with plaintiffs in the Consolidated Action, and that agreement is reflected in a memorandum
of understanding. In connection with the settlement contemplated by the memorandum of understanding, Covidien agreed to
make certain additional disclosures related to the Transactions, which are contained in Covidien’s Report on Form 8-K filed on
December 23, 2014. The memorandum of understanding contemplates that the parties will enter into a stipulation of settlement.

A stipulation of settlement was filed with the court on May 15, 2015, and a hearing will be scheduled at which the United States
District Court for the District of Massachusetts will consider the fairness, reasonableness, and adequacy of the settlement,

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Medtronic plc
Notes to Consolidated Financial Statements (Continued)

including attorneys’ fees and expenses that will be paid to plaintiffs’ counsel. If the settlement is finally approved by the court,
it will resolve and release all claims in all actions that were or could have been brought by Covidien shareholders challenging
any aspect of the Transactions. There can be no assurance that United States District Court for the District of Massachusetts will
approve the settlement. In such event, the proposed settlement as contemplated by the memorandum of understanding may be
terminated.

The Company has not recorded an expense related to damages in connection with the shareholder related matters because any
potential
the Company cannot
reasonably estimate the range of loss, if any, that may result from these matters.

loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally,

Environmental Proceedings

Covidien is involved in various stages of investigation and cleanup related to environmental remediation matters at a number of
sites. These projects relate to a variety of activities, including removal of solvents, metals and other hazardous substances from
soil and groundwater. The ultimate cost of site cleanup and timing of future cash flows is difficult to predict given uncertainties
regarding the extent of the required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup
methods.

Covidien is a successor to a company which owned and operated a chemical manufacturing facility in Orrington, Maine from
1967 until 1982, and is responsible for the costs of completing an environmental site investigation as required by the Maine
Department of Environmental Protection (MDEP). MDEP served a compliance order on Mallinckrodt LLC and United States
Surgical Corporation in December 2008. The compliance order included a directive to remove a significant volume of soils at
the site. On December 19, 2008, Covidien filed an appeal with the Maine Board of Environmental Protection (Maine Board) to
challenge the terms of the compliance order. A hearing before the Maine Board began on January 25, 2010 and concluded on
February 4, 2010. On August 19, 2010, the Maine Board modified the MDEP order and issued a final order requiring removal of
two landfills, capping of the remaining three landfills, installation of a groundwater extraction system and long-term monitoring
of the site and the three remaining landfills.

On April 3, 2014, the Maine Supreme Judicial Court affirmed the Maine Board’s compliance order. Covidien has proceeded
with implementation of the investigation and remediation at the site in accordance with the MDEP order as modified by the
Maine Board order. See “Accrued Certain Litigation Charges” within Note 1 for additional discussion.

Covidien has also been involved in a lawsuit filed in the U.S. District Court for the District of Maine by the Natural Resources
Defense Council and the Maine People’s Alliance. Plaintiffs sought an injunction requiring Covidien to conduct extensive
studies of mercury contamination of the Penobscot River and Bay and options for remediating such contamination, and to
perform appropriate remedial activities, if necessary.

On July 29, 2002, following a March 2002 trial, the District Court entered an opinion and order which held that conditions in the
Penobscot River and Bay may pose an imminent and substantial endangerment and that Covidien was liable for the cost of
performing a study of the river and bay. The District Court subsequently appointed an independent study panel to oversee the
study and ordered Covidien to pay costs associated with the study. A report issued by the study panel contains recommendations
for a variety of potential remedial options which could be implemented individually or in a variety of combinations, and
includes preliminary cost estimates for the potential remedial options, which the report describes as “very rough estimates of
cost,” ranging from $25 million to $235 million. The report indicates that these costs are subject to uncertainties, and that before
any remedial option is implemented, further engineering studies and engineering design work are necessary to determine the
feasibility of the proposed remedial options. In June of 2014, a trial was held to determine if remediation was necessary and
feasible, and, at a post-trial hearing on June 18, 2015, the Court indicated that further engineering study and engineering design
work is appropriate to determine the nature and extent of remediation in the Penobscot River and Bay. See “Accrued Certain
Litigation Charges” within Note 1 for additional discussion.

Other Matters

One of Covidien’s subsidiaries, ev3 Inc., (ev3) acquired Appriva Medical, Inc. in 2002. The acquisition agreement relating to
ev3’s acquisition of Appriva Medical contained four contingent milestone payments totaling $175 million. ev3 determined that

125

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

the milestones were not achieved by the applicable dates and that none of the milestones were payable. On April 7, 2009,
Michael Lesh and Erik Van Der Burg, acting jointly as the Shareholder Representatives for the former shareholders of Appriva
Medical, filed a motion to amend their previously dismissed complaints in Superior Court of the State of Delaware. The
plaintiffs asserted several claims, including breach of contract, fraudulent inducement and violation of California securities law.
On May 1, 2013, the jury returned a verdict finding that ev3 breached the merger agreement and awarded $175 million in
damages plus interest to the plaintiffs. On September 30, 2014, the Delaware Supreme Court reversed the jury’s verdict and
remanded the case for a new trial. See “Accrued Certain Litigation Charges” within Note 1 for additional discussion.

Medtronic has received subpoenas or document requests from the Attorneys General in Massachusetts, California, Oregon,
Illinois, and Washington seeking information regarding sales, marketing, clinical, and other information relating to the INFUSE
bone graft product. The Company is fully cooperating with these requests.

On December 3, 2013, Medtronic, Inc. received a subpoena for records from the U.S. Attorney’s Office for the District of
Minnesota requesting information relating to Medtronic, Inc’s compliance with the Trade Agreements Act. In April 2015, the
Company settled this matter with no admission of liability and recorded a certain litigation charge of $4 million in fiscal year
2015.

On May 2, 2011, the U.S. Attorney’s Office for the District of Massachusetts issued a subpoena to ev3, a subsidiary of the
Company, requesting production of documents relating to sales and marketing and other issues in connection with several
neurovascular products. The matters under investigation relate to activities prior to Covidien’s acquisition of ev3 in 2010. ev3
complied as required with the subpoena and cooperated with the investigation. The Company is fully cooperating with these
requests.

On September 2, 2014, the U.S. Department of Health and Human Services, Office of Inspector General and the U.S. Attorney’s
Office for the Northern District of California, issued a subpoena requesting production of documents relating to sales and
marketing practices associated with certain of ev3’s peripheral vascular products. The Company is fully cooperating with these
requests.

Except as noted above, the Company has not recorded an expense related to damages in connection with the issued subpoenas
because any potential loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally, the Company
cannot reasonably estimate the range of loss, if any, that may result from these matters.

Income Taxes

In March 2009, the U.S. Internal Revenue Service (IRS) issued its audit report on Medtronic, Inc. for fiscal years 2005 and
2006. Medtronic, Inc. reached agreement with the IRS on some, but not all matters related to these fiscal years. On
December 23, 2010, the IRS issued a statutory notice of deficiency with respect to the remaining issues. Medtronic, Inc. filed a
Petition with the U.S. Tax Court on March 21, 2011 objecting to the deficiency. During October and November 2012,
Medtronic, Inc. reached resolution with the IRS on various matters, including the deductibility of a settlement payment.
Medtronic, Inc. and the IRS agreed to hold one issue, the calculation of amounts eligible for the one-time repatriation holiday,
because such specific issue was being addressed by other taxpayers in litigation with the IRS. The remaining unresolved issue
for fiscal years 2005 and 2006 relates to the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary
operating in Puerto Rico, which is one of the Company’s key manufacturing sites. The Tax Court proceeding with respect to this
issue began on February 3, 2015 and ended on March 12, 2015. The Company expects a ruling from the Tax Court sometime
during fiscal year 2017.

In October 2011, the IRS issued its audit report on Medtronic, Inc. for fiscal years 2007 and 2008. Medtronic, Inc. reached
agreement with the IRS on some but not all matters related to these fiscal years. The significant issues that remain unresolved
relate to the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico and
proposed adjustments associated with the tax effects of the Company’s acquisition of Kyphon Inc. (Kyphon). During the fourth
quarter of fiscal year 2015, a tentative settlement was reached with the IRS for the Kyphon acquisition matters. As a result, the
Company recorded a $329 million certain tax adjustment, including interest, during fiscal year 2015.

In April 2014, the IRS issued its audit report on Medtronic, Inc. for fiscal years 2009, 2010, and 2011. Medtronic, Inc. reached
agreement with the IRS on some but not all matters related to these fiscal years. The significant issues that remain unresolved

126

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

relate to the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico, and
proposed adjustments associated with the tax effects of its acquisition structures for Ardian, CoreValve, Inc., and Ablation
Frontiers, Inc. The Company disagrees with the IRS and will attempt to resolve these matters at the IRS Appellate level,
however, it will proceed through litigation, if necessary. The IRS continues to audit Medtronic, Inc.’s U.S. federal income tax
returns for the fiscal years 2012 through 2014.

Covidien and the IRS have concluded and reached agreement on its audit of Covidien’s U.S. federal income tax returns for the
2008 and 2009 tax years. The IRS continues to audit Covidien’s U.S. federal income tax returns for the years 2010 through
2012. Open periods for examination also include certain periods during which Covidien was a subsidiary of Tyco International.
The resolution of these matters is subject to the conditions set forth in the Tyco tax sharing agreement. Tyco International has
the right to administer, control and settle all U.S. income tax audits for periods prior to the 2007 separation.

The IRS has concluded its field examination of certain of Tyco International’s U.S. federal income tax returns for the years
1997 through 2000 and proposed tax adjustments, several of which also affect Covidien’s income tax returns for certain years
after 2000. Tyco International has appealed certain of the tax adjustments proposed by the IRS and has resolved all but one of
the matters associated with the proposed tax adjustments. With respect to the outstanding issue that remains in dispute, on
June 20, 2013, Tyco International advised Covidien that it had received Notices of Deficiency from the IRS asserting that
several of Tyco International’s former U.S. subsidiaries owe additional taxes of $914 million plus penalties of $154 million
based on audits of the 1997 through 2000 tax years of Tyco International and its subsidiaries as they existed at that time. These
amounts exclude interest and do not reflect the impact on subsequent periods if the IRS position is ultimately proved correct.
The IRS has asserted in the Notices of Deficiency that substantially all of Tyco International’s intercompany debt originating
during the years 1997 through 2000 should not be treated as debt for U.S. federal income tax purposes, and has disallowed
interest deductions related to the intercompany debt and certain tax attribute adjustments recognized on Tyco International’s
U.S. income tax returns totaling approximately $3.0 billion. The Company disagrees with the IRS’s proposed adjustments. On
July 22, 2013, Tyco International filed a petition with the U.S. Tax Court contesting the IRS assessment. The Company believes
there are meritorious defenses for the tax filings in question, that the IRS positions with regard to these matters are inconsistent
with the applicable tax laws and existing Treasury regulations, and that the previously reported taxes for the years in question
are appropriate.

No payments with respect to these matters or any additional matters that may be raised by the U.S. Tax Court would be required
until the dispute is definitively resolved, which could take several years. The timing and outcome of such litigation is highly
uncertain and could have a material adverse effect on the Company’s consolidated financial statements. In particular, if the IRS
is successful in asserting its claim, it would likely assert that approximately $6.6 billion of interest deductions with respect to
Tyco International’s intercompany debt in subsequent time periods should also be disallowed.

Covidien’s income tax returns for the years 2001 through 2003 remain subject to adjustment by the IRS upon ultimate
resolution of the disputed issue involving certain intercompany loans that originated during 1997 through 2000. Covidien and
the IRS have effectively settled its audits of tax matters for the years 2004 through 2007.

