Medtronic (MDT) 10-K risk factor changes: FY2018 vs FY2017

Investing in [removed: us] [added: our securities] involves a variety of risks and uncertainties, known and unknown, including, among others, those discussed below.

[removed: Additional] [added: Furthermore, additional] risks and uncertainty not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

We compete in both the therapeutic and diagnostic medical markets in [removed: approximately 160] [added: more than 150] countries throughout the world.

In the product lines in which we compete, we face a [removed: mixture] [added: range] of competitors [removed: ranging] from large [removed: manufacturers] [added: companies] with multiple business lines to [removed: small] [added: small, specialized] 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 [removed: products] [added: existing] or [removed: proposed] [added: planned] products less competitive.

In addition, we face competition from providers of alternative medical [removed: therapies] [added: therapies,] such as pharmaceutical companies.

| • | product [added: performance and] reliability, |

| • | product [removed: technology,] [added: technology and innovation,] |

| • | product [removed: quality,] [added: quality and safety,] |

| • | product [added: support] services, |

| • | [added: cost-effectiveness and] price, and |

[removed: We] [added: Further, our continued growth and success depend on our ability to develop, acquire and market new and differentiated products, technologies and intellectual property, and as a result we] also face competition for marketing, distribution, and collaborative development agreements, [removed: for] establishing relationships with academic and research [removed: institutions,] [added: institutions] and [removed: for] licenses to intellectual property.

In addition, academic institutions, governmental agencies and other public and private research organizations also may conduct research, seek [removed: patient] [added: patent] protection and establish collaborative arrangements for discovery, research, clinical development and marketing of products similar to ours.

[removed: Major shifts] [added: From time to time we have lost, and may] in [removed: industry] [added: the future lose,] market share [removed: have occurred] in connection with product problems, physician advisories, safety [removed: alerts,] [added: alerts] and publications about our [removed: products; reflecting] [added: products, which highlights] the importance of product quality, product [removed: efficacy,] [added: efficacy] and quality systems [removed: in] [added: to] our [removed: industry.][added: business.]

In order to continue to compete effectively, we must continue to create, invest [removed: in,] [added: 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 [removed: success in our industry.][added: success.]

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

We manufacture [removed: most] [added: the majority] of our products at numerous manufacturing facilities [removed: located throughout the world.][added: worldwide.]

However, for reasons of quality assurance, cost effectiveness, or availability, [removed: we procure] certain components and raw materials [added: used in our products are obtained] from a sole supplier.

[removed: We] [added: Although we] work closely with our suppliers to try to ensure continuity of supply while maintaining high quality and [removed: reliability.][added: reliability, the supply of these components and raw materials may be interrupted or insufficient.]

In addition, due to the stringent regulations and requirements of [added: regulatory agencies, including] the U.S. [removed: FDA] [added: FDA,] regarding the manufacture of our products, we may not be able to quickly establish additional or replacement [removed: sources for certain components or materials.][added: sources.]

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 [removed: to make our related product] [added: could result in lost] sales.

Other [removed: problems] [added: disruptions] in the manufacturing [removed: process,] [added: process or product sales and fulfillment systems for any reason,] including equipment malfunction, failure to follow specific protocols and procedures, defective raw [removed: materials] [added: materials, natural disasters such as hurricanes, tornadoes or wildfires,] and [added: other] environmental factors, could lead to launch delays, product shortage, unanticipated costs, lost revenues and damage to our reputation.

[removed: A] [added: Furthermore, any] failure to identify and address manufacturing problems prior to the release of products to our customers [removed: may also] [added: could] result in quality or safety issues.

In addition, several of our key products are manufactured at a [removed: single] [added: particular] manufacturing facility, with limited alternate facilities.

If an event occurs that results in damage to one or more of such facilities, [added: such as the damage caused by Hurricane Maria in Puerto Rico in September 2017,] we may be unable to manufacture the relevant products at [added: the previous levels or at all.]

Our medical devices and [removed: technologies and] [added: technologies, as well as] our business [removed: activities] [added: activities,] are subject to a complex [removed: regime] [added: set] of regulations and [removed: an aggressive enforcement environment,] [added: rigorous enforcement,] including by the U.S. FDA, U.S. Department of Justice, Health and Human Services-Office of the Inspector General, and numerous other federal, state, and non-U.S. governmental authorities.

[removed: Our medical devices are subject to regulation by numerous 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, [removed: marketing,] [added: 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 [removed: conditions] [added: condition] and cash flows.

Even if we are able to obtain [removed: such] approval or clearance, it may:

| • | involve modifications, [removed: repairs,] [added: repairs] or replacements of our products, and |

| • | [removed: result in limitations on] [added: limit] the proposed uses of our products. |

Both before and after a product is commercially released, we have ongoing responsibilities under U.S. FDA [added: and other applicable non-U.S. government agency] regulations.

[removed: Many] [added: For instance, 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 [removed: the U.S. FDA’s requirements, including primarily the quality system regulations and medical device reporting] [added: applicable] regulations.

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 [removed: devices] [added: products] are ineffective or pose an unreasonable health risk, the U.S. FDA could ban such medical [removed: devices,] [added: products,] detain or seize adulterated or misbranded medical [removed: devices,] [added: products,] order a recall, repair, replacement, or refund of such [removed: devices,] [added: products,] refuse to grant pending pre-market approval applications or require certificates of non-U.S 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 [added: and other non-U.S. government agencies] may also assess civil or criminal penalties against us, our officers or employees and impose operating restrictions on a company-wide [removed: basis, or enjoin and/or restrain certain conduct resulting in violations of applicable law.][added: basis.]

The U.S. FDA may also recommend prosecution to the [removed: U. S.] [added: U.S.] Department of Justice.

In addition, the U.S. FDA has taken the position that device manufacturers are prohibited from promoting their products other than for the uses and indications set forth in the approved product [removed: labeling.][added: labeling, and any failure to comply could subject us to significant civil or criminal exposure, administrative obligations and costs, and/or other potential penalties from, and/or agreements with, the federal government.]

Governmental regulations outside the U.S. [removed: have] [added: have, and may continue to,] become increasingly stringent and [removed: more common, and we may become subject to more rigorous regulation by governmental authorities in the future.][added: common.]

In the European Union, for example, a new Medical Device Regulation was published in 2017 which, when it enters into full [removed: force,] [added: force in 2020,] will [removed: impose significant additional premarket and post-market requirements.]

Each of the following risks should be carefully considered, together with all the other information included in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and in our other filings with the SEC.

Our business, financial condition, operating results, cash flow and prospects could be materially and adversely affected by any of these risks or uncertainties.

We believe our ability to compete depends upon many factors both within and beyond our control, including:

Competition may increase as additional companies enter our markets or modify their existing products to compete directly with ours.

Furthermore, the prices of commodities and other materials used in our products, which are often volatile and outside of our control, could adversely impact our supply.

For example, in June 2017 we experienced a global information technology systems

interruption that affected our customer ordering, distribution, and manufacturing processes.

Furthermore, we occasionally receive subpoenas or other requests for information from state and federal governmental agencies, and while these investigations typically relate primarily to financial arrangements with health care providers, regulatory compliance and product promotional practices, we cannot predict the timing, outcome or impact of any such investigations.

include significant additional premarket and post-market requirements.

Any failure to comply with these laws and regulations could subject us or our officers and employees to criminal and civil financial penalties.

We develop, manufacture, distribute and sell our products globally.

Operations in countries outside of the U.S. are accompanied by certain risks.

We intend to continue to expand our operations and to pursue growth opportunities outside the U.S., especially in emerging markets, which could expose us to additional and greater risks.

In light of these global economic fluctuations, we continue to monitor the creditworthiness of customers.

Failure to receive payment of all or a significant portion of these receivables could adversely affect our business, results of operations, financial condition and cash flows.

We also participate in public-private partnerships and other commercial and policy arrangements with governments around the globe.

It is our policy

Many health care industry companies, including health care systems, distributors, manufacturers, providers, and insurers, are consolidating or have formed strategic alliances.

Further, this consolidation creates larger enterprises with greater negotiating power, which they can use to negotiate price concessions.

If we must reduce our prices because of industry consolidation, or if we lose customers as a result of consolidation, our business, financial condition, results of operations and cash flows could be adversely affected.

For example, managed care organizations have successfully negotiated volume discounts for pharmaceuticals, and GPOs and IDNs have also concentrated purchasing decisions for some customers, which has led to downward pricing pressure for medical device companies, including us.

We rely on the proper function, security and availability of our information technology systems and data to operate our business, and a breach, cyber-attack or other disruption to these systems or data could materially and adversely affect our business, results of operations, financial condition, cash flows, reputation or competitive position.

In addition, we continue to grow in part through new business acquisitions and, as a result, may face risks associated with defects and vulnerabilities in their systems, or difficulties or other breakdowns or disruptions in connection with the integration of the acquisitions into our information technology systems.

For example, in the E.U. the Data Protection Directive requires us to manage individually identifiable information in the E.U., and the new General Data Protection Regulation may impose fines of up to four percent of our global revenue in the event of violations occurring after its implementation in May 2018.

Any data security breaches, cyber-attacks, malicious intrusions or significant disruptions could result in actions by regulatory bodies and/or civil litigation, any of which could materially and adversely affect our business, results of operations, financial condition, cash flows, reputation or competitive position.

At April 27, 2018, we had approximately $2.1 billion of current debt obligations and $23.7 billion of long-term debt outstanding.

