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

The following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of the Company. You should read this discussion and analysis along with our consolidated financial statements and related notes thereto at April 24, 2020 and April 26, 2019 and for each of the three fiscal years ended April 24, 2020 (fiscal year 2020), April 26, 2019 (fiscal year 2019), and April 27, 2018 (fiscal year 2018), which are presented within "Item 8. Financial Statements and Supplementary Data" in this Annual Report on Form 10-K.

Throughout this Management’s Discussion and Analysis, we present certain financial measures that 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 accounting principles generally accepted in the U.S. (U.S. GAAP). 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. We generally use non-GAAP financial measures to facilitate management's review of the operational performance of the Company and as a basis for strategic planning. We believe that non-GAAP financial measures provide information useful to investors in understanding the Company's underlying operational performance and trends and may facilitate comparisons with the performance of other companies in the medical technologies industry.

As presented in the GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measures exclude the impact of certain charges or benefits that contribute to or reduce earnings and that may affect financial trends, and include certain charges or benefits that result from transactions or events that 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 calculated and reported. Because the effective rate can be significantly 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 income tax provision, adjusted for the impact of Non-GAAP Adjustments, as a percentage of income before income taxes, excluding Non-GAAP Adjustments.

Free cash flow is a non-GAAP financial measure calculated by subtracting property, plant, and equipment additions from operating cash flows.

Refer to the “GAAP to Non-GAAP Reconciliations," "Income Taxes," and "Free Cash Flow" sections for reconciliations of the non-GAAP financial measures to their most directly comparable financial measures prepared in accordance with U.S. GAAP.

EXECUTIVE LEVEL OVERVIEW

Medtronic is among the world's largest medical technology, services, and solutions companies - alleviating pain, restoring health, and extending life for millions of people around the world. Our primary products include those for cardiac rhythm disorders, cardiovascular disease, advanced and general surgical care, respiratory and monitoring solutions, renal care, neurological disorders, spinal conditions and musculoskeletal trauma, urological and digestive disorders, and ear, nose, and throat and diabetes conditions.

The global healthcare system is facing an unprecedented challenge as a result of the Covid-19 pandemic ("COVID-19" or the "pandemic"). The Company’s top priority during this pandemic has been to ensure the health and well-being of our more than 90,000 employees and their families around the globe. In addition, the Company is focused on fulfilling our mission and getting our products and therapies to those who need them by rapidly expanding the production and distribution of critical products in the fight against COVID-19, including dramatically increased ventilator production and partnering with key government authorities to allocate our ventilators to the communities that need them most. In fiscal year 2020, sales of Airway and Ventilator products represented approximately ten percent of the Minimally Invasive Therapies Group's net sales. Medtronic has been supporting our communities during this time of need by, among other things, providing direct support in the form of donations of certain products, and we made an $80 million contribution to the Medtronic Foundation during fiscal year 2020, which has provided direct financial assistance to communities around the world.

COVID-19 is having, and will likely continue to have, an adverse impact on significant aspects of our Company and business, including the demand for our products, our operations, supply chains and distribution systems, and our ability to research and develop and bring to market new products and services. Almost all of our businesses have been affected by a decline in procedure volumes as a result of COVID-19 as hospital resources have been diverted to fight the pandemic, and many government agencies in conjunction with healthcare systems have made decisions to postpone many deferrable and semi-deferrable procedures that use our products. In addition, some people are avoiding seeking treatment for non-COVID-19 emergency procedures, resulting in an impact to those emergent product lines. It is not possible to accurately predict the timing of a broad resumption of deferrable medical procedures and, to the extent individuals and hospital systems continue to de-prioritize, delay or cancel these procedures, our business, cash flows, financial condition and results of operations would continue to be negatively affected.

Further, COVID-19 is straining hospital systems around the world, resulting in adverse financial impacts to those systems which has resulted in and may continue to result in reduced future expenditures for capital equipment and other products and services we provide. The Company has experienced recent changes in customer buying patterns as customers have prioritized preservation of cash and reduced their holdings of certain purchased product inventories, especially in more deferrable procedure categories. As COVID-19 continues to impact hospital systems and other customers, we may encounter higher inventory levels which could result in inventory obsolescence due to excess and/or expired inventory. Additionally, the pandemic's impact on our customers may adversely impact the collectability of our current and future accounts receivable balance. COVID-19 has also disrupted and may continue to disrupt our product launches for our recently approved products and may negatively impact the regulatory approval of new products. Clinical trials generally have suspended enrollment due to facility closures and governmental restrictions, which we expect will delay the results from those clinical trials and will impact our ability to timely bring new products to market.

In addition, a significant number of our global suppliers, vendors, and distributors have been adversely affected by COVID-19, including an adverse impact on the ability of their employees to get to their places of work and maintain the continuity of their on-site operations. Therefore, although we work closely with our suppliers to try to ensure continuity of supply while maintaining high quality and reliability, the supply of certain components, raw materials, and services has been and may continue to be interrupted, in certain instances, as a direct result of COVID-19.

As of the June 19, 2020 filing date of this Annual Report on Form 10-K, which is in the middle of our first quarter of fiscal year 2021, we are starting to see signs of medical procedure recovery in certain geographies and across certain therapies. We expect medical procedure recovery rates to vary by therapy and country, and to be impacted by COVID-19 case volumes, hospital and clinical occupancy and staffing levels, patient’s willingness to re-book previously deferred procedures, travel restrictions, transportation limitations, quarantine restrictions, and potential COVID-19 resurgence.

The following is a summary of revenue, diluted earnings per share, and cash flow for fiscal years 2020 and 2019:

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 2020 and 2019:

			Fiscal year ended April 24, 2020
(in millions, except per share data)			Income Before Income Taxes						Income Tax (Benefit) Provision						Net Income Attributable to Medtronic						Diluted EPS (1)						Effective Tax Rate
GAAP			$	4,055					$	(751)					$	4,789					$	3.54					(18.5)		%
Non-GAAP Adjustments:
Restructuring and associated costs (2)			441						69						372						0.28						15.6
Acquisition-related items (3)			66						13						53						0.04						19.7
Certain litigation charges			313						59						254						0.19						18.8
(Gain)/loss on minority investments (4)			19						(3)						22						0.02						(15.8)
Debt tender premium and other charges (5)			406						86						320						0.24						21.2
Medical device regulations (6)			48						6						42						0.03						12.5
Exit of businesses (7)			52						12						40						0.03						23.1
IPR&D charges (8)			25						3						22						0.02						12.0
Contribution to Medtronic Foundation			80						18						62						0.05						22.5
Amortization of intangible assets			1,756						284						1,472						1.09						16.2
Certain tax adjustments, net (9)			—						1,242						(1,242)						(0.92)						—
Non-GAAP			$	7,261					$	1,038					$	6,206					$	4.59					14.3		%

			Fiscal year ended April 26, 2019
(in millions, except per share data)			Income Before Income Taxes						Income Tax (Benefit) Provision						Net Income Attributable to Medtronic						Diluted EPS (1)						Effective Tax Rate
GAAP			$	5,197					$	547					$	4,631					$	3.41					10.5		%
Non-GAAP Adjustments:
Restructuring and associated costs (2)			407						66						341						0.25						16.2
Acquisition-related items (3)			88						16						72						0.05						18.2
Certain litigation charges			166						24						142						0.10						14.5
(Gain)/loss on minority investments (4)			(62)						3						(65)						(0.05)						(4.8)
Debt tender premium and other charges (10)			457						113						344						0.25						24.7
Exit of businesses (7)			149						31						118						0.09						20.8
IPR&D charges (8)			58						9						49						0.04						15.5
Amortization of intangible assets			1,764						267						1,497						1.10						15.1
Certain tax adjustments, net (11)			—						40						(40)						(0.03)						—
Non-GAAP			$	8,224					$	1,116					$	7,089					$	5.22					13.6		%

(1)Amounts in this column have been intentionally rounded to the nearest $0.01 and, therefore, may not sum.

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

(3)The charges primarily include costs incurred in connection with legacy-Covidien enterprise resource planning deployment activities, business combination related costs, and changes in fair value of contingent consideration.

(4)We exclude unrealized and realized gains and losses on our minority investments as we do not believe these components of income or expense have a direct correlation to our ongoing or future business operations.

(5)The charges, which include $413 million recognized in interest expense and ($7 million) recognized in other operating expense, net, primarily relates to the early redemption of approximately $5.2 billion of debt.

(6)The charges represent incremental costs of complying with the new European Union medical device regulations for previously registered products and primarily include charges for contractors supporting the project and other direct third-party expenses.

(7)The net charges relate to the exit of businesses and are primarily comprised of intangible asset impairments.

(8)The charges represent acquired in-process research and development (IPR&D) in connection with asset acquisitions and charges recognized in connection with the impairment of IPR&D assets.

(9)The net benefit primarily relates to the release of a valuation allowance on certain net operating losses, the impact of an intercompany sale of intellectual property, and the impact of tax reform in Switzerland and the United States.

(10)The charges, which include $485 million recognized in interest expense and ($28 million) recognized in other operating expense, net, primarily relates to the early redemption of approximately $6.4 billion of Medtronic Inc. and CIFSA senior notes.

(11)The net benefit relates to the impacts of U.S. tax reform, along with intercompany legal entity restructuring, and the finalization of certain income tax aspects of the Divestiture.

