Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Medtronic plc

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Medtronic plc and its subsidiaries (the “Company”) as of April 26, 2024 and April 28, 2023, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended April 26, 2024, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended April 26, 2024 appearing under Item 15 (a)(1) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of April 26, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of April 26, 2024 and April 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended April 26, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 26, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

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

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

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Income Tax Reserve for the Uncertain Tax Position Related to Puerto Rico Manufacturing

As described in Notes 13 and 18 to the consolidated financial statements, management records reserves for uncertain tax positions related to unresolved matters with the Internal Revenue Service (IRS) and other taxing authorities. A remaining unresolved issue with the IRS relates to the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico, which is one of the Company's manufacturing sites. These reserves are subject to a high degree of estimation and management judgment. Total reserves relating to uncertain tax positions as of April 26, 2024 were $2.824 billion, of which the Puerto Rico manufacturing reserve makes up a significant portion.

The principal considerations for our determination that performing procedures relating to the income tax reserve for the uncertain tax position related to Puerto Rico manufacturing is a critical audit matter are (i) the significant judgment by management when determining the reserve, including a high degree of estimation uncertainty relative to the unresolved issue with the IRS involving one of the Company’s manufacturing sites; and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s measurement of the income tax reserve for the uncertain tax position related to Puerto Rico manufacturing, as the nature of the evidence is often highly subjective.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the recognition of the income tax reserves for uncertain tax positions, as well as controls over measurement of the reserve for the uncertain tax position related to Puerto Rico manufacturing. These procedures also included, among others (i) testing management’s process for determining the reserve, (ii) evaluating the status and results of the related U.S. Tax Court case, and (iii) evaluating the consistency of the reserve calculation with the relevant documents related to the U.S. Tax Court case. Evaluating the reasonableness of the measurement of the reserve included evaluating whether the methodology and assumptions used by the Company were consistent with the U.S. Tax Court’s ruling.


/s/ PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 20, 2024

We have served as the Company’s auditor since 1963.

Medtronic plc

Consolidated Statements of Income


	Fiscal Year
(in millions, except per share data)	2024		2023		2022
Net sales	$	32,364	$	31,227	$	31,686
Costs and expenses:
Cost of products sold, excluding amortization of intangible assets	11,216		10,719		10,145
Research and development expense	2,735		2,696		2,746
Selling, general, and administrative expense	10,736		10,415		10,292
Amortization of intangible assets	1,693		1,698		1,733
Restructuring charges, net	226		375		60
Certain litigation charges, net	149		(30)		95
Other operating expense (income), net	464		(131)		862
Operating profit	5,144		5,485		5,752
Other non-operating income, net	(412)		(515)		(318)
Interest expense, net	719		636		553
Income before income taxes	4,837		5,364		5,517
Income tax provision	1,133		1,580		456
Net income	3,705		3,784		5,062
Net income attributable to noncontrolling interests	(28)		(26)		(22)
Net income attributable to Medtronic	$	3,676	$	3,758	$	5,039
Basic earnings per share	$	2.77	$	2.83	$	3.75
Diluted earnings per share	$	2.76	$	2.82	$	3.73
Basic weighted average shares outstanding	1,327.7		1,329.8		1,342.4
Diluted weighted average shares outstanding	1,330.2		1,332.8		1,351.4

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

Medtronic plc

Consolidated Statements of Comprehensive Income


	Fiscal Year
(in millions)	2024		2023		2022
Net income	$	3,705	$	3,784	$	5,062

Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on investment securities	46		(49)		(301)
Translation adjustment	(848)		(240)		(2,086)
Net investment hedge	633		(596)		2,299
Net change in retirement obligations	212		32		574
Unrealized gain (loss) on cash flow hedges	136		(381)		727
Other comprehensive income (loss)	178		(1,234)		1,213
Comprehensive income including noncontrolling interests	3,883		2,549		6,274
Comprehensive income attributable to noncontrolling interests	(27)		(26)		(16)
Comprehensive income attributable to Medtronic	$	3,856	$	2,524	$	6,258

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

Medtronic plc

Consolidated Balance Sheets


(in millions, except share amounts)	April 26, 2024		April 28, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,284	$	1,543
Investments	6,721		6,416
Accounts receivable, less allowances and credit losses of $173 and $176, respectively	6,128		5,998
Inventories	5,217		5,293
Other current assets	2,584		2,425
Total current assets	21,935		21,675
Property, plant, and equipment, net	6,131		5,569
Goodwill	40,986		41,425
Other intangible assets, net	13,225		14,844
Tax assets	3,657		3,477
Other assets	4,047		3,959
Total assets	$	89,981	$	90,948
LIABILITIES AND EQUITY
Current liabilities:
Current debt obligations	$	1,092	$	20
Accounts payable	2,410		2,662
Accrued compensation	2,375		1,949
Accrued income taxes	1,330		840
Other accrued expenses	3,582		3,581
Total current liabilities	10,789		9,051
Long-term debt	23,932		24,344
Accrued compensation and retirement benefits	1,101		1,093
Accrued income taxes	1,859		2,360
Deferred tax liabilities	515		708
Other liabilities	1,365		1,727
Total liabilities	39,561		39,283
Commitments and contingencies (Notes 3, 16, and 18)
Shareholders’ equity:
Ordinary shares— par value $0.0001, 2.6 billion shares authorized, 1,311,337,531 and 1,330,809,036 shares issued and outstanding, respectively	—		—
Additional paid-in capital	23,129		24,590
Retained earnings	30,403		30,392
Accumulated other comprehensive loss	(3,318)		(3,499)
Total shareholders’ equity	50,214		51,483
Noncontrolling interests	206		182
Total equity	50,420		51,665
Total liabilities and equity	$	89,981	$	90,948

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

Medtronic plc

Consolidated Statements of Equity


	Ordinary Shares			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity		Noncontrolling Interests		Total Equity
(in millions, except per share data)	Number	Par Value
April 30, 2021	1,345	$	—	$	26,319	$	28,594	$	(3,485)	$	51,428	$	174	$	51,602
Net income	—	—		—		5,039		—		5,039		22		5,062
Other comprehensive income (loss)	—	—		—		—		1,219		1,219		(6)		1,213
Dividends to shareholders ($2.52 per ordinary share)	—	—		—		(3,383)		—		(3,383)		—		(3,383)
Issuance of shares under stock purchase and award plans	7	—		329		—		—		329		—		329
Repurchase of ordinary shares	(21)	—		(2,442)		—		—		(2,442)		—		(2,442)
Stock-based compensation	—	—		359		—		—		359		—		359
Changes to noncontrolling ownership interests	—	—		1		—		—		1		(19)		(18)

April 29, 2022	1,331	$	—	$	24,566	$	30,250	$	(2,265)	$	52,551	$	171	$	52,722
Net income	—	—		—		3,758		—		3,758		26		3,784
Other comprehensive loss	—	—		—		—		(1,234)		(1,234)		—		(1,234)
Dividends to shareholders ($2.72 per ordinary share)	—	—		—		(3,616)		—		(3,616)		—		(3,616)
Issuance of shares under stock purchase and award plans	6	—		236		—		—		236		—		236
Repurchase of ordinary shares	(6)	—		(571)		—		—		(571)		—		(571)
Stock-based compensation	—	—		355		—		—		355		—		355
Changes to noncontrolling ownership interests	—	—		5		—		—		5		(15)		(10)

April 28, 2023	1,331	$	—	$	24,590	$	30,392	$	(3,499)	$	51,483	$	182	$	51,665
Net income	—	—		—		3,676		—		3,676		28		3,705
Other comprehensive income (loss)	—	—		—		—		180		180		(2)		178
Dividends to shareholders ($2.76 per ordinary share)	—	—		—		(3,666)		—		(3,666)		—		(3,666)
Issuance of shares under stock purchase and award plans	6	—		231		—		—		231		—		231
Repurchase of ordinary shares	(25)	—		(2,084)		—		—		(2,084)		—		(2,084)
Stock-based compensation	—	—		393		—		—		393		—		393
Changes to noncontrolling ownership interests	—	—		—		—		—		—		(2)		(2)
April 26, 2024	1,311	$	—	$	23,129	$	30,403	$	(3,318)	$	50,214	$	206	$	50,420

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

Medtronic plc

Consolidated Statements of Cash Flows


	Fiscal Year
(in millions)	2024		2023		2022
Operating Activities:
Net income	$	3,705	$	3,784	$	5,062
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,647		2,697		2,707
Provision for credit losses	90		73		58
Deferred income taxes	(508)		(226)		(604)
Stock-based compensation	393		355		359
Loss on debt extinguishment	—		53		—

Asset impairments and related inventory write-downs	371		—		515

Other, net	573		270		138
Change in operating assets and liabilities, net of acquisitions and divestitures:
Accounts receivable, net	(391)		(576)		(477)
Inventories, net	(139)		(939)		(560)
Accounts payable and accrued liabilities	391		696		213
Other operating assets and liabilities	(345)		(148)		(65)
Net cash provided by operating activities	6,787		6,039		7,346
Investing Activities:
Acquisitions, net of cash acquired	(211)		(1,867)		(91)

Additions to property, plant, and equipment	(1,587)		(1,459)		(1,368)
Purchases of investments	(7,748)		(7,514)		(9,882)
Sales and maturities of investments	7,441		7,343		9,692
Other investing activities, net	(261)		4		(10)
Net cash used in investing activities	(2,366)		(3,493)		(1,659)
Financing Activities:
Change in current debt obligations, net	1,073		—		—
Proceeds from short-term borrowings (maturities greater than 90 days)	—		2,284		—
Repayments from short-term borrowings (maturities greater than 90 days)	—		(2,279)		—
Issuance of long-term debt	—		5,409		—
Payments on long-term debt	—		(6,012)		(1)
Dividends to shareholders	(3,666)		(3,616)		(3,383)
Issuance of ordinary shares	284		308		429
Repurchase of ordinary shares	(2,138)		(645)		(2,544)
Other financing activities	(3)		(409)		163
Net cash used in financing activities	(4,450)		(4,960)		(5,336)
Effect of exchange rate changes on cash and cash equivalents	(230)		243		(231)
Net change in cash and cash equivalents	(259)		(2,171)		121
Cash and cash equivalents at beginning of period	1,543		3,714		3,593
Cash and cash equivalents at end of period	$	1,284	$	1,543	$	3,714
Supplemental Cash Flow Information
Cash paid for:
Income taxes	$	1,622	$	1,548	$	996
Interest	826		606		540

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

Medtronic plc

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Nature of Operations Medtronic plc (Medtronic or the Company) is the leading global healthcare technology company– alleviating pain, restoring health, and extending life for millions of people around the world. The Company provides innovative products and therapies to serve healthcare systems, physicians, clinicians, and patients. Medtronic was founded in 1949 and is headquartered in Dublin, Ireland.