For example, on December 22, 2017, the U.S. enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"), which resulted in a significant charge to tax expense during our quarter ending January 2018 associated with the U.S. taxation of accumulated foreign earnings as well as the requirement to revalue U.S. deferred tax assets and liabilities resulting from the reduction in the U.S. corporate tax rate.

Certain elements of the Tax Act impact fiscal year 2018 while other portions of the legislation are not effective until future fiscal years.

The U.S. Treasury has issued additional guidance subsequent to the enactment of the Tax Act, and we expect ongoing guidance to be provided which could change the impact on our tax reserves.

We made reasonable estimates of the effect of the Tax Act and recorded provisional amounts in the financial statements for fiscal year 2018.

Additional guidance, as well as future changes to these rules, may result in adjustments to these estimates which could materially affect our financial results.

In 2013, the Organization for Economic Cooperation and Development (OECD) published an action plan called Base Erosion and Profit Shifting (BEPS) with a view to tackling perceived tax abuse and inconsistency between taxing authorities and their approach to International tax matters.

The final BEPS Action report was published in October 2015 and subsequently many taxing authorities have adopted the guidelines provided within their local laws.

The EU expanded upon these guidelines with Anti-Tax Avoidance Directives (ATAD) to be applied by its member states.

We continue to monitor any and all changes to local country legislation resulting from this guidance.

One specific change is a requirement for increased disclosures of financial information on a local and global basis.

This information could lead to disagreements between jurisdictions associated with the proper allocation of profits between such jurisdictions.

We are subject to ongoing tax audits in the various jurisdictions in which we operate.

See Note 19 to the consolidated financial statements in "Item 8.

Financial Statements and Supplementary Data" in this Annual Report on Form 10-K.

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 us.

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.

Competitive factors include:

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However, we cannot guarantee that these efforts will be successful.

the previous levels or at all.

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 continue to 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.

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 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 will 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.

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.

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.

You should read this discussion and analysis along with our consolidated financial statements and related notes thereto at April [removed: 28, 2017] [added: 27, 2018] and April [removed: 29, 2016] [added: 28, 2017] and for each of the three fiscal years ended April [added: 27, 2018 (fiscal year 2018), April] 28, 2017 (fiscal year 2017), [added: and] April 29, 2016 (fiscal year 2016), [removed: and April 24, 2015 (fiscal year 2015).][added: which are presented within "Item 8.]

Our fiscal year-end is the last Friday in April, and therefore, the total weeks in a fiscal year [removed: may fluctuate] [added: fluctuates] between 52 and 53 weeks.

Fiscal years [removed: 2017] [added: 2018] and [removed: 2015] [added: 2017] were 52-week years.

[removed: The] [added: Note 19 to the] consolidated financial statements [removed: are presented within] [added: in] "Item 8.

Throughout this Management’s Discussion and Analysis, we present certain financial measures that [removed: management uses] [added: we use] to evaluate the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not presented in our financial statements prepared in accordance with generally accepted accounting principles in the [removed: United States (U.S.)] [added: U.S.] (U.S. GAAP).

[removed: Management uses] [added: We generally use] non-GAAP financial measures to facilitate [removed: management’s] [added: management's] review of the operational performance of the Company and as a basis for strategic planning.

[removed: Management believes] [added: We believe] that non-GAAP financial measures provide [removed: useful] information [added: useful] to investors [removed: regarding] [added: in understanding] the [added: Company's] underlying [removed: business] [added: operational performance and] trends and [added: may facilitate comparisons with the] performance of [added: other companies in] the [removed: Company’s ongoing operations and are useful for period over period comparisons of such operations.][added: medical technologies industry.]

[removed: The] [added: As presented in the] GAAP to Non-GAAP [removed: Reconciliation presents] [added: Reconciliations section below, our] non-GAAP financial measures [removed: that] exclude the impact of [added: certain] charges or gains that contribute to or reduce earnings and that may affect financial trends, [removed: but which] [added: and] include [added: certain] charges or benefits that result from transactions or events that [removed: management believes] [added: we believe] may or may not recur with similar materiality or impact to our operations in future periods (Non-GAAP Adjustments).

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 [removed: calculated.][added: calculated and reported.]

Because the effective rate [removed: may] [added: can] be significantly [removed: affected] [added: impacted] by the Non-GAAP Adjustments that take place during the period, we often refer to our tax rate using both the effective rate and the non-GAAP nominal tax rate (Non-GAAP Nominal Tax Rate).

The Non-GAAP Nominal Tax Rate is calculated as the [removed: provision for] income [removed: taxes,] [added: tax provision,] adjusted for the impact of Non-GAAP Adjustments, as a percentage of income [removed: from operations] before income taxes, excluding Non-GAAP Adjustments.

Free cash [removed: flow is] [added: flow,] a non-GAAP financial [removed: measure] [added: measure, is] calculated by subtracting additions to property, plant, and equipment from net cash provided by operating activities.

Refer to the “GAAP to Non-GAAP [removed: Reconciliation,"] [added: Reconciliations,"] "Income Taxes," and [removed: "Summary of] [added: "Free] Cash [removed: Flows"] [added: Flow"] sections for reconciliations of [removed: our results of operations] [added: the non-GAAP financial measures to their most directly comparable financial measures] prepared in accordance with U.S. [removed: GAAP to the adjusted non-GAAP financial measures considered by management.][added: GAAP.]

Our primary products include those for cardiac rhythm disorders, cardiovascular disease, advanced and general surgical care, respiratory and monitoring solutions, [added: renal care,] neurological disorders, spinal conditions and musculoskeletal trauma, urological and digestive disorders, and ear, nose, and throat and diabetes conditions.

The table below illustrates net sales by [removed: operating] segment [added: and division] for fiscal years [added: 2018,] 2017, [removed: 2016,] and [removed: 2015:][added: 2016:]

| | | Fiscal Year | | | | | | | | | | | [removed: Fiscal Year] | [removed: | | | |] [added: Percent Change] | | | | |

| (in millions) | [removed: |] [added: Fiscal Year] 2017 | | | | [added: Fiscal Year] 2016 | | | | % Change | | | [added: Fiscal Year 2017 | | | | Fiscal Year] 2016 | | | | [removed: 2015] [added: % Change] | | | [added: Fiscal Year 2017] | [added: | | | Fiscal Year 2016 | | | |] % Change | |

| Cardiac and Vascular Group | [removed: | $ | 10,498 | | | $] [added: 11,354] | [removed: 10,196] | | | [removed: 3] [added: 10,498] | [removed: %] | | [removed: $] | 10,196 | | | [removed: $] | [removed: 9,361] [added: 8] | | | [removed: 9] [added: 3] | [removed: %] |

| Minimally Invasive Therapies Group [removed: (1)] | [removed: | 9,919 | | |] [added: 8,716] | [removed: 9,563] | | | [added: 9,919] | [removed: 4] | | | 9,563 | | | | [removed: 2,387 |] [added: (12] | [added: )] | | [removed: 301] [added: 4] | |

| Restorative Therapies Group | [removed: | 7,366 | | |] [added: 7,743] | [removed: 7,210] | | | [added: 7,366] | [removed: 2] | | | 7,210 | | | | [removed: 6,751 |] [added: 5] | | | [removed: 7] [added: 2] | |

| Diabetes Group | [removed: | 1,927 | | |] [added: 2,140] | [removed: 1,864] | | | [added: 1,927] | [removed: 3] | | | 1,864 | | | | [removed: 1,762 |] [added: 11] | | | [removed: 6] [added: 3] | |

| Total [removed: Net Sales] | [removed: |] $ | [removed: 29,710] [added: 29,953] | | | $ | [removed: 28,833 | | | 3] [added: 29,710] | [removed: %] | | $ | 28,833 | | | [removed: $ | 20,261] [added: 1] | [added: %] | | [removed: 42] [added: 3] | % |

[removed: Net] [added: The Cardiac and Vascular Group’s net] sales [removed: growth] for fiscal year 2017 [removed: was also] [added: were] unfavorably affected by an additional selling week during the first quarter [removed: of] fiscal year [removed: 2016, resulting from our 52/53 week fiscal year calendar.][added: 2016.]

We are creating competitive advantages and capitalizing on the long-term trends in healthcare: [removed: namely,] [added: namely] the desire to improve clinical [removed: outcomes;] [added: outcomes,] the growing demand for expanded access to [removed: care;] [added: care,] and the optimization of cost and efficiency within healthcare systems.

[removed: In globalization,] [added: For fiscal year 2017,] net sales [removed: in emerging markets and] [added: for the U.S. increased 1 percent,] non-U.S. developed markets [removed: grew 7 percent and] [added: increased] 4 percent, [removed: respectively, in fiscal year 2017] [added: and emerging markets increased 7 percent as] compared to fiscal year 2016.