NET SALES

Segment and Division

The table below illustrates net sales by segment and division for fiscal years 2020 and 2019:

			Net Sales by Fiscal Year																								Percent Change
(in millions)			2020						2019												2020
Cardiac Rhythm & Heart Failure			$	5,141					$	5,849											(12)		%
Coronary & Structural Heart			3,541						3,730												(5)
Aortic, Peripheral & Venous			1,786						1,926												(7)
Cardiac and Vascular Group			10,468						11,505												(9)
Surgical Innovations			5,513						5,753												(4)
Respiratory, Gastrointestinal, & Renal			2,839						2,725												4
Minimally Invasive Therapies Group			8,352						8,478												(1)
Brain Therapies			2,922						2,938												(1)
Spine			2,503						2,654												(6)
Specialty Therapies			1,193						1,307												(9)
Pain Therapies			1,107						1,284												(14)
Restorative Therapies Group			7,725						8,183												(6)
Diabetes Group			2,368						2,391												(1)
Total			$	28,913					$	30,557											(5)		%

The decrease in net sales for fiscal year 2020 as compared to fiscal year 2019 was primarily attributable to the decline in procedure volume and, to a lesser extent, changing customer buying patterns resulting from the impact of COVID-19 in the fourth quarter of fiscal year 2020. Changing customer buying patterns were primarily experienced in the Cardiac Rhythm & Heart Failure business, and to a lesser extent in the Restorative Therapies Group with our Biologics business in Spine, and our Pain Therapies business.

We remain focused against our three growth strategies: therapy innovation, globalization, and economic value. We continue to allocate our capital to higher growth markets and new opportunities that create competitive advantages and capitalize on the long-term trends in healthcare: namely, the desire to improve clinical outcomes; the growing demand for expanded access to care; and the optimization of cost and efficiency within healthcare systems.

We continue to see an acceleration in our innovation cycle within our therapy innovation growth strategy. Our segments invest in a pipeline of groundbreaking medical technology. We remain focused on our globalization strategy as our emerging markets continue to benefit from geographic diversification, with balanced results around the world. Finally, in our third growth strategy, economic value, we continue to execute our value-based healthcare signature programs and develop unique, value-based healthcare solutions that directly link our therapies to improving outcomes while delivering improved economic value to

the payers and providers. We remain focused on leading the shift to healthcare payment systems that reward value and improved patient outcomes over volume.

Segment and Market Geography

The tables below include net sales by market geography for each of our segments for fiscal years 2020 and 2019:

			U.S.(1), (2)																														Non-U.S. Developed Markets(1), (3)																														Emerging Markets(1), (4)
(in millions)			Fiscal Year 2020						Fiscal Year 2019						% Change						Fiscal Year 2020						Fiscal Year 2019						% Change						Fiscal Year 2020						Fiscal Year 2019						% Change
Cardiac and Vascular Group			$	5,062					$	5,750					(12)		%				$	3,519					$	3,767					(7)		%				$	1,887					$	1,988					(5)		%
Minimally Invasive Therapies Group			3,532						3,630						(3)						3,169						3,250						(2)						1,651						1,598						3
Restorative Therapies Group			5,122						5,478						(6)						1,659						1,759						(6)						945						946						—
Diabetes Group			1,204						1,336						(10)						940						855						10						224						200						12
Total			$	14,919					$	16,194					(8)		%				$	9,287					$	9,631					(4)		%				$	4,707					$	4,732					(1)		%

(1)The data in this schedule has been intentionally rounded to the nearest million and, therefore, may not sum.

(2)U.S. includes the United States and U.S. territories.

(3)Non-U.S. developed markets include Japan, Australia, New Zealand, Korea, Canada, and the countries within Western Europe.

(4)Emerging markets include the countries of the Middle East, Africa, Latin America, Eastern Europe, and the countries of Asia that are not included in the non-U.S. developed markets, as defined above.

Net sales decreases in the U.S., non-U.S. developed markets, and emerging markets for fiscal year 2020 as compared to fiscal year 2019 were primarily attributable to the impact of COVID-19 in the fourth quarter of fiscal year 2020 driven by a combination of deferred procedures and reduced demand for certain products as hospital systems prioritized treatment of COVID-19 patients and customers sought to preserve cash. Net sales decreases in non-U.S. developed markets for fiscal year 2020 were partially offset by growth in the Diabetes group due to strong demand for supplies internationally. Net sales decreases in non-U.S. developed markets were led by Australia and New Zealand as well as Western Europe, partially offset by growth in Korea. Net sales decreases in emerging markets were led by China, partially offset by strong performance in Eastern Europe and Southeast Asia. Currency had an unfavorable impact on net sales in non-U.S. developed markets and emerging markets of $418 million for fiscal year 2020. For the nine months ended January 24, 2020, which was prior to the impact of COVID-19, net sales increased one percent and ten percent in the U.S. and emerging markets, respectively, while net sales remained flat in non-U.S. development markets.

Looking ahead, we expect COVID-19 to continue to have a significant impact on our business, noting that it is not possible to accurately predict the length and severity of the pandemic. Additionally, our segments are likely to face competitive product launches and pricing pressure, geographic macro-economic risks, reimbursement challenges, impacts from changes in the mix of our product offerings, the timing of product registration approvals, replacement cycle challenges, and fluctuations in currency exchange rates. Additionally, changes in procedural volumes could affect our Cardiac and Vascular, Minimally Invasive Therapies, and Restorative Therapies Groups.

Cardiac and Vascular Group

The Cardiac and Vascular Group’s products include pacemakers, insertable cardiac monitors, cardiac resynchronization therapy devices (CRT-D), implantable cardioverter defibrillators (ICD), leads and delivery systems, ventricular assist systems, ablation products, electrophysiology catheters, products for the treatment of atrial fibrillation, information systems for the management of patients with Cardiac Rhythm & Heart Failure devices, products designed to reduce surgical site infections, coronary and peripheral stents and related delivery systems, balloons and related delivery systems, endovascular stent graft systems, heart valve replacement technologies, cardiac tissue ablation systems, and open heart and coronary bypass grafting surgical products. The Cardiac and Vascular Group also includes Care Management Services and Cath Lab Managed Services (CLMS) within the Cardiac Rhythm & Heart Failure division. The Cardiac and Vascular Group's net sales for fiscal year 2020 were $10.5 billion, a decrease of 9 percent as compared to fiscal year 2019. Currency had an unfavorable impact on net sales for fiscal year 2020 of $162 million. The Cardiac and Vascular Group's net sales decline for fiscal year 2020, as compared to fiscal year 2019, was experienced across all divisions and reflected the impact of COVID-19, specifically a significant decline in deferrable procedure volumes and reduced demand for certain of our products experienced in the fourth quarter of fiscal year 2020 as hospital systems prioritized treatment of COVID-19 patients.

The graphs below illustrate percent of Cardiac and Vascular Group net sales by division for fiscal years 2020 and 2019:

Cardiac Rhythm & Heart Failure (CRHF) net sales for fiscal year 2020 were $5.1 billion, a decrease of 12 percent as compared to fiscal year 2019. Declines were experienced in ICDs, CRT-Ds, LVADs, insertable cardiac monitoring systems, pacemakers, and products for the treatment of atrial fibrillation as a result of a global slowdown in procedural volumes experienced in the fourth quarter of fiscal year 2020 related to COVID-19. Additionally, Arrhythmia Management products were impacted by changing customer buying patterns during the fourth quarter resulting from COVID-19. While the overall Pacing business declined, the Micra transcatheter pacing system experienced growth during the year resulting from continued adoption and the third quarter launch of Micra AV. Additionally, LVAD headwinds resulting from competitive pressures in the U.S continue to negatively impact the division's sales.

Coronary & Structural Heart (CSH) net sales for fiscal year 2020 were $3.5 billion, a decrease of 5 percent as compared to fiscal year 2019. Procedural volume declines related to COVID-19 resulted in decreased sales across the division, with the exception of transcatheter aortic valves which experienced sales growth during the year, and guide catheters which were flat compared to fiscal year 2019. Sales growth in transcatheter aortic valves was driven by expansion of the Evolut Pro+ platform into the low risk patient population.

Aortic, Peripheral & Venous (APV) net sales for fiscal year 2020 were $1.8 billion, a decrease of 7 percent as compared to fiscal year 2019, which was also driven by COVID-19 related declines in procedure rates. Declines were experienced across all products, with the exception of thoracic stent grafts and the VenaSeal vein closure system. Growth in thoracic stent grafts is a result of continued momentum from the launch of the Valiant Navion thoracic stent graft system. Additionally, net sales of the division continue to be impacted by declines in drug-coated balloons due to uncertainty around Paclitaxel in the market.

In addition to the general impacts of COVID-19 on our Company as described in the Executive Level Overview, looking ahead, we expect our Cardiac and Vascular Group could be affected by the following:

• Given the uncertain progression of COVID-19 around the world, it is not possible to accurately predict the timing of a broad resumption of deferrable medical procedures overall as the speed of recovery may vary by therapy and geography. COVID-19 case volumes and potential resurgence will play a role. Therapies that might be considered more deferrable include AF Solutions, EndoVenous, and Diagnostics while more urgent therapies include Pacing, Aortic, Coronary, and Cardiac Surgery. Moderately deferrable procedures include

ICD’s/CRT-D’s, TAVR/Structural Heart, and Peripheral. Extracorporeal Life Support products, including ECMO machines and disposables within our Cardiac Surgery business, are in higher demand as a result of COVID-19.