See Note 12 for additional discussion of income taxes.

Guarantees

As a result of the recent acquisition of Covidien, the Company has guarantee commitments and indemnifications with Tyco
International, TE Connectivity, and Mallinckrodt plc (Mallinckrodt) which relate to certain contingent tax liabilities.

On June 29, 2007, Covidien entered into a tax sharing agreement, under which Covidien shares responsibility for certain of its,
Tyco International’s and TE Connectivity’s income tax liabilities for periods prior to Covidien’s 2007 separation from Tyco
International (2007 separation). Covidien, Tyco International and TE Connectivity share 42%, 27%, and 31%, respectively, of
U.S. income tax liabilities that arise from adjustments made by tax authorities to Covidien’s, Tyco International’s and TE
Connectivity’s U.S. income tax returns, certain income tax liabilities arising from adjustments made by tax authorities to
intercompany transactions or similar adjustments, and certain taxes attributable to internal
transactions undertaken in
anticipation of the 2007 separation. If Tyco International and TE Connectivity default on their obligations to Covidien under the
Tyco tax sharing agreement, the Company would be liable for the entire amount of these liabilities. All costs and expenses
associated with the management of these tax liabilities are being shared equally among the parties.

127

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

In connection with the 2007 separation, all tax liabilities associated with Covidien business became Covidien’s tax liabilities.
Following Covidien’s spin-off of its Pharmaceuticals business to Covidien shareholders through a distribution of all the
outstanding ordinary shares of Mallinkrodt (2013 separation), Mallinckrodt became the primary obligor to the taxing authorities
for the tax liabilities attributable to its subsidiaries, a significant portion of which relate to periods prior to the 2007 separation.
However, Covidien remains the sole party subject to the tax sharing agreement with Tyco International and TE Connectivity.
Accordingly, Mallinckrodt does not share in Covidien’s liability to Tyco International and TE Connectivity, nor in the
receivable that Covidien has from Tyco International and TE Connectivity.

If any party to the Tyco tax sharing agreement were to default in its obligation to another party to pay its share of the
distribution taxes that arise as a result of no party’s fault, each non-defaulting party would be required to pay, equally with any
other non-defaulting party, the amounts in default. In addition, if another party to the Tyco tax sharing agreement that is
responsible for all or a portion of an income tax liability were to default in its payment of such liability to a taxing authority, the
Company could be legally liable under applicable tax law for such liabilities and be required to make additional tax payments.
Accordingly, under certain circumstances, the Company may be obligated to pay amounts in excess of the Company’s agreed
upon share of Covidien’s, Tyco International’s and TE Connectivity’s tax liabilities.

The Company has used available information to develop its best estimates for certain assets and liabilities related to periods
prior to the 2007 separation, including amounts subject to or impacted by the provisions of the Tyco tax sharing agreement. The
actual amounts that the Company may be required to ultimately accrue or pay under the Tyco tax sharing agreement, however,
could vary depending upon the outcome of the unresolved tax matters. Final determination of the balances will be made in
subsequent periods, primarily related to certain pre-2007 separation tax liabilities and tax years open for examination. These
balances will also be impacted by the filing of final or amended income tax returns in certain jurisdictions where those returns
include a combination of Tyco International, Covidien and/or TE Connectivity legal entities for periods prior to the 2007
separation.

In conjunction with the 2013 separation, Mallinckrodt assumed the tax liabilities that are attributable to its subsidiaries, and
Covidien indemnified Mallinckrodt to the extent that such tax liabilities arising from periods prior to 2013 exceed $200 million,
net of certain tax benefits realized. In addition, in connection with the 2013 separation, Covidien entered into certain other
guarantee commitments and indemnifications with Mallinckrodt.

See “Tax Guarantees” within Note 1 for additional discussion.

Except as described above or certain income tax related matters, the Company has not recorded an expense related to losses in
connection with these matters because any potential loss is not currently probable or reasonably estimable under U.S. GAAP.
Additionally, the Company cannot reasonably estimate the range of loss, if any, that may result from these matters.

In the normal course of business, the Company and/or its affiliates periodically enter into agreements that require one or more of
them to indemnify customers or suppliers for specific risks, such as claims for injury or property damage arising out of the
Company or its affiliates’ products or the negligence of any of their personnel or claims alleging that any of their products
infringe third-party patents or other intellectual property. The Company’s maximum exposure under these indemnification
provisions cannot be estimated, and the Company has not accrued any liabilities within the consolidated financial statements.
Historically, the Company has not experienced significant losses on these types of indemnifications.

128

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

17. Quarterly Financial Data (unaudited)

(in millions, except per share data)

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Fiscal Year

Net Sales

Gross Profit

Net Income (Loss)

Basic Earnings per Share

Diluted Earnings per Share

2015
2014

4,273
4,083

3,168
3,061

871
953

0.88
0.94

0.87
0.93

4,366
4,194

3,224
3,104

828
902

0.84
0.90

0.83
0.89

4,318
4,163

3,190
3,113

977
762

0.99
0.76

0.98
0.75

7,304
4,566

4,370
3,395

(1) $

448

—
0.45

—
0.44

20,261
17,005

13,952
12,672

2,675
3,065

2.44
3.06

2.41
3.02

The data in the schedule above has been intentionally rounded to the nearest million, and therefore, the quarterly amounts may
not sum to the fiscal year-to-date amounts.

18. Segment and Geographic Information

The Company’s management evaluates performance and allocates resources based on profit and loss from operations before
income taxes and interest expense, net, not including special (gains) charges, net, restructuring charges, net, certain litigation
charges, net, acquisition-related items, and certain tax adjustments. The accounting policies of the reportable segments are the
same as those described in the summary of significant accounting policies in Note 1.

In the fourth quarter of fiscal year 2015, the Company amended the way in which management evaluates performance and
allocates resources due to the Covidien acquisition. As a result, the Company began to operate under four reportable segments
and four operating segments. This change had no impact on the Company’s consolidated results for prior periods presented.

The Company’s Cardiac and Vascular Group consists of three divisions: Cardiac Rhythm & Heart Failure, Coronary &
Structural Heart, and Aortic & Peripheral Vascular. The primary products sold by this operating segment include those for
cardiac rhythm disorders and cardiovascular disease. The Company’s Minimally Invasive Therapies Group consists of two
divisions: Surgical Solutions and Patient Monitoring & Recovery. The primary products sold by this operating segment include
those for advanced and general surgical care and patient monitoring, nursing and patient care, and airway and ventilation. The
Company’s Restorative Therapies Group consists of four divisions: Spine, Neuromodulation, Surgical Technologies, and
Neurovascular. The primary products sold by this operating segment include those for spinal conditions and musculoskeletal
trauma, neurological disorders, urological and digestive disorders, and ear, nose, and throat conditions. The primary products
sold by the Company’s Diabetes Group include those for diabetes management.

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Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Net sales of the Company’s reportable segments include end-customer revenues from the sale of products they each develop and
manufacture or distribute. Net sales and income before income taxes by reportable segment are as follows:

(in millions)

Cardiac and Vascular Group
Minimally Invasive Therapies Group
Restorative Therapies Group
Diabetes Group

Total Net Sales

(in millions)

Cardiac and Vascular Group
Minimally Invasive Therapies Group
Restorative Therapies Group
Diabetes Group

Total Reportable Segments’ Income Before Income Taxes

Impact of inventory step-up
Impact of product technology upgrade commitment
Special (gains) charges, net
Restructuring charges, net(a)
Certain litigation charges, net
Acquisition-related items
Interest expense, net
Corporate

2015

Fiscal Year

2014

2013

9,361
2,387
6,751
1,762

8,847
—
6,501
1,657

8,695
—
6,369
1,526

20,261

17,005

16,590

2015

Fiscal Year

2014

2013

3,140
342
1,828
540

5,850
(623)
(74)
38
(252)
(42)
(550)
(280)
(581)

2,982
—
1,821
457

5,260
—
—
(40)
(88)
(770)
(117)
(108)
(432)

2,935
—
1,778
432

5,145
—
—
—
(182)
(245)
49
(151)
(365)

4,251

Total Income From Operations Before Income Taxes

3,486

3,705

(a)

Restructuring charges, net within this table include the impact of amounts recorded within cost of products sold in the
consolidated statements of income.

The following table presents the Company’s assets by reportable segment:

(in millions)

Cardiac and Vascular Group
Minimally Invasive Therapies Group
Restorative Therapies Group
Diabetes Group

Total Assets of Reportable Segments

Corporate

Total Assets

Geographic Information

April 24,
2015

April 25,
2014

13,642
51,228
15,249
2,597

82,716
23,969

106,685

8,705
—
10,568
2,038

21,311
16,632

37,943

In the fourth quarter of fiscal year 2015, the Company amended the way in which management evaluates performance and
allocates resources by geography. As a result, the Company began to operate under four geographic regions: Americas, Europe,
Middle East, and Africa (EMEA), Asia Pacific, and Greater China. Accordingly, the geographic information for the prior years
has been restated to present these regions.

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Notes to Consolidated Financial Statements (Continued)

Net sales to external customers and property, plant, and equipment, net by geography are as follows:

(in millions)

Americas

EMEA(a)

Asia Pacific

Greater China

Consolidated

Fiscal Year 2015
Net sales to external customers
Property, plant, and equipment, net
Fiscal Year 2014
Net sales to external customers
Property, plant, and equipment, net
Fiscal Year 2013
Net sales to external customers
Property, plant, and equipment, net

$
$

12,125
3,626

9,922
1,833

9,761
1,920

$
$

5,064
725

4,483
393

4,225
397

$
$

2,059
165

1,776
74

1,886
74

$
$

1,013
183

824
92

718
99

$
$

20,261
4,699

17,005
2,392

16,590
2,490

(a)

Sales to Ireland were insignificant during all periods presented. Property, plant, and equipment, net includes $151
million, $72 million, and $70 million in Ireland in fiscal years 2015, 2014, and 2013, respectively.

No single customer represented over 10 percent of the Company’s consolidated net sales in fiscal years 2015, 2014, or 2013.

19. Guarantor Financial Information

On January 26, 2015, Medtronic plc (“Parent Company Guarantor”) and Medtronic Luxco, a subsidiary guarantor, each
provided a full and unconditional guarantee of the obligations of Medtronic, Inc. under the Medtronic 2015 Senior Notes and
Medtronic Outstanding Notes. In addition, Medtronic plc and Medtronic Luxco each provided a full and unconditional
guarantee of the obligations of CIFSA, assumed as part of the Covidien acquisition, under the CIFSA Senior Notes. These
guarantees of the CIFSA Senior Notes were in addition to the guarantees of the CIFSA Senior Notes by legacy Covidien
holding companies Covidien Ltd. (f/k/a Covidien plc) and Covidien Group Holdings Ltd. (f/k/a Covidien Ltd.), both of which
remain guarantors of the CIFSA Senior Notes. A summary of the guarantees is as follows:

Guarantees of Medtronic 2015 Senior Notes and Medtronic Outstanding Notes

(cid:129)

Parent Company Guarantor — Medtronic plc
Subsidiary Issuer — Medtronic, Inc.
Subsidiary Guarantor — Medtronic Luxco

Since Medtronic plc and Medtronic Luxco did not exist in prior years, the Parent Company Guarantor column and Subsidiary
Guarantor Column in the consolidating financial information for the guarantee of the Medtronic 2015 Senior Notes and
Medtronic Outstanding Notes will appear as zeros for fiscal year 2014 and fiscal year 2013. Accordingly, the prior years’
consolidating financial information are those of the predecessor registrant Medtronic, Inc.