[removed: In our third growth strategy, economic value, we continue to execute our value-based healthcare signature programs and] [added: We] remain focused on leading the shift to healthcare payment systems that reward value and improved patient outcomes over volume.

| | Fiscal year ended April 28, 2017 | | | | | | | | | | | | | | [added: | | | |]

| (in [removed: millions)] [added: millions, except per share data)] | Income [removed: Before Provision for] [added: before income taxes | | | |] Income [removed: Taxes] [added: tax provision (benefit)] | | | | [removed: Diluted EPS (2)] [added: Net income attributable to Medtronic] | | | | [removed: Provision for Income Taxes] [added: Diluted EPS] (1) | | | | Effective [removed: Tax Rate] [added: tax rate] | |

| GAAP | $ | 4,602 | | | $ | [removed: 2.89] [added: 578] | | | $ | [removed: 578] [added: 4,028] | | | [added: $ | 2.89 | | |] 12.6 | % |

| Non-GAAP Adjustments: | | | | | | | | | | | | | | | [added: | | | |]

| Impact of inventory step-up [added: (10)] | 38 | | | | [removed: 0.02] [added: 14] | | | | [removed: 14] [added: 24] | | | | [added: 0.02 | | | |] 36.8 | |

| Special charge [added: (8)] | 100 | | | | [removed: 0.05] [added: 37] | | | | [removed: 37] [added: 63] | | | | [added: 0.05 | | | |] 37.0 | |

| Restructuring charges, net | 373 | | | | [removed: 0.20] [added: 101] | | | | [removed: 101] [added: 272] | | | | [added: 0.20 | | | |] 27.1 | |

| Certain litigation charges | 300 | | | | [removed: 0.14] [added: 110] | | | | [removed: 110] [added: 190] | | | | [added: 0.14 | | | |] 36.7 | |

| Acquisition-related items | 230 | | | | [removed: 0.11] [added: 74] | | | | [removed: 74] [added: 156] | | | | [added: 0.11 | | | |] 32.2 | |

| Amortization of intangible assets | 1,980 | | | | [removed: 1.05] [added: 520] | | | | [removed: 520] [added: 1,460] | | | | [added: 1.05 | | | |] 26.3 | |

| Certain tax adjustments, net [added: (11)] | — | | | | [removed: 0.15] [added: (202] | | [added: )] | | [removed: (202] [added: 202] | | [removed: )] | | [added: 0.15 | | | |] — | |

| Non-GAAP | $ | 7,623 | | | $ | [removed: 4.60] [added: 1,232] | | | $ | [removed: 1,232] [added: 6,395] | | | [added: $ | 4.60 | | |] 16.2 | % |

| [removed: (2)] [added: (1)] | [removed: The data] [added: Amounts] in this [removed: schedule has] [added: column have] been intentionally rounded to the nearest $0.01 and, therefore, may not sum. |

| | Fiscal year ended April 29, 2016 | | | | | | | | | | | | | | [added: | | | |]

These financial measures are considered "non-GAAP financial measures" and are intended to supplement, and should not be considered as superior to, financial measures presented in accordance with U.S. GAAP.

The table below presents net income attributable to Medtronic and diluted earnings per share for fiscal years 2018, 2017, and 2016:

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| (in millions, except per share data) | | 2018 | | | | 2017 | | | | 2016 | | | | 2018 | | | 2017 | |

| Net income attributable to Medtronic | | $ | 3,104 | | | $ | 4,028 | | | $ | 3,538 | | | (23 | )% | | 14 | % |

| Diluted earnings per share | | $ | 2.27 | | | $ | 2.89 | | | $ | 2.48 | | | (21 | )% | | 17 | % |

Diluted earnings per share (EPS) for fiscal year 2018 as compared to fiscal year 2017 was unfavorably affected by the net $2.4 billion tax charge related to the enactment of U.S. comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the Tax Act), which had a significant effect on the income tax provision in fiscal year 2018.

Further, diluted EPS for fiscal year 2018 was unfavorably affected by an investment loss related to the impairment of certain cost and equity method investments of $227 million, along with impairments of IPR&D of $68 million.

Additionally, for fiscal year 2018, diluted EPS was unfavorably affected by the July 29, 2017 sale of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses within the Minimally Invasive Therapies Group.

Net sales of these businesses for fiscal years 2018 and 2017 were $0.6 billion and $2.4

billion, respectively.

For fiscal year 2018, diluted EPS was partially offset by a $697 million gain on the sale of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.

Diluted EPS for fiscal year 2017 as compared to 2016 was favorably affected by the recognition of certain tax adjustments of $417 million, including a charge of $442 million in fiscal year 2016 primarily related to the U.S. income tax expense resulting from our completion of an internal reorganization of the ownership of certain legacy Covidien businesses that reduced the cash and investments held by our U.S. controlled non-U.S. subsidiaries, partially offset by a benefit related to the establishment of a deferred tax asset on the tax basis in excess of book basis of a wholly owned U.S. subsidiary of which we disposed.

GAAP to Non-GAAP Reconciliations The tables below present reconciliations of our Non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with U.S. GAAP for fiscal years 2018, 2017, and 2016:

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| GAAP | $ | 5,675 | | | $ | 2,580 | | | $ | 3,104 | | | $ | 2.27 | | | 45.5 | % |

| Restructuring and associated costs (2) | 107 | | | | 20 | | | | 87 | | | | 0.06 | | | | 18.7 | |

| Debt redemption premium (3) | 38 | | | | 12 | | | | 26 | | | | 0.02 | | | | 31.6 | |

| Divestiture-related items (4) | 115 | | | | 12 | | | | 103 | | | | 0.08 | | | | 10.4 | |

| Investment loss (5) | 227 | | | | (1 | | ) | | 228 | | | | 0.17 | | | | (0.4 | ) |

| IPR&D impairment | 46 | | | | 5 | | | | 41 | | | | 0.03 | | | | 10.9 | |

| Gain on sale of businesses (6) | (697 | | ) | | — | | | | (697 | | ) | | (0.51 | | ) | | — | |

| Hurricane Maria (7) | 34 | | | | 1 | | | | 33 | | | | 0.02 | | | | 2.9 | |

| Special charge (8) | 80 | | | | 26 | | | | 54 | | | | 0.04 | | | | 32.5 | |

| Amortization of intangible assets | 1,823 | | | | 322 | | | | 1,501 | | | | 1.10 | | | | 17.7 | |

| Certain tax adjustments, net (9) | — | | | | (1,907 | | ) | | 1,907 | | | | 1.39 | | | | — | |

| Non-GAAP | $ | 7,641 | | | $ | 1,120 | | | $ | 6,530 | | | $ | 4.77 | | | 14.7 | % |

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| Investment loss (12) | 70 | | | | 26 | | | | 44 | | | | 0.03 | | | | 37.1 | |

| (2) | Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses. |

| (3) | The charge, included within interest expense, net in our consolidated statements of income, was recognized in connection with the early redemption of approximately $1.2 billion of Medtronic Inc. senior notes. |

UNDERSTANDING OUR FINANCIAL INFORMATION

Early in the week of June 19, 2017, we experienced a global information technology systems interruption that affected our ability to manufacture devices and fulfill orders from customers in a large portion of our business.

Our systems have now been fully restored.

At this time, we do not believe our fiscal year 2018 results of operations or financial condition will be materially affected by this incident.

On January 26, 2015, 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 Transactions, the Company became the successor registrant to Medtronic, Inc. and re-registered as a public limited company organized under the laws of Ireland.

For fiscal year 2015, the results of operations of Covidien are reflected in the Company's results of operations for only the fourth quarter due to the timing of the acquisition of Covidien, which affects comparability throughout this Annual Report on Form 10-K.

Organization of Financial Information

Management’s Discussion and Analysis 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.

Financial Statements and Supplementary Data" in this Annual Report on Form 10-K and include the consolidated statements of income, consolidated statements of comprehensive income, consolidated balance sheets, consolidated statements of equity, consolidated statements of cash flows, and the related notes, which are an integral part of the consolidated financial statements.

Financial Trends

These financial measures are considered "non-GAAP financial measures."

The non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations.

Investors should not consider results reflecting non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP and are cautioned that Medtronic may calculate results reflecting non-GAAP financial measures in a manner that is different from other companies.

We employ more than 91,000 full-time employees worldwide, serving physicians, hospitals, and patients in approximately 160 countries.

Net income attributable to Medtronic for fiscal year 2017 was $4.0 billion, $2.89 per diluted share, as compared to net income attributable to Medtronic of $3.5 billion, $2.48 per diluted share, for fiscal year 2016, representing an increase of 14 percent and 17 percent, respectively.

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| | | Net Sales | | | | | | | | | | | Net Sales | | | | | | | | | |

| (1) | The Minimally Invasive Therapies Group was a new group in the fourth quarter of fiscal year 2015 that contains the majority of Covidien's former operations. Revenue growth is compared to a full year of operations in fiscal year 2016. |

Currency translation had an unfavorable impact of $34 million on net sales for fiscal year 2017, as compared to fiscal year 2016 when using the average exchange rates in effect during fiscal year 2016.

In addition, the fiscal year 2017 acquisitions of HeartWare and Smith & Nephew's gynecology business contributed $200 million to our total net sales growth.

In our therapy innovation growth strategy, we continue to see strong adoption of our products across all our operating segments.

Further discussion about our products is included within the operating segment sections below.

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.

GAAP to Non-GAAP Reconciliation We have provided non-GAAP financial measures, because we believe they provide meaningful information regarding our results on a consistent and comparable basis for the periods presented.

Management uses these non-GAAP financial measures to facilitate its review of our operational performance and as a basis for strategic planning.

Management believes that non-GAAP financial measures provide useful information to investors regarding the underlying business trends and performance of our ongoing operations and are useful for period over period comparisons of such operations.

Refer to our discussion in the "Costs and Expenses" and "Income Taxes" sections of this Management's Discussion and Analysis for more information on the Non-GAAP Adjustments.