• Acceptance and growth of the Cobalt and Crome portfolio of ICDs and CRT-Ds, both of which received CE Mark approval during the fourth quarter of fiscal year 2020.

• Continued acceptance and growth of the Claria MRI CRT-D system with EffectivCRT Diagnostic and Effective CRT during AF algorithm.

• Continued growth of our Micra transcatheter pacing system. Micra AV received U.S. FDA approval and CE Mark approval in January and April 2020, respectfully. Micra AV expands the Micra target population from 15 percent to 55 percent of pacemaker patients.

• Continued acceptance and growth from the Azure XT and S SureScan pacing systems. Azure pacemakers feature Medtronic-exclusive BlueSync technology, which enables automatic, secure wireless remote monitoring with increased device longevity.

• Acceptance and growth of the LINQ 2 cardiac monitor, which received approval in Europe during the fourth quarter of fiscal year 2020.

• Changes in the U.S. heart transplant guidelines as well as a competitor's product launch as it relates to our LVAD business.

• Continued acceptance and growth of the CRT-P quadripolar pacing system.

• Continued growth, adoption, and utilization of the TYRX Envelope for implantable devices driven by the favorable results of the WRAP-IT clinical study. In the fourth quarter of fiscal year 2020, we received 12 month shelf life extension for our TYRX Envelope product.

• Continued acceptance of Care Management Services and post-acute care services becoming even more critical in bundled payment models for different interventions or therapies.

• Continued acceptance and growth of the self-expanding CoreValve Evolut transcatheter aortic valve replacement platform into intermediate risk indication globally and for the treatment of patients determined to be at low risk with surgery.

• Changes to the U.S. Medicare national coverage determination for transcatheter aortic valve replacement that will allow approximately 30 percent more U.S. centers to offer the therapy to patients.

• Continued expansion and training of field support to increase coverage in the U.S. centers performing transcatheter aortic valve replacement procedures.

• Continued acceptance and growth from Evolut PRO, which provides industry-leading hemodynamics, reliable delivery, and advanced sealing with an excellent safety profile, as well as acceptance of our next generation Evolut Pro Plus TAVR valve which launched late in the second quarter of fiscal year 2020.

• Continued acceptance and growth from the VenaSeal vein closure system in the U.S. The VenaSeal system is a unique non-thermal solution to address superficial venous disease that provides improved patient comfort, reduces the recovery time, and eliminates the risk of thermal nerve injury.

• Continued acceptance and growth from the Valiant family of thoracic stent grafts, including the Valiant Navion.

• Ongoing impact of Paclitaxel safety concerns affecting the drug-coated balloon market.

Minimally Invasive Therapies Group

The Minimally Invasive Therapies Group’s products span the entire continuum of patient care from diagnosis to recovery, with a focus on diseases of the gastrointestinal tract, lungs, pelvic region, kidneys, obesity, and preventable complications. The products include those for advanced and general surgical products, surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products, hernia mechanical devices, mesh implants, advanced ablation, interventional lung, ventilators, capnography, airway products, sensors, renal care products, and patient monitoring products. The Minimally Invasive Therapies Group’s net sales for fiscal year 2020 were $8.4 billion, a decrease of 1 percent as compared to fiscal year 2019. Currency had an unfavorable impact on net sales of $142 million for fiscal year 2020. The Minimally Invasive Therapies Group's net sales decline for fiscal year 2020, as compared to fiscal year 2019, reflected the impact of COVID-19 in the fourth quarter of fiscal year 2020, specifically impacted by deferrable procedure volumes. The net sales decline was partially offset by growth in Respiratory and Patient Monitoring as demand in Ventilators and Airways grew globally. Prior to the pandemic, net sales performance for fiscal year 2020 was attributable to growth in both Surgical Innovations and Respiratory, Gastrointestinal, & Renal divisions.

The graphs below illustrate percent of Minimally Invasive Therapies Group net sales by division for fiscal years 2020 and 2019:

Surgical Innovations (SI) net sales for fiscal year 2020 were $5.5 billion, a decrease of 4 percent as compared to fiscal year 2019. Surgical Innovations net sales declines were experienced across all product lines and were driven by the impact of COVID-19 in the fourth quarter of fiscal year 2020. Surgical Innovations was impacted significantly from the decline in surgical volumes, particularly Bariatric, Colorectal, Gynecological Health, Hernia, and Thoracic. Aside from the declines due to the pandemic, net sales performance for fiscal year 2020 was strong in Advanced Stapling and Advanced Energy, led by the LigaSure Exact Dissector and L-Hook Laparoscopic Sealer/Divider, Sonicision curved jaw cordless ultrasonic dissection system, Valleylab FT10 energy platform, and Endo GIA and EEA circular stapler platforms with Tri-Staple technology.

Respiratory, Gastrointestinal, & Renal (RGR) net sales for fiscal year 2020 were $2.8 billion, an increase of 4 percent as compared to fiscal year 2019. Respiratory, Gastrointestinal, & Renal net sales growth was due in part to increased demand during the fourth quarter for ventilators and airways products due to COVID-19. The net sales growth was driven by strength in Respiratory and Patient Monitoring, including the Puritan Bennett ventilator portfolio, Nellcor pulse oximetry, and Microstream capnography monitoring products. Also driving growth for fiscal year 2020 was growth in Renal Care due to strong demand for Renal Access Catheters and Acute/Chronic Bellco consumables, as dialysis treatment continued throughout the pandemic.

In addition to the general impacts of COVID-19 on our Company as described in the Executive Level Overview, looking ahead we expect our Minimally Invasive Therapies Group could be affected by the following:

• Given the uncertain progression of COVID-19 around the world, it is not possible to accurately predict the timing of a broad resumption of deferrable medical procedures as the speed of recovery may vary by therapy and geography. COVID-19 case volumes and potential resurgence will play a role. Therapies that might be considered more deferrable include Surgical Innovations bariatric, hysterectomy, hernia, and GI while more urgent therapies include Surgical Innovations appendectomy, bowel obstruction, and trauma, Respiratory and Patient Monitoring, and Renal Care. Moderately deferrable procedures include Surgical Innovations CABG and oncology. Ventilators, pulse oximetry, capnography, and advanced parameter monitoring products within our Respiratory and Patient Monitoring business are in higher demand as a result of COVID-19.

• Continued acceptance and future growth of Open-to-MIS techniques and tools supported by our efforts to transition open surgery to MIS (minimally invasive surgery). The Open-to-MIS initiative focuses on furthering our presence in and working to optimize open surgery globally, while capturing the market opportunity that exists in transitioning open procedures to MIS, whether through traditional MIS, or advanced technologies including robotics.

• Continued acceptance and future growth of powered stapling and energy platform, along with our ability to execute ongoing strategies to develop, gain regulatory approval, and commercialize new products including our surgical robotics platform.

• Our ability to execute ongoing strategies in order to address the competitive pressure of reprocessing of our vessel sealing disposables in the U.S.

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

• Continued and future acceptance of Interventional Lung Solutions. Products include the superDimension GenCut core biopsy system and the Triple Needle Cytology Brush, a lung tissue biopsy tool for use with the superDimension navigation system. The superDimension system enables a minimally invasive approach to accessing difficult-to-reach areas of the lung, which may aid in the diagnosis of lung cancer.

• Expanding the use of less invasive treatments and furthering our commitment to improving options for women with abnormal uterine bleeding. Our expanded and strengthened surgical offerings are expected to complement our global gynecology business.

• Continued acceptance and growth within the end stage renal disease market. The population of patients treated for end stage renal disease globally is expected to double over the next decade. We plan to grow our therapy innovation with scalable and affordable dialysis delivery while investing in vascular creation and maintenance technologies. In addition, the HD multi-pass system reduces infrastructure by requiring less water, less start-up costs, and offers high quality ultrapure dialysate treatment. We are expecting regulatory filing in first half of calendar year 2021, with launch following regulatory clearance in targeted countries.

• Continued elevation of the standard of care for respiratory compromise, a progressive condition impacting a patient’s ability to breathe effectively which leverages our market leading MicroStream capnography technology.

• Continued acceptance and growth in patient monitoring, airway, and ventilation management. Key products in this area include the Puritan Bennet 980 ventilator, Microstream Capnography, Nellcor pulse oximetry with OxiMax technology, Shiley tracheostomy and endotracheal tubes, and McGRATH MAC video laryngoscopes.

• Continued and future acceptance of less invasive standards of care in Gastrointestinal and Hepatology products, including the areas of GI Diagnostic and Therapeutic product lines. Recently launched products include the PillCam COLON capsule endoscopy, the Barrx platform through ablation with the Barrx 360 Express catheter, EndoFLIP imaging systems, Bravo Calibration-free reflux testing, and the Emprint ablation system with Thermosphere Technology, which maintains predictable spherical ablation zones throughout procedures reducing procedure time and cost.

• The July 29, 2017 divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses. We entered into Transition Manufacturing Agreements (TMAs) with Cardinal Health, Inc. (Cardinal). The TMAs will contribute to net sales and are designed to ensure and facilitate an orderly transfer of business operations for a transition period of two to five years, with the ability to extend upon mutual agreement of the parties.