Principles of Consolidation The consolidated financial statements include the accounts of Medtronic plc, its wholly-owned subsidiaries, entities for which the Company has a controlling financial interest, and variable interest entities for which the Company is the primary beneficiary. Intercompany transactions and balances have been fully eliminated in consolidation. Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. Amounts reported in millions within this annual report are computed based on the amounts in thousands, and therefore, the sum of the components may not equal the total amount reported in millions due to rounding. Additionally, certain columns and rows within tables may not sum due to rounding.

Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States (U.S.) (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are used when accounting for items such as income taxes, contingencies, goodwill, intangible asset, equity investment, and liability valuations. Actual results may or may not differ from those estimates.

Fiscal Year-End The Company utilizes a 52/53-week fiscal year, ending the last Friday in April, for the presentation of its consolidated financial statements and related notes thereto at April 26, 2024 and April 28, 2023 and for each of the three fiscal years ended April 26, 2024 (fiscal year 2024), April 28, 2023 (fiscal year 2023), and April 29, 2022 (fiscal year 2022).

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

Investments The Company invests in marketable debt and equity securities, investments for which the Company has elected the fair value option, investments that do not have readily determinable fair values, and investments accounted for under the equity method.

Marketable debt securities are classified and accounted for as available-for-sale. These investments are recorded at fair value in the consolidated balance sheets. The change in fair value for available-for-sale securities is recorded, net of taxes, as a component of accumulated other comprehensive loss on the consolidated balance sheets. The Company determines the appropriate classification of its investments in marketable debt securities at the time of purchase and reevaluates such determinations at each balance sheet date. The classification of marketable debt securities as current or long-term is based on the nature of the securities and the availability for use in current operations consistent with the Company's management of its capital structure and liquidity.

Certain of the Company’s investments in marketable equity securities and other securities are long-term, strategic investments in companies that are in various stages of development and are primarily included in other assets on the consolidated balance sheets. Marketable equity securities are recorded at fair value in the consolidated balance sheets. The change in fair value of marketable equity securities is recognized within other non-operating income, net in the consolidated statements of income. At each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. Equity method investments for which the Company has elected the fair value option are valued using a discounted cash flow methodology, taking into consideration various assumptions including discount rate and all pertinent financial information available related to the investees, including the timing of anticipated product launches, historical financial results, and projections of future cash flows. Equity investments that do not have readily determinable fair values are measured using the measurement alternative at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Equity securities accounted for under the equity method are initially recorded at the amount of the Company’s investment and are adjusted each period for the Company’s share of the investee’s income or loss and dividends paid. Securities accounted for under the equity method are reviewed quarterly for changes in circumstance or the occurrence of events that suggest other than temporary impairment has occurred.

Accounts Receivable and Allowance for Doubtful Accounts and Credit Losses The Company grants credit to customers in the normal course of business and maintains an allowance for doubtful accounts for potential credit losses. When evaluating allowances for doubtful accounts, the Company considers various factors, including historical experience and customer-specific information. Uncollectible accounts are written-off against the allowance when it is deemed that a customer account is uncollectible.

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

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Property, Plant, and Equipment Property, plant, and equipment is stated at cost and depreciated over the useful lives of the assets using the straight-line method. Additions and improvements that extend the lives of the assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. The Company assesses property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of property, plant, and equipment asset groupings may not be recoverable. The cost of interest that is incurred in connection with significant ongoing construction projects is capitalized using a weighted average interest rate. These costs are included in property, plant, and equipment and amortized over the useful life of the related asset. Upon retirement or disposal of property, plant, and equipment, the costs and related amounts of accumulated depreciation or amortization are eliminated from the asset and accumulated depreciation accounts. The difference, if any, between the net asset value and the proceeds, is recognized in earnings.

Goodwill and Intangible Assets Goodwill is the excess of the purchase price over the estimated fair value of identified net assets of acquired businesses. The Company assesses goodwill for impairment annually in the third quarter of the fiscal year and whenever an event occurs or circumstances change that would indicate the carrying amount may be impaired. Impairment testing for goodwill is performed at a reporting unit level. The Company calculates the excess of each reporting unit's fair value over its carrying amount, including goodwill, utilizing a discounted cash flow analysis and revenue and earnings multiples using comparable public company information. The test for impairment of goodwill requires the Company to make several estimates related to projected future cash flows and appropriate multiples to determine the fair value of the goodwill reporting units. Significant assumptions used in the reporting unit fair value measurements include forecasted cash flows, including revenue and expense growth rates, discount rates, and revenue and earnings multiples. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit.

Intangible assets include patents, trademarks, tradenames, customer relationships, purchased technology, and in-process research and development (IPR&D). Intangible assets with a definite life are amortized on a straight-line basis with estimated useful lives typically ranging from three to 20 years. Amortization is recognized within amortization of intangible assets in the consolidated statements of income. Intangible assets with a definite life are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group, which includes intangible assets, may not be recoverable. When events or changes in circumstances indicate that the carrying amount of an asset group, which includes intangible assets, may not be recoverable, the Company calculates the excess of an asset group's carrying value over its undiscounted future cash flows. If the carrying value is not recoverable, an impairment loss is recognized based on the amount by which the carrying value exceeds the fair value. The fair value of an asset group, which includes intangible assets, is estimated by utilizing a discounted cash flow analysis.

Acquired IPR&D represents the fair value assigned to those research and development projects that were primarily acquired in a business combination for which the related products have not received regulatory approval and have no alternative future use. IPR&D is capitalized at its fair value as an indefinite-lived intangible asset, and any development costs incurred after the acquisition are expensed as incurred. The fair value of IPR&D is determined by estimating the future cash flows of each project and discounting the net cash flows back to their present values. Upon achieving regulatory approval or commercial viability for the related product, the indefinite-lived intangible asset is accounted for as a definite-lived asset and is amortized on a straight-line basis over the estimated useful life. If the project is not completed or is terminated or abandoned, the Company may have an impairment related to the IPR&D, which is charged to expense. Indefinite-lived intangible assets are tested for impairment annually in the third quarter of the fiscal year, prior to moving to definite-lived, and whenever events or changes in circumstances indicate that the carrying amount may be impaired. Impairment is calculated as the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted future cash flow analysis. IPR&D with no alternative future use acquired outside of a business combination is expensed immediately.

Contingent Consideration Certain of the Company’s business combinations involve potential payment or receipt of future consideration that is contingent upon the achievement of certain product development milestones and/or contingent on the acquired business reaching certain performance milestones. The Company records contingent consideration at fair value at the date of acquisition or divestiture based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value. The fair value of contingent consideration is measured using projected payment dates, discount rates, probabilities of payment, and projected revenues (for revenue-based considerations). Projected revenues are based on the Company’s most recent internal operational budgets and long-range strategic plans. The discount rate used is determined at the time of measurement in accordance with accepted valuation methodologies. Changes in projected revenues, probabilities of payment, discount rates, and projected payment dates may result in adjustments to the fair value measurements. Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized as income or expense within other operating expense (income), net in the consolidated statements of income. Contingent consideration payments made or received soon after the acquisition date are classified as investing activities in the consolidated statements of cash flows. Contingent consideration payments not made or received soon after the acquisition date that are related to the acquisition date fair value are reported as financing activities in the consolidated statements of cash flows, and amounts paid or received in excess of the original acquisition date fair value are reported as operating activities in the consolidated statements of cash flows.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Self-Insurance The Company self-insures the majority of its insurable risks, including medical and dental costs, disability coverage, physical loss to property, business interruptions, workers’ compensation, comprehensive general, and product liability. Insurance coverage is obtained for risks required to be insured by law or contract. The Company uses claims data and historical experience, as applicable, to estimate liabilities associated with the exposures that the Company has self-insured.

Retirement Benefit Plan Assumptions The Company sponsors various retirement benefit plans, including defined benefit pension plans, post-retirement medical plans, defined contribution savings plans, and termination indemnity plans, covering substantially all U.S. employees and many employees outside the U.S. See Note 15 for assumptions used in determining pension and post-retirement benefit costs and liabilities.

Derivatives The Company recognizes all derivative financial instruments in its consolidated financial statements at fair value in accordance with authoritative guidance on derivatives and hedging, and presents assets and liabilities associated with derivative financial instruments on a gross basis in the consolidated financial statements. For derivative instruments that are designated and qualify as hedging instruments, the hedging instrument must be designated as a cash flow hedge or hedges of net investments, based upon the exposure being hedged. See Note 7 for more information on the Company's derivative instruments and hedging programs.

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

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

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

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

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. Financial assets that are classified as Level 3 include certain investment securities for which there is limited market activity such that the determination of fair value requires significant judgment or estimation, equity method investments for which the Company has elected the fair value option, and auction rate securities. The investment securities with limited market activity are valued using third-party pricing sources that incorporate transaction details such as contractual terms, maturity, timing, and amount of expected future cash flows, as well as assumptions about liquidity and credit valuation adjustments by market participants. The fair value of auction rate securities is estimated by the Company using a discounted cash flow model, which incorporates significant unobservable inputs. The significant unobservable inputs used in the fair value measurement of the Company’s auction rate securities are years to principal recovery and the illiquidity premium that is incorporated into the discount rate. Valuation techniques for investments valued using the fair value option are included in the "Investments" section above. For goodwill, other

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

intangible assets, and IPR&D, inputs used in the fair value analysis fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value.