Guarantees of CIFSA Senior Notes

(cid:129)

Parent Company Guarantor — Medtronic plc
Subsidiary Issuer — CIFSA
Subsidiary Guarantors — Medtronic Luxco, Covidien Ltd., and Covidien Group Holdings Ltd.

There were no Medtronic plc or Medtronic Luxco guarantees in effect in prior periods, and the CIFSA Senior Notes were
assumed as part of the Covidien acquisition. Therefore, no consolidating financial information for the years ended April 25,
2014 and April 26, 2013 is presented related to the guarantee of the CIFSA Senior Notes.

The following presents the Company’s Consolidating Statements of Comprehensive Income and Condensed Consolidating
Statements of Cash Flows as of and for the fiscal years ended April 24, 2015, April 25, 2014, and April 26, 2013, and
Condensed Consolidating Balance Sheets as of April 24, 2015 and April 25, 2014. The guarantees provided by the Parent
Company Guarantor and Subsidiary Guarantors are joint and several. Condensed consolidating financial information for
Medtronic plc, Medtronic Luxco, Medtronic, Inc. and CIFSA, on a stand-alone basis, is presented using the equity method of
accounting for subsidiaries.

131

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Consolidating Statement of Comprehensive Income
Fiscal Year Ended April 24, 2015
Medtronic 2015 Senior Notes and Medtronic Outstanding Notes

(in millions)

Net sales

Costs and expenses:

Cost of products sold
Research and development expense
Selling, general, and administrative

expense

Special (gains) charges, net
Restructuring charges, net
Certain litigation charges, net
Acquisition-related items
Amortization of intangible assets
Other (income) expense, net

Operating profit
Interest income
Interest expense

Parent
Company
Guarantor
(Medtronic
plc)

Subsidiary
Issuer
(Medtronic,
Inc.)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

Total

— $

1,261

— $ 20,261

(1,261)

$ 20,261

—
—

—
—
—
—
—
—
(108)

108
—
—

1,234
390

535
—
—
—
—
11
(712)

(197)
—
706

—
—

—
—
—
—
—
—
—

—
(170)
—

(170)
(2,408)

2,578
—

2,578
(587)

5,969
1,250

6,369
(38)
237
42
550
722
938

4,222
(386)
130

(256)
—

4,478
1,268

3,210
(587)

(894)
—

—
—
—
—
—
—
—

(367)
170
(170)

—
8,615

(8,982)
(138)

(8,844)
1,761

6,309
1,640

6,904
(38)
237
42
550
733
118

3,766
(386)
666

280
—

3,486
811

2,675
(587)

Interest expense (income), net
Equity in net income of subsidiaries

—
(2,578)

706
(3,629)

Income from operations before

income taxes

Provision (benefit) for income taxes

Net income

Other comprehensive loss, net of tax

2,686
11

2,675
(587)

2,726
(330)

3,056
(587)

Total comprehensive income

2,088

2,469

1,991

2,623

(7,083)

2,088

132

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Consolidating Statement of Comprehensive Income
Fiscal Year Ended April 25, 2014
Medtronic 2015 Senior Notes and Medtronic Outstanding Notes

(in millions)

Net sales

Costs and expenses:

Cost of products sold
Research and development expense
Selling, general, and administrative

expense

Special charges
Restructuring charges, net
Certain litigation charges, net
Acquisition-related items
Amortization of intangible assets
Other (income) expense, net

Operating profit
Interest income
Interest expense

Interest expense (income), net
Equity in net income of subsidiaries

Income from operations before

income taxes

Provision for income taxes

Net income

Other comprehensive loss, net of tax

Parent
Company
Guarantor
(Medtronic
plc)

Subsidiary
Issuer
(Medtronic,
Inc.)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

Total

— $

1,155

— $ 17,005

(1,155)

$ 17,005

—
—

—
—
—
—
—
—
—

—
—
—

—
—

1,123
380

617
—
—
—
—
12
(1,219)

242
(5)
317

312
(3,560)

3,490
425

3,065
(105)

—
—

—
—
—
—
—
—
—

—
—
—

—
—

4,353
1,097

5,230
40
78
770
117
337
1,400

3,583
(266)
62

(204)
—

3,787
227

3,560
(105)

(1,143)
—

—
—
—
—
—
—
—

(12)
—
—

—
3,560

(3,572)
(12)

(3,560)
105

4,333
1,477

5,847
40
78
770
117
349
181

3,813
(271)
379

108
—

3,705
640

3,065
(105)

Total comprehensive income

— $

2,960

— $

3,455

(3,455)

2,960

133

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Consolidating Statement of Comprehensive Income
Fiscal Year Ended April 26, 2013
Medtronic 2015 Senior Notes and Medtronic Outstanding Notes

(in millions)

Net sales

Costs and expenses:

Cost of products sold
Research and development expense
Selling, general, and administrative

expense

Special charges
Restructuring charges, net
Certain litigation charges, net
Acquisition-related items
Amortization of intangible assets
Other (income) expense, net

Operating profit
Interest income
Interest expense

Interest expense (income), net
Equity in net income of subsidiaries

Income from operations before

income taxes

Provision for income taxes

Net income

Other comprehensive loss, net of tax

Parent
Company
Guarantor
(Medtronic
plc)

Subsidiary
Issuer
(Medtronic,
Inc.)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

Total

— $

1,090

— $ 16,590

(1,090)

$ 16,590

—
—

—
—
—
—
—
—
—

—
—
—

—
—

1,057
421

542
—
—
—
—
14
(1,136)

192
—
329

329
(3,945)

3,808
341

3,467
(19)

—
—

—
—
—
—
—
—
—

—
—
—

—
—

4,147
1,136

5,156
—
172
245
(49)
317
1,244

4,222
(237)
59

(178)
—

4,400
455

3,945
(19)

(1,078)
—

—
—
—
—
—
—
—

(12)
—
—

—
3,945

(3,957)
(12)

(3,945)
19

4,126
1,557

5,698
—
172
245
(49)
331
108

4,402
(237)
388

151
—

4,251
784

3,467
(19)

Total comprehensive income

— $

3,448

— $

3,926

(3,926)

3,448

134

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Balance Sheet
Fiscal Year Ended April 24, 2015
Medtronic 2015 Senior Notes and Medtronic Outstanding Notes

(in millions)

ASSETS
Current assets:

Cash and cash equivalents
Investments
Accounts receivable, net
Inventories
Intercompany receivable
Tax assets
Prepaid expenses and other current assets

Total current assets
Property, plant and equipment, net
Goodwill
Other intangible assets, net
Long-term tax assets
Investment in subsidiaries
Intercompany loans receivable
Other assets

Parent
Company
Guarantor
(Medtronic
plc)

Subsidiary
Issuer
(Medtronic,
Inc.)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

Total

263
—
—
—
259
—
4

526
—
—
—
—
70,255
3,000
—

1,071
—
—
165
146,373
770
128

148,507
976
1,607
39
643
41,218
6,516
678

170
—
—
—
—
—
—

170
—
—
—
—
64,335
10,000
—

3,339
14,637
5,112
3,298
150,679
729
1,322

179,116
3,753
38,923
28,062
559
—
10,218
1,059

—
—
—
—
(297,311)
(164)
—

(297,475)
(30)
—
—
(428)
(175,808)
(29,734)
—

4,843
14,637
5,112
3,463
—
1,335
1,454

30,844
4,699
40,530
28,101
774
—
—
1,737

Total assets

$ 73,781

$ 200,184

$ 74,505

$ 261,690

(503,475)

106,685

LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:

Short-term borrowings
Accounts payable
Intercompany payable
Accrued compensation
Accrued income taxes
Deferred tax liabilities
Other accrued expenses

Total current liabilities

Long-term debt
Long-term accrued compensation and

retirement benefits

Long-term accrued income taxes
Long-term intercompany loans payable
Long-term deferred tax liabilities
Other long-term liabilities

Total liabilities

Shareholders’ equity

—
—
20,506
1
41
3
—

20,551
—

—
—
—
—
—

20,551
53,230

1,110
261
135,091
490
371
—
600

137,923
29,004

965
1,450
10,218
—
207

179,767
20,417

—
—
—
—
—
—
—

—
—

—
—
10,000
—
—

10,000
64,505

1,324
1,349
141,714
1,120
523
280
1,894

148,204
4,748

570
1,026
9,516
5,128
1,612

170,804
90,886

—
—
(297,311)
—
—
(164)
(30)

(297,505)
—

—
—
(29,734)
(428)
—

(327,667)
(175,808)

2,434
1,610
—
1,611
935
119
2,464

9,173
33,752

1,535
2,476
—
4,700
1,819

53,455
53,230

Total liabilities and shareholders’ equity

$ 73,781

$ 200,184

$ 74,505

$ 261,690

(503,475)

106,685

135

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Balance Sheet
Fiscal Year Ended April 25, 2014
Medtronic 2015 Senior Notes and Medtronic Outstanding Notes

Parent
Company
Guarantor
(Medtronic
plc)

Subsidiary
Issuer
(Medtronic,
Inc.)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

Total

(in millions)
ASSETS

Current assets:

Cash and cash equivalents

Investments

Accounts receivable, net

Inventories

Intercompany receivable

Tax assets

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net

Goodwill

Other intangible assets, net

Long-term tax assets

Investment in subsidiaries

Intercompany loans receivable

Other assets

Total assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Short-term borrowings

Accounts payable

Intercompany payable

Accrued compensation

Accrued income taxes

Deferred tax liabilities

Other accrued expenses

Total current liabilities

Long-term debt

Long-term accrued compensation and retirement

benefits

Long-term accrued income taxes

Long-term intercompany loans payable

Long-term deferred tax liabilities

Other long-term liabilities

Total liabilities

Shareholders’ equity

Total liabilities and shareholders’ equity

264

—

154

43,377

602

479

44,876

954

1,565

435

36,943

573

85,417

1,262

201

51,593

405

144

—

53,605

10,177

487

1,315

273

—

117

65,974

19,443

85,417

—

136

1,139

12,838

3,811

1,571

51,593

193

597

71,742

1,461

9,028

2,235

252

—

273

589

—

(94,970)

(59)

(379)

(95,408)

(23)

—

(387)

(36,943)

(293)

—

$ 1,403

12,838

3,811

1,725

—

736

697

21,210

2,392

10,593

2,286

300

—

1,162

$ 85,580

(133,054)

$37,943

351

541

— $ 1,613

—

43,377

(94,970)

610

2,408

47,385

138

175

773

118

—

(59)

(402)

(95,431)

—

(293)

(387)

—

742

—

1,015

164

2,006

5,559

10,315

662

1,343

—

386

235

48,637

36,943

(96,111)

(36,943)

18,500

19,443

$ 85,580

(133,054)

$37,943

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended April 24, 2015
Medtronic 2015 Senior Notes and Medtronic Outstanding Notes

Parent
Company
Guarantor
(Medtronic
plc)

Subsidiary
Issuer
(Medtronic,
Inc.)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

Total

(in millions)
Operating Activities:

Net cash provided by operating activities

26 $

1,649 $

170 $

3,057 $

— $ 4,902

Investing Activities:
Acquisitions, net of cash acquired
Additions to property, plant, and equipment
Purchases of marketable securities
Sales and maturities of marketable securities
Net decrease in intercompany loans
Other investing activities, net

(65)
(9,700)
—
—
—
—
—
—
— (16,996)
—
—

— (5,119)
—
(571)
— (7,582)
5,890
—
55
—
89
—

— (14,884)
—
(571)
— (7,582)
5,890
—
—
16,941
89
—

Net cash used in investing activities

(9,700)

(17,061)