Restorative Therapies Group

The Restorative Therapies Group's products focus on various areas of the spine, bone graft substitutes, biologic products, trauma, implantable neurostimulation therapies and drug delivery systems for the treatment of chronic pain, movement disorders, epilepsy, overactive bladder, urinary retention, fecal incontinence and gastroparesis, as well as products to treat conditions of the ear, nose, and throat (ENT), and systems that incorporate advanced energy surgical instruments. The Restorative Therapies Group also manufactures and sells image-guided surgery and intra-operative imaging systems, robotic

guidance systems used in robot assisted spine procedures, and therapies to treat diseases of the vasculature in and around the brain, including coils, neurovascular stents, and flow diversion products. The Restorative Therapies Group’s net sales for fiscal year 2020 were $7.7 billion, a decrease of 6 percent as compared to fiscal year 2019. Currency had a negative impact on net sales for fiscal year 2020 of $71 million. The Restorative Therapies Group’s net sales decline reflected the impact of COVID-19 in the fourth quarter of fiscal year 2020, specifically a decline in deferrable procedures, a reduction in capital equipment purchases, and reduced demand for certain of our products as hospital systems prioritized treatment of COVID-19 patients. Prior to the pandemic, net sales performance for fiscal year 2020 was driven by increases in Brain Therapies, Spine, and Specialty Therapies divisions, partially offset by modest declines in Pain Therapies.

The graphs below illustrate percent of Restorative Therapies Group net sales by division for fiscal years 2020 and 2019:

Brain Therapies net sales for fiscal year 2020 were $2.9 billion, a decrease of 1 percent as compared to fiscal year 2019. Brain Therapies declines were driven by declines in Neurosurgery, partially offset by strength in Neurovascular. Neurovascular net sales growth was driven by continued strength in our Ischemic stroke products and modest growth in Hemorrhagic stroke products. Hemorrhagic stroke saw continued growth in flow diversion products, particularly with the Pipeline Flex flow diversion system, partially offset by fourth quarter declines due to procedural deferrals caused by COVID-19. Ischemic stroke saw continued strong adoption of the recently launched Solitaire X stent retriever products as well as our Riptide aspiration system and React catheters. Neurosurgery net sales declines were impacted by delays in capital equipment sales during the fourth quarter due to COVID-19, particularly with the Mazor X robotic guidance systems, StealthStation S8 surgical navigation systems, and O-Arm Imaging Systems. These declines were partially offset by strength in sales across all of these systems throughout fiscal year 2020 prior to COVID-19.

Spine net sales for fiscal year 2020 were $2.5 billion, a decrease of 6 percent as compared to fiscal year 2019. The declines were experienced across all product lines, and were primarily driven by the impact of COVID-19. The Surgical Synergy strategy, which integrates our spinal implants with enabling technologies such as imaging, navigation, power instruments, nerve monitoring and Mazor robotics sold by our Neurosurgery business, was particularly impacted by the reduction in capital equipment purchases as a result of the pandemic. Net sales declines in Core Spine were driven by procedural deferrals as a result of the pandemic. Changing customer buying patterns also drove net sales declines within Biologics as COVID-19 drove a reduction in certain customer purchases in the fourth quarter of fiscal year 2020, as compared to the corresponding period in the prior fiscal year. Prior to the pandemic's impact, sales for fiscal year 2020 were driven by the Surgical Synergy strategy for spinal implants with enabling technologies, and new product penetration from recently launched Core Spine products, including the Infinity OCT System, T2 Stratosphere, and Prestige LP cervical disc system. Finally, Core Spine net sales also benefited from the acquisition of Titan Spine in the first quarter of fiscal year 2020.

Specialty Therapies net sales for fiscal year 2020 were $1.2 billion, a decrease of 9 percent as compared to fiscal year 2019. Net sales declines were primarily caused by deferral of procedures across both ENT and Pelvic Health as a result of COVID-19. Prior to the pandemic's impact, fiscal year 2020 sales were driven by capital equipment sales of the StealthStation ENT surgical navigation system, intraoperative NIM nerve monitoring system, and powered ENT instruments.

Pain Therapies net sales for fiscal year 2020 were $1.1 billion, a decrease of 14 percent as compared to fiscal year 2019. The decrease in net sales was primarily driven by the continued overall slowdown in the U.S. spinal cord stimulation market, as well as fourth quarter procedural deferrals and changes in customer buying patterns resulting from COVID-19.

In addition to the general impacts of COVID-19 on our Company as described in the Executive Level Overview, looking ahead we expect our Restorative Therapies Group could be affected by the following:

• Given the uncertain progression of COVID-19 around the world, it is not possible to accurately predict the timing of a broad resumption of deferrable medical procedures as the speed of recovery may vary by therapy and geography. COVID-19 case volumes and potential resurgence will play a role. The Restorative Therapies Group therapies tend to be used in procedures that are more deferrable. Therapies that might be considered more deferrable include Spine, Pain Therapies, Pelvic Health, and ENT while more urgent therapies include Spine trauma and Neurovascular ischemic stroke. Moderately deferrable procedures include Brain Modulation and Neurovascular hemorrhagic stroke. In addition, COVID-19 may continue to result in delayed evaluation and purchases for certain capital equipment including the Neurosurgery business which has a high mix of capital sales.

• Continued acceptance and growth of the Solitare FR revascularization device for treatment of acute ischemic stroke and the Pipeline Embolization Devices, endovascular treatments for large or giant wide-necked brain aneurysms.

• Continued acceptance of our React Catheter and Riptide aspiration system, along with our next-generation Solitaire revascularization device.

• Continued growth from Neurosurgery StealthStation and O-Arm Imaging Systems, Midas, and ENT Navigation and Power Systems, as well as acceptance of the Stealth Autoguide cranial robotic guidance platform.

• Acceptance and future growth of our Percept PC deep brain stimulation (DBS) device with Brainsense technology.

• Continued acceptance of our devices for the treatment of Parkinson's Disease, epilepsy and other movement disorders.

• Continued sales of Mazor robotic units and associated market adoption of robot-assisted spine procedures, including the Mazor X Stealth, our integrated robotics and navigation platform.

• Strengthening of our position in the spine titanium interbody implant marketplace as a result of the June 2019 acquisition of Titan Spine.

• Continued adoption of our integrated solutions through the Surgical Synergy strategy, which integrates our spinal implants with enabling technologies such as imaging, navigation, power instruments, nerve monitoring, and Mazor robotics.

• Market acceptance and continued global adoption of innovative new Spine products and procedural solutions, such as our Infinity OCT System and Prestige LP cervical disc system.

• Growth in the broader vertebral compression fracture (VCF) and adjacent markets, as we continue to pursue the development of other therapies to treat more patients with VCF, including continued success of both the Kyphon V vertebroplasty system and the Osteocool RF Spinal Tumor ablation system.

• Continued acceptance and growth of our Specialty Therapies, including our InterStim therapy with InterStim II and InterStim Micro neurostimulators for the treatment of the symptoms of overactive bladder, urinary retention, and bowel incontinence, and capital equipment sales of the Stealth Station ENT surgical navigation system and intraoperative NIM nerve monitoring system.

• Market acceptance and continued global adoption of our Intellis spinal cord stimulator, DTM (differential target multiplexed) proprietary waveform, Evolve workflow algorithm, and Snapshot reporting to treat chronic pain in major markets around the world.

• Ongoing obligations under the U.S. FDA consent decree entered in April 2015 relating to the SynchroMed drug infusion system and the Neuromodulation quality system. The U.S. FDA lifted its distribution requirements on our implantable drug pump in October 2017 and its warning letter in November 2017.

Diabetes Group

The Diabetes Group's products include insulin pumps, continuous glucose monitoring (CGM) systems, and insulin pump consumables. The Diabetes Group’s net sales for fiscal year 2020 were $2.4 billion, a decrease of 1 percent as compared to fiscal year 2019. Currency had an unfavorable impact on net sales for fiscal year 2020 of $42 million. The Diabetes Group's net sales declines for fiscal year 2020 were primarily attributable to the insulin pump business, particularly with competitive pressure in the U.S. and new patient start delays from physician office closings in the fourth quarter of fiscal year 2020 associated with COVID-19. These declines were partially offset by growth in international markets resulting from sustained strong consumer demand for the MiniMed 670G, as well as the higher sensor attachment and utilization associated with the global adoption of sensor-augmented insulin pump systems. We also launched our Next Tech Pathway program during the third quarter of fiscal year 2020 to ensure eligible patients have access to upcoming product innovations.

In addition to the general impacts of COVID-19 on our Company as described in the Executive Level Overview, looking ahead we expect our Diabetes Group could be affected by the following:

• Given the uncertain progression of COVID-19 around the world, it is not possible to accurately predict the timing of a broad resumption of deferrable medical procedures as the speed of recovery may vary by therapy and geography. COVID-19 case volumes and potential resurgence will play a role. Therapies that might be considered more deferrable include new insulin pump starts while more urgent therapies include diabetes supplies and consumables including continuous glucose sensors and infusion sets.

• Continued pump competition in an expanding U.S. market.

• Continued patient demand for the MiniMed 670G system, the first hybrid closed loop system in the world. The system is powered by SmartGuard technology, which mimics some of the functions of a healthy pancreas by providing two levels of automated insulin delivery, maximizing Time in Range with reduced user input. As of the end of fiscal year 2020, approximately 249,000 trained, active users are benefiting from SmartGuard technology.

• Continued acceptance and future growth internationally for the MiniMed 670G system. This system received CE mark in June 2018 and is now commercialized in Canada, Australia, Chile and in select European, and Central and South American countries. The global adoption of sensor-augmented insulin pump systems has resulted in strong sensor attachment rates.

• Changes in medical reimbursement policies and programs, along with additional payor coverage of the MiniMed 670G system.