Investors should not consider results reflecting non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP, and should be cautioned that we may calculate results reflecting non-GAAP financial measures in a manner that is different from other companies.

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| (1) | The tax effect of each Non-GAAP Adjustment is based on the jurisdictions in which the expense (income) is incurred and the tax laws in effect for each such jurisdiction. |

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Due to the global nature of our operations, we are exposed to currency exchange rate [removed: changes.][added: changes which may cause fluctuations in earnings and cash flows.]

We use operational and economic hedges, as well as currency exchange rate derivative instruments, to manage the impact of currency exchange rate [removed: fluctuations on earnings and cash flows.][added: fluctuations.]

The primary currencies of our derivative instruments are the [removed: Euro and] [added: Euro,] Japanese [removed: Yen.][added: Yen, and British Pound.]

The gross notional amount of all currency exchange rate derivative instruments outstanding at April [removed: 28, 2017] [added: 27, 2018] and April [removed: 29, 2016] [added: 28, 2017] was [added: $11.5 billion and] $10.8 [removed: billion.][added: billion, respectively.]

At April [removed: 28, 2017,] [added: 27, 2018,] these contracts were in a net unrealized [removed: gain] [added: loss] position of [removed: $118] [added: $159] million.

A sensitivity analysis of changes in the fair value of all currency exchange rate derivative contracts at April [removed: 28, 2017] [added: 27, 2018] 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 [removed: $836] [added: $879] million.

Our debt portfolio at April [removed: 28, 2017] [added: 27, 2018] was comprised of debt predominately denominated in U.S. dollars, of which approximately [removed: 85%] [added: 95%] is fixed rate debt and approximately [removed: 15%] [added: 5%] is floating-rate debt.

A sensitivity analysis of the impact on our [removed: investments in] interest [removed: rate sensitive] [added: rate-sensitive] financial instruments of a hypothetical 10 basis point change in interest rates, [added: as] compared to interest rates at April [removed: 28, 2017,] [added: 27, 2018,] indicates that the fair value of these instruments would correspondingly change by [removed: $67] [added: $81] million.

In periods in which the U.S. dollar, our functional currency, is strengthening/weakening as compared to other currencies, our revenues, expenses, assets, and liabilities denominated in other currencies may be translated into U.S. dollars at a lower/higher value than they would be in an otherwise constant currency exchange rate environment.

Medtronic plc, headquartered in Dublin, Ireland, is among the world's largest medical technology, [removed: services] [added: services,] and solutions companies - 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 [removed: approximately 160] [added: more than 150] countries worldwide.

[removed: In connection with the transaction,] Medtronic, [removed: Inc., a Minnesota corporation (Medtronic, Inc.),] [added: Inc.] and Covidien [added: plc (Covidien)] were combined under and became subsidiaries of Medtronic [removed: plc.][added: plc on January 26, 2015.]

For more information [removed: on] [added: regarding] our segments, please see Note [removed: 22] [added: 21] to the consolidated financial statements in [removed: “Item] [added: "Item] 8.

We [removed: currently function in] [added: have] four operating [added: and reportable] segments that primarily [removed: manufacture] [added: develop, manufacture, distribute,] and sell device-based medical [removed: therapies.][added: therapies and services.]

Our [removed: operating] segments [removed: with each of] [added: and] their [added: portion of our total] reported net sales for fiscal year [removed: 2017, along with their related divisions,] [added: 2018 of $30.0 billion] are as follows:

[added: | • |] Cardiac and Vascular Group [removed: (Fiscal year 2017 net sales of $10.5] [added: ($11.4] billion) [added: |]

[removed: | • |] Cardiac Rhythm & Heart Failure [removed: |]

[removed: | • |] Coronary & Structural Heart [removed: |]

[removed: | • |] Aortic & Peripheral Vascular [removed: |]

[added: | • |] Minimally Invasive Therapies Group [removed: (Fiscal year 2017 net sales of $9.9] [added: ($8.7] billion) [added: |]

Our [removed: CRHF] [added: Cardiac Rhythm & Heart Failure] 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 treatment of atrial fibrillation (AF), products designed to reduce surgical site infections, information systems for the management of patients with [removed: CRHF] [added: Cardiac Rhythm & Heart Failure] devices, ventricular assist systems, and an integrated health solutions business.

[removed: The following are the principal] [added: Principal] products and services offered [removed: by our CRHF division:][added: include:]

[removed: The] [added: | • | Implantable cardiac pacemakers including the Azure, Adapta, Advisa MRI SureScan, and] Micra Transcatheter Pacing System, which is leadless and does not have a subcutaneous device pocket like a conventional [removed: pacemaker, and the Advisa MRI SureScan models have received United States (U.S.) Food and Drug Administration (FDA) approval and Conformité Européene (CE) Mark approval, while the Ensura MRI SureScan models have received CE Mark approval.][added: pacemaker. |]

[removed: The] [added: | • | Implantable cardioverter defibrillators (ICDs), including the Visia AF and] Evera [removed: system] [added: MRI SureScan, which] is paired with the reliable Sprint Quattro Secure lead, the only defibrillator lead with more than 12 years of proven performance with active monitoring. [added: |]

[removed: AF Products Our portfolio of] [added: | • |] AF [added: ablation] products [removed: includes] [added: including] the Arctic Front Advance Cardiac Cryoballoon System, which includes the [removed: U.S. FDA approved] Arctic Front Advance ST Cryoablation Catheter, designed for pulmonary vein isolation in the treatment of patients with drug refractory paroxysmal [added: AF and the second-generation 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. [added: |]

[removed: The system] [added: | • | Insertable cardiac monitor systems including the Reveal LINQ, which] 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. [added: |]

[added: | • |] Mechanical [removed: Circulatory Support Products (MCS) Our MCS] [added: circulatory support] products [removed: include] [added: including] miniaturized implantable heart pumps, or ventricular assist devices, patient accessories and surgical tools to treat patients suffering from advanced heart failure. [added: |]

[removed: TYRX Products Our] [added: | • |] TYRX products [removed: include] [added: including] 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. [added: |]

[removed: Services and Solutions Our Care Management Services products and services include remote] [added: | • | Remote] monitoring [added: services] and patient-centered software to enable efficient care coordination and specialized telehealth nurse [removed: support.][added: support as well as services related to hospital operational efficiency. |]

Our [removed: CSH] [added: Coronary & Structural Heart] division includes therapies to treat coronary artery disease [removed: (CAD),] and heart valve disorders.

[added: | • |] Percutaneous Coronary Intervention [removed: (PCI) Our latest generation PCI] stent products [removed: include] [added: including] our Resolute Integrity [removed: drug-eluting stent systems, which have received U.S. FDA approval, as well as our] [added: and] Resolute Onyx drug-eluting stent [removed: systems, which have received both CE Mark and U.S. FDA approval.][added: systems. |]

[removed: We also offer a complete line of] [added: | • | Surgical valve replacement and repair products for damaged or diseased heart valves, including both tissue and mechanical valves,] 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 [removed: surgery.][added: surgery, and surgical ablation systems and positioning and stabilization technologies. |]

Our [removed: APV] [added: Aortic & Peripheral Vascular] division 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 [removed: disease (PVD),] [added: disease,] and [removed: critical limb ischemia (CLI).][added: venous disease.]

Our products include endovascular stent graft systems, peripheral drug coated balloons, stent and angioplasty systems, and carotid embolic protection [removed: systems for the treatment of vascular disease outside the heart, as well as products for superficial and deep venous disease.]

[removed: Our product line includes a range of endovascular] [added: | • | Endovascular] stent grafts and accessories including the [removed: market-leading] Endurant [removed: 2S] Abdominal Aortic Aneurysm [removed: (AAA)] Stent Graft [removed: System,] [added: System family of products,] the Valiant Captivia Thoracic Aortic Aneurysm [removed: (TAA)] stent graft system, and the [removed: Aptu] Heli-FX EndoAnchor System. [added: |]

[removed: Peripheral Vascular (PV) Our primary PV products include percutaneous] [added: | • | Percutaneous] angioplasty balloons including the IN.PACT family of drug-coated balloons, vascular stents, such as the Protégé [removed: &] [added: and] Everflex self-expanding stents and Visi-Pro balloon expandable stents, directional atherectomy products, such as the HawkOne plaque excision system, and other procedure support tools. [added: |]

Our Surgical [removed: Solutions] [added: Innovations] division develops, manufactures, and markets advanced [removed: surgical, general surgical,] and [added: general surgical products including surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products,] hernia [added: mechanical devices, mesh implants, and gynecology] products and therapies to treat diseases and conditions that are typically, but not exclusively, addressed by surgeons.