— (7,238)

16,941

(17,058)

Financing Activities:
Acquisition-related contingent consideration
Change in short-term borrowings, net
Repayment of short-term borrowings (maturities greater

than 90 days)

Proceeds from short-term borrowings (maturities greater

than 90 days)

Issuance of long-term debt
Payments on long-term debt
Dividends to shareholders
Issuance of ordinary shares
Repurchase of ordinary shares
Net intercompany loan borrowings (repayments)
Other financing activities

—
—

—

—
—
—
(435)
172
(300)
10,500
—

—
—

(150)

150
19,942
(1,268)
(902)
477
(1,620)
(55)
—

Net cash provided by financing activities

9,937

16,574

Effect of exchange rate changes on cash and cash

equivalents

Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period

—

263
—

(355)

807
264

—
—

—

—
—
—
—
—
—
—
—

—

170
—

(85)
(1)

—

—
—
—
—
—
—
6,496
(31)

6,379

2,200
1,139

—
—

—

(85)
(1)

(150)

—
150
— 19,942
— (1,268)
— (1,337)
—
649
— (1,920)
—
(31)

(16,941)
—

(16,941)

15,949

—

—
—

(353)

3,440
1,403

Cash and cash equivalents at end of period

263 $

1,071 $

170 $

3,339 $

— $ 4,843

137

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended April 25, 2014
Medtronic 2015 Senior Notes and Medtronic Outstanding Notes

(in millions)

Operating Activities:

Net cash provided by operating
activities

Investing Activities:

Acquisitions, net of cash acquired

Additions to property, plant, and equipment

Purchases of marketable securities

Sales and maturities of marketable securities

Net decrease in intercompany loans

Increase in investment in subsidiary

Other investing activities, net

Net cash used in investing activities

Financing Activities:

Acquisition-related contingent consideration

Change in short-term borrowings, net

Repayment of short-term borrowings
(maturities greater than 90 days)

Proceeds from short-term borrowings
(maturities greater than 90 days)

Issuance of long-term debt

Payments on long-term debt

Dividends to shareholders

Issuance of ordinary shares

Repurchase of ordinary shares

Net intercompany loan borrowings

(repayments)

Other financing activities

Net cash (used in) provided by
financing activities

Effect of exchange rate changes on cash and

cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of

period

Cash and cash equivalents at end of

period

Parent
Company
Guarantor
(Medtronic
plc)

Subsidiary
Issuer
(Medtronic,
Inc.)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

Total

— $

1,384

— $

3,575

— $

4,959

—

(154)

—

(153)

—

(1,301)

1,045

1,994

(565)

(1,116)

1,307

(2,553)

(1,163)

—

196

—

(385)

(242)

(10,895)

8,111

(12)

—

(29)

(3,452)

(1)

127

—

131

—

(1)

—

256

416

723

—

(11)

—

(11)

—

(385)

(396)

(10,895)

8,111

—

(29)

(3,594)

(1)

127

(1,301)

1,176

1,994

(565)

(1,116)

1,307

(2,553)

—

(918)

484

919

— $

264

— $

1,139

— $

1,403

138

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended April 26, 2013
Medtronic 2015 Senior Notes and Medtronic Outstanding Notes

(in millions)

Operating Activities:

Net cash provided by operating
activities

Investing Activities:

Acquisitions, net of cash acquired

Additions to property, plant, and equipment

Purchases of marketable securities

Sales and maturities of marketable securities

Net decrease in intercompany loans

Increase in investment in subsidiary

Other investing activities, net

Net cash used in investing activities

Financing Activities:

Acquisition-related contingent consideration

Change in short-term borrowings, net

Repayment of short-term borrowings
(maturities greater than 90 days)

Proceeds from short-term borrowings
(maturities greater than 90 days)

Issuance of long-term debt

Payments on long-term debt

Dividends to shareholders

Issuance of ordinary shares

Repurchase of ordinary shares

Net intercompany loan borrowings

(repayments)

Other financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and

cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of

period

Cash and cash equivalents at end of

period

Parent
Company
Guarantor
(Medtronic
plc)

Subsidiary
Issuer
(Medtronic,
Inc.)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

Total

— $

2,298

— $

2,644

— $

4,942

—

(119)

—

(119)

—

(699)

(2,700)

2,628

2,980

(2,214)

(1,055)

267

(1,247)

(17)

(22)

(2,079)

—

100

—

(820)

(338)

(12,321)

10,511

—

(14)

(2,965)

(18)

(21)

—

(39)

(353)

1,076

—

(17)

—

(17)

—

(820)

(457)

(12,321)

10,511

—

(14)

(3,101)

(18)

(720)

(2,700)

2,628

2,980

(2,214)

(1,055)

267

(1,247)

—

(22)

(2,101)

(253)

1,172

— $

196

— $

723

— $

919

139

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Consolidating Statement of Comprehensive Income
Fiscal Year Ended April 24, 2015
CIFSA Senior Notes

(in millions)

Net sales
Costs and expenses:

Cost of products sold

Research and development expense

Selling, general, and administrative expense

Special (gains) charges, net

Restructuring charges, net

Certain litigation charges, net

Acquisition-related items

Amortization of intangible assets
Other (income) expense, net

Operating profit

Interest income

Interest expense

Interest (income) expense, net

Equity in net income of subsidiaries

Income (loss) from operations before income

taxes

Provision for income taxes

Net income (loss)

Other comprehensive loss, net of tax

Parent
Company
Guarantor
(Medtronic
plc)

—

—
(108)

108

—

(2,578)

2,686
11

2,675

(587)

Subsidiary
Issuer
(CIFSA)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

—

—
1

(1)

(149)

(120)

626

(507)
—

(507)

(587)

—

—
26

(47)

(170)

—

(170)

(2,410)

2,533
—

2,533

(587)

20,261

6,309

1,640

6,883

(38)

237

550

733
199

3,706

(386)

956

570

—

3,136
800

2,336

(587)

—

—
—

—

319

(319)

—

4,362

(4,362)
—

(4,362)

1,761

Total

20,261

6,309

1,640

6,904

(38)

237

550

733
118

3,766

(386)

666

280

—

3,486
811

2,675

(587)

Total comprehensive income (loss)

2,088

(1,094)

1,946

1,749

(2,601)

2,088

140

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Balance Sheet
Fiscal Year Ended April 24, 2015
CIFSA Senior Notes

(in millions)

ASSETS
Current assets:

Cash and cash equivalents
Investments
Accounts receivable, net
Inventories
Intercompany receivable
Tax assets
Prepaid expenses and other current assets

Total current assets
Property, plant and equipment, net
Goodwill
Other intangible assets, net
Long-term tax assets
Investment in subsidiaries
Intercompany loans receivable
Other assets

Parent
Company
Guarantor
(Medtronic
plc)

Subsidiary
Issuer
(CIFSA)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

Total

263 $
—
—
—
259
—
4

728 $
—
—
—
—
—
—

170 $
—
—
—
269
—
6

3,682 $
14,637
5,112
3,463
20,508
1,335
1,444

— $
—
—
—
(21,036)
—
—

526
—
—
—
—
70,255
3,000
—

728
—
—
—
—
7,040
7,401
—

445
1
—
—
—
64,335
11,303
—

50,181
4,728
40,530
28,101
774
—
6,372
1,737

(21,036)
(30)
—
—
—
(141,630)
(28,076)
—

4,843
14,637
5,112
3,463
—
1,335
1,454

30,844
4,699
40,530
28,101
774
—
—
1,737

Total assets

$ 73,781 $ 15,169 $ 76,084 $ 132,423 $ (190,772) $ 106,685

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:

Short-term borrowings
Accounts payable
Intercompany payable
Accrued compensation
Accrued income taxes
Deferred tax liabilities
Other accrued expenses

Total current liabilities

Long-term debt
Long-term accrued compensation and retirement

benefits

Long-term accrued income taxes
Long-term intercompany loans payable
Long-term deferred tax liabilities
Other long-term liabilities

Total liabilities
Shareholders’ equity

— $ 1,002 $
—
20,506
1
41
3
—

—
—
—
—
—
610

20,551
—

—
—
—
—
—

1,612
4,580

—
—
8,385
—
—

20,551
53,230

14,577
592

— $
2
280
—
—
—
1

283
—

—
—
10,002
—
—

10,285
65,799

1,432 $
1,608
250
1,610
894
116
1,883

7,793
29,172

1,535
2,476
9,689
4,700
1,819

57,184
75,239

— $
—
(21,036)
—
—
—
(30)

(21,066)
—

—
—
(28,076)
—
—

(49,142)
(141,630)

2,434
1,610
—
1,611
935
119
2,464

9,173
33,752

1,535
2,476
—
4,700
1,819

53,455
53,230

Total liabilities and shareholders’ equity

$ 73,781 $ 15,169 $ 76,084 $ 132,423 $ (190,772) $ 106,685

141

Medtronic plc
Notes to Consolidated Financial Statements (Continued)

Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended April 24, 2015
CIFSA Senior Notes

(in millions)

Operating Activities:

Net cash provided by (used in) operating
activities

Net cash used in investing activities

Financing Activities:
Acquisition-related contingent consideration
Change in short-term borrowings, net
Repayment of short-term borrowings (maturities

greater than 90 days)

Proceeds from short-term borrowings (maturities

greater than 90 days)
Issuance of long-term debt
Payments on long-term debt
Dividends to shareholders
Issuance of ordinary shares
Repurchase of ordinary shares
Net intercompany loan borrowings (repayments)
Intercompany dividend paid
Other financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash

equivalents

Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period

Parent
Company
Guarantor
(Medtronic
plc)

Subsidiary
Issuer
(CIFSA)

Subsidiary
Guarantors

Subsidiary
Non-
guarantors

Consolidating
Adjustments

Total

$ (205)

$ 1,472

$ 4,709

(1,100)

$ 4,902

—
—
—
—
27,591
—

27,591

—
—

—

—
—
—
—
—
—
(27,591)
1,100
—

(26,491)

—

—
—

(14,884)
(571)
(7,582)
5,890
—
89

(17,058)

(85)
(1)

(150)

150
19,942
(1,268)
(1,337)
649
(1,920)
—
—
(31)

15,949

(353)

3,440
1,403

—
(1)
—
—
(1,303)
—

(5,184)
(570)
(7,582)
5,890
(18,887)
89

(1,304)

(26,244)

(85)
(1)

(150)

150
19,942
(1,217)
(902)
477
(1,620)
8,704
(1,100)
(31)

24,167

(353)

2,279
1,403

—
—

—

—
—
—
—
—
—
2
—
—

—

170
—

170

—
—
—
—
(7,401)
—

(7,401)

—
—

—

—
—
(51)
—
—
—
8,385
—
—

8,334

—

728
—

728

(9,700)
—
—
—
—
—

(9,700)

—
—

—

—
—
—
(435)
172
(300)
10,500
—
—

9,937

—

263
—

263

142

Cash and cash equivalents at end of period

$ 3,682

— $ 4,843

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934, as amended (the Exchange Act)) and changes in the Company’s internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange Act) as of the end of the period covered by this report. Based upon
that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered
by this annual report, our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) are effective.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company
(as defined in Exchange Act Rule 13a-15(f)). Management conducted an evaluation of the effectiveness of internal control over
financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that the
Company’s internal control over financial reporting was effective as of April 24, 2015. Our internal control over financial
reporting as of April 24, 2015, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting
firm who has also audited our consolidated financial statements, as stated in their report in the section entitled “Report of
Independent Registered Public Accounting Firm,” which expresses an unqualified opinion on the effectiveness of the
Company’s internal control over financial reporting as of April 24, 2015, which is included in “Item 8. Financial Statements and
Supplementary Data” in this Annual Report on Form 10-K.