• Our ability to execute ongoing strategies to develop, gain regulatory approval, commercialize, and gain customer acceptance of new products, including our MiniMed 780G advanced hybrid closed loop system, as well as our Personalized Closed Loop system that was granted "Breakthrough Device" designation by the U.S. FDA. These technologies feature our next-generation algorithms designed to improve Time in Range by further automating insulin delivery.

• Continued acceptance and growth of the Guardian Connect CGM system which displays glucose information directly to a smartphone.

• Continued partnership with UnitedHealthcare as the preferred in-network provider of insulin pumps, giving their members access to our advanced diabetes technology and comprehensive support services.

CRITICAL ACCOUNTING ESTIMATES

We have used various accounting policies to prepare the consolidated financial statements in accordance with U.S. GAAP. Our significant accounting policies are disclosed in Note 1 to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" in this Annual Report on Form 10-K.

The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires us to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates reflect our best judgment about economic and market conditions and the potential effects on the valuation and/or carrying value of assets and liabilities based upon relevant information available. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Our critical accounting estimates include the following:

Litigation Contingencies We are involved in a number of legal actions involving product liability, intellectual property and commercial disputes, shareholder related matters, environmental proceedings, tax disputes, and governmental proceedings and investigations. The outcomes of these legal actions are not completely within our control and may not be known for prolonged periods of time. In some actions, the enforcement agencies or private claimants seek damages, as well as other civil or criminal remedies (including injunctions barring the sale of products that are the subject of the proceeding), that could require significant expenditures or result in lost revenues or limit our ability to conduct business in the applicable jurisdictions. Estimating probable losses from our litigation and governmental proceedings is inherently difficult, particularly when the matters are in early procedural stages with incomplete scientific facts or legal discovery; involve unsubstantiated or indeterminate claims for damages; potentially involve penalties, fines, or punitive damages; or could result in a change in business practice. Our significant legal proceedings are discussed in Note 19 to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" in this Annual Report on Form 10-K.

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

Valuation of Intangible Assets and Goodwill When we acquire a business, the assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date. Goodwill is the excess of the purchase price over the estimated fair value of net assets of acquired businesses. Intangible assets primarily include patents, trademarks, tradenames, customer relationships, purchased technology, and IPR&D. Determining the fair value of intangible assets acquired as part of a business combination requires us to make significant estimates. These estimates include the amount and timing of projected future cash flows of each project or technology, the discount rate used to discount those cash flows to present value, the assessment of the asset’s life cycle, and the consideration of legal, technical, regulatory, economic, and competitive risks.

The test for goodwill impairment requires us to make several estimates to determine fair value, most of which are based on projected future cash flows. Our estimates associated with the goodwill impairment test are considered critical due to the amount of goodwill recorded on our consolidated balance sheets and the judgment required in determining fair value. We assess the impairment of goodwill at the reporting unit level annually in the third quarter and whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired.

We test definite-lived intangible assets for impairment when an event occurs or circumstances change that would indicate the carrying amount of the assets or asset group may be impaired. Our tests are based on future cash flows that require significant judgment with respect to future revenue and expense growth rates, appropriate discount rates, asset groupings, and other assumptions and estimates. We use estimates that are consistent with our business plans and a market participant's view of the assets being evaluated. Actual results may differ from our estimates due to a number of factors including, among others, changes in competitive conditions, timing of regulatory approval, results of clinical trials, changes in worldwide economic conditions, and fluctuations in currency exchange rates.

We assess the impairment of indefinite-lived intangible assets annually in the third quarter and whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. Our impairment tests of indefinite-lived intangible assets require us to make several estimates to determine fair value, including projected future cash flows and discount rates.

ACQUISITIONS AND DIVESTITURES

Information regarding acquisitions and divestitures is included in Notes 3 and 4, respectively, to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

NEW ACCOUNTING PRONOUNCEMENTS

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

COSTS AND EXPENSES

The following is a summary of cost of products sold, research and development, and selling, general, and administrative expenses as a percent of net sales (dollar amounts in millions):

Cost of Products Sold We continue to focus on reducing our costs of production through supplier management, manufacturing improvements, and optimizing our manufacturing network. Cost of products sold was $9.4 billion and $9.2 billion during fiscal years 2020 and 2019, respectively. The increase in cost of products sold as a percentage of net sales from fiscal year 2020, as compared to fiscal year 2019, was largely due to increased expenses as a result of COVID-19, including expanded manufacturing facility cleaning, increased protective equipment, bonuses for our factory employees, and higher freight and obsolescence charges, as well as negative impact from mix, as products in higher demand carried lower margin. Additionally, the increase was driven by increased restructuring and associated costs and increased duty, driven in part by increased China tariffs on inbound products. Cost of products sold for fiscal year 2020 includes $155 million of restructuring and associated costs, as compared to $91 million for fiscal year 2019.

Research and Development Expense We remain committed to accelerating the development of meaningful innovations to deliver better patient outcomes at appropriate costs that lead to enhanced quality of life and may be validated by clinical and economic evidence. We are also focused on expanding access to quality healthcare. Research and development expense was $2.3 billion during fiscal years 2020 and 2019.

Selling, General, and Administrative Expense Our goal is to continue to leverage selling, general, and administrative expense initiatives and to continue to realize cost synergies expected from our acquisitions. Selling, general, and administrative expense primarily consists of salaries and wages, other administrative costs, such as professional fees and marketing expenses, and certain acquisition, restructuring, and divestiture-related expenses.

Selling, general, and administrative expense was $10.1 billion and $10.4 billion during fiscal years 2020 and 2019, respectively. The increase in selling, general, and administrative expense as a percentage of sales from fiscal year 2019 to 2020 was primarily due to the deleveraging experienced in the fourth quarter of fiscal year 2020 as a result of COVID-19. The increase in selling, general, and administrative expense as a percentage of sales is also attributable to the increase in restructuring and associated costs. Selling, general, and administrative expense in fiscal year 2020 includes $168 million of restructuring and associated costs, as compared to $118 million in fiscal year 2019. These increases were partially offset by savings from our Enterprise Excellence program and cost containment measures and decreased variable compensation costs.

The following is a summary of other costs and expenses:

						Fiscal Year
(in millions)						2020						2019
Amortization of intangible assets						$	1,756					$	1,764
Restructuring charges, net						118						198
Certain litigation charges						313						166
Other operating expense, net						71						258
Other non-operating income, net						(356)						(373)
Interest expense						1,092						1,444

Amortization of Intangible Assets Amortization of intangible assets includes the amortization expense of our definite-lived intangible assets, consisting of purchased patents, trademarks, tradenames, customer relationships, purchased technology, and other intangible assets. Amortization expense was $1.8 billion during fiscal years 2020 and 2019.

Restructuring Charges, Net

In the third quarter of fiscal year 2018, we announced a multi-year global Enterprise Excellence Program designed to drive long-term business growth and sustainable efficiency. The Enterprise Excellence Program is expected to further leverage our global size and scale as well as enhance the customer and employee experience.

The Enterprise Excellence Program is focused on three objectives:

• Global Operations - integrating and enhancing global manufacturing and supply processes, systems and site presence to improve quality, delivery cost and cash flow

• Functional Optimization - enhancing and leveraging global operating models and systems across several enabling functions to improve productivity and employee experience

• Commercial Optimization - optimizing certain processes, systems and models to improve productivity and the customer experience

The Enterprise Excellence Program is designed to drive operating margin improvement as well as fund investment in strategic growth initiatives, with expected annual gross savings of more than $3.0 billion from cost reductions and leverage of our fixed infrastructure by the end of fiscal year 2022. Approximately $500 million to $700 million of gross annual savings are expected to be achieved each fiscal year through the end of fiscal year 2022.

The Enterprise Excellence Program is expected to result in pre-tax restructuring charges of approximately $1.6 billion to $1.8 billion, the vast majority of which are expected to be incurred by the end of fiscal year 2022 and result in cash outlays to be substantially complete by the end of fiscal year 2023. Approximately half of the estimated charges are related to employee termination benefits. The remaining charges are costs associated with the restructuring program, such as salaries for employees supporting the program and consulting expenses. We expect these costs to be recognized within restructuring charges, net, cost of products sold, and selling, general and administrative expense in the consolidated statements of income.

During fiscal year 2020, we recognized charges of $462 million, partially offset by accrual adjustments of $21 million related to certain employees identified for termination finding other positions within Medtronic. For fiscal year 2020, charges included $130 million recognized within restructuring charges, net in the consolidated statements of income, primarily comprised of employee termination benefits. For fiscal year 2020, charges also included costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses, including $149 million recognized within cost of products sold and $165 million recognized within selling, general and administrative expense in the consolidated statements of income. For fiscal year 2020, cost of products sold also included $6 million of fixed asset write-downs and selling, general, and administrative expense included $3 million of fixed asset write-downs.

During fiscal year 2019, we recognized charges of $424 million. For fiscal year 2019, charges included $198 million recognized within restructuring charges, net in the consolidated statements of income, primarily comprised of employee termination benefits. For fiscal year 2019, charges also included costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses, including $91 million recognized within cost of products sold and $101 million recognized within selling, general and administrative expense in the consolidated statements of income. For fiscal year 2019, selling, general and administrative expense also included $17 million of fixed asset write-downs.