Certain investments for which the fair value is measured using the net asset value per share (or its equivalent) practical expedient are excluded from the fair value hierarchy. Financial assets for which the fair value is measured using the net asset value per share practical expedient include equity and fixed income commingled trusts, partnership units, and registered investment companies.

Revenue Recognition The Company sells its products through direct sales representatives and independent distributors. Additionally, a portion of the Company's revenue is generated from consignment inventory maintained at hospitals and royalty and intellectual property arrangements. The Company recognizes revenue when control is transferred to the customer. For products sold through direct sales representatives and independent distributors, control is typically transferred upon shipment or upon delivery, based on the contract terms and legal requirements. For consignment inventory, control is transferred when the product is used or implanted. Payment terms vary depending on the country of sale, type of customer, and type of product.

If a contract contains more than one performance obligation, the transaction price is allocated to each performance obligation based on relative standalone selling price. Shipping and handling is treated as a fulfillment activity rather than a promised service, and therefore, is not considered a performance obligation. Taxes assessed by a governmental authority that are both imposed on, and concurrent with, a specific revenue producing transaction and collected by the Company from customers (for example, sales, use, value added, and some excise taxes) are not included in revenue. For contracts that have an original duration of one year or less, the Company uses the practical expedient applicable to such contracts and does not adjust the transaction price for the time value of money.

The amount of revenue recognized reflects sales rebates and returns, which are estimated based on sales terms, historical experience, and trend analysis. In estimating rebates, the Company considers the lag time between the point of sale and the payment of the rebate claim, the stated rebate rates, and other relevant information. The Company records adjustments to rebates and returns reserves as increases or decreases of revenue.

The Company records a deferred revenue liability if a customer pays consideration, or the Company has the right to invoice, before the Company transfers a good or service to the customer. Deferred revenue primarily represents remote monitoring services and equipment maintenance, for which consideration is received at the same time as consideration for the device or equipment. Revenue related to remote monitoring services and equipment maintenance is recognized over the service period as time elapses.

Shipping and Handling Shipping and handling costs incurred to physically move product from the Company's premises to the customer's premises are recognized in selling, general, and administrative expense in the consolidated statements of income and were $341 million, $351 million, and $354 million in fiscal years 2024, 2023, and 2022, respectively. Other shipping and handling costs incurred to store, move, and prepare products for shipment are recognized in cost of products sold in the consolidated statements of income.

Research and Development Research and development costs are expensed when incurred. Research and development costs include costs of research, engineering, and technical activities to develop a new product or service or make significant improvement to an existing product or manufacturing process. Research and development costs also include pre-approval regulatory and clinical trial expenses and license payments for technology not yet approved by regulators.

Contingencies The Company records a liability in the consolidated financial statements on an undiscounted basis for loss contingencies related to legal actions when a loss is known or considered probable and the amount may be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed.

Income Taxes The Company has deferred taxes that arise as a result of the different treatment of transactions for U.S. GAAP and income tax accounting, known as temporary differences. The Company records the tax effect of these temporary differences as deferred tax assets and deferred tax liabilities. Deferred tax assets generally represent items that may be used as a tax deduction or credit in a tax return in future years for which the Company has already recognized the tax benefit in the consolidated statements of income. The Company establishes valuation allowances for deferred tax assets when the amount of expected future taxable income is not likely to support the use of the deduction or credit. Deferred tax liabilities generally represent tax expense for which payment has been deferred or expense has already been taken as a deduction on the Company’s tax return but has not yet been recognized as an expense in the consolidated statements of income. See Footnote 13 for more information on the Company's uncertain tax positions and tax policies.

Other Operating Expense (Income), Net Other operating expense (income), net primarily includes royalty expense, currency remeasurement and derivative gains and losses, Puerto Rico excise taxes, changes in fair value of contingent consideration, certain

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

acquisition and divestiture-related items, income from funded research and development arrangements, and commitments to the Medtronic Foundation and Medtronic LABS.

Other Non-Operating Income, Net Other non-operating income, net includes the non-service component of net periodic pension and post-retirement benefit cost, investment gains and losses, and interest income.

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

Stock-Based Compensation The Company measures stock-based compensation expense at the grant date based on the fair value of the award and recognizes the compensation expense over the requisite service period, which is generally the vesting period. The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are expected to vest. The Company estimates pre-vesting forfeitures at the time of grant and revises the estimates in subsequent periods.

Recently Adopted Accounting Standards

Supplier Finance Programs

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-04, Liabilities— Supplier Finance Programs (Subtopic 405-50), which requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The Company adopted this guidance on April 29, 2023. The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.

Not Yet Adopted Accounting Standards

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Improvements to Segment Reporting (Topic 280), which requires incremental disclosures on reportable segments, primarily through enhanced disclosures on significant segment expenses. The Company will adopt this guidance beginning in the fourth quarter of fiscal year 2025 for our annual report and for interim periods starting in fiscal year 2026. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

Income Taxes

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which requires incremental annual disclosures on income taxes, including rate reconciliations, income taxes paid, and other disclosures. The Company will adopt this guidance beginning in the fourth quarter of fiscal year 2026 for our annual report. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

2. Revenue

The Company's revenues are principally derived from device-based medical therapies and services related to cardiac rhythm disorders, cardiovascular disease, neurological disorders and diseases, spinal conditions and musculoskeletal trauma, chronic pain, urological and digestive disorders, ear, nose, and throat conditions, and diabetes conditions as well as advanced and general surgical care products, respiratory and monitoring solutions, and neurological surgery technologies. The Company's primary customers include healthcare systems, clinics, third-party healthcare providers, distributors, and other institutions, including governmental healthcare programs and group purchasing organizations. Prior period revenue has been recast to reflect the new reporting structure. The activity of the Company's Renal Care Solutions business and the ventilator product line were moved out of Medical Surgical and into the Other line, and the retained PMRI businesses were combined into one business unit called Acute Care & Monitoring in Medical Surgical. Refer to Note 19 to the consolidated financial statements for additional information regarding the Company's reporting structure.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The table below illustrates net sales by segment and division for fiscal years 2024, 2023, and 2022:


	Net Sales by Fiscal Year
(in millions)	2024		2023		2022
Cardiac Rhythm & Heart Failure	$	5,995	$	5,783	$	5,852
Structural Heart & Aortic	3,358		3,363		3,055
Coronary & Peripheral Vascular	2,478		2,375		2,460
Cardiovascular	11,831		11,522		11,368
Cranial & Spinal Technologies	4,756		4,451		4,456
Specialty Therapies	2,905		2,815		2,592
Neuromodulation	1,746		1,693		1,735
Neuroscience	9,406		8,959		8,784
Surgical & Endoscopy	6,508		6,152		6,543
Acute Care & Monitoring	1,908		1,837		1,926
Medical Surgical	8,417		7,989		8,469
Diabetes	2,488		2,262		2,338
Reportable segment net sales	32,142		30,731		30,959
Other operating segment (1)	221		495		727
Total net sales	$	32,364	$	31,227	$	31,686

(1) Includes historical operations and ongoing transition agreements from businesses the Company has exited or divested, which primarily includes the Company's ventilator product line and the Renal Care Solutions business.

The table below illustrates net sales by market geography for each segment for fiscal years 2024, 2023, and 2022:


	U.S.(1)						Non-U.S. Developed Markets(2)						Emerging Markets(3)
(in millions)	Fiscal Year 2024		Fiscal Year 2023		Fiscal Year 2022		Fiscal Year 2024		Fiscal Year 2023		Fiscal Year 2022		Fiscal Year 2024		Fiscal Year 2023		Fiscal Year 2022
Cardiovascular	$	5,597	$	5,796	$	5,490	$	3,857	$	3,564	$	3,866	$	2,377	$	2,161	$	2,012
Neuroscience	6,305		6,018		5,753		1,739		1,658		1,801		1,362		1,283		1,229
Medical Surgical	3,717		3,549		3,659		3,049		2,917		3,155		1,650		1,522		1,655
Diabetes	852		849		974		1,284		1,106		1,085		352		307		279
Reportable segment net sales	16,471		16,212		15,876		9,929		9,245		9,907		5,742		5,273		5,176
Other operating segment (4)	91		160		259		50		163		218		81		172		250
Total net sales	$	16,562	$	16,373	$	16,135	$	9,979	$	9,408	$	10,126	$	5,823	$	5,446	$	5,426

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

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

(3)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.

(4)Includes historical operations and ongoing transition agreements from businesses the Company has exited or divested, which primarily includes the Company's ventilator product line and the Renal Care Solutions business.

The amount of revenue recognized is reduced by sales rebates and returns. Adjustments to rebates and returns reserves are recorded as increases or decreases to revenue. At April 26, 2024, $1.0 billion of rebates were classified as other accrued expenses, and $574 million of rebates were classified as a reduction of accounts receivable in the consolidated balance sheet. At April 28, 2023, $1.1 billion of rebates were classified as other accrued expenses, and $555 million of rebates were classified as a reduction of accounts receivable in the consolidated balance sheet. During fiscal year 2024, adjustments to rebate and return reserves recognized in revenue that were included in the rebate and return reserves at the beginning of the period were not material.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Deferred Revenue and Remaining Performance Obligations

Deferred revenue at April 26, 2024 and April 28, 2023 was $453 million and $405 million, respectively. At April 26, 2024 and April 28, 2023, $352 million and $314 million was included in other accrued expenses, respectively, and $101 million and $91 million was included in other liabilities, respectively. During the fiscal year ended April 26, 2024, the Company recognized $324 million of revenue that was included in deferred revenue as of April 28, 2023. During the fiscal year ended April 28, 2023, the Company recognized $240 million of revenue that was included in deferred revenue at April 29, 2022.

Remaining performance obligations include goods and services that have not yet been delivered or provided under existing, noncancellable contracts with minimum purchase commitments. At April 26, 2024, the estimated revenue expected to be recognized in future periods related to unsatisfied performance obligations for executed contracts with an original duration of one year or more was approximately $0.5 billion. The Company expects to recognize revenue on the majority of these remaining performance obligations over the next two years.