On January 26, 2015, the Company completed the acquisition of Covidien plc. As a result, management has excluded Covidien
plc from our assessment of internal control over financial reporting. Covidien plc is a wholly-owned subsidiary whose total
assets and total revenues represent 8 percent and 13 percent, respectively, of the related consolidated financial statement
amounts as of and for the year ended April 24, 2015.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the Company’s most recently
completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.

Item 9B. Other Information

On June 19, 2015, Medtronic’s Board of Directors set December 11, 2015 as the date for the Company’s 2015 Annual Meeting.
Because the date of the 2015 Annual Meeting is more than 30 days after the anniversary of Medtronic, Inc.’s 2014 annual
meeting of shareholders, in accordance with Rule 14a-5(f) under the Exchange Act, the Company has set a new deadline for
receipt of shareholder proposals submitted for inclusion in the Company’s proxy materials for the 2015 Annual Meeting in
accordance with Rule 14a-8 under the Exchange Act. In order to be considered timely, such proposals must be received no later
than the close of business on July 7, 2015. Proposals should be addressed to the Corporate Secretary at the Company’s principal
executive offices at 20 On Hatch, Lower Hatch Street, Dublin 2, Ireland, and must comply with Rule 14a-8 under the Exchange
Act regarding the inclusion of shareholder proposals in proxy materials.

Shareholders also have a right under the Company’s Memorandum and Articles of Association (the “Articles”) to nominate
individuals for election to the Board and to present a proposal before an annual meeting of shareholders that is not intended to
be included in the Company’s proxy statement by following specified procedures. For a shareholder proposal for the 2015
Annual Meeting that is not intended to be included in the Company’s proxy statement under Rule 14a-8, the shareholder must
(i) provide the applicable information required by the Articles and (ii) give timely notice to the Corporate Secretary at the
address above in accordance with the Articles not less than 50 days (October 22, 2015), nor more than 90 days (September 12,
2015), prior to the 2015 Annual Meeting.

143

PART III

Part III of this Annual Report on Form 10-K incorporates information by reference from our 2015 definitive proxy statement,
which will be filed no later than 120 days after April 24, 2015.

Item 10. Directors, Executive Officers, and Corporate Governance

The sections entitled “Proposal 1 — Election of Directors — Directors and Nominees,” “Governance of Medtronic —
Committees of the Board and Meetings,” “Governance of Medtronic — Audit Committee,” “Governance of Medtronic — Audit
Committee — Audit Committee Independence and Financial Experts,” “Governance of Medtronic — Nominating and
Corporate Governance Committee,” and “Share Ownership Information — Section 16(a) Beneficial Ownership Reporting
Compliance” in our Proxy Statement for our 2015 Annual Shareholders’ Meeting, which will be filed no later than 120 days
after April 24, 2015, are incorporated herein by reference. See also “Executive Officers of Medtronic” on pages 16 to 17 herein.

We have adopted a written Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer, Corporate
Treasurer, Corporate Controller, and other senior financial officers performing similar functions who are identified from time to
time by the Chief Executive Officer. We have also adopted a written Code of Business Conduct and Ethics for Members of the
Board of Directors. The Code of Ethics for Senior Financial Officers, which is part of our broader Code of Conduct applicable
to all employees, and the Code of Business Conduct and Ethics for Members of the Board of Directors are posted on our
website, www.medtronic.com under the “Investors” caption and then under the “Corporate Governance” subcaption. Any
amendments to, or waivers for executive officers or directors of, these ethics codes will be disclosed on our website promptly
following the date of such amendment or waiver.

Item 11. Executive Compensation

The sections entitled “Governance of Medtronic — Director Compensation,” “Governance of Medtronic — Compensation
Committee — Compensation Committee Interlocks and Insider Participation,” “Compensation Discussion and Analysis
(CD&A),” and “Executive Compensation” in our Proxy Statement for our 2015 Annual Shareholders’ Meeting, which will be
filed no later than 120 days after April 24, 2015, are incorporated herein by reference. The section entitled “Compensation
Committee Report” in our Proxy Statement for our 2015 Annual Shareholders’ Meeting, which will be filed no later than 120
days after April 24, 2015, is furnished herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The sections entitled “Share Ownership Information — Significant Shareholders,” “Share Ownership Information — Beneficial
Ownership of Management,” and “Executive Compensation — Equity Compensation Plan Information” in our Proxy Statement
for our 2015 Annual Shareholders’ Meeting, which will be filed no later than 120 days after April 24, 2015, are incorporated
herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The sections entitled “Proposal 1 — Election of Directors — Director Independence” and “Proposal 1 — Election of Directors
— Related Transactions and Other Matters” in our Proxy Statement for our 2015 Annual Shareholders’ Meeting, which will be
filed no later than 120 days after April 24 2015, are incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

The sections entitled “Governance of Medtronic — Audit Committee — Audit Committee Pre-Approval Policies” and “Report
of the Audit Committee — Audit and Non-Audit Fees” in our Proxy Statement for our 2015 Annual Shareholders’ Meeting,
which will be filed no later than 120 days after April 24, 2015, are incorporated herein by reference.

144

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) 1. Financial Statement Schedules

Schedule II. Valuation and Qualifying Accounts — years ended April 24, 2015, April 25, 2014, and April 26, 2013 (set
forth on page 154 of this report).

All other schedules are omitted because they are not applicable or the required information is shown in the financial
statements or notes thereto.

2. Exhibits

Exhibit No.

Description

2.1

2.2

2.3

2.4

2.5

3.1

3.2

4.1

4.2

4.3

4.4

4.5

Transaction Agreement, dated as of June 15, 2014, among Medtronic, Inc., Covidien plc, Medtronic plc
(formerly known as Kalani I Limited), Makani II Limited, Aviation Acquisition Co., Inc., and Aviation Merger
Sub, LLC (incorporated by reference to Exhibit 2.1 to Medtronic plc’s Amendment No. 5 to the Registration
Statement on Form S-4, filed on November 20, 2014, File No. 333-197406).

Appendix III to the Rule 2.5 Announcement (Conditions Appendix) (incorporated by reference to Exhibit 2.2
to Medtronic, Inc.’s Current Report on Form 8-K, filed on June 16, 2014, File No. 001-07707).

Expenses Reimbursement Agreement, dated as of June 15, 2014, by and between Covidien plc and Medtronic,
Inc. (incorporated by reference to Exhibit 2.3 to Medtronic, Inc.’s Current Report on Form 8-K, filed on
June 16, 2014, File No. 001-07707).

Separation and Distribution Agreement, dated as of June 29, 2007, by and among Tyco International Ltd.,
Covidien Ltd. and Tyco Electronics Ltd. (incorporated by reference to Exhibit 2.1 to Covidien plc’s Current
Report on Form 8-K, filed on July 5, 2007, File No. 001-33259).

Separation and Distribution Agreement, dated as of June 28, 2013, between Covidien plc and Mallinckrodt plc
(incorporated by reference to Exhibit 2.1 to Covidien plc’s Current Report on Form 8-K filed on July 1, 2013,
File No. 001-33259).

Certificate of Incorporation of Medtronic plc (incorporated by reference to Exhibit 3.1 to Medtronic plc’s
Current Report on Form 8-K, filed on January 27, 2015, File No. 001-36820).

Amended and Restated Memorandum and Articles of Association of Medtronic plc (incorporated by reference to
Exhibit 3.1 to Medtronic plc’s Current Report on Form 8-K12B, filed on January 27, 2015, File No. 001-36820).

Form of Indenture between Medtronic, Inc. and Wells Fargo Bank, National Association (incorporated by
reference to Exhibit 4.1 to Medtronic, Inc.’s Amendment No. 2 to the Registration Statement on Form S-4,
filed on January 10, 2005, File No. 333-121239).

Indenture, dated as of September 15, 2005, between Medtronic, Inc. and Wells Fargo Bank, N. A. (including
the Forms of Notes thereof) (incorporated by reference to Exhibit 4.1 to Medtronic, Inc.’s Registration
Statement on Form S-4, filed December 6, 2005, File No. 333-130163).

First Supplemental Indenture, dated as of January 26, 2015, by and among Medtronic plc, Medtronic, Inc.,
Medtronic Global Holdings S.C.A. and Wells Fargo Bank, National Association (incorporated by reference to
filed on January 27, 2015,
Exhibit 4.1 to Medtronic plc’s Current Report on Form 8-K12B,
File No. 001-36820).

Form of Indenture between Medtronic, Inc. and Wells Fargo Bank, National Association regarding 2009
offering (incorporated by reference to Exhibit 4.1 to Medtronic, Inc.’s Registration Statement on Form S-3,
filed on March 9, 2009, File No. 333-157777).

First Supplemental Indenture, dated March 12, 2009, between Medtronic, Inc. and Wells Fargo Bank, National
Association (including the Forms of Notes thereof) (incorporated by reference to Exhibit 4.1 to Medtronic,
Inc.’s Current Report on Form 8-K, filed on March 12, 2009, File No. 001-07707).

145

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

4.15

4.16

4.17

4.18

4.19

4.20

Second Supplemental Indenture, dated March 16, 2010, between Medtronic, Inc. and Wells Fargo Bank,
National Association (including the Forms of Notes thereof) (incorporated by reference to Exhibit 4.1 to
Medtronic, Inc.’s Current Report on Form 8-K, filed on March 16, 2010, File No. 001-07707).

Third Supplemental Indenture, dated March 15, 2011, between Medtronic, Inc. and Wells Fargo Bank,
National Association (including the Forms of Notes thereof) (incorporated by reference to Exhibit 4.1 to
Medtronic, Inc.’s Current report on Form 8-K, filed on March 16, 2011, File No. 001-07707).

Fourth Supplemental Indenture, dated March 19, 2012, between Medtronic, Inc. and Wells Fargo Bank,
National Association (including the Forms of Notes thereof) (incorporated by reference to Exhibit 4.2 to
Medtronic, Inc.’s Current Report on Form 8-K, filed on March 20, 2012, File No. 001-07707).

Fifth Supplemental Indenture, dated March 26, 2013, between Medtronic, Inc. and Wells Fargo Bank, National
Association (including the Forms of Notes thereof) (incorporated by reference to Exhibit 4.1 to Medtronic,
Inc.’s Current Report on Form 8-K, filed on March 26, 2013, File No. 001-07707).

Sixth Supplemental Indenture, dated February 27, 2014, between Medtronic, Inc. and Wells Fargo Bank,
National Association (including the Form of Global Note thereof) (incorporated by reference to Exhibit 4.2 to
Medtronic, Inc.’s Current Report on Form 8-K, filed on February 27, 2014, File No. 001-07707).

Seventh Supplemental Indenture, dated as of January 26, 2015, by and among Medtronic plc, Medtronic, Inc.,
Medtronic Global Holdings S.C.A. and Wells Fargo Bank, National Association (incorporated by reference to
Exhibit 4.2 to Medtronic plc’s Current Report on Form 8-K12B,
filed on January 27, 2015,
File No. 001-36820).

Indenture, dated December 10, 2014, between Medtronic, Inc. and Wells Fargo Bank, National Association
(incorporated by reference to Exhibit 4.1 to Medtronic, Inc.’s Current Report on Form 8-K filed with the
Commission on December 10, 2014, File No. 001-07707).