For additional information, see Note 5 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

Certain Litigation Charges We classify litigation charges and gains related to significant legal matters as certain litigation charges. During fiscal years 2020 and 2019, we recognized $313 million, and $166 million, respectively, of certain litigation charges related to probable and estimable damages for significant legal matters.

Other Operating Expense, Net Other operating expense, net primarily includes royalty income and expense, currency remeasurement and derivative gains and losses, Puerto Rico excise taxes, changes in fair value of contingent consideration, TSA income, a commitment to the Medtronic Foundation, charges associated with business exits, and IPR&D charges. Other operating expense, net was $71 million and $258 million during fiscal years 2020 and 2019, respectively.

The decrease in other operating expense, net from fiscal year 2019 to 2020 was primarily driven by our remeasurement and hedging programs, which, combined, resulted in a gain of $295 million for fiscal year 2020 as compared to $87 million for fiscal year 2019. Also contributing to the change was a charge of $80 million recognized in fiscal year 2020 related to our commitment to the Medtronic Foundation and charges of $52 million related to business exits during fiscal year 2020 as compared to $149 million during fiscal year 2019. There were no charges in fiscal year 2019 related to our commitment to the Medtronic Foundation.

Other Non-Operating Income, Net Other non-operating income, net includes the non-service components of net periodic pension and postretirement benefit cost, investment gains and losses, and interest income. Other non-operating income, net was $356 million and $373 million during fiscal years 2020 and 2019, respectively.

The change in other non-operating income, net from fiscal year 2019 to 2020 was primarily attributable to losses on minority investments, partially offset by increased interest income and income from the non-service components of net periodic pension and postretirement benefit costs. Losses on minority investments were $19 million for fiscal year 2020 as compared to gains on minority investments of $62 million for fiscal year 2019. Interest income was $300 million and $267 million for fiscal years 2020 and 2019, respectively, and charges related to the non-service components of net periodic pension and postretirement benefits were $75 million and $45 million for fiscal years 2020 and 2019, respectively.

Interest Expense Interest expense includes interest incurred on our outstanding borrowings, amortization of debt issuance costs and debt premiums or discounts, amortization of gains or losses on terminated or de-designated interest rate derivative instruments, and charges recognized in connection with the tender and early redemption of senior notes. Interest expense was $1.1 billion for fiscal year 2020 and $1.4 billion for fiscal year 2019. The decrease in interest expense from fiscal year 2019 to 2020 was the result of a decrease in the weighted-average interest rate of outstanding debt obligations due to debt issuance and tender transactions in the fourth quarter of fiscal year 2019 and first quarter of fiscal year 2020. Interest expense for fiscal year 2020 includes $413 million of charges recognized in connection with the tender and early redemption of senior notes, as compared to $485 million for fiscal year 2019. Refer to the "Debt and Capital" section of this Management's Discussion and Analysis for additional information on the debt issuances, tenders, and early redemptions.

INCOME TAXES

			Fiscal Year
(in millions)			2020						2019
Income tax (benefit) provision			$	(751)					$	547
Income before income taxes			4,055						5,197
Effective tax rate			(18.5)		%				10.5		%
Non-GAAP income tax (benefit) provision			$	1,038					$	1,116
Non-GAAP income before income taxes			7,261						8,224
Non-GAAP Nominal Tax Rate			14.3		%				13.6		%
Difference between the effective tax rate and Non-GAAP Nominal Tax Rate			32.8		%				3.1		%

Many of the countries we operate in have statutory tax rates lower than our blended U.S. statutory rate, thereby resulting in an overall effective tax rate less than the U.S. statutory rate of 21.0 percent. A significant portion of our earnings are generated from operations in Puerto Rico, Switzerland, and Ireland. The statutory tax rates for these jurisdictions range from 12.5 percent to 43.75 percent. Our earnings in Puerto Rico are subject to certain tax incentive grants which provide for tax rates lower than

the country’s statutory tax rates. Unless our tax incentive grants are extended, they will expire between fiscal years 2021 and 2030. The tax incentive grants, which expired during fiscal year 2020, did not have a material impact on our financial results. See Note 14 to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" in this Annual Report on Form 10-K for additional information.

Our effective tax rate for fiscal year 2020 was (18.5) percent, as compared to 10.5 percent in fiscal year 2019. The decrease in the effective tax rate was primarily due to the impacts from certain tax adjustments, the impact from investment losses, and year-over-year changes in operational results by jurisdiction.

Our Non-GAAP Nominal Tax Rate for fiscal year 2020 was 14.3 percent, as compared to 13.6 percent in fiscal year 2019. The increase in our Non-GAAP Nominal Tax Rate for fiscal year 2020 as compared to fiscal year 2019 was primarily due to the year-over-year changes in operational results by jurisdiction.

During fiscal year 2020, we recognized $138 million of operational tax benefits. The operational tax benefits included a $63 million benefit from excess tax benefits associated with stock-based compensation and a $75 million net benefit associated with the resolution of certain income tax audits, finalization of certain tax returns, changes to uncertain tax position reserves, and changes to certain deferred income tax balances.

During fiscal year 2019, we recognized $134 million of operational tax benefits. The operational tax benefits included a $50 million benefit from excess tax benefits associated with stock-based compensation and an $84 million net benefit associated with the resolution of certain income tax audits, finalization of certain tax returns, changes to uncertain tax position reserves, and changes to certain deferred income tax balances.

An increase in our Non-GAAP Nominal Tax Rate of one percent would result in an additional income tax provision for fiscal years 2020 and 2019 of approximately $73 million and $82 million, respectively.

Certain Tax Adjustments

During fiscal year 2020, certain tax adjustments of $1.2 billion, recognized in income tax (benefit) provision in the consolidated statement of income, included the following:

• A net benefit of $63 million related to the finalization of certain state tax impacts from U.S. Tax Reform, and the issuance of certain final U.S. Treasury Regulations associated with U.S. Tax Reform. The primary impact of these regulations resulted in the Company re-establishing its permanently reinvested assertion on certain foreign earnings and reversing the previously accrued tax liability. This benefit was partially offset by additional tax associated with a previously executed internal reorganization of certain foreign subsidiaries.

• A benefit of $252 million related to tax legislative changes in Switzerland which abolished certain preferential tax regimes the Company benefited from and replaced them with a new set of internationally accepted measures. The legislation provided for higher effective tax rates but allowed for a transitional period whereby an amortizable asset was created for Swiss federal income tax purposes which will be amortized and deducted over a 10-year period.

• A benefit of $658 million related to the release of a valuation allowance previously recorded against certain net operating losses. Luxembourg enacted tax legislation during the year which required the company to reassess the realizability of certain net operating losses. The Company evaluated both the positive and negative evidence and released valuation allowance equal to the expected benefit from the utilization of certain net operating losses in connection with a planned intercompany sale of intellectual property.

• A net benefit of $269 million associated with the intercompany sale of intellectual property and the establishment of a deferred tax asset.

During fiscal year 2019, certain tax adjustments of $40 million, recognized in income tax (benefit) provision in the consolidated statement of income, included the following:

• A net benefit of $30 million associated with the finalization of the transition tax liability and the Tax Act impact to deferred tax assets, liabilities, and valuation allowances.

• A charge of $42 million related to the recognition of a prepaid tax expense resulting from the reduction in the U.S. statutory tax rate under the Tax Act and the current year sale of U.S. manufactured inventory held as of April 27, 2018.

• A benefit of $32 million related to intercompany legal entity restructuring.

• A net benefit of $20 million associated with the finalization of certain income tax aspects of the Divestiture.

Certain tax adjustments will affect the comparability of our operating results between periods. Therefore, we consider these Non-GAAP Adjustments. Refer to the "Executive Level Overview" section of this Management's Discussion and Analysis for further discussion of these adjustments.

LIQUIDITY AND CAPITAL RESOURCES

We are currently in a strong financial position. Despite the impact from COVID-19, we believe our balance sheet and liquidity provide us with flexibility, and our cash, cash equivalents, and current investments, as well as our credit facility and related commercial paper programs outlined below, will satisfy our foreseeable operating needs. We believe we have ample liquidity, with $10.9 billion of cash and investments as of April 24, 2020, and an undrawn $3.5 billion credit facility. Furthermore, we have no public debt maturing until March 2021. Given our strong financial position, we are continuing to focus on making capital allocation decisions to drive our long-term strategies.

Our liquidity and capital structure are evaluated regularly within the context of our annual operating and strategic planning process. We consider the liquidity necessary to fund our operations, which includes working capital needs, investments in research and development, property, plant, and equipment, and other operating costs. We also consider capital allocation alternatives that balance returning value to shareholders through dividends and share repurchases, satisfying maturing debt, and acquiring businesses and technology.