3. Acquisitions and Dispositions

Acquisition Activity

The Company had acquisitions during fiscal years 2024 and 2023 that were accounted for as business combinations. The assets and liabilities of the businesses acquired were recorded and consolidated on the acquisition date at their respective fair values. Goodwill resulting from business combinations is largely attributable to future, yet to be defined technologies, new customer relationships, existing workforce of the acquired businesses, and synergies expected to arise after the Company's acquisition of these businesses. The results of operations of acquired businesses have been included in the Company’s consolidated statements of income since the date each business was acquired. The results of operations of acquired businesses and the pro forma impact of the acquisitions during fiscal years 2024 and 2023 was not significant, either individually or in the aggregate, to the consolidated results of the Company. Purchase price allocation adjustments for fiscal years 2024 and 2023 business combinations were not significant.

Fiscal Year 2024

The acquisition date fair value of net assets acquired during the fiscal year ended April 26, 2024 was $335 million. Based on preliminary valuations, assets acquired were primarily comprised of $131 million of goodwill, $150 million of IPR&D, and $29 million of technology-based intangible assets with estimated useful lives of 10 years. For tax purposes, $51 million of goodwill is deductible while $80 million is not deductible. The Company recognized $30 million of non-cash contingent consideration liabilities in connection with these business combinations during the fiscal year ended April 26, 2024, which are comprised of revenue and product development milestone-based payments.

Fiscal Year 2023

Intersect ENT

On May 13, 2022, the Company acquired Intersect ENT, a global ear, nose, and throat (ENT) medical technology leader. The acquisition expands the Neuroscience segment portfolio of products used during ENT procedures, and combined with the Company's navigation, powered instruments, and existing tissue health products, offers a broader suite of solutions to assist surgeons treating patients who suffer from chronic rhinosinusitis (CRS). Total consideration, net of cash acquired, for the transaction, in which the Company acquired all outstanding shares of Intersect ENT for $28.25 per share, was $1.2 billion consisting of $1.1 billion of cash and $98 million previously held investments in Intersect ENT. The Company acquired $615 million of goodwill, $635 million of technology-based intangible assets, $35 million of customer-related intangible assets, and $13 million of tradenames with estimated useful lives of 20 years. The goodwill is not deductible for tax purposes. Revenue and net loss attributable to Intersect ENT since the date of acquisition as well as costs incurred in connection with the acquisition included in the consolidated statements of income were not significant for fiscal year 2023.

Affera, Inc.

On August 30, 2022, the Company acquired Affera, Inc. (Affera) a privately-held company focused on the development of cardiac mapping and navigation systems and catheter-based cardiac ablation technologies. The acquisition expands the Cardiovascular segment suite of advanced cardiac ablation products and accessories, including its first cardiac mapping and navigation platform. Total consideration, net of cash acquired for the transaction, was $904 million. The Company acquired $660 million of goodwill and $300 million of IPR&D, which was capitalized into intangible assets during the fourth quarter of fiscal year 2023. The goodwill is not deductible for tax purposes. The Company recognized $201 million of non-cash contingent consideration liabilities in connection with the acquisition, which are comprised of product development milestone-based payments. Revenue and net loss attributable to Affera since the date of acquisition as well as costs incurred in connection with the acquisition included in the consolidated statements of income were not significant for fiscal year 2023.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The acquisition date fair values of the assets acquired and liabilities assumed were as follows:


(in millions)	Intersect ENT		Affera
Cash and cash equivalents	$	39	$	66
Inventory	32		—
Goodwill	615		660
Other intangible assets	683		300
Other assets	40		1
Total assets acquired	1,408		1,027

Current liabilities	63		2
Deferred tax liabilities	51		53
Other liabilities	18		1
Total liabilities assumed	131		56
Net assets acquired	$	1,277	$	970

Other Acquisitions

For acquisitions, other than Intersect ENT and Affera, the acquisition date fair value of net assets acquired during fiscal year 2023 was $123 million. Assets acquired were primarily comprised of $66 million of goodwill and $57 million of technology-based intangible assets with estimated useful lives of 16 years. The goodwill is deductible for tax purposes. The Company recognized $73 million of non-cash contingent consideration liabilities in connection with these acquisitions during fiscal year 2023, which are comprised of revenue and product development milestone-based payments.

Disposal Activity

Ventilator Product Line Exit

On February 20, 2024, the Company announced the decision to exit its ventilator product line and retain and combine the remaining Patient Monitoring and Respiratory Interventions (PMRI) businesses into one business unit called Acute Care and Monitoring (ACM). In connection with this decision, the Company recorded pre-tax charges of $439 million, including $369 million recognized within other operating expense (income), net and $70 million recognized in cost of products sold in the consolidated statements of income in fiscal year 2024. The charges included $371 million of non-cash impairments and write-downs primarily related to $295 million of long-lived intangible asset impairments and $70 million of inventory-write downs. The other charges primarily related to contract cancellation costs and severance. The Company will continue to honor existing ventilator contracts to serve the needs of its customers and their patients.

Renal Care Solutions (RCS) Disposition

On May 25, 2022, the Company and DaVita Inc. (DaVita) entered into a definitive agreement for the Company to sell half of its RCS business, and on April 1, 2023, completed the transaction. This sale is part of an agreement between Medtronic and DaVita to form a new, independent kidney care-focused medical device company (“Mozarc Medical” or "Mozarc") with equal equity ownership. At closing, the Company received $45 million cash consideration, recorded non-cash contingent consideration receivables valued at $195 million, made an additional cash investment of $224 million, and retained a 50% non-controlling equity interest in Mozarc valued at $307 million. For the contingent consideration receivables, the maximum consideration the Company could receive in the future is $300 million based on the achievement of certain milestones, as further described below. The Company recorded non-cash pre-tax charges of $136 million in fiscal year 2023, primarily related to impairment of goodwill and changes in the carrying amount of the disposal group, recognized in other operating expense (income), net in the consolidated statements of income. Refer to Note 9 to the consolidated financial statements for additional information on the goodwill impairment. Refer to Note 5 to the consolidated financial statements for additional information on the Company’s retained 50% equity investment in Mozarc as a result of this transaction.

The Company determined that the sale of the RCS business did not meet the criteria to be classified as discontinued operations.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Mechanical Circulatory Support (MCS) Business Exit

In June 2021, the Company announced the decision to stop the distribution and sale of the Medtronic HVAD System. In connection with this decision, the Company recorded pre-tax charges of $881 million, including $58 million recognized in costs of products sold and $823 million recognized within other operating expense (income), net in the consolidated statement of income in fiscal year 2022*.* The charges included $515 million of non-cash impairments and write-downs primarily related to $409 million of intangible asset impairments and $58 million of inventory write-downs. The Company also recorded charges of $366 million for commitments and obligations associated with the decision, which included charges for patient support obligations, restructuring, and other associated costs.

Contingent Consideration

Certain of the Company’s business combinations involve potential payment of future consideration that is contingent upon the achievement of certain product development milestones and/or contingent on the acquired business reaching certain performance milestones. A liability is recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized within other operating expense (income), net in the consolidated statements of income.

The fair value of contingent consideration liabilities at April 26, 2024 and April 28, 2023 was $149 million and $206 million, respectively. At April 26, 2024, $96 million was recorded in other accrued expenses, and $53 million was recorded in other liabilities on the consolidated balance sheets. At April 28, 2023, $34 million was reflected in other accrued expenses, and $171 million was reflected in other liabilities on the consolidated balance sheets.

The following table provides a reconciliation of the beginning and ending balances of contingent consideration liabilities:


	Fiscal Year
(in millions)	2024		2023
Beginning Balance	$	206	$	119
Purchase price contingent consideration	30		274

Payments	(104)		(154)
Change in fair value	18		(24)
Divestiture-related and other	—		(8)
Ending Balance	$	149	$	206

The recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs:


(in millions)	Fair Value at April 26, 2024			Unobservable Input	Range	Weighted Average (1)
Revenue and other performance-based payments	$	80		Discount rate	16.5% - 28.2%	20.3%
			Projected fiscal year of payment	2025 - 2030	2027
Product development and other milestone-based payments	$	69		Discount rate	5.5% - 5.5%	5.5%
			Projected fiscal year of payment	2025 - 2027	2026

(1) Unobservable inputs were weighted by the relative fair value of the contingent consideration liability. For projected fiscal year of payment, the amount represents the median of the inputs and is not a weighted average.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

In connection with the sale of our RCS business as further discussed above, the Company may be entitled to receive additional consideration based on the achievement of certain revenue, regulatory, and profitability milestones, with potential payouts starting in fiscal year 2025 through 2029. The fair value of the contingent consideration receivable at April 26, 2024 and April 28, 2023 was $58 million and $195 million, respectively, and was recorded in other assets in the consolidated balance sheet.

The following table provides a reconciliation of the beginning and ending balances of the Level 3 measurement of contingent consideration receivable:


	Fiscal Year
(in millions)	2024		2023
Beginning balance	$	195	$	—
Purchase price contingent consideration	—		195
Change in fair value	(138)		—
Ending balance	$	58	$	195

4. Restructuring Charges

In fiscal year 2024, the Company incurred $389 million of restructuring and associated costs primarily related to employee termination benefits and facility consolidations to support cost reduction initiatives. In fiscal years 2023 and 2022, restructuring costs primarily related to Enterprise Excellence and Simplification restructuring programs, both of which were substantially completed as of the end fiscal year 2023. Enterprise Excellence was designed to leverage the Company’s global size and scale to focus on global operations, and functional and commercial optimization, and had total cumulative pre-tax charges of $1.8 billion. Simplification was designed to focus the organization on accelerating innovation, enhancing customer experience, driving revenue growth and winning market share, and had total cumulative pre-tax charges of $0.5 billion. In addition, in the fourth quarter of fiscal year 2023, the Company incurred $0.3 billion of restructuring charges primarily related to employee termination benefits to support cost reduction initiatives. These charges were incremental to charges incurred under our Enterprise Excellence and Simplification programs noted above.