[removed: Key advanced surgical products include:] [added: | • | Advanced stapling products, including] 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 [removed: stapler;] [added: stapler,] the [removed: iDrive and] Signia [added: and iDrive] powered stapling [removed: systems;] [added: systems,] the LigaSure vessel sealing [removed: system, which features specialty/application specific handpieces powered by proprietary hardware platforms;] [added: system with nano-coating, and] the Sonicision cordless ultrasonic dissection [removed: 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.][added: system. |]

[removed: This includes the PillCam SB] [added: | • | Gastrointestinal] and [added: endoscopy products, including the] PillCam COLON, [removed: a minimally-invasive, swallowed optical endoscopy technology; superDimesion to evaluate lung lesions;] the [added: Emprint ablation system with Thermosphere Technology, the HET Bipolar System, the] Cool-tip radiofrequency ablation [removed: system;] [added: system,] the [removed: Evident microwave ablation system;] [added: Barrx platform with the Barrx 360 Express catheter,] and the HALO ablation catheters for treatment of Barrett’s esophagus. [added: |]

[removed: Key] [added: | • | Products focused on] patient [removed: monitoring products include:] [added: monitoring, including the] Capnostream with Microstream technology capnography monitors, the Nellcor Bedside SpO2 patient monitoring system, the Bispectral Index (BIS) brain monitoring technology, [added: and] the INVOS Cerebral/Somatic [removed: Oximeter, and related modules and sensors.][added: Oximeter. |]

[removed: Key airway & ventilation products include:] [added: | • | Airway, ventilation, and inhalation therapies products, including] the Puritan Bennett [removed: 840 and] 980 [removed: ventilators,] [added: ventilator,] the Newport e360 and HT70 ventilators, the TaperGuard Evac tube, Shiley Endotracheal Tubes, Shiley Tracheostomy Tubes, [removed: DAR Filters,] and [removed: resuscitation bags.][added: DAR Filters. |]

[removed: Our products and therapies] [added: | • | Products to] treat a variety of conditions affecting the spine, including degenerative disc disease, spinal deformity, spinal tumors, fractures of the spine, and stenosis. [added: These products include our CD HORIZON SOLERA and LEGACY Systems, and the CAPSTONE, CLYDESDALE, and ELEVATE interbody spacers. |]

Our Spine division also provides biologic solutions for the orthopedic and dental markets and, in concert with our Neurosurgery business, [removed: we offer] [added: offers] unique and highly differentiated [added: imaging,] navigation, [removed: neuromonitoring, and] power [removed: technologies designed] [added: instruments, nerve monitoring, and Mazor robotics integrated] for [added: our] spine procedures.

[removed: In addition, Medtronic offers a number of products] [added: | • | Products] that facilitate less invasive thoracolumbar surgeries, including the CD HORIZON VOYAGER, SOLERA SEXTANT and LONGITUDE Percutaneous Fixation Systems. [added: |]

[added: | • |] Products [removed: used] to treat conditions in the cervical region of the [removed: spine include] [added: spine, including] the ZEVO and ATLANTIS VISION ELITE Anterior Cervical Plate Systems, the VERTEX SELECT Reconstruction System, and the PRESTIGE and BRYAN Cervical Artificial Discs. [added: |]

[removed: Biologics Products Our Biologics products include] [added: | • | Biologic solutions products, including our] INFUSE Bone Graft (InductOs in the European Union (E.U.)), which contains a recombinant human bone morphogenetic protein, rhBMP-2, for certain spinal, trauma, and oral maxillofacial [removed: applications,] [added: applications.] Demineralized Bone Matrix [removed: (DBM)] products, including MagniFuse, Grafton/Grafton Plus, and PROGENIX, and the MASTERGRAFT family of synthetic bone graft products - Matrix, Putty, and Granules. [added: |]

Our Brain Therapies division [removed: offers] [added: develops, manufactures, and markets] an integrated portfolio of devices and therapies for the treatment of neurological disorders and diseases, as well as surgical technologies designed to improve the precision and workflow of neuro procedures.

[removed: Our] [added: | • | Neurovascular] products [added: to treat diseases of the vasculature in and around the brain. This includes coils, neurovascular stents, and flow diversion products, as well as access and delivery products to support procedures. Products] also include the Pipeline Flex Embolization Devices, endovascular treatments for large or giant wide-necked brain [removed: aneurysms;] [added: aneurysms,] the [added: portfolio of] Solitaire [removed: FR] revascularization [removed: device] [added: devices] for treatment of acute ischemic [removed: stroke;] [added: stroke,] and [removed: the Apollo Onyx delivery micro catheter, the first detachable tip micro-catheter available in the U.S.][added: a portfolio of access catheters. |]

Medtronic plc is the successor to Medtronic, Inc., a Minnesota corporation.

Prior to the divestiture, these businesses were included within the Minimally Invasive Therapies Group segment.

| • | Restorative Therapies Group ($7.7 billion) |

| • | Diabetes Group ($2.1 billion) |

The Cardiac and Vascular Group is made up of the Cardiac Rhythm & Heart Failure, Coronary & Structural Heart, and Aortic & Peripheral Vascular divisions.

| • | Implantable cardiac resynchronization therapy devices (CRT-Ds and CRT-Ps) including the Claria/Amplia/Compia family of MRI Quad CRT-D SureScan systems and the Percepta/Serena/Solara family of MRI Quad CRT-P SureScan systems. The Claria CRT-D MRI and Percepta CRT-P MRI devices feature EffectivCRT, which is an algorithm that verifies left ventricular pacing effectiveness and automatically tailors the therapy to individual patients, and the AdaptivCRT algorithm, which reduces a patient's odds of a 30-day heart failure readmission and has demonstrated a reduction in AF risk compared to echo-optimized biventricular pacing. |

Principal products and services offered include:

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| • | CoreValve family of aortic valves, including our second-generation recapturable TCV system, CoreValve Evolut R, and our third-generation system, CoreValve Evolut PRO. |

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systems for the treatment of vascular disease outside the heart, and products for superficial and deep venous disease.

Principal products and services offered include:

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| • | Products to treat superficial venous diseases in the lower extremities including the ClosureFast RF ablation system and the VenaSeal medical adhesive closure system. |

The Minimally Invasive Therapies Group is made up of the Surgical Innovations and Respiratory, Gastrointestinal, & Renal divisions.

While less frequent, some products and therapies are also used in home settings.

Surgical Innovations

Principal products and services offered include:

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| --- | --- |

| • | Electrosurgical hardware and instruments, including the Valleylab FT10 energy platform, and the Force TriVerse electrosurgical pencil. |

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| --- | --- |

| • | Products designed for the treatment of hernias, including the AbsorbaTack absorbable mesh fixation device for hernia repair, the Symbotex composite mesh for surgical laparoscopic and open ventral hernia repair, and Parietex ProGrip, a self-gripping, biocompatible solution for inguinal hernias. |

Respiratory, Gastrointestinal, & Renal

Our Respiratory, Gastrointestinal, & Renal division develops, manufactures, and markets products in the emerging fields of minimally invasive gastrointestinal diagnostics and therapies, respiratory monitoring, airway management and ventilation therapies, and for the treatment of renal disease.

Principal products and services offered include:

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| --- | --- |

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 $50.0 billion.

Covidien was a global leader in the development, manufacture and sale of healthcare products for use in clinical and home settings.

On a pro forma basis, as if the Covidien merger had occurred at the beginning of fiscal year 2015, our combined net sales would have been $28.4 billion.

The merger with Covidien provides us with increased financial strength and flexibility and is expected to meaningfully accelerate all three strategies discussed above.

We reorganized our reporting structure and aligned our segments and the underlying divisions and businesses in fiscal year 2015 due to the acquisition of Covidien.

The majority of Covidien’s operations are included in the Minimally Invasive Therapies Group.

Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

| • | Surgical Solutions |

| • | Patient Monitoring & Recovery |

Restorative Therapies Group (Fiscal year 2017 net sales of $7.4 billion)

| • | Spine |

| • | Brain Therapies |

| • | Specialty Therapies |

| • | Pain Therapies |

Diabetes Group (Fiscal year 2017 net sales of $1.9 billion)

| • | Intensive Insulin Management |

| • | Non-Intensive Diabetes Therapies |

| • | Diabetes Service & Solutions |

Cardiac Rhythm & Heart Failure Disease Management (CRHF)

Implantable Cardiac Pacemakers (Pacemakers) Our latest generations of pacemaker systems are the Advisa MRI SureScan models, the Micra Transcatheter Pacing System, and the Ensura MRI SureScan model.

Implantable Cardioverter Defibrillators (ICDs) Our latest generation ICD is the Evera MRI SureScan, the first ICD system with CE Mark, PMDA (Japan), and U.S. FDA, approval for full-body MRI scans for both 1.5T and 3T scanners.

Implantable Cardiac Resynchronization Therapy Devices (CRT-Ds and CRT-Ps) Our latest generation of CRTs, the Claria/Amplia/Compia family of MRI Quad CRT-D SureScan systems and the Percepta/Serena/Solara family of MRI Quad CRT-P SureScan systems, have received U.S. FDA approval and CE Mark.

The Claria CRT-D MRI and Percepta CRT-P MRI devices feature EffectivCRT, which is a new algorithm that verifies left ventricular pacing effectiveness and automatically tailors the therapy to individual patients.

These devices also include the proprietary AdaptivCRT algorithm, which reduces a patient's odds of a 30-day heart failure readmission and has demonstrated a reduction in AF risk compared to echo-optimized biventricular pacing.

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.

Our Cath Lab Managed Services business is focused on developing partnerships with hospitals to provide services directly related to hospital operational efficiency.

Coronary & Structural Heart Disease Management (CSH)

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 second-generation recapturable TCV system, CoreValve Evolut R, has received U.S. FDA approval and CE Mark approval for the 23, 26, 29, and 34 millimeter sizes of the valve.

Our third-generation system, CoreValve Evolut PRO has received U.S. FDA approval.

Heart Surgery Our Heart Surgery business offers 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.

Additionally, we offer surgical ablation systems and positioning and stabilization technologies.