Summary of Cash Flows

The following is a summary of cash provided by (used in) operating, investing, and financing activities, the effect of exchange rate changes on cash and cash equivalents, and the net change in cash and cash equivalents:

			Fiscal Year
(in millions)			2020						2019
Cash provided by (used in):
Operating activities			$	7,234					$	7,007
Investing activities			(3,203)						(774)
Financing activities			(4,198)						(5,431)
Effect of exchange rate changes on cash and cash equivalents			(86)						(78)
Net change in cash and cash equivalents			$	(253)					$	724

Operating Activities The $227 million increase in net cash provided was primarily driven by a decrease in cash paid for income taxes, interest, and certain litigation payments, partially offset by an increase in retirement benefit plan contributions, cash paid for Enterprise Excellence restructuring activities, and an increase in cash paid to employees. The decrease in cash paid for income taxes was primarily due to the decrease in estimated federal tax payments, as well as a tax payment associated with the intercompany sale of intellectual property in the first quarter of fiscal year 2019, and a lower transition tax payment made in fiscal year 2020 as compared to fiscal year 2019. Cash paid for interest decreased due to a decrease in interest expense and change in timing of interest payments resulting from the debt tenders and issuances in the first quarter of fiscal year 2020 and the fourth quarter of fiscal year 2019. Certain litigation payments decreased primarily due to the payment of previously accrued settlement amounts for the INFUSE litigation matter in fiscal year 2019. Cash paid to employees increased due to higher annual incentive plan payouts in fiscal year 2020 as compared to fiscal year 2019. COVID-19 did not have a significant impact on our cash collected from customers in the fourth quarter of fiscal year 2020 due to the timing of the pandemic within the quarter and our normal cash collection cycle lag. Looking forward, we anticipate a decrease in cash collected from customers in fiscal year 2021 due to the decrease in sales in the fourth quarter of fiscal year 2020 resulting from COVID-19, and potential ongoing impacts of the pandemic on sales.

For information on retirement benefit plan contributions, refer to Note 16 to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" in this Annual Report on Form 10-K. Refer to the "Restructuring Charges, Net" section of this Management's Discussion and Analysis and Note 5 to the consolidated financial statements in "Item 8. Financial

Statements and Supplementary Data" in this Annual Report on Form 10-K for information on the Enterprise Excellence program.

Investing Activities The $2.4 billion increase in net cash used was primarily attributable to a decrease in net proceeds from purchases and sales of investments of $3.6 billion and an increase in cash paid for additions of property, plant, and equipment of $79 million, partially offset by a decrease in cash paid for acquisitions of $1.3 billion as compared to fiscal year 2019.

Financing Activities The $1.2 billion decrease in net cash used was primarily attributable to a decrease in net cash used for share repurchases of $1.6 billion and a net decrease in repayments of short-term borrowings of $696 million, partially offset by a decrease in the issuance of ordinary shares of $330 million as compared to fiscal year 2019. Financing cash flows were also impacted by the debt tenders and issuances in the first quarter of fiscal year 2020 and the fourth quarter of fiscal year 2019, as well as payment of notes at maturity in both periods. In the first quarter of fiscal year 2020, we issued $5.6 billion of Euro-denominated senior notes, offset by the tender of $5.2 billion of senior notes for $5.6 billion of total consideration. We also repaid $500 million of senior notes at maturity during the fourth quarter of fiscal year 2020. In the fourth quarter of fiscal year 2019, we issued $7.8 billion of Euro-denominated senior notes, offset by the tender of $6.4 billion of senior notes for $6.9 billion of total consideration. We also repaid $1.0 billion of senior notes at maturity during the fourth quarter of fiscal year 2019.

Free Cash Flow

Free cash flow, a non-GAAP financial measure, is calculated by subtracting additions to property, plant, and equipment from net cash provided by operating activities. Management uses this non-GAAP financial measure, in addition to U.S. GAAP financial measures, to evaluate our operating results. Free cash flow should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with U.S. GAAP. Reconciliations between net cash provided by operating activities (the most comparable U.S. GAAP measure) and free cash flow are as follows:

			Fiscal Year
(in millions)			2020						2019
Net cash provided by operating activities			$	7,234					$	7,007
Additions to property, plant, and equipment			(1,213)						(1,134)
Free cash flow			$	6,021					$	5,873

Debt and Capital

Our capital structure consists of equity and interest-bearing debt. We use a combination of bank borrowings and commercial paper issuances to fund our short-term financing needs. Current debt, including the current portion of our long-term debt and capital lease obligations, at April 24, 2020 was $2.8 billion as compared to $838 million at April 26, 2019. Long-term debt at April 24, 2020 was $22.0 billion as compared to $24.5 billion at April 26, 2019. We utilize unsecured senior debt obligations to meet our long-term financing needs. From time to time, we may repurchase our outstanding debt obligations in the open market or through privately negotiated transactions.

Total debt at April 24, 2020 was $24.8 billion, as compared to $25.3 billion at April 26, 2019. The decrease in total debt was primarily driven by the payment of $500 million of five-year floating rate senior notes and the issuance and cash tender offers described below.

In June 2019, we issued six tranches of Euro-denominated senior notes with an aggregate principal of €5.0 billion, with maturities ranging from fiscal year 2021 to fiscal year 2050, resulting in cash proceeds of approximately $5.6 billion, net of discounts and issuance costs. We used the net proceeds of the offering to fund the cash tender offer and early redemption described below. The Euro-denominated debt is designated as a net investment hedge of certain of our European operations.

We completed the cash tender offer of $4.6 billion of senior notes for $5.0 billion of total consideration in July 2019. We recognized a loss on debt extinguishment of $413 million in the first quarter of fiscal year 2020, which primarily included cash premiums and accelerated amortization of deferred financing costs and debt discounts and premiums. The loss on debt extinguishment also included a $16 million charge for the estimated early redemption premium for $533 million of senior notes which were redeemed in August 2019. The loss on debt extinguishment was recognized in interest expense in the consolidated statements of income.

In May 2020, subsequent to fiscal year 2020, we entered into an unsecured term loan agreement with Mizuho Bank, Ltd. for an aggregate principal amount of up to ¥300 billion, or approximately $2.8 billion, with a term of six months, which may be

extended for an additional six months at the Company’s option. On May 13, 2020, Medtronic Luxco borrowed the entire amount of the term loan under the Loan Agreement. The proceeds of the loan will be used for general corporate purposes.

For additional information on debt issuance transactions and the cash tender offers and early redemption, refer to Note 7 to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" in this Annual Report on Form 10-K. For additional information on the Euro-denominated debt designated as a net investment hedge, refer to Note 8 to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" in this Annual Report on Form 10-K.

We maintain multicurrency commercial paper programs for short-term financing, which allows us to issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $3.5 billion. At both April 24, 2020 and April 26, 2019, we had no commercial paper outstanding. The issuance of commercial paper reduces the amount of credit available under our existing line of credit, as explained below.

We also have a $3.5 billion five-year syndicated credit facility (Credit Facility) which expires in December 2024. The Credit Facility provides backup funding for the commercial paper programs and may also be used for general corporate purposes. The Credit Facility provides us with the ability to increase our borrowing capacity by an additional $1.0 billion at any time during the term of the agreement. At each anniversary date of the Credit Facility, but not more than twice prior to the maturity date, we could also request a one-year extension of the maturity date. At April 24, 2020 and April 26, 2019, no amounts were outstanding under the Credit Facility.

Interest rates on advances of our Credit Facility are determined by a pricing matrix based on our long-term debt ratings assigned by S&P and Moody’s. For additional information on our credit ratings status by S&P and Moody's, refer to the "Liquidity" section of this Management's Discussion and Analysis. Facility fees are payable on the Credit Facility and are determined in the same manner as the interest rates. The agreements also contain customary covenants, all of which we were in compliance with at April 24, 2020.

We repurchase our ordinary shares from time to time as part of our focus on returning value to our shareholders. In June 2017, our Board of Directors authorized the expenditure of up to $5.0 billion for new share repurchases. In March 2019, our Board of Directors authorized an incremental $6.0 billion for repurchase of our ordinary shares. There is no specific time period associated with these repurchase authorizations. During fiscal years 2020 and 2019, we repurchased a total of 12 million and 31 million shares, respectively, under these programs at an average price of $106.22 and $91.43, respectively. At April 24, 2020, we had approximately $6.0 billion remaining under the share repurchase programs authorized by our Board of Directors. We temporarily halted repurchases of ordinary shares as a result of our reprioritization of capital deployment due to COVID-19, and made no share repurchases in March and April of fiscal year 2020. Looking forward, we expect to continue to deprioritize share repurchases in our capital allocation priorities.

For more information on credit arrangements, see Note 7 of the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

Liquidity

Our liquidity sources at April 24, 2020 include $4.1 billion of cash and cash equivalents and $6.8 billion of current investments. Additionally, we maintain commercial paper programs (no commercial paper outstanding at April 24, 2020) and a Credit Facility. See discussion above regarding changes in our cash and cash equivalents, commercial paper programs, and Credit Facility.

Our investments include available-for-sale debt securities, including U.S. and non-U.S. government and agency securities, corporate debt securities, mortgage-backed securities, other asset-backed securities, and auction rate securities. Some of our investments may experience reduced liquidity due to changes in market conditions and investor demand. For fiscal year 2020, the total other-than-temporary impairment losses on available-for-sale debt securities were not significant. Based on our assessment of the credit quality of the underlying collateral and credit support available to each of the remaining securities in which we are invested, we believe we have recognized all necessary other-than-temporary impairments as we do not have the intent to sell, nor is it more likely than not that we will be required to sell, before recovery of the amortized cost. At April 24, 2020, we have $141 million of gross unrealized losses on our aggregate available-for-sale debt securities of $6.8 billion. If market conditions deteriorate, some of these holdings may experience other-than-temporary impairment in the future, which could adversely affect our financial results. There were no significant other-than-temporary impairments at April 24, 2020 and April 26, 2019. We are required to use estimates and assumptions in our valuation of investments, which requires a high degree of judgment, and therefore, actual results could differ materially from estimates. See Note 6 to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" in this Annual Report on Form 10-K for additional information.