Employee-related costs primarily consist of termination benefits provided to employees who have been involuntarily terminated and voluntary early retirement benefits in fiscal year 2023. Associated costs primarily include salaries and wages of employees that are fully-dedicated to restructuring programs, consulting fees, and asset write-offs.

The following table presents the classification of restructuring costs in the consolidated statements of income:


	Fiscal year
(in millions)	2024		2023		2022
Cost of products sold	$	55	$	97	$	117
Selling, general, and administrative expenses	108		173		158
Restructuring charges, net(1)	226		375		60
Total restructuring and associated costs	$	389	$	647	$	335

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the activity related to restructuring programs for fiscal years 2024 and 2023:


(in millions)	Employee Termination Benefits(1)		Associated and Other Costs		Total
April 29, 2022	$	81	$	28	$	110
Charges	285		279		564
Cash payments	(150)		(281)		(433)

Accrual adjustments(2)	(11)		(1)		(12)
April 28, 2023	204		25		230
Charges	233		163		396
Cash payments	(292)		(161)		(453)
Settled non-cash	—		(16)		(16)
Accrual adjustments(2)	(8)		—		(8)
April 26, 2024	$	136	$	11	$	147

(1)In fiscal year 2023, restructuring charges, net included $94 million of incremental defined benefit, defined contribution, and post-retirement related expenses for employees that accepted voluntary early retirement packages. These costs are not included in the table summarizing restructuring charges above, as they are associated with costs that are accounted for under the pension and post-retirement rules.

(2)Accrual adjustments relate to certain employees identified for termination finding other positions within the Company or contract terminations being settled for less than originally estimated.

5. Financial Instruments

Debt Securities

The Company holds investments in marketable debt securities that are classified and accounted for as available-for-sale and are remeasured on a recurring basis. The following tables summarize the Company's investments in available-for-sale debt securities by significant investment category and the related consolidated balance sheet classification at April 26, 2024 and April 28, 2023:


	April 26, 2024
	Valuation								Balance Sheet Classification
(in millions)	Cost		Unrealized Gains		Unrealized Losses		Fair Value		Investments		Other Assets
Level 1:
U.S. government and agency securities	$	494	$	—	$	(22)	$	472	$	472	$	—
Level 2:
Corporate debt securities	3,953		4		(125)		3,832		3,832		—
U.S. government and agency securities	847		—		(43)		804		804		—
Mortgage-backed securities	692		1		(50)		643		643		—
Non-U.S. government and agency securities	5		—		—		5		5		—

Other asset-backed securities	941		2		(9)		934		934		—
Total Level 2	6,438		7		(227)		6,218		6,218		—
Level 3:
Auction rate securities	36		—		(3)		33		—		33
Total available-for-sale debt securities	$	6,968	$	7	$	(252)	$	6,723	$	6,690	$	33

Medtronic plc

Notes to Consolidated Financial Statements (Continued)


	April 28, 2023
	Valuation								Balance Sheet Classification
(in millions)	Cost		Unrealized Gains		Unrealized Losses		Fair Value		Investments		Other Assets
Level 1:
U.S. government and agency securities	$	527	$	—	$	(22)	$	505	$	505	$	—
Level 2:
Corporate debt securities	4,140		6		(162)		3,984		3,984		—
U.S. government and agency securities	879		—		(45)		834		834		—
Mortgage-backed securities	560		—		(54)		506		506		—
Non-U.S. government and agency securities	15		—		—		15		15		—
Certificates of deposit	10		—		—		10		10
Other asset-backed securities	580		—		(19)		561		561		—

Total Level 2	6,185		6		(281)		5,911		5,911		—
Level 3:
Auction rate securities	36		—		(3)		33		—		33
Total available-for-sale debt securities	$	6,748	$	6	$	(305)	$	6,449	$	6,416	$	33

The amortized cost of debt securities excludes accrued interest, which is reported in other current assets in the consolidated balance sheets.

The following tables present the gross unrealized losses and fair values of the Company’s available-for-sale debt securities that have been in a continuous unrealized loss position deemed to be temporary, aggregated by investment category at April 26, 2024 and April 28, 2023:


	April 26, 2024
	Less than 12 months				More than 12 months
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate debt securities	$	661	$	(10)	$	2,448	$	(116)
U.S. government and agency securities	177		(4)		730		(61)
Mortgage-backed securities	—		—		582		(50)
Other asset-backed securities	—		—		502		(9)
Auction rate securities	—		—		33		(3)
Total	$	838	$	(14)	$	4,296	$	(238)


	April 28, 2023
	Less than 12 months				More than 12 months
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate debt securities	$	286	$	(4)	$	2,901	$	(158)
U.S. government and agency securities	89		(3)		821		(64)
Mortgage-backed securities	26		(1)		460		(53)
Other asset-backed securities	—		—		545		(19)
Auction rate securities	—		—		33		(3)
Total	$	401	$	(8)	$	4,760	$	(297)

The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There were no transfers into or out of Level 3 during the fiscal years ended April 26, 2024 and April 28, 2023. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Activity related to the Company’s available-for-sale debt securities portfolio is as follows:


(in millions)	April 26, 2024		April 28, 2023		April 29, 2022
Proceeds from sales	$	7,359	$	7,321	$	9,611
Gross realized gains	24		10		15
Gross realized losses	(26)		(43)		(18)

The contractual maturities of available-for-sale debt securities at April 26, 2024 are shown in the following table. Within the table, maturities of mortgage-backed securities have been allocated based upon timing of estimated cash flows assuming no change in the current interest rate environment. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.


(in millions)	Amortized Cost		Fair Value
Due in one year or less	$	1,548	$	1,534
Due after one year through five years	3,644		3,479
Due after five years through ten years	758		744
Due after ten years	1,019		967
Total	$	6,968	$	6,723

Interest income is recognized in other non-operating income, net, in the consolidated statements of income. For fiscal years 2024, 2023, and 2022 there was $597 million, $386 million, and $186 million of interest income, respectively.

Equity Securities, Equity Method Investments, and Other Investments

The Company holds investments in equity securities with readily determinable fair values, equity method investments for which the Company has elected the fair value option, equity investments without readily determinable fair values, investments accounted for under the equity method, and other investments. Equity securities with readily determinable fair values are included in Level 1 of the fair value hierarchy, as they are measured using quoted market prices. Equity method investments for which the Company has elected the fair value option are included within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value. To determine the fair value of these investments, the Company uses a discounted cash flow methodology, taking into consideration various assumptions including discount rate, and all pertinent financial information available related to the investees, including the timing of anticipated product launches, historical financial results, and projections of future cash flows. Equity investments that do not have readily determinable fair values, and that are not accounted for via the fair value option, are included within Level 3 of the fair value hierarchy, as they are measured using the measurement alternative at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

The following table summarizes the Company's equity and other investments at April 26, 2024 and April 28, 2023, which are classified as primarily other assets in the consolidated balance sheets:


(in millions)	April 26, 2024		April 28, 2023
Investments with readily determinable fair value (marketable equity securities)	$	28	$	115
Investments for which the fair value option has been elected	311		531
Investments without readily determinable fair values	859		872
Equity method and other investments	84		89
Total equity and other investments	$	1,282	$	1,607

Gains and losses on the Company's portfolio of equity and other investments are recognized in other non-operating income, net in the consolidated statements of income. During the fiscal year ended April 26, 2024, there were $291 million of net unrealized losses on equity securities and other investments still held at April 26, 2024. During the fiscal year ended April 28, 2023, there were $56 million of net unrealized gains on equity securities and other investments still held at April 28, 2023.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Mozarc Medical Investment

As further described in Note 3, on April 1, 2023 the Company sold half of its RCS business to Mozarc, and as a result of the transaction the Company retained a 50% equity interest in Mozarc. Although the equity investment provides the Company with the ability to exercise significant influence over Mozarc, the Company has elected the fair value option to account for this equity investment. The Company believes the fair value option best reflects the economics of the underlying transaction.

Under the fair value option, changes in the fair value of the investment are recognized through earnings each reporting period in other non-operating income, net in the consolidated statements of income. During the fiscal year ended April 26, 2024, the Company recognized a loss of $220 million, primarily driven by the timing of anticipated product launches, historical financial results, and projections of future cash flows.

The following table provides a reconciliation of the beginning and ending balances of the Mozarc investment for which the fair value option has been elected:


	Fiscal Year
(in millions)	2024		2023
Beginning Balance	$	531	$	—
Initial valuation	—		307
Additional cash investment	—		224
Change in fair value	(220)		—
Ending Balance	$	311	$	531

6. Financing Arrangements

Current debt obligations consisted of the following:


(in millions)	April 26, 2024		April 28, 2023
Bank borrowings	$	13	$	13
Finance lease obligations	6		7
Commercial Paper	1,073		—
Current debt obligations	$	1,092	$	20

Commercial Paper On January 26, 2015, Medtronic Global Holdings S.C.A. (Medtronic Luxco), an entity organized under the laws of Luxembourg, entered into various agreements pursuant to which Medtronic Luxco may issue United States Dollar-denominated unsecured commercial paper notes (the 2015 CP Program) on a private placement basis, and on January 31, 2020 Medtronic Luxco entered into various agreements pursuant to which Medtronic Luxco may issue Euro-denominated unsecured commercial paper notes (the 2020 CP Program) on a private placement basis. The maximum aggregate amount outstanding at any time under the 2015 CP Program and the 2020 CP Program together may not exceed the equivalent of $3.5 billion. The Company and Medtronic, Inc. have guaranteed the obligations of Medtronic Luxco under the 2015 CP Program and the 2020 CP Program.

There was $1.1 billion commercial paper outstanding at April 26, 2024. During fiscal year 2024, the weighted average original maturity of the commercial paper outstanding was approximately 20 days and the weighted average interest rate was 5.45 percent. There was no commercial paper outstanding at April 28, 2023. During fiscal year 2023, the weighted average original maturity of the commercial paper outstanding was approximately 22 days and the weighted average interest rate was 4.34 percent. The issuance of commercial paper reduces the amount of credit available under the Company's existing credit facility, defined below.