First Supplemental Indenture, dated December 10, 2014, between Medtronic, Inc. and Wells Fargo Bank,
National Association (including Form of Floating Rate Senior Notes due 2020, Form of 1.500% Senior Notes
due 2018, Form of 2.500% Senior Notes due 2020, Form of 3.150% Senior Notes due 2022, Form of 3.500%
Senior Notes due 2025, Form of 4.375% Senior Notes due 2035 and Form of 4.625% Senior Notes due 2045)
(incorporated by reference to Exhibit 4.2 of Medtronic, Inc.’s Current Report on Form 8-K filed with the
Commission on December 10, 2014, File No. 001-07707).

Second Supplemental Indenture, dated as of January 26, 2015, by and among Medtronic plc and Wells Fargo
Bank, National Association (incorporated by reference to Exhibit 4.3 to Medtronic plc’s Current Report on
Form 8-K12B, filed on January 27, 2015, File No. 001-36820).

Third Supplemental Indenture, dated as of January 26, 2015, by and among Medtronic Global Holdings S.C.A.
and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.4 to Medtronic plc’s
Current Report on Form 8-K12B, filed on January 27, 2015, File No. 001-36820).

Indenture, dated as of October 22, 2007, by and among Covidien International Finance S.A., Covidien Ltd. and
Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.1(a) to Covidien plc’s
Current Report on Form 8-K filed on October 22, 2007, File No. 001-33259).

First Supplemental Indenture, dated as of October 22, 2007, by and among Covidien International Finance
S.A., Covidien Ltd. 1and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit
4.1(b) to the Covidien plc’s Current Report on Form 8-K filed on October 22, 2007, File No. 001-33259).

Second Supplemental Indenture, dated as of October 22, 2007, by and among Covidien International Finance
S.A., Covidien Ltd. and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.1(c)
to the Covidien plc’s Current Report on Form 8-K filed on October 22, 2007, File No. 001-33259).

Third Supplemental Indenture, dated as of October 22, 2007, by and among Covidien International Finance
S.A., Covidien Ltd. and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.1(d)
to Covidien plc’s Current Report on Form 8-K filed on October 22, 2007, File No. 001-33259).

Fourth Supplemental Indenture, dated as of October 22, 2007, by and among Covidien International Finance
S.A., Covidien Ltd. and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.1(e)
to Covidien plc’s Current Report on Form 8-K filed on October 22, 2007, File No. 001-33259).

146

4.21

4.22

4.23

4.24

4.25

4.26

4.27

10.1

10.2

10.3

10.4

10.5

10.6

10.7

Fifth Supplemental Indenture, dated as of June 4, 2009, by and among Covidien International Finance S.A.,
Covidien Ltd., Covidien plc and Deutsche Bank Trust Company Americas (incorporated by reference to
Exhibit 4.1 to Covidien plc’s Current Report on Form 8-K12G3 filed on June 5, 2009, File No. 001-33259).

Sixth Supplemental Indenture, dated as of June 28, 2010, among Covidien International Finance S.A.,
Covidien Ltd., Covidien plc and Deutsche Bank Trust Company Americas (incorporated by reference to
Exhibit 4.1 to Coviden plc’s Current Report on Form 8-K filed on June 28, 2010, File No. 001-33259).

Seventh Supplemental Indenture, dated as of May 30, 2012, among Covidien International Finance S.A.,
Covidien Ltd., Covidien plc and Deutsche Bank Trust Company Americas (incorporated by reference to
Exhibit 4.1 to Covidien plc’s Current Report on Form 8-K filed on May 30, 2012, File No. 001-33259).

Eighth Supplemental Indenture, dated as of May 16, 2013, among Covidien International Finance S.A.,
Covidien Ltd., Covidien plc and Deutsche Bank Trust Company Americas (incorporated by reference to
Exhibit 4.1 to Covidien plc’s Current Report on Form 8-K filed on May 16, 2013, File No. 001-33259).

Ninth Supplemental Indenture, dated as of January 26, 2015, by and among Medtronic plc, Medtronic Global
Holdings S.C.A., Covidien public limited company, Covidien International Finance S.A., Covidien Ltd. and
Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.5 to Medtronic plc’s Current
Report on Form 8-K12B, filed on January 27, 2015, File No. 001-36820).

Registration Rights Agreement, dated December 10, 2014, by and among Medtronic, Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, as
representatives of the several initial purchasers (incorporated by reference to Exhibit 4.10 to Medtronic, Inc.’s
Current Report on Form 8-K filed with the Commission on December 10, 2014, File No. 001-07707)

Joinder Agreement to the Registration Rights Agreement, dated as of January 26, 2015, by and among
Medtronic plc and Medtronic Global Holdings S.C.A. (incorporated by reference to Exhibit 4.6 to Medtronic
plc’s Current Report on Form 8-K12B, filed on January 27, 2015, File No. 001-36820).

Senior Unsecured Term Loan Credit Agreement, dated as of November 7, 2014, by and among Medtronic,
Inc., Medtronic Holdings Limited, Medtronic Global Holdings SCA, the lenders from time to time party
thereto and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 to
Medtronic Inc.’s Current Report on Form 8-K, filed on November 10, 2014, File No. 001-07707).

Amendment and Restatement Agreement, dated as of November 7, 2014, by and among Medtronic, Inc.,
Medtronic plc (formerly known as Medtronic Holdings Limited), Medtronic Global Holdings S.C.A., the
lenders from time to time party thereto, and Bank of America, N.A., as administrative agent and issuing bank
(incorporated by reference to Exhibit 10.3 to Medtronic, Inc.’s Current Report on Form 8-K, filed on
November 10, 2014, File No. 001-07707).

Senior Unsecured Bridge Credit Agreement, dated as of November 7, 2014, by and among Medtronic, Inc.,
Medtronic Holdings Limited, Medtronic Global Holdings SCA, the lenders from time to time party thereto,
and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to Medtronic,
Inc.’s Current Report on Form 8-K, filed on November 10, 2014, File No. 001-07707).

Senior Unsecured Bridge Credit Agreement, dated as of June 15, 2014, by and among Medtronic, Inc., Kalani I
Limited, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent
(incorporated by reference to Exhibit 10.1 to Medtronic, Inc.’s Current Report on Form 8-K, filed on June 18,
2014, File No. 001-07707).

Senior Unsecured Cash Bridge Credit Agreement, dated as of June 15, 2014, by and among Makani II Limited,
Kalani I Limited, the lenders from time to time party thereto, and Bank of America, N.A., as administrative
agent (incorporated by reference to Exhibit 10.2 to Medtronic, Inc.’s Current Report on Form 8-K, filed on
June 18, 2014, File No. 001-07707).

Amended and Restated Five-Year Senior Credit Agreement, dated as of May 23, 2014, among Covidien
International Finance S.A., Covidien plc, the lenders party thereto and Citibank, N.A., as administrative agent
(incorporated by reference to Exhibit 10.1 to Covidien plc’s Current Report on Form 8-K, filed on May 28,
2014, File No. 001-33259).

Tax Sharing Agreement, dated as of June 29, 2007, by and among Tyco International Ltd., Covidien Ltd. and
Tyco Electronics Ltd. (incorporated by reference to Exhibit 10.1 to Covidien plc’s Current Report on
Form 8-K, filed on July 5, 2007, File No. 001-33259).

147

10.8

10.9

10.10

10.11

10.12

*10.13

*10.14

*10.15

*10.16

*10.17

*10.18

*10.19

*10.20

*10.21

*10.22

*10.23

*10.24

*10.25

Tax Matters Agreement, dated as of June 28, 2013, between Covidien plc and Mallinckrodt plc (incorporated
by reference to Exhibit 10.1 to Covidien plc’s Current Report on Form 8-K filed on July 1, 2013,
File No. 001-33259).

Employee Matters Agreement, dated as of June 28, 2013, between Covidien plc and Mallinckrodt plc
(incorporated by reference to Exhibit 10.2 to Covidien plc’s Current Report on Form 8-K filed on July 1, 2013,
File No. 001-33259).

Transition Services Agreement, dated as of June 28, 2013, between Covidien plc and Mallinckrodt plc
(incorporated by reference to Exhibit 10.3 to Covidien plc’s Current Report on Form 8-K filed on July 1, 2013,
File No. 001-33259).

Form of Deed of Indemnification (incorporated by reference to Exhibit 10.1 to Medtronic plc’s Current Report
on Form 8-K12B, filed on January 27, 2015, File No. 001-36820).

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to Medtronic plc’s Current
Report on Form 8-K12B, filed on January 27, 2015, File No. 001-36820).

Form of Change of Control Employment Agreement for Medtronic Executive Officers (incorporated by
reference to Exhibit 10.1 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
October 30, 2009, filed on December 9, 2009, File No. 001-07707).

Form of Change of Control Employment Agreement (as amended and restated as of January 26, 2015)
(incorporated by reference to Exhibit 10.12 to Medtronic plc’s Current Report on Form 8-K, filed on
January 27, 2015, File No. 001-36820).

Letter Agreement by and between Medtronic, Inc. and Omar Ishrak dated May 11, 2011 (incorporated by
reference to Exhibit 10.1 to Medtronic, Inc.’s Current Report on Form 8-K, filed on May 11, 2011,
File No. 001-07707).

Amendment to Letter Agreement dated May 11, 2011 by and between Medtronic, Inc. and Omar Ishrak
(incorporated by reference to Exhibit 10.1 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter
ended July 29, 2011, filed September 7, 2011, File No. 001-07707).

Amendment dated February 12, 2015 to the Letter Agreement by and between Medtronic, Inc. and Omar
Ishrak dated May 11, 2011 (incorporated by reference to Exhibit 10.24 to Medtronic plc’s Quarterly Report on
Form 10-Q, filed on February 27, 2015, File No. 001-36820).

Letter Agreement by and between Medtronic, Inc. and Michael J. Coyle dated November 19, 2009
(incorporated by reference to Exhibit 10.55 to Medtronic, Inc.’s Annual Report on Form 10-K for the year
ended April 27, 2012, filed on June 26, 2012, File No. 001-07707).

Letter Agreement by and between Medtronic, Inc. and Carol Surface dated August 22, 2013 (incorporated by
reference to Exhibit 10.44 to Medtronic, Inc.’s Annual Report on Form 10-K for the year ended April 25, 2014,
filed on June 20, 2014, File No. 001-07707).

Letter Agreement by and between Medtronic, Inc. and Hooman Hakami dated April 29, 2014 (incorporated by
reference to Exhibit 10.5 of Medtronic, Inc.’s Quarterly Report on Form 10-Q, filed on August 29, 2014,
File No. 001-07707)

Letter Agreement by and between Medtronic, Inc. and Bradley E. Lerman dated May 2, 2014 (incorporated by
reference to Exhibit 10.4 of Medtronic, Inc.’s Quarterly Report on Form 10-Q, filed on August 29, 2014,
File No. 001-07707)

Letter Agreement by and between Medtronic plc and Bryan C. Hanson dated February 12, 2015 (incorporated
by reference to Exhibit 10.30 to Medtronic plc’s Quarterly Report on Form 10-Q, filed on February 27, 2015,
File No. 001-36820).

Form of Offer Letter Amendment (incorporated by reference to Exhibit 10.25 to Medtronic plc’s Quarterly
Report on Form 10-Q, filed on February 27, 2015, File No. 001-36820).

1979 Nonqualified Stock Option Plan (incorporated by reference to Exhibit 10.3 to Medtronic, Inc.’s Annual
Report on Form 10-K for the year ended April 26, 2002, filed on July 19, 2002, File No. 001-07707).

Amendment to the 1979 Nonqualified Stock Option Plan (incorporated by reference to Exhibit 10.6 to
Medtronic plc’s Current Report on Form 8-K, filed on January 27, 2015, File No. 001-36820).