The following table is a summary of our Standard and Poor's Rating Services (S&P) and Moody's Investors Service (Moody's) long-term debt ratings and short-term debt ratings:

						Agency Rating (1)
						April 24, 2020						April 26, 2019
Standard & Poor's Ratings Services
Long-term debt						A						A
Short-term debt						A-1						A-1
Moody's Investors Service
Long-term debt						A3						A3
Short-term debt						P-2						P-2

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

S&P and Moody's long-term debt ratings and short-term debt ratings at April 24, 2020 were unchanged as compared to the ratings at April 26, 2019. We do not expect the S&P and Moody's ratings to have a significant impact on our liquidity or future flexibility to access additional liquidity given our balance sheet, Credit Facility, and related commercial paper programs.

We have future contractual obligations and other minimum commercial commitments that are entered into in the normal course of business. We believe our off-balance sheet arrangements do not have a material current or anticipated future effect on our consolidated earnings, financial position, and/or cash flows. Refer to the "Off-Balance Sheet Arrangements and Long-Term Contractual Obligations" section of this Management's Discussion and Analysis for more information on these obligations and commitments.

Note 19 to the consolidated financial statements in "Item 8. Financial Statements and Supplementary Data" in this Annual Report on Form 10-K provides information regarding amounts we have accrued related to legal matters. In accordance with U.S. GAAP, we record a liability in our consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. Actual settlements may be different than estimated and could have a material effect on our consolidated earnings, financial position, and/or cash flows.

We record tax liabilities in our consolidated financial statements for amounts that we expect to repatriate from subsidiaries (to the extent the repatriation would be subject to tax); however, no tax liabilities are recorded for amounts we consider to be permanently reinvested. We removed our permanently reinvested assertion on the undistributed earnings of certain foreign subsidiaries with a U.S. parent which were subject to the transition tax and all earnings of these subsidiaries through April 27, 2018. We have reasserted for certain earnings of such subsidiaries through April 27, 2018 which were not subject to the transition tax. We expect to have access to the majority of our cash flows in the future. In addition, we continue to evaluate our legal entity structure supporting our business operations, and to the extent such evaluation results in a change to our overall business structure, we may be required to accrue for additional tax obligations.

We believe our balance sheet and liquidity provide us with flexibility, and our cash, cash equivalents, and current investments, as well as our Credit Facility and related commercial paper programs, will satisfy our foreseeable operating needs for at least the next 12 months. We regularly review our capital needs and consider various investing and financing alternatives to support our requirements.

OFF-BALANCE SHEET ARRANGEMENTS AND LONG-TERM CONTRACTUAL OBLIGATIONS

In the normal course of business, we periodically enter into agreements that require us to indemnify customers or suppliers for specific risks, such as claims for injury or property damage arising as a result of our products or the negligence of our personnel or claims alleging that our products infringe third-party patents or other intellectual property. Our maximum exposure under these indemnification provisions is unable to be estimated, and we have not accrued any liabilities within our consolidated financial statements or included any indemnification provisions in the table below. Historically, we have not experienced significant losses on these types of indemnification agreements.

Presented below is a summary of our off-balance sheet contractual obligations and other minimum commercial commitments at April 24, 2020, as well as long-term contractual obligations reflected in the balance sheet at April 24, 2020.

						Maturity by Fiscal Year
(in millions)						Total						2021						2022						2023						2024						2025						Thereafter
Contractual obligations related to off-balance sheet arrangements:
Commitments to fund minority investments, milestone payments, and royalty obligations(1)						$	325					$	153					$	91					$	25					$	24					$	9					$	23
Interest payments(2)						7,341						563						563						504						468						448						4,795
Other(3)						892						479						176						82						44						26						85
Contractual obligations related to off-balance sheet arrangements subtotal						$	8,558					$	1,195					$	830					$	611					$	536					$	483					$	4,903
Contractual obligations reflected in the balance sheet:
Debt obligations(4)						$	24,916					$	2,776					$	1,594					$	3,630					$	746					$	2,704					$	13,466
Operating leases						1,034						218						175						144						118						102						277
Contingent consideration(5)						280						213						49						7						5						3						3
Tax obligations(6)						1,848						176						176						176						330						440						550
Contractual obligations reflected in the balance sheet subtotal(7)						28,078						3,383						1,994						3,957						1,199						3,249						14,296
Total contractual obligations						$	36,636					$	4,578					$	2,824					$	4,568					$	1,735					$	3,732					$	19,199

(1)Includes commitments related to the funding of minority investments, estimated milestone payments, and royalty obligations. While it is not certain if and/or when payments will be made, the maturity dates included in the table reflect our best estimates.

(2)Includes the contractual interest payments on our outstanding debt and excludes the impacts of debt premium and discount amortization. See Note 7 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information on our debt agreements.

(3)Includes inventory purchase commitments and research and development arrangements which are legally binding and specify minimum purchase quantities or spending amounts. These purchase commitments do not exceed our projected requirements and are in the normal course of business. Excludes open purchase orders with a remaining term of less than one year.

(4)Includes the current and non-current portion of our Senior Notes and bank borrowings. Excludes debt premium and discount, unamortized gains from terminated interest rate swap agreements, and commercial paper. See Notes 7 and 8 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information on our debt agreements and interest rate swap agreements, respectively.

(5)Includes the fair value of our current and non-current portions of contingent consideration. While it is not certain if and/or when payments will be made, the maturity dates included in this table reflect our best estimates.

(6)Represents the tax obligations associated with the transition tax that resulted from U.S. Tax Reform. The transition tax will be paid over an eight-year period and will not accrue interest. See Note 14 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further information.

(7)Excludes defined benefit plan obligations, guarantee obligations, uncertain tax positions, non-current tax liabilities, and litigation settlements for which we cannot make a reliable estimate of the period of cash settlement. For further information, see Notes 14, 16, and 19 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for further information.

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

Medtronic plc and Medtronic Global Holdings S.C.A. (Medtronic Luxco), a wholly-owned subsidiary guarantor, each have provided full and unconditional guarantees of the obligations of Medtronic, Inc., a wholly-owned subsidiary issuer, under the Senior Notes (Medtronic Senior Notes) and full and unconditional guarantees of the obligations of Covidien International Finance S.A. (CIFSA), a wholly-owned subsidiary issuer, under the Senior Notes (CIFSA Senior Notes). The guarantees of the CIFSA Senior Notes are in addition to the guarantees of the CIFSA Senior Notes by Covidien Ltd. and Covidien Group Holdings Ltd., both of which are wholly-owned subsidiary guarantors of the CIFSA Senior Notes. Medtronic plc and Medtronic, Inc. each have provided a full and unconditional guarantee of the obligations of Medtronic Luxco under the Senior Notes (Medtronic Luxco Senior Notes). The following is a summary of these guarantees:

Guarantees of Medtronic Senior Notes

• Parent Company Guarantor - Medtronic plc

• Subsidiary Issuer - Medtronic, Inc.

• Subsidiary Guarantor - Medtronic Luxco

Guarantees of Medtronic Luxco Senior Notes

• Parent Company Guarantor - Medtronic plc

• Subsidiary Issuer - Medtronic Luxco

• Subsidiary Guarantor - Medtronic, Inc.

Guarantees of CIFSA Senior Notes

• Parent Company Guarantor - Medtronic plc

• Subsidiary Issuer - CIFSA

• Subsidiary Guarantors - Medtronic Luxco, Covidien Ltd., and Covidien Group Holdings Ltd. (CIFSA Subsidiary Guarantors)

The following tables present summarized financial information for the fiscal year ended April 24, 2020 for the obligor groups of Medtronic and Medtronic Luxco Senior Notes, and CIFSA Senior Notes. The obligor group consists of the parent company guarantor, subsidiary issuer, and subsidiary guarantors for the applicable senior notes. The summarized financial information is presented after elimination of (i) intercompany transactions and balances among the guarantors and issuers and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor or issuer.

The summarized results of operations information for the fiscal year ended April 24, 2020 was as follows:

(in millions)			Medtronic & Medtronic Luxco Senior Notes (1)						CIFSA Senior Notes (2)
Net sales			$	1,510					$	—
Operating profit (loss)			69						(63)
Loss before income taxes			(1,527)						(817)
Net loss attributable to Medtronic			(1,393)						(810)

The summarized balance sheet information for the fiscal year ended April 24, 2020 was as follows:

(in millions)			Medtronic & Medtronic Luxco Senior Notes (1)						CIFSA Senior Notes (2)
Total current assets(3)			$	19,563					$	49
Total noncurrent assets(4)			18,516						13,636
Total current liabilities(5)			41,263						16,180
Total noncurrent liabilities(6)			44,480						48,729
Noncontrolling interests			135						135

(1)The Medtronic Senior Notes and Medtronic Luxco Senior Notes obligor group consists of the following entities: Medtronic plc, Medtronic Luxco, and Medtronic, Inc. Please refer to the guarantee summary above for further details.

(2)The CIFSA Senior Notes obligor group consists of the following entities: Medtronic plc, Medtronic Luxco, CIFSA, and CIFSA Subsidiary Guarantors. Please refer to the guarantee summary above for further details.

(3)Includes receivables due from non-guarantor subsidiaries of $19.1 billion and $34 million for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.

(4)Includes loans receivable due from non-guarantor subsidiaries of $13.7 billion and $13.6 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.

(5)Includes payables due to non-guarantor subsidiaries of $37.0 billion and $13.6 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.

(6)Includes loans payable due to non-guarantor subsidiaries of $21.7 billion and $36.6 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.