Line of Credit On December 12, 2023, Medtronic Luxco, as borrower, entered into an amendment to its amended and restated credit agreement (Credit Facility), by and among Medtronic, Medtronic, Inc., Medtronic Luxco, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent and issuing bank, extending the maturity date of the Credit Facility to December 2028.

The Credit Facility provides for a $3.5 billion five-year unsecured revolving credit facility (Credit Facility). At each anniversary date of the Credit Facility, we can request a one-year extension of the maturity date. The Credit Facility provides the Company with the ability to increase its borrowing capacity by an additional $1.0 billion at any time during the term of the agreement. The Company and Medtronic, Inc. have guaranteed the obligations of the borrowers under the Credit Facility, and Medtronic Luxco will also guarantee the obligations of any designated borrower. The Credit Facility includes a multi-currency borrowing feature for certain specified foreign currencies. At April 26, 2024 and April 28, 2023, no amounts were outstanding under the Credit Facility.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Interest rates on advances on the Credit Facility are determined by a pricing matrix based on the Company’s long-term debt ratings, assigned by Standard & Poor’s Ratings Services and Moody’s Investors Service. Facility fees are payable on the Credit Facility and are determined in the same manner as the interest rates. The Company is in compliance with all covenants related to the Credit Facility.

The Company's long-term debt obligations consisted of the following:


		April 26, 2024			April 28, 2023
(in millions, except interest rates)	Maturity by Fiscal Year	Amount		Effective Interest Rate	Amount		Effective Interest Rate
0.250 percent six-year 2019 senior notes	2026	1,070		0.44	1,097		0.44
2.625 percent three-year 2022 senior notes	2026	535		2.86	549		2.86
0.000 percent five-year 2020 senior notes	2026	1,070		0.23	1,097		0.23
1.125 percent eight-year 2019 senior notes	2027	1,606		1.25	1,646		1.25
4.250 percent five-year 2023 senior notes	2028	1,000		4.42	1,000		4.42
3.000 percent six-year 2022 senior notes	2029	1,070		3.10	1,097		3.09
0.375 percent eight-year 2020 senior notes	2029	1,070		0.51	1,097		0.51
1.625 percent twelve-year 2019 senior notes	2031	1,070		1.75	1,097		1.75
1.000 percent twelve-year 2019 senior notes	2032	1,070		1.06	1,097		1.06
3.125 percent nine-year 2022 senior notes	2032	1,070		3.25	1,097		3.25
0.750 percent twelve-year 2020 senior notes	2033	1,070		0.81	1,097		0.81
4.500 percent ten-year 2023 senior notes	2033	1,000		4.62	1,000		4.62
3.375 percent twelve-year 2022 senior notes	2035	1,070		3.44	1,097		3.44
4.375 percent twenty-year 2015 senior notes	2035	1,932		4.47	1,932		4.47
6.550 percent thirty-year 2007 CIFSA senior notes	2038	253		4.67	253		4.67
2.250 percent twenty-year 2019 senior notes	2039	1,070		2.34	1,097		2.34
6.500 percent thirty-year 2009 senior notes	2039	158		6.56	158		6.56
1.500 percent twenty-year 2019 senior notes	2040	1,070		1.58	1,097		1.58
5.550 percent thirty-year 2010 senior notes	2040	224		5.58	224		5.58
1.375 percent twenty-year 2020 senior notes	2041	1,070		1.46	1,097		1.46
4.500 percent thirty-year 2012 senior notes	2042	105		4.54	105		4.54
4.000 percent thirty-year 2013 senior notes	2043	305		4.09	305		4.09
4.625 percent thirty-year 2014 senior notes	2044	127		4.67	127		4.67
4.625 percent thirty-year 2015 senior notes	2045	1,813		4.69	1,813		4.69
1.750 percent thirty-year 2019 senior notes	2050	1,070		1.87	1,097		1.87
1.625 percent thirty-year 2020 senior notes	2051	1,070		1.75	1,097		1.75

Finance lease obligations	2026-2036	55		10.17	57		9.91
Debt discount, net	2026-2051	(55)		—	(64)		—
Deferred financing costs	2026-2051	(110)		—	(124)		—
Long-term debt		$	23,932		$	24,344

Senior Notes The Company has outstanding unsecured senior obligations, described as senior notes in the tables above (collectively, the Senior Notes). The Senior Notes rank equally with all other unsecured and unsubordinated indebtedness of the Company. The Company is in compliance with all covenants related to the Senior Notes.

In September 2022, Medtronic Luxco issued four tranches of Euro-denominated Senior Notes with an aggregate principal of €3.5 billion, with maturities ranging from fiscal year 2026 to 2035, resulting in cash proceeds of approximately $3.4 billion, net of discounts and issuance costs. The Company used the net proceeds to repay at maturity €750 million of Medtronic Luxco Senior Notes for $772 million of total consideration in December 2022 and €2.8 billion of Medtronic Luxco Senior Notes for $2.9 billion of total consideration in March 2023.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

In March 2023, Medtronic Luxco issued two tranches of USD-denominated Senior Notes with an aggregate principal of $2.0 billion, with maturities ranging from fiscal year 2028 to 2033, resulting in cash proceeds of approximately $2.0 billion, net of discounts and issuance costs. The Company used the net proceeds supplemented by additional cash to repay the ¥297 billion Fiscal 2023 Loan Agreement discussed below for $2.3 billion of total consideration.

Subsequent to year-end, on June 3, 2024, Medtronic Inc. issued four tranches of EUR-denominated Senior Notes with an aggregate principal of €3.0 billion, with maturities ranging from fiscal year 2030 to 2054, resulting in cash proceeds of approximately $3.2 billion, net of discounts and issuance costs. In anticipation of the Euro-denominated debt issuance, the Company entered into forward currency exchange rate contracts to manage the exposure to exchange rate movements. These contracts were settled in conjunction with the issuance of the June 2024 Notes.

The Euro-denominated debt issued in September 2022 is designated as a net investment hedge of certain of the Company's European operations. Refer to Note 7 for additional information regarding the net investment hedge.

Term Loan Agreements In May 2022, Medtronic Luxco entered into a term loan agreement (Fiscal 2023 Loan Agreement) by and among Medtronic Luxco, Medtronic plc, Medtronic, Inc., and Mizuho Bank, Ltd. as administrative agent and as lender. The Fiscal 2023 Loan Agreement provides an unsecured term loan in an aggregate principal amount of up to ¥300 billion with a term of 364 days. Borrowings under the Fiscal 2023 Loan Agreement bear interest at the TIBOR Rate (as defined in the Fiscal 2023 Loan Agreement) plus a margin of 0.40% per annum. Medtronic plc and Medtronic, Inc. guaranteed the obligations of Medtronic Luxco under the Fiscal 2023 Loan Agreement. In May and June 2022, Medtronic Luxco borrowed an aggregate of ¥297 billion, or approximately $2.3 billion, of the term loan, under the Fiscal 2023 Loan Agreement. The Company used the net proceeds of the borrowings to fund the early redemption of $1.9 billion of Medtronic Inc.'s 3.500% Senior Notes due 2025 for $1.9 billion of total consideration, and $368 million of Medtronic Luxco's 3.350% Senior Notes due 2027 for $376 million of total consideration. The Company recognized a total loss on debt extinguishment of $53 million within interest expense, net in the consolidated statements of income during fiscal year 2023, which primarily includes cash premiums and accelerated amortization of deferred financing costs and debt discounts and premiums. During the fourth quarter of fiscal year 2023, the Company repaid the term loan in full, including interest.

Contractual maturities of debt for the next five fiscal years and thereafter, excluding deferred financing costs and debt discount, net, are as follows:


(in millions)
2025	$	1,092
2026	2,684
2027	1,612
2028	1,006
2029	2,146
Thereafter	16,649
Total	$	25,189

For fiscal years 2024, 2023, and 2022, there was $916 million, $743 million, and $553 million of interest expense on outstanding borrowings, including amortization of debt issuance costs and debt discounts and premiums, and charges recognized in connection with the early redemption of senior notes, recognized in interest expense, net in the consolidated statements of income.

Financial Instruments Not Measured at Fair Value

At April 26, 2024, the estimated fair value of the Company’s Senior Notes was $21.2 billion compared to a principal value of $24.0 billion. At April 28, 2023, the estimated fair value was $21.7 billion compared to a principal value of $24.5 billion. The fair value was estimated using quoted market prices for the publicly registered Senior Notes, which are classified as Level 2 within the fair value hierarchy. The fair values and principal values consider the terms of the related debt and exclude the impacts of debt discounts and hedging activity.

7. Derivatives and Currency Exchange Risk Management

The Company uses derivative instruments and foreign currency denominated debt to manage the impact that currency exchange rate and interest rate changes have on reported financial statements. The Company does not enter into derivative contracts for speculative purposes.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Cash Flow Hedges

The Company uses foreign currency forward and option contracts designated as cash flow hedges to manage its exposure to the variability of future cash flows that are denominated in a foreign currency.

At inception, foreign currency forward and option contracts are designated as a cash flow hedge. Changes in the fair value of these derivatives are reported as a component of accumulated other comprehensive loss until the hedged transaction affects earnings. When the hedged transaction affects earnings, the gain or loss on the derivative is reclassified to earnings. Amounts excluded from the measurement of hedge effectiveness are recognized in earnings on a straight-line basis over the term of the hedge. Cash flows are reported as operating activities in the consolidated statements of cash flows.

The Company's cash flow hedges will mature within the subsequent three-year period. At April 26, 2024 and April 28, 2023, the Company had $229 million and $93 million in after-tax unrealized gains, respectively, associated with cash flow hedging instruments recorded in accumulated other comprehensive loss. The Company expects that $158 million of after-tax net unrealized gains at April 26, 2024 will be recognized in the consolidated statements of income over the next 12 months.