Aortic & Peripheral Vascular Disease Management (APV)

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

Endovascular Stent Grafts (Aortic) Our Aortic products are designed to treat aortic aneurysms in either the abdomen or thoracic regions of the aorta.

A discussion of the Company’s legal proceedings is contained in Note [removed: 20] [added: 19] to the consolidated financial statements in “Item 8.

| x | Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. For the fiscal year ended April [removed: 28, 2017.] [added: 27, 2018.] |

[removed: ®][added: ®]

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

Aggregate market value of voting and non-voting common equity of Medtronic [removed: PLC] [added: plc] held by non-affiliates of the registrant as of October [removed: 28, 2016,] [added: 27, 2017,] based on the closing price of [removed: $81.93,] [added: $81.30,] as reported on the New York Stock Exchange: approximately [removed: $112.4] [added: $110.0] billion.

Portions of [removed: Registrant’s] [added: the registrant’s] Proxy Statement for its [removed: 2017] [added: 2018] Annual General Meeting are incorporated by reference into Part III [removed: hereto.][added: hereof.]

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| [removed: [6.](#sF69370B4FF3D5AE2A6CE0B83080148C5)] [added: [6.](#s3C99A56288795F4A8EF033F8D62EA4BA)] | | [Selected Financial [removed: Data](#sF69370B4FF3D5AE2A6CE0B83080148C5)] [added: Data](#s3C99A56288795F4A8EF033F8D62EA4BA)] | | [removed: [38](#sF69370B4FF3D5AE2A6CE0B83080148C5)] [added: [29](#s3C99A56288795F4A8EF033F8D62EA4BA)] |

| [removed: [7.](#sC58A84B46D4951EB82C7FCE998541DD2)] [added: [7.](#s1CAB59ED388D58B7B5469C6F6873CCA9)] | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sC58A84B46D4951EB82C7FCE998541DD2)] [added: Operations](#s1CAB59ED388D58B7B5469C6F6873CCA9)] | | [removed: [39](#sC58A84B46D4951EB82C7FCE998541DD2)] [added: [30](#s1CAB59ED388D58B7B5469C6F6873CCA9)] |

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| | | [PART [removed: III](#sAC77744901F551EC947C043AF67FB436)] [added: III](#sA293F264D1035139956DC6C12A0030F5)] | | |

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10-K 1 mdt-2018427x10k.htm 10-K

Number of Ordinary Shares outstanding on June 20, 2018: 1,351,709,097

| | | [PART I](#s888CB25028D457D8A0DDEB9D20A00444) | | |

| [1.](#s3F4EE3323E2D55578F24DE8506E5D17D) | | [Business](#s3F4EE3323E2D55578F24DE8506E5D17D) | | [3](#s3F4EE3323E2D55578F24DE8506E5D17D) |

| [2.](#sFE61E7B8949F591EA66877F5F8A5FD6A) | | [Properties](#sFE61E7B8949F591EA66877F5F8A5FD6A) | | [25](#sFE61E7B8949F591EA66877F5F8A5FD6A) |

| | | [PART II](#sB9808F9EFC335D79943125980489259D) | | |

| | | [PART IV](#sB46401C1204D50F490B484140A6F42C8) | | |

| [16.](#sf35cce8c811b48eab9e49c550fee8605) | | [Form 10-K Summary](#sf35cce8c811b48eab9e49c550fee8605) | | [142](#sf35cce8c811b48eab9e49c550fee8605) |

| | | [Signatures](#s187BA11BC45658AC8259F04D3EC02FB3) | | [143](#s187BA11BC45658AC8259F04D3EC02FB3) |

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, and other written reports of Medtronic public limited company, organized under the laws of Ireland (together with its consolidated subsidiaries, Medtronic, the Company, or we, us, or our), 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.

All statements other than statements of historical fact contained in this Annual Report on Form 10-K, including statements regarding our future results of operations and financial position, business strategy and plans, objectives of management for future operations and current expectations or forecasts of future results, are forward-looking statements.

These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

Our forward-looking statements may include statements related to our growth and growth strategies, developments in the markets for our products, therapies and services, financial results, product development launches and effectiveness, research and development strategy, regulatory approvals, competitive strengths, restructuring and cost-saving initiatives, intellectual property rights, litigation and tax matters, government investigations, mergers and acquisitions, divestitures, market acceptance of our products, therapies and services, accounting estimates, financing activities, ongoing contractual obligations, working capital adequacy, value of our investments, our effective tax rate, our expected returns to shareholders, and sales efforts.

In some cases, such statements may 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, therapies and services in our 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; divestitures and the potential benefits thereof; the costs and benefits of integrating previous acquisitions; anticipated timing for United States (U.S.) Food and Drug Administration (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, including potential changes to reimbursement policies and pricing pressures; our expectations regarding changes to patient standards of care; our ability to identify and maintain successful business partnerships; 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; our payment of dividends and redemption of shares; 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.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations.

These forward-looking statements speak only as of the date of this Annual Report on Form 10-K and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section and elsewhere in this Annual Report on Form 10-K.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events.

One must carefully consider forward-looking statements and understand that such forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, and 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 shortfalls; |

| | |

| --- | --- |

| • | decreasing prices and pricing pressure; |

| | |

| --- | --- |

| • | fluctuations in currency exchange rates; |

| | |

| --- | --- |

| • | changes in applicable tax rates; |

10-K 1 mdt-2017428x10k.htm 10-K

Number of Ordinary Shares outstanding on June 21, 2017: 1,359,026,669

| | | [PART I](#s9C3782549C79522BAB6CE2A2610F1946) | | |

| [1.](#sC95E45EC71DF54149FA21F6EB2DF5888) | | [Business](#sC95E45EC71DF54149FA21F6EB2DF5888) | | [1](#sC95E45EC71DF54149FA21F6EB2DF5888) |

| [2.](#sD2D8A5C4F5895A0B91C361213B3B7E79) | | [Properties](#sD2D8A5C4F5895A0B91C361213B3B7E79) | | [33](#sD2D8A5C4F5895A0B91C361213B3B7E79) |

| | | [PART II](#s08AD248469495AD694C62ACB8ED6EA29) | | |

| | | [PART IV](#s99B939FFB3E15D1C98C8CBD4BB75D111) | | |

| | | [Signatures](#s11845B856B46566D86FAEB3F7F65E8E0) | | [155](#s11845B856B46566D86FAEB3F7F65E8E0) |

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 2017 Annual General Meeting of Shareholders (2017 Annual Meeting) on Friday, December 8, 2017 at 8:00 a.m., local Dublin time at the Conrad Dublin Hotel Earlsfort Terrace Dublin 2, Ireland.

The record date for the 2017 Annual Meeting is October 10, 2017 and all shareholders of record at the close of business on that day will be entitled to vote at the 2017 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 "About Medtronic - 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 "About Medtronic - Corporate Governance” caption.

Information relating to transactions in Medtronic securities by directors and officers is available through our website at www.medtronic.com under the "About Medtronic - 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, 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 may 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 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.”

Medtronic's principal executive office is located in [added: Dublin,] Ireland and is leased by the Company, while its main operational offices are located in the Minneapolis, Minnesota metropolitan area and are owned by the Company.

The Company's total manufacturing and research space is approximately [removed: 13] [added: 10] million square feet.

Approximately [removed: 70] [added: 36] percent of the manufacturing [removed: or] [added: and] research facilities [removed: is] [added: are] owned by Medtronic and the balance is leased.

The following is a summary of the Company's largest manufacturing [removed: or] [added: and] research facilities by location:

Medtronic also maintains sales and administrative offices in the U.S. at 12 locations in 10 states and outside the U.S. at [removed: 177] [added: 168] locations in [removed: 67] [added: 70] countries.

The Company is using substantially all of its currently available productive space to develop, manufacture, and market [removed: its] products.

The Company's facilities are [removed: well maintained,] [added: well-maintained,] suitable for their respective uses, and adequate for current needs.

| China | | 985 | |

| Minnesota | | 969 | |

| Mexico | | 762 | |

| California | | 495 | |

| Italy | | 454 | |

| Ireland | | 446 | |

| Switzerland | | 283 | |

| Colorado | | 276 | |

| South Carolina | | 1,146 | |

| Minnesota | | 1,024 | |

| Mexico | | 983 | |

| China | | 821 | |

| Florida | | 649 | |

| Ireland | | 640 | |

| Massachusetts | | 549 | |

| Illinois | | 501 | |

| California | | 364 | |

| Switzerland | | 347 | |

| Indiana | | 291 | |

| Colorado | | 287 | |

| Nebraska | | 281 | |

| Georgia | | 236 | |

| Japan | | 223 | |

| Canada | | 206 | |

| Italy | | 200 | |

The following table provides information about the shares repurchased by the Company during the fourth quarter of fiscal year [removed: 2017:][added: 2018:]

| Fiscal Period | | Total Number of Shares Purchased | | | Average Price Paid per Share | | | | Total Number of Shares Purchased as a Part of Publicly Announced Program [removed: (1)] | | | Maximum [removed: Number] [added: Approximate Dollar Value] of Shares that may yet be Purchased Under the Program [removed: (1)] | | [added: |]

[removed: | (1) |] In June 2015, the Company’s Board of Directors authorized, subject to the ongoing existence of sufficient distributable reserves, the repurchase of 80 million of the Company’s ordinary [removed: shares (2015 Repo Authorization). In June 2017, the Company’s Board of Directors replaced the existing 2015 Repo Authorization to redeem up to an aggregate number of ordinary shares with an authorization to expend up to an aggregate amount of $5 billion beginning June 26, 2017 to redeem the Company’s ordinary] shares. [removed: |]

On June [removed: 21, 2017,] [added: 20, 2018,] there were approximately [removed: 32,550] [added: 29,965] shareholders of record of the Company’s ordinary shares.