148

*10.26

*10.27

*10.28

*10.29

*10.30

*10.31

*10.32

*10.33

*10.34

*10.35

*10.36

*10.37

*10.38

*10.39

*10.40

*10.41

*10.42

*10.43

1994 Stock Award Plan (amended and restated as of January 1, 2008) (incorporated by reference to Exhibit
10.1 of Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 28, 2008, filed on
March 4, 2008, File No. 001-07707).

Amendment to the 1994 Stock Award Plan (incorporated by reference to Exhibit 10.7 to Medtronic plc’s
Current Report on Form 8-K, filed on January 27, 2015, File No. 001-36820).

1998 Outside Director Stock Compensation Plan (as amended and restated effective as of January 1, 2008)
(incorporated by reference to Exhibit 10.3 to Medtronic, Inc.’s Current Report on Form 8-K, filed on
February 27, 2014, File No. 001-07707)

Amendment to the 1998 Outside Director Stock Compensation Plan (incorporated by reference to Exhibit 10.2
to Medtronic plc’s Current Report on Form 8-K, filed on January 27, 2015, File No. 001-36820).

Form of Initial Option Agreement under the 1998 Outside Director Stock Compensation Plan (incorporated by
reference to Exhibit 10.17 to Medtronic, Inc.’s Annual Report on Form 10-K for the year ended April 29, 2005,
filed June 29, 2005, File No. 001-07707).

Form of Annual Option Agreement under the 1998 Outside Director Stock Compensation Plan (incorporated
by reference to Exhibit 10.18 to Medtronic, Inc.’s Annual Report on Form 10-K for the year ended April 29,
2005, filed June 29, 2005, File No. 001-07707).

Form of Replacement Option Agreement under the 1998 Outside Director Stock Compensation Plan
(incorporated by reference to Exhibit 10.19 to Medtronic, Inc.’s Annual Report on Form 10-K for the year
ended April 29, 2005, filed June 29, 2005, File No. 001-07707).

Kyphon Inc. 2002 Stock Plan (amended and restated July 26, 2007, as further amended on October 18, 2007)
(incorporated by reference to Exhibit 10.6 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter
ended January 25, 2008, filed on March 4, 2008, File No. 001-07707).

Addendum: Kyphon Inc. 2002 Stock Plan (dated December 13, 2007) (incorporated by reference to Exhibit
10.7 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 25, 2008, filed on
March 4, 2008, File No. 001-07707).

Amendment to the Kyphon Inc. 2002 Stock Plan (incorporated by reference to Exhibit 10.1 to Medtronic plc’s
Current Report on Form 8-K, filed on January 27, 2015, File No. 001-36820).

2003 Long-Term Incentive Plan (as amended and restated effective January 1, 2008) (incorporated by
reference to Exhibit 10.4 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 28,
2008, filed on March 4, 2008, File No. 001-07707).

Amendment to the 2003 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to Medtronic
plc’s Current Report on Form 8-K, filed on January 27, 2015, File No. 001-36820).

Form of Restricted Stock Award Agreement under 2003 Long-Term Incentive Plan (incorporated by reference
to Exhibit 10.3 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 28, 2005,
filed on March 7, 2005, File No. 001-07707).

Form of Non-Qualified Stock Option Agreement under 2003 Long-Term Incentive Plan (four year vesting)
(incorporated by reference to Exhibit 10.1 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter
ended January 28, 2005, filed on March 7, 2005, File No. 001-07707).

Form of Non-Qualified Stock Option Agreement under 2003 Long-Term Incentive Plan (immediate vesting)
(incorporated by reference to Exhibit 10.2 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter
ended January 28, 2005, filed on March 7, 2005, File No. 001-07707).

Form of Restricted Stock Units Award Agreement under 2003 Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.20 to Medtronic, Inc.’s Annual Report on Form 10-K for the year ended April 29, 2005,
filed on June 29, 2005, File No. 001-07707).

Form of Performance Share Award Agreement under 2003 Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.21 to Medtronic, Inc.’s Annual Report on Form 10-K for the year ended April 29, 2005,
filed on June 29, 2005, File No. 001-07707).

Form of Non-Qualified Stock Option Agreement under 2003 Long-Term Incentive Plan effective June 22,
2006 (incorporated by reference to Exhibit 10.23 to Medtronic, Inc.’s Annual Report on Form 10-K for the
year ended April 28, 2006, filed on June 28, 2006, File No. 001-07707).

149

*10.44

*10.45

*10.46

*10.47

*10.48

*10.49

*10.50

*10.51

*10.52

*10.53

*10.54

*10.55

*10.56

*10.57

*10.58

*10.59

*10.60

Form of Restricted Stock Award Agreement under 2003 Long-Term Incentive Plan effective June 22, 2006
(incorporated by reference to Exhibit 10.24 to Medtronic, Inc.’s Annual Report on Form 10-K for the year
ended April 28, 2006, filed on June 28, 2006, File No. 001-07707).

Form of Restricted Stock Unit Award Agreement under 2003 Long-Term Incentive Plan effective June 22,
2006 (incorporated by reference to Exhibit 10.25 to Medtronic, Inc.’s Annual Report on Form 10-K for the
year ended April 28, 2006, filed on June 28, 2006, File No. 001-07707).

Form of Performance Award Agreement under 2003 Long-Term Incentive Plan effective June 22, 2006
(incorporated by reference to Exhibit 10.26 to Medtronic, Inc.’s Annual Report on Form 10-K for the year
ended April 28, 2006, filed on June 28, 2006, File No. 001-07707).

Form of Restricted Stock Award Agreement under 2003 Long-Term Incentive Plan (incorporated by reference
to Exhibit 10.3 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 26, 2007,
filed on December 4, 2007, File No. 001-07707).

Form of Restricted Stock Unit Award Agreement under 2003 Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.4 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
October 26, 2007, filed on December 4, 2007, File No. 001-07707).

Form of Non-Qualified Stock Option Agreement under 2003 Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.39 to Medtronic, Inc.’s Annual Report on Form 10-K for the year ended April 25, 2008,
filed on June 24, 2008, File No. 001-07707).

Form of Restricted Stock Unit Award Agreement under 2003 Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.40 to Medtronic, Inc.’s Annual Report on Form 10-K for the year ended April 25, 2008,
filed on June 24, 2008, File No. 001-07707).

Form of Restricted Stock Unit Award Agreement under 2003 Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.41 to Medtronic, Inc.’s Annual Report on Form 10-K for the year ended April 25, 2008,
filed on June 24, 2008, File No. 001-07707).

Israeli Amendment to the 2003 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5 to
Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 25, 2008, filed on March 4,
2008, File No. 001-07707).

2005 Employees Stock Purchase Plan, as amended and restated effective August 27, 2009 (incorporated by
reference to Exhibit 10.3 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
October 30, 2009, filed on December 9, 2009, File No. 001-07707).

2008 Stock Award and Incentive Plan (as amended and restated effective August 27, 2009) (incorporated by
reference to Exhibit 10.2 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
October 30, 2009, filed on December 9, 2009, File No. 001-07707).

Amendment to the 2008 Stock Award and Incentive Plan (incorporated by reference to Exhibit 10.4 to
Medtronic plc’s Current Report on Form 8-K, filed on January 27, 2015, File No. 001-36820).

Form of Restricted Stock Unit Award Agreement under 2008 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.2 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended July 25,
2008, filed on September 3, 2008, File No. 001-07707).

Form of Restricted Stock Award Agreement under 2008 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.3 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended July 25,
2008, filed on September 3, 2008, File No. 001-07707).

Form of Restricted Stock Award Agreement under 2008 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.4 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended July 25,
2008, filed on September 3, 2008, File No. 001-07707).

Form of Restricted Stock Unit Award Agreement under 2008 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.5 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended July 25,
2008, filed on September 3, 2008, File No. 001-07707).

Form of Non-Qualified Stock Option Agreement under 2008 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.6 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended July 25,
2008, filed on September 3, 2008, File No. 001-07707).

150

*10.61

*10.62

*10.63

*10.64

*10.65

*10.66

*10.67

*10.68

*10.69

*10.70

*10.71

*10.72

*10.73

*10.74

*10.75

*10.76

*10.77

Terms of Non-Employee Director Compensation under 2008 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.42 to Medtronic, Inc.’s Annual Report on Form 10-K for the year ended April 27, 2012,
filed on June 26, 2012, File No. 001-07707).

Form of Non-Employee Director Initial Option Agreement under 2008 Stock Award and Incentive Plan
(incorporated by reference to Exhibit 10.1 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter
ended October 24, 2008, filed on December 3, 2008, File No. 001-07707).

Form of Non-Employee Director Annual Option Agreement under 2008 Stock Award and Incentive Plan
(incorporated by reference to Exhibit 10.2 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter
ended October 24, 2008, filed on December 3, 2008, File No. 001-07707).

Form of Non-Employee Director Deferred Unit Award Agreement under 2008 Stock Award and Incentive Plan
(incorporated by reference to Exhibit 10.3 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter
ended October 24, 2008, filed on December 3, 2008, File No. 001-07707).

Form of Non-Employee Restricted Stock Unit Award Agreement under Amended and Restated 2013 Stock
Award and Incentive Plan.

Medtronic Incentive Plan (amended and restated effective January 1, 2008) (incorporated by reference to
Exhibit 10.2 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 28, 2008, filed
on March 4, 2008, File No. 001-07707).

Amended and Restated 2013 Stock Award and Incentive Plan (incorporated by reference to Exhibit 10.9 to
Medtronic plc’s Current Report on Form 8-K, filed on January 27, 2015, File No. 001-36820).

Israeli Amendment to the Amended and Restated 2013 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.10 to Medtronic plc’s Current Report on Form 8-K, filed on January 27, 2015,
File No. 001-36820).

Non-Qualified Stock Option Agreement under Amended and Restated 2013 Stock Award and Incentive Plan
(incorporated by reference to Exhibit 10.31 to Medtronic plc’s Quarterly Report on Form 10-Q, filed on
February 27, 2015, File No. 001-36820).

Form of Non-Employee Director Deferred Unit Award Agreement under the 2008 Stock Award and Incentive
Plan (incorporated by reference to Exhibit 19.3 to Medtronic, Inc.’s Quarterly Report on Form 10-Q for the
quarter ended October 24, 2008, filed on December 3, 2008, File No. 001-07707).

Form of Non-Qualified Stock Option Agreement under 2013 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.2 to Medtronic, Inc.’s Current Report on Form 8-K, filed on August 27, 2013,
File No. 001-07707).

Form of Restricted Stock Unit Award Agreement under 2013 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.3 to Medtronic, Inc.’s Current Report on Form 8-K, filed on August 27, 2013,
File No. 001-07707).

Form of Restricted Stock Unit Award Agreement under 2013 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.4 to Medtronic, Inc.’s Current Report on Form 8-K, filed on August 27, 2013,
File No. 001-07707).

Form of Restricted Stock Unit Award Agreement under 2013 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.5 to Medtronic, Inc.’s Current Report on Form 8-K, filed on August 27, 2013,
File No. 001-07707).

Form of Restricted Stock Unit Award Agreement under 2013 Stock Award and Incentive Plan (incorporated by
reference to Exhibit 10.8 to Medtronic, Inc.’s Current Report on Form 8-K, filed on August 27, 2013,
File No. 001-07707).

Form of Non-Qualified Stock Option Agreement under Amended and Restated 2013 Stock Award and
Incentive Plan (incorporated by reference to Exhibit 10.48 to Medtronic plc’s Quarterly Report on Form 10-Q,
filed on February 27, 2015, File No. 001-36820).