Net Investment Hedges

The Company uses derivative instruments and foreign currency denominated debt to manage foreign currency risk associated with its net investment in foreign operations. The derivative instruments that the Company uses for this purpose may include foreign currency forward exchange contracts used on a standalone basis or in combination with option collars and standalone cross currency interest rate contracts.

For instruments that are designated as net investment hedges, the gains or losses are reported as a component of accumulated other comprehensive loss. The gains or losses are reclassified into earnings upon a liquidation event or deconsolidation of the foreign subsidiary. Amounts excluded from the assessment of effectiveness are recognized in interest expense, net on a straight-line basis over the term of the hedge. During the twelve months ended April 26, 2024 and April 28, 2023, the Company recognized $197 million and $107 million, respectively, of after-tax unrealized gains related to excluded components in interest expense, net. The cash flows related to the Company’s derivative instruments designated as net investment hedges are reported as investing activities in the consolidated statements of cash flows. Cash flows attributable to amounts excluded from the assessment of effectiveness are reported as operating activities in the consolidated statements of cash flows.

Undesignated Derivatives

The Company uses foreign currency forward exchange contracts to offset the Company’s exposure to the change in the value of non-functional currency denominated assets, liabilities, and cash flows.

These foreign currency forward exchange rate contracts are not designated as hedges at inception, and therefore, changes in the fair value of these contracts are recognized in the consolidated statements of income. Cash flows related to the Company’s undesignated derivative contracts are reported in the consolidated statements of cash flows based on the nature of the derivative instrument.

Outstanding Instruments

The following table presents the contractual amounts of the Company's outstanding instruments:


		As of
(in billions)	Designation	April 26, 2024		April 28, 2023
Currency exchange rate contracts	Cash flow hedge	$	10.4	$	9.1
Currency exchange rate contracts(1)	Net investment hedge	7.4		7.2
Foreign currency-denominated debt(2)	Net investment hedge	17.1		17.6
Currency exchange rate contracts	Undesignated	5.9		5.8

(1)At April 26, 2024, includes derivative contracts with a notional value of €5.0 billion, or $5.4 billion, designated as hedges of a portion of our net investment in certain European operations and derivative contracts with a notional value of ¥322 billion, or $2.1 billion, designated as hedges of a portion of our net investment in certain Japanese operations. These derivative contracts mature in fiscal years 2025 through 2033.

(2)At April 26, 2024, includes €16.0 billion, or $17.1 billion, of outstanding Euro-denominated debt designated as hedges of a portion our net investment in foreign operations. This debt matures in fiscal years 2026 through 2051.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Gains and Losses on Hedging Instruments and Derivatives not Designated as Hedging Instruments

The amount of the gains and losses on hedging instruments and the classification of those gains and losses within our consolidated financial statements for fiscal years 2024, 2023, and 2022 were as follows:


	(Gain) Loss Recognized in Accumulated Other Comprehensive Income						(Gain) Loss Reclassified into Income

	Fiscal Year						Fiscal Year						Location of (Gain) Loss in Income Statement
(in millions)	2024		2023		2022		2024		2023		2022
Cash flow hedges
Currency exchange rate contracts	$	(416)	$	(161)	$	(953)	$	(312)	$	(703)	$	(144)	Other operating expense (income), net
Currency exchange rate contracts	(124)		(79)		18		(57)		(3)		61		Cost of products sold
Net investment hedges
Foreign currency-denominated debt	(431)		524		(2,299)		—		—		—		N/A
Currency exchange rate contracts	(202)		73		—		—		—		—		N/A
Total	$	(1,173)	$	356	$	(3,234)	$	(369)	$	(706)	$	(83)

The amount of the gains and losses on our derivative instruments not designated as hedging instruments and the classification of those gains and losses within our consolidated financial statements for fiscal years 2024, 2023, and 2022 were as follows:


	(Gain) Loss Recognized in Income
	Fiscal Year						Location of (Gain) Loss in Income Statement
(in millions)	2024		2023		2022

Currency exchange rate contracts	$	136	$	31	$	(54)	Other operating expense (income), net

Balance Sheet Presentation

The following tables summarize the balance sheet classification and fair value of derivative instruments included in the consolidated balance sheets at April 26, 2024 and April 28, 2023. The fair value amounts are presented on a gross basis and are segregated between derivatives that are designated and qualify as hedging instruments and those that are not designated and do not qualify as hedging instruments, and are further segregated by type of contract within those two categories.


	Fair Value - Assets					Fair Value - Liabilities
(in millions)	April 26, 2024		April 28, 2023		Balance Sheet Classification	April 26, 2024		April 28, 2023		Balance Sheet Classification
Derivatives designated as hedging instruments
Currency exchange rate contracts	$	368	$	318	Other current assets	$	37	$	109	Other accrued expenses

Currency exchange rate contracts	276		33		Other assets	17		117		Other liabilities
Total derivatives designated as hedging instruments	644		351			54		226
Derivatives not designated as hedging instruments
Currency exchange rate contracts	15		17		Other current assets	12		10		Other accrued expenses




Total derivatives	$	659	$	368		$	66	$	236

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following table provides information by level for the derivative assets and liabilities that are measured at fair value on a recurring basis:


	April 26, 2024				April 28, 2023
(in millions)	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Level 1	$	659	$	66	$	368	$	236

The Company has elected to present the fair value of derivative assets and liabilities within the consolidated balance sheets on a gross basis, even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation. The cash flows related to collateral posted and received are reported gross as investing and financing activities, respectively, in the consolidated statements of cash flows.

The following tables provide information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria as stipulated by the terms of the master netting arrangements with each of the counterparties. Derivatives not subject to master netting arrangements are not eligible for net presentation.


	April 26, 2024
			Gross Amount Not Offset on the Balance Sheet
(in millions)	Gross Amount of Recognized Assets (Liabilities)		Financial Instruments		Cash Collateral (Received) Posted		Net Amount
Derivative assets:
Currency exchange rate contracts	$	659	$	(66)	$	(101)	$	492




Derivative liabilities:
Currency exchange rate contracts	(66)		66		—		—




Total	$	593	$	—	$	(101)	$	492


	April 28, 2023
			Gross Amount Not Offset on the Balance Sheet
(in millions)	Gross Amount of Recognized Assets (Liabilities)		Financial Instruments		Cash Collateral (Received) Posted		Net Amount
Derivative assets:
Currency exchange rate contracts	$	368	$	(189)	$	(11)	$	168




Derivative liabilities:
Currency exchange rate contracts	(236)		189		—		(48)



Total	$	132	$	—	$	(11)	$	121

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of interest-bearing investments, derivative contracts, and trade accounts receivable. Global concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of customers and their dispersion across many geographic areas. The Company monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business.

The Company maintains cash and cash equivalents, investments, and certain other financial instruments (including currency exchange rate and interest rate derivative contracts) with various major financial institutions. The Company performs periodic evaluations of the relative credit standings of these financial institutions and limits the amount of credit exposure with any one institution. In addition, the Company has collateral credit agreements with its primary derivatives counterparties. Under these agreements, either party is required to post eligible collateral when the market value of transactions covered by the agreement exceeds specific thresholds, thus limiting credit exposure for both parties. As of April 26, 2024 and April 28, 2023, the Company received net cash collateral of $101 million and $11 million, respectively,

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

from its counterparties. Cash collateral posted is recorded as a reduction in cash and cash equivalents, with the offset recorded as an increase in other current assets in the consolidated balance sheets. Cash collateral received is recorded as an increase in cash and cash equivalents with the offset recorded in other accrued expenses in the consolidated balance sheets.

8. Inventories

Inventory balances were as follows:


(in millions)	April 26, 2024		April 28, 2023
Finished goods	$	3,668	$	3,440
Work-in-process	642		789
Raw materials	907		1,063
Total	$	5,217	$	5,293

9. Goodwill and Other Intangible Assets

Goodwill

The following table presents the changes in the carrying amount of goodwill by segment:


(in millions)	Cardiovascular		Neuroscience		Medical Surgical		Diabetes		Total
April 29, 2022	$	7,160	$	11,132	$	19,957	$	2,254	$	40,502
Goodwill as a result of acquisitions	726		615		—		—		1,340
Purchase accounting adjustments	(6)		2		—		—		(5)
Sale of RCS business	—		—		(208)		—		(208)
Currency translation and other	(6)		(30)		(170)		1		(204)
April 28, 2023	7,873		11,718		19,579		2,255		41,425
Goodwill as a result of acquisitions	131		—		—		—		131
Purchase accounting adjustments	(5)		—		—		—		(5)
Currency translation and other	(33)		(74)		(458)		—		(565)
April 26, 2024	$	7,966	$	11,644	$	19,121	$	2,255	$	40,986

As further described in Note 19, the Company had changes to the operating segments during fiscal year 2024. As of the beginning of fiscal year 2024, the Medical Surgical portfolio was separated into two operating segments, and each new operating segment was considered a standalone reporting unit as of the beginning of fiscal year 2024. As a result of this change, the Company allocated all goodwill that was previously assigned to the Medical Surgical reporting unit to the Surgical/Endoscopy reporting unit and the Patient Monitoring/Respiratory Interventions (PMRI) reporting unit using a relative fair value allocation approach. The effected reporting units were tested for impairment before and after the alignment. No goodwill impairment was identified in either test as of the beginning of the fiscal year 2024.

Additionally, during the fourth quarter of fiscal year 2024, the Company's operating segments changed again resulting in the two reporting units created in the first quarter to be combined into the Medical Surgical reporting unit. All goodwill that was previously assigned to the two reporting units was combined into the Medical Surgical reporting unit.