Ordinary cash dividends declared and paid totaled [removed: 43.0] [added: 46.0] cents per share for each quarter of fiscal year [removed: 2017] [added: 2018] and [removed: 38.0] [added: 43.0] cents per share for each quarter of fiscal year [removed: 2016.][added: 2017.]

| Fiscal Year | [added: |] 1st Quarter | | | | 2nd Quarter | | | | 3rd Quarter | | | | 4th Quarter | | |

| 2017 High | [removed: $] | 89.27 | | | [removed: $] | 88.65 | | | [removed: $] | 85.09 | | | [removed: $] | 84.00 | | [added: |]

| 2017 Low | [added: |] 78.63 | | | | 80.71 | | | | 69.35 | | | | 74.27 | | |

The graph assumes that $100 was invested at market close on April [removed: 27, 2012] [added: 26, 2013] 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.

[removed: ][added: ]

| Company/Index | | April [removed: 2012 | | | | April] 2013 | | | | April 2014 | | | | April 2015 | | | | April 2016 | | | | April 2017 | | | [added: | April 2018 | | |]

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 [removed: European Communities] [added: EU] if they had been made between Member States of the [removed: Communities.][added: EU.]

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, [added: Syria, Tunisia] and [removed: Syria.][added: Ukraine.]

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| 1/27/2018 - 2/23/2018 | | 232,323 | | | $ | 86.09 | | | 232,323 | | | $ | 4,166,826,968 | |

| 2/24/2018 - 3/30/2018 | | 1,007,445 | | | 79.58 | | | | 1,007,445 | | | 4,086,673,551 | | |

| 3/31/2018 - 4/27/2018 | | 1,270,691 | | | 78.70 | | | | 1,270,691 | | | 3,986,698,992 | | |

| Total | | 2,510,459 | | | $ | 79.74 | | | 2,510,459 | | | $ | 3,986,698,992 | |

As authorized by the Board of Directors, the Company's share repurchase program expires when the total number of authorized shares have been repurchased.

This repurchase authorization was replaced in June 2017 with the repurchase authorization described below.

As such, the maximum number of shares that may yet be purchased under the June 2015 share repurchase program is no longer applicable to the repurchase program in place.

In June 2017, the Company's Board of Directors authorized the repurchase of $5.0 billion of the Company’s ordinary shares.

This authorization replaces the June 2015 authorization described above.

There is no specific time-period associated with this repurchase authorization.

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | |

| 2018 High | | $ | 89.72 | | | $ | 85.07 | | | $ | 87.93 | | | $ | 87.30 | |

| 2018 Low | | 81.50 | | | | 76.52 | | | | 77.06 | | | | 76.41 | | |

| Medtronic, Inc. / Medtronic plc | | $ | 100.00 | | | $ | 128.10 | | | $ | 173.85 | | | $ | 180.96 | | | $ | 194.03 | | | $ | 194.16 | |

| S&P 500 Index | | 100.00 | | | | 120.27 | | | | 139.48 | | | | 139.05 | | | | 163.96 | | | | 187.24 | | |

| S&P 500 Health Care Equipment Index | | 100.00 | | | | 119.09 | | | | 156.85 | | | | 166.19 | | | | 194.71 | | | | 234.34 | | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| 1/28/2017 - 2/24/2017 | | 393,134 | | | $ | 76.31 | | | 393,134 | | | 30,494,376 | |

| 2/25/2017 - 3/31/2017 | | 458,013 | | | 81.88 | | | | 458,013 | | | 30,036,363 | |

| 4/1/2017 - 4/28/2017 | | 839,332 | | | 80.42 | | | | 839,332 | | | 29,197,031 | |

| Total | | 1,690,479 | | | $ | 79.86 | | | 1,690,479 | | | 29,197,031 | |

| | |

| --- | --- |

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | |

| 2016 High | 79.08 | | | | 78.91 | | | | 78.92 | | | | 80.74 | | |

| 2016 Low | 72.20 | | | | 55.54 | | | | 72.28 | | | | 71.03 | | |

| Medtronic, Inc. / Medtronic plc | | $ | 100.00 | | | $ | 126.02 | | | $ | 161.43 | | | $ | 219.09 | | | $ | 228.05 | | | $ | 244.52 | |

| S&P 500 Index | | 100.00 | | | | 115.32 | | | | 138.69 | | | | 160.85 | | | | 160.35 | | | | 189.08 | | |

| S&P 500 Health Care Equipment Index | | 100.00 | | | | 115.94 | | | | 138.08 | | | | 181.85 | | | | 192.69 | | | | 225.75 | | |

| (in millions, except per share data and additional information) | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015 (1)] [added: 2016] | | | | [removed: 2014] [added: 2015(1)] | | | | [removed: 2013] [added: 2014] | | |

| Net sales | $ | [removed: 29,710] [added: 29,953] | | | $ | [removed: 28,833] [added: 29,710] | | | $ | [removed: 20,261] [added: 28,833] | | | $ | [removed: 17,005] [added: 20,261] | | | $ | [removed: 16,590] [added: 17,005] | |

| Cost of products sold | [removed: 9,291] [added: 9,055] | | | | [removed: 9,142] [added: 9,291] | | | | [removed: 6,309] [added: 9,142] | | | | [removed: 4,333] [added: 6,309] | | | | [removed: 4,126] [added: 4,333] | | |

| Research and development expense | [removed: 2,193] [added: 2,253] | | | | [removed: 2,224] [added: 2,193] | | | | [removed: 1,640] [added: 2,224] | | | | [removed: 1,477] [added: 1,640] | | | | [removed: 1,557] [added: 1,477] | | |

| Selling, general, and administrative expense | [removed: 9,711] [added: 9,974] | | | | [removed: 9,469] [added: 9,711] | | | | [removed: 6,904] [added: 9,469] | | | | [removed: 5,847] [added: 6,904] | | | | [removed: 5,698] [added: 5,847] | | |

| Special charge (gain), net | [removed: 100] [added: 80] | | | | [removed: 70] [added: 100] | | | | [removed: (38] [added: —] | | [removed: )] | | [removed: 40] [added: (38] | | [added: )] | | [removed: —] [added: 40] | | |

| Restructuring charges, net | [removed: 363] [added: 30] | | | | [removed: 290] [added: 363] | | | | [removed: 237] [added: 290] | | | | [removed: 78] [added: 237] | | | | [removed: 172] [added: 78] | | |

| Certain litigation charges | [removed: 300] [added: 61] | | | | [removed: 26] [added: 300] | | | | [removed: 42] [added: 26] | | | | [removed: 770] [added: 42] | | | | [removed: 245] [added: 770] | | |

| Acquisition-related items | [removed: 220] [added: 104] | | | | [removed: 283] [added: 220] | | | | [removed: 550] [added: 283] | | | | [removed: 117] [added: 550] | | | | [removed: (49] [added: 117] | | [removed: )] |

| Amortization of intangible assets | [removed: 1,980] [added: 1,823] | | | | [removed: 1,931] [added: 1,980] | | | | [removed: 733] [added: 1,931] | | | | [removed: 349] [added: 733] | | | | [removed: 331] [added: 349] | | |

| Other expense, net | [removed: 222] [added: 505] | | | | [removed: 107] [added: 222] | | | | [removed: 118] [added: 107] | | | | [removed: 181] [added: 118] | | | | [removed: 108] [added: 181] | | |

| Operating profit | [removed: 5,330] [added: 6,651] | | | | [removed: 5,291] [added: 5,330] | | | | [removed: 3,766] [added: 5,361] | | | | [removed: 3,813] [added: 3,766] | | | | [removed: 4,402] [added: 3,813] | | |

| Operating profit margin percent | [removed: 17.9] [added: 22.2] | | % | | [removed: 18.4] [added: 17.9] | | % | | 18.6 | | % | | [removed: 22.4] [added: 18.6] | | % | | [removed: 26.5] [added: 22.4] | | % |

| Interest expense, net | [removed: 728] [added: 749] | | | | [removed: 955] [added: 728] | | | | [removed: 280] [added: 955] | | | | [removed: 108] [added: 280] | | | | [removed: 151] [added: 108] | | |

| Income before [removed: provision for] income taxes | [removed: 4,602] [added: 5,675] | | | | [removed: 4,336] [added: 4,602] | | | | [removed: 3,486] [added: 4,336] | | | | [removed: 3,705] [added: 3,486] | | | | [removed: 4,251] [added: 3,705] | | |

| [removed: Provision for income taxes] [added: Income tax provision] | [removed: 578] [added: 2,580] | | | | [removed: 798] [added: 578] | | | | [removed: 811] [added: 798] | | | | [removed: 640] [added: 811] | | | | [removed: 784] [added: 640] | | |

| Net income | [removed: 4,024] [added: 3,095] | | | | [removed: 3,538] [added: 4,024] | | | | [removed: 2,675] [added: 3,538] | | | | [removed: 3,065] [added: 2,675] | | | | [removed: 3,467] [added: 3,065] | | |