Form of Restricted Stock Unit Award Agreement under Amended and Restated 2013 Stock Award and
Incentive Plan (incorporated by reference to Exhibit 10.49 to Medtronic plc’s Quarterly Report on Form 10-Q,
filed on February 27, 2015, File No. 001-36820).

151

*10.78

*10.79

*10.80

*10.81

*10.82

*10.83

*10.84

*10.85

*10.86

*10.87

*10.88

*10.89

*10.90

*10.91

*10.92

*10.93

*10.94

Form of Restricted Stock Unit Award Agreement under Amended and Restated 2013 Stock Award and
Incentive Plan (incorporated by reference to Exhibit 10.50 to Medtronic plc’s Quarterly Report on Form 10-Q,
filed on February 27, 2015, File No. 001-36820).

Form of Restricted Stock Unit Award Agreement under Amended and Restated 2013 Stock Award and
Incentive Plan (incorporated by reference to Exhibit 10.51 to Medtronic plc’s Quarterly Report on Form 10-Q,
filed on February 27, 2015, File No. 001-36820).

Form of Stock Option Agreement under Amended and Restated 2013 Stock Award and Incentive Plan
(incorporated by reference to Exhibit 10.53 to Medtronic plc’s Quarterly Report on Form 10-Q, filed on
February 27, 2015, File No. 001-36820).

Form of Restricted Stock Unit Award Agreement under Amended and Restated 2013 Stock Award and
Incentive Plan (incorporated by reference to Exhibit 10.54 to Medtronic plc’s Quarterly Report on Form 10-Q,
filed on February 27, 2015, File No. 001-36820).

Medtronic plc 2014 Amended and Restated Employees Stock Purchase Plan (incorporated by reference to
Exhibit 10.8 to Medtronic plc’s Current Report on Form 8-K, filed on January 27, 2015, File No. 001-36820).

Medtronic plc Incentive Plan (as amended and restated effective January 26, 2015) (incorporated by reference
to Exhibit 10.11 to Medtronic plc’s Current Report on Form 8-K,
filed on January 27, 2015,
File No. 001-36820).

Medtronic plc Supplemental Executive Retirement Plan (as restated generally effective January 26, 2015)
(incorporated by reference to Exhibit 10.15 to Medtronic plc’s Current Report on Form 8-K, filed on
January 27, 2015, File No. 001-36820).

Medtronic plc Savings and Investment Plan (as amended and restated generally effective January 26, 2015)
(incorporated by reference to Exhibit 4.22 to Medtronic plc’s Registration Statement on Form S-8 filed on
January 28, 2015, File No. 333-201737).

Medtronic plc Puerto Rico Employees’ Savings and Investment Plan (as amended and restated generally
effective January 26, 2015) (incorporated by reference to Exhibit 4.23 to Medtronic plc’s Registration
Statement on Form S-8 filed on January 28, 2015, File No. 333-201737).

Medtronic plc Capital Accumulation Plan Deferral Program (as amended and restated generally effective
January 26, 2015) (incorporated by reference to Exhibit 10.13 to Medtronic plc’s Current Report on Form 8-K,
filed on January 27, 2015, File No. 001-36820).

Stock Option Replacement Program (incorporated by reference to Exhibit 10.8 to Medtronic, Inc.’s Annual
Report on Form 10-K for the year ended April 27, 2001, filed on July 26, 2001, File No. 001-07707).

Change of Control Severance Plan — Section 16B Officers (as amended and restated as of January 26, 2015)
(incorporated by reference to Exhibit 10.14 to Medtronic plc’s Current Report on Form 8-K, filed on
January 27, 2015, File No. 001-36820).

Covidien Savings Related Share Plan (incorporated by reference to Exhibit 99.3 to Covidien plc’s
Post-Effective Amendment No. 1 to Registration Statement on Form S-8 filed with the Commission on June 5,
2009, File No. 333-144309).

Covidien Stock and Incentive Plan (incorporated by reference to Exhibit 10.5 to Covidien plc’s Current Report
on Form 8-K filed on March 26, 2013, File No. 001-33259).

Covidien Separation and Distribution Agreement Equity Awards under the Separation and Distribution
Agreement, dates as of June 29, 2007, by and among Tyco International Ltd., Covidien Ltd., and Tyco
Electronics Ltd. (incorporated by reference to Exhibit 2.1 to Covidien plc’s Current Report on Form 8-K filed
on July 5, 2007, File No. 001-33259).

Covidien Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to Covidien’s Current
Report on Form 8-K12G3 filed on June 5, 2009, File No. 001-33259).

Covidien Severance Plan for U.S. Officers and Executives, as amended and restated (incorporated by reference
to Exhibit 10.1 to Covidien plc’s Current Report on Form 8-K filed on September 23, 2014,
File No. 001-33259).

152

*10.95

*10.96

*10.97

*10.98

*10.99

*10.100

*10.101

*10.102

*10.103

*10.104

*10.105

*10.106

*10.107

*10.108

*10.109

*10.110

Covidien Change in Control Severance Plan for Certain U.S. Officers and Executives (incorporated by reference
to Exhibit 10.1 to Covidien plc’s Current Report on Form 8-K filed on March 26, 2013, File No. 001-33259).

Covidien Supplemental Savings and Retirement Plan, as amended and restated (incorporated by reference to
Exhibit 10.1 to Covidien plc’s Quarterly Report on Form 10-Q filed on January 26, 2010, File No. 001-33259).

Form of Non-Competition, Non-Solicitation and Confidentiality Agreement for executive officers and certain
key employees (incorporated by reference to Exhibit 10.4 to Covidien plc’s Quarterly Report on Form 10-Q
filed on January 29, 2009, File No. 001-33259).

FY09 Grant U.S. Option Terms and Conditions (incorporated by reference to Exhibit 10.3 to Covidien plc’s
Current Report on Form 8-K filed on September 23, 2014, File No. 001-33259).

FY09 Grant U.S. Restricted Stock Unit Terms and Conditions (incorporated by reference to Exhibit 10.2 to
Covidien plc’s Current Report on Form 8-K filed on November 25, 2008, File No. 001-33259).

Deed Poll of Assumption relating to Covidien Ltd. Employee Equity Plans, dated June 4, 2009 (incorporated
by reference to Exhibit 10.3 to Covidien plc’s Current Report on Form 8-K12G3 filed on June 5, 2009,
File No. 001-33259).

Director Grant Restricted Stock Unit Terms and Conditions (incorporated by reference to Exhibit 10.2 to
Covidien plc’s Current Report on Form 8-K filed on March 23, 2009, File No. 001-33259).

Founders’ Grant Standard Option Terms and Conditions (incorporated by reference to Exhibit 10.4 to Covidien
plc’s Current Report on Form 8-K filed on September 23, 2014, File No. 001-33259).

Founders’ Grant Standard Option Terms and Conditions for Directors (incorporated by reference to
Exhibit 10.13 to Covidien plc’s Current Report on Form 8-K filed on July 5, 2007, File No. 001-33259).

Form of Deed of Indemnification by and between Covidien plc and Covidien plc’s Directors and Secretary
(incorporated by reference to Exhibit 10.4 to Covidien plc’s Form 10-Q filed on August 5, 2013,
File No. 001-33259).

Form of Terms and Conditions of Option Award (incorporated by reference to Exhibit 10.2 to Covidien plc’s
Current Report on Form 8-K filed on September 23, 2014, File No. 001-33259).

Form of Terms and Conditions of Restricted Unit Award (incorporated by reference to Exhibit 10.3 to
Covidien plc’s Quarterly Report on Form 10-Q filed on January 26, 2010, File No. 001-33259).

Form of Terms and Conditions of Performance Unit Award (incorporated by reference to Exhibit 10.4 to
Covidien plc’s Quarterly Report on Form 10-Q filed on January 26, 2010, File No. 001-33259).

Amended Terms and Conditions of Performance Unit Awards FY12-FY14 (incorporated by reference to
Exhibit 10.3 to Covidien plc’s Current Report on Form 8-K filed on March 26, 2013, File No. 001-33259).

Amended Terms and Conditions of Performance Unit Awards FY13-FY15 (incorporated by reference to
Exhibit 10.4 to Covidien plc’s Current Report on Form 8-K filed on March 26, 2013, File No. 001-33259).

Form of Indemnification Agreement between Covidien Ltd. and Covidien plc’s Directors and Secretary
(incorporated by reference to Exhibit 10.5 to Covidien plc’s Form 10-Q filed on August 5, 2013,
File No. 001-33259).

12.1

Computation of Ratio of Earnings to Fixed Charges.

31.1

31.2

32.1

32.2

101

List of Subsidiaries of Medtronic plc.

Consent of Independent Registered Public Accounting Firm.

Power of Attorney.

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

The following materials from Medtronic plc’s Annual Report on Form 10-K for the year ended April 24, 2015,
formatted in Extensible Business Reporting Language (XBRL): (i) consolidated statements of income, (ii)
consolidated statements of comprehensive income, (iii) consolidated balance sheets, (iv) consolidated
statements of cash flows, (v) consolidated statements of shareholders’ equity, and (vi) the notes to the
consolidated financial statements.

* Exhibits that are management contracts or compensatory plans or arrangements.

153

MEDTRONIC PLC AND SUBSIDIARIES
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

(in millions)

Additions

Balance at
Beginning of
Fiscal Year

Charges to
Income

Charges to Other
Accounts

Deductions

Other
Changes
(Debit) Credit

Balance
at End of
Fiscal Year

Allowance for doubtful accounts:
Year ended 4/24/15

Year ended 4/25/14

Year ended 4/26/13

Deferred tax valuation allowance:
Year ended 4/24/15

Year ended 4/25/14

Year ended 4/26/13

115

100

397

313

258

35 $

43 $

51 $

40 $

104 $

71 $

—

34 (a) $
$
$
$
$
$

—

5,660 (a) $
$
$
$
$
$

—

(36) (b) $
(4) (c)
(30) (b) $
4 (c)
(53) (b) $
— (c)

(56) (e) $
(434) (c)
(29) (e) $
4 (c)
(15) (e) $
(1) (c)

144

115

5,607

397

313

(a) Reflects the impact from acquisitions
(b) Uncollectible accounts written off, less recoveries.
(c) Reflects primarily the effects of foreign currency fluctuations.
(d) Reflects rebate payments.
(e) Decrease in deferred tax valuation allowance due to carryover attribute utilization and expiration.

154

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

Dated: June 23, 2015

MEDTRONIC PUBLIC LIMITED COMPANY

By: /s/ Omar Ishrak
Omar Ishrak
Chairman and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.

Dated: June 23, 2015

MEDTRONIC PUBLIC LIMITED COMPANY

By: /s/ Omar Ishrak
Omar Ishrak
Chairman and
Chief Executive Officer
(Principal Executive Officer)

By: /s/ Gary L. Ellis
Gary L. Ellis
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)

Directors

Richard H. Anderson*
Craig Arnold*
Scott C. Donnelly*
Randall J. Hogan, III*
Omar Ishrak*
Shirley Ann Jackson, Ph.D*
Michael O. Leavitt*
James T. Lenehan*
Elizabeth G. Nabel*
Denise M. O’Leary*
Kendall J. Powell*
Robert C. Pozen*
Preetha Reddy*

*Bradley E. Lerman, by signing his name hereto, does hereby sign this document on behalf of each of the above named
directors of the registrant pursuant to powers of attorney duly executed by such persons.

Dated: June 23, 2015

By: /s/ Bradley E. Lerman
Bradley E. Lerman

155

MEDTRONIC PUBLIC LIMITED COMPANY
Principal Executive Office
20 On Hatch, Lower Hatch Street
Dublin 2, Ireland
+353 1 438-1700

www.medtronic.com