| Net loss attributable to noncontrolling interests | [removed: 4] [added: 9] | | | | [removed: —] [added: 4] | | | | — | | | | — | | | | — | | |

| Net income attributable to Medtronic | $ | [removed: 4,028] [added: 3,104] | | | $ | [removed: 3,538] [added: 4,028] | | | $ | [removed: 2,675] [added: 3,538] | | | $ | [removed: 3,065] [added: 2,675] | | | $ | [removed: 3,467] [added: 3,065] | |

| Basic - Net income attributable to Medtronic | $ | [removed: 2.92] [added: 2.29] | | | $ | [removed: 2.51] [added: 2.92] | | | $ | [removed: 2.44] [added: 2.51] | | | $ | [removed: 3.06] [added: 2.44] | | | $ | [removed: 3.40] [added: 3.06] | |

| Diluted - Net income attributable to Medtronic | [removed: 2.89] [added: 2.27] | | | | [removed: 2.48] [added: 2.89] | | | | [removed: 2.41] [added: 2.48] | | | | [removed: 3.02] [added: 2.41] | | | | [removed: 3.37] [added: 3.02] | | |

| Cash dividends declared per ordinary share | [removed: 1.72] [added: 1.84] | | | | [removed: 1.52] [added: 1.72] | | | | [removed: 1.22] [added: 1.52] | | | | [removed: 1.12] [added: 1.22] | | | | [removed: 1.04] [added: 1.12] | | |

| Current [removed: ratio (2)] [added: ratio(2)(3)] | [removed: 1.7:1.0] [added: 2.3:1.0] | | | | [removed: 3.3:1.0] [added: 1.7:1.0] | | | | [removed: 3.4:1.0] [added: 3.3:1.0] | | | | [removed: 3.8:1.0] [added: 3.3:1.0] | | | | [removed: 4.5:1.0] [added: 3.8:1.0] | | |

| Long-term debt | [removed: 25,921] [added: 23,699] | | | | [removed: 30,109] [added: 25,921] | | | | [removed: 33,752] [added: 30,109] | | | | [removed: 10,315] [added: 33,752] | | | | [removed: 9,741] [added: 10,315] | | |

| Full-time employees at year-end | [removed: 91,267] [added: 86,368] | | | | [removed: 88,063] [added: 91,267] | | | | [removed: 85,573] [added: 88,063] | | | | [removed: 43,305] [added: 85,573] | | | | [removed: 42,466] [added: 43,305] | | |

| Full-time equivalent employees at year-end | [removed: 102,688] [added: 98,003] | | | | [removed: 98,017] [added: 102,688] | | | | [removed: 92,500] [added: 98,017] | | | | [removed: 49,247] [added: 92,500] | | | | [removed: 46,659] [added: 49,247] | | |

| (1) | Covidien [added: plc] was acquired on January 26, 2015. As such, for the fiscal year ended April 24, 2015, the results of operations of Covidien are reflected in Medtronic’s results of operations for only the fourth quarter due to the timing of the acquisition, which affects comparability. |

| [removed: (2)] [added: (3)] | The ratio of current assets to current [removed: liabilities, excluding] [added: liabilities. The] current [added: ratio at April 28, 2017 excludes current] assets and current liabilities held for [removed: sale at April 28, 2017.] [added: sale.] |

Our fiscal year-end is the last Friday in April, and therefore, the total weeks in a fiscal year fluctuates between 52 and 53 weeks.

Fiscal years 2018, 2017, 2015, and 2014 were 52-week years.

Fiscal year 2016 was a 53-week year, with the additional week occurring in the first quarter.

The table below illustrates operating results and other selected financial data for fiscal years 2014 to 2018:

| Divestiture-related items | 114 | | | | — | | | | — | | | | — | | | | — | | |

| Gain on sale of businesses | (697 | | ) | | — | | | | — | | | | — | | | | — | | |

| Investment loss | 227 | | | | — | | | | 70 | | | | — | | | | — | | |

| Working capital(2) | $ | 12,896 | | | $ | 10,272 | | | $ | 16,391 | | | $ | 21,627 | | | $ | 15,607 | |

| Total assets(2) | 91,393 | | | | 99,857 | | | | 99,685 | | | | 106,726 | | | | 37,984 | | |

| Shareholders’ equity(2) | 50,720 | | | | 50,208 | | | | 51,977 | | | | 53,144 | | | | 19,357 | | |

| (2) | Amounts and ratios have been immaterially revised as necessary for prior periods, as discussed in Note 1 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. |

| | |

| --- | --- |

| Working capital | $ | 10,316 | | | $ | 16,435 | | | $ | 21,671 | | | $ | 15,651 | | | $ | 13,902 | |

| Total assets | 99,816 | | | | 99,644 | | | | 106,685 | | | | 37,943 | | | | 34,900 | | |

| Shareholders’ equity | 50,294 | | | | 52,063 | | | | 53,230 | | | | 19,443 | | | | 18,671 | | |

In our opinion, the [removed: accompanying] consolidated [removed: balance sheets and the related consolidated] [added: financial] statements [removed: of income, comprehensive income, equity and cash flows] [added: referred to above] present fairly, in all material respects, the financial position of [removed: Medtronic plc and its subsidiaries (the Company) at] [added: the Company as of] April [removed: 28, 2017] [added: 27, 2018] and April [removed: 29, 2016,] [added: 28, 2017,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended April [removed: 28, 2017] [added: 27, 2018] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April [removed: 28, 2017,] [added: 27, 2018,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the [removed: Committee of Sponsoring Organizations of the Treadway Commission (COSO).][added: COSO.]

The Company's management is responsible for these [removed: financial statements and] [added: consolidated] financial [removed: statement schedule,] [added: statements,] for maintaining effective internal control over financial [removed: reporting] [added: reporting,] and for its assessment of the effectiveness of internal control over financial reporting, included in [removed: the accompanying Management's] [added: Management’s] Annual Report on Internal Control over Financial [removed: Reporting.][added: Reporting appearing under Item 9A.]

Our responsibility is to express opinions on [removed: these financial statements, on] the [added: Company’s consolidated] financial [removed: statement schedule,] [added: statements] and on the Company's internal control over financial reporting based on our [removed: integrated] audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the [added: consolidated] financial statements are free of material [removed: misstatement] [added: misstatement, whether due to error or fraud,] and whether effective internal control over financial reporting was maintained in all material respects.

Our audits [removed: of the financial statements] [added: also] included [removed: examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing] [added: evaluating] the accounting principles used and significant estimates made by management, [removed: and] [added: as well as] evaluating the overall [added: presentation of the consolidated] financial [removed: statement presentation.][added: statements.]

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 [removed: 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.]

| (in millions, except per share data) | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Net sales | | $ | [removed: 29,710] [added: 29,953] | | | $ | [removed: 28,833] [added: 29,710] | | | $ | [removed: 20,261] [added: 28,833] | |

| Cost of products sold | | [removed: 9,291] [added: 9,055] | | | | [removed: 9,142] [added: 9,291] | | | | [removed: 6,309] [added: 9,142] | | |

| Research and development expense | | [removed: 2,193] [added: 2,253] | | | | [removed: 2,224] [added: 2,193] | | | | [removed: 1,640] [added: 2,224] | | |

| Selling, general, and administrative expense | | [removed: 9,711] [added: 9,974] | | | | [removed: 9,469] [added: 9,711] | | | | [removed: 6,904] [added: 9,469] | | |

| Special charge [removed: (gain), net] | | [removed: 100] [added: 80] | | | | [removed: 70] [added: 100] | | | | [removed: (38] [added: —] | | [removed: )] |

| Restructuring charges, net | | [removed: 363] [added: 30] | | | | [removed: 290] [added: 363] | | | | [removed: 237] [added: 290] | | |

| Certain litigation charges | | [removed: 300] [added: 61] | | | | [removed: 26] [added: 300] | | | | [removed: 42] [added: 26] | | |

| Acquisition-related items | | [removed: 220] [added: 104] | | | | [removed: 283] [added: 220] | | | | [removed: 550] [added: 283] | | |

| Amortization of intangible assets | | [removed: 1,980] [added: 1,823] | | | | [removed: 1,931] [added: 1,980] | | | | [removed: 733] [added: 1,931] | | |

| Other expense, net | | [removed: 222] [added: 505] | | | | [removed: 107] [added: 222] | | | | [removed: 118] [added: 107] | | |

| Operating profit | | [removed: 5,330] [added: 6,651] | | | | [removed: 5,291] [added: 5,330] | | | | [removed: 3,766] [added: 5,361] | | |

| Interest income | | [removed: (366] [added: (397] | | ) | | [removed: (431] [added: (366] | | ) | | [removed: (386] [added: (431] | | ) |

| Interest expense | | [removed: 1,094] [added: 1,146] | | | | [removed: 1,386] [added: 1,094] | | | | [removed: 666] [added: 1,386] | | |

| Interest expense, net | | [removed: 728] [added: 749] | | | | [removed: 955] [added: 728] | | | | [removed: 280] [added: 955] | | |

| Income before [removed: provision for] income taxes | | [removed: 4,602] [added: 5,675] | | | | [removed: 4,336] [added: 4,602] | | | | [removed: 3,486] [added: 4,336] | | |

| [removed: Provision for income taxes] [added: Income tax provision] | | [removed: 578] [added: 2,580] | | | | [removed: 798] [added: 578] | | | | [removed: 811] [added: 798] | | |