The Company did not recognize any goodwill impairment charges during fiscal years 2024 or 2022. As a result of the agreement with DaVita, as disclosed in Note 3, the Company allocated $208 million of goodwill to the RCS business that met the criteria to be classified as held for sale during the first quarter of fiscal year 2023 and was subsequently sold on April 1, 2023. Upon allocation, a goodwill impairment test was performed for the RCS business, and the Company recognized $61 million of goodwill impairment charges during fiscal year 2023. The goodwill impairment charges are recognized in other operating expense (income), net in the consolidated statements of income.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Intangible Assets

The following table presents the gross carrying amount and accumulated amortization of intangible assets:


	April 26, 2024				April 28, 2023
(in millions)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Definite-lived:
Customer-related	$	16,518	$	(8,689)	$	16,956	$	(7,979)
Purchased technology and patents	11,557		(6,868)		11,659		(6,277)
Trademarks and tradenames	424		(274)		486		(280)
Other	256		(84)		116		(69)
Total	$	28,755	$	(15,915)	$	29,217	$	(14,605)
Indefinite-lived:
IPR&D	$	385	$	—	$	232	$	—

During fiscal year 2024, the Company recognized $295 million of definite-lived intangible asset impairment charges in connection with the decision to exit its ventilator product line. The intangible asset impairment charges primarily related to purchased technology, customer-related intangibles, and trade names. During fiscal year 2022, the Company recognized $409 million of definite-lived intangible asset impairment charges in connection with the Company's decision to stop the distribution and sale of the Medtronic HVAD System. The intangible asset impairment charge primarily related to purchased technology and patents. The intangible asset impairment charges are recognized in other operating expense (income), net in the consolidated statements of income. Refer to Note 3 for additional information on what led to the impairments in fiscal year 2024 and 2022. The Company did not recognize any definite-lived intangible asset impairment charges during fiscal year 2023.

Indefinite-lived intangible asset impairment charges were not significant for fiscal year 2024, 2023, or 2022. Due to the nature of IPR&D projects, the Company may experience future delays or failures to obtain regulatory approvals to conduct clinical trials, failures of such clinical trials, delays or failures to obtain required market clearances, other failures to achieve a commercially viable product, or the discontinuation of certain projects, and as a result, may recognize impairment losses in the future.

Amortization Expense

Intangible asset amortization expense was $1.7 billion for fiscal years 2024, 2023 and 2022. Estimated aggregate amortization expense by fiscal year based on the current carrying value and remaining estimated useful lives of definite-lived intangible assets at April 26, 2024, excluding any possible future amortization associated with acquired IPR&D which has not met technological feasibility, is as follows:


(in millions)	Amortization Expense
2025	$	1,635
2026	1,623
2027	1,600
2028	1,550
2029	1,471

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

10. Property, Plant, and Equipment

Property, plant, and equipment balances and corresponding estimated useful lives were as follows:


(in millions)	April 26, 2024		April 28, 2023		Estimated Useful Lives (in years)
Equipment	$	6,396	$	6,707	Generally 2-10, up to 15
Computer software	2,872		2,952		Up to 10
Land and land improvements	159		162		Up to 20
Buildings and leasehold improvements	2,506		2,487		Up to 40
Construction in progress	2,119		1,754		—
Property, plant, and equipment	14,052		14,062
Less: Accumulated depreciation	(7,922)		(8,493)
Property, plant, and equipment, net	$	6,131	$	5,569

Depreciation expense of $954 million, $999 million, and $974 million was recognized in fiscal years 2024, 2023, and 2022, respectively.

11. Shareholders’ Equity

Share Capital Medtronic plc is authorized to issue 2.6 billion Ordinary Shares, $0.0001 par value; 40 thousand Euro Deferred Shares, €1.00 par value; 127.5 million Preferred Shares, $0.20 par value; and 500 thousand A Preferred Shares, $1.00 par value.

Euro Deferred Shares The authorized share capital of the Company includes 40 thousand Euro Deferred Shares, with a par value of €1.00 per share. At April 26, 2024, no Euro Deferred Shares were issued or outstanding.

Preferred Shares The authorized share capital of the Company includes 127.5 million of Preferred Shares, with a par value of $0.20 per share. At April 26, 2024, no Preferred Shares were issued or outstanding.

A Preferred Shares The authorized share capital of the Company includes 500 thousand A Preferred Shares, with a par value of $1.00 per share. At April 26, 2024, no A Preferred Shares were outstanding.

Dividends The timing, declaration, and payment of future dividends to holders of the Company's ordinary shares falls within the discretion of the Company's Board of Directors and depends upon many factors, including the statutory requirements of Irish law, the Company's earnings and financial condition, the capital requirements of the Company's businesses, industry practice and any other factors the Board of Directors deems relevant.

Ordinary Share Repurchase Program Shares are repurchased on occasion to support the Company’s stock-based compensation programs and to return capital to shareholders. During fiscal years 2024 and 2023, the Company repurchased approximately 25 million and 6 million shares, respectively, at an average price of $83.04 and $91.31, respectively.

In March 2019, the Company's Board of Directors authorized $6.0 billion for repurchase of the Company's ordinary shares. In March 2024, the Company's Board of Directors authorized an incremental $5.0 billion for share repurchases. There is no specific time-period associated with these repurchase authorizations. At April 26, 2024, the Company had used $5.7 billion of the $11.0 billion authorized under the repurchase program, leaving approximately $5.3 billion available for future repurchases. The Company accounts for repurchases of ordinary shares using the par value method and shares repurchased are cancelled.

12. Stock Purchase and Award Plans

In fiscal year 2024, the Company granted stock awards under the 2021 Medtronic plc Long Term Incentive Plan (2021 Plan). The 2021 Plan provides for the grant of non-qualified and incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other stock and cash-based awards. At April 26, 2024, there were approximately 88 million shares available for future grants under the 2021 Plan.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Stock-Based Compensation Expense The following table presents the components and classification of stock-based compensation expense recognized for stock options, restricted stock, performance share units, and employee stock purchase plan (ESPP) in fiscal years 2024, 2023, and 2022:


	Fiscal Year
(in millions)	2024		2023		2022
Stock options	$	76	$	77	$	70
Restricted stock	184		166		184
Performance share units	97		74		66
Employee stock purchase plan	36		38		39
Total stock-based compensation expense	$	393	$	355	$	359

Cost of products sold	$	35	$	36	$	36
Research and development expense	47		39		40
Selling, general, and administrative expense	310		280		283
Total stock-based compensation expense	393		355		359
Income tax benefits	(64)		(60)		(62)
Total stock-based compensation expense, net of tax	$	329	$	295	$	297

Stock Options Options are granted at the exercise price, which is equal to the closing price of the Company’s ordinary shares on the grant date. The majority of the Company’s options are non-qualified options with a ten-year life and a four-year ratable vesting term. The Company uses the Black-Scholes option pricing model (Black-Scholes model) to determine the fair value of stock options at the grant date. The fair value of stock options under the Black-Scholes model requires management to make assumptions regarding projected employee stock option exercise behaviors, risk-free interest rates, volatility of the Company’s stock price, and expected dividends. Expected volatility is based on a blend of historical volatility and an implied volatility of the Company’s ordinary shares. Implied volatility is based on market traded options of the Company’s ordinary shares.

The following table provides the weighted average fair value of options granted to employees and the related assumptions used in the Black-Scholes model:


	Fiscal Year
	2024			2023			2022
Weighted average fair value of options granted	$	18.49		$	17.76		$	22.83
Assumptions used:
Expected life (years)	6.1			6.0			6.0
Risk-free interest rate	4.16		%	2.70		%	0.90		%
Volatility	24.29		%	24.05		%	23.04		%
Dividend yield	3.18		%	2.92		%	1.95		%

The following table summarizes stock option activity during fiscal year 2024:


	Options (in thousands)	Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at April 28, 2023	30,866	$	93.30
Granted	4,823	86.86
Exercised	(1,445)	65.07
Expired/Forfeited/Cancelled	(1,905)	98.12
Outstanding at April 26, 2024	32,339	93.32		4.9	$	30
Expected to vest at April 26, 2024	8,914	95.62		8.4	2
Exercisable at April 26, 2024	22,746	92.46		3.4	28

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the total cash received from the issuance of new shares upon stock option award exercises, the total intrinsic value of options exercised, and the related tax benefit during fiscal years 2024, 2023, and 2022:


	Fiscal Year
(in millions)	2024		2023		2022
Cash proceeds from options exercised	$	78	$	77	$	209
Intrinsic value of options exercised	28		42		174
Tax benefit related to options exercised	6		9		40

Unrecognized compensation expense related to outstanding stock options at April 26, 2024 was $90 million and is expected to be recognized over a weighted average period of 2.4 years.

Restricted Stock Restricted stock units are expensed over the vesting period and are subject to forfeiture if employment terminates prior to the lapse of the restrictions. The expense recognized for restricted stock units is equal to the grant date fair value, which is equal to the closing stock price on the date of grant. The majority of the Company's restricted stock units either have a four-year ratable vesting term or cliff vest after three years. Restricted stock units are not considered issued or outstanding ordinary shares of the Company. Dividend equivalent units are accumulated on restricted stock units during the vesting period.

The following table summarizes restricted stock activity during fiscal year 2024:


	Units (in thousands)	Wtd. Avg. Grant Price
Nonvested at April 28, 2023	5,189	$	102.34
Granted	3,297	82.80
Vested	(1,819)	102.17
Forfeited/Cancelled	(526)	99.34
Nonvested at April 26, 2024	6,142	92.57

The following table summarizes the weighted-average grant date fair value of restricted stock granted, total fair value of restricted stock vested and related tax benefit during fiscal years 2024, 2023, and 2022:


	Fiscal Year
(in millions, except per share data)	2024		2023		2022
Weighted-average grant-date fair value per restricted stock	$	82.80	$	91.83	$	127.47
Fair value of restricted stock vested	186		256		194
Tax benefit related to restricted stock vested	29		45		52

Unrecognized compensation expense related to restricted stock as of April 26, 2024 was $361 million and is expected to be recognized over a weighted average period of 2.6 years.

Performance Share Units Performance share units typically cliff vest after three years. The awards include three metrics: relative total shareholder return (rTSR), revenue growth, and return on investor capital (ROIC). rTSR is considered a market condition metric, and the expense is determined at the grant date and will not be adjusted even if the market condition is not met. Revenue growth and ROIC are considered performance metrics, and the expense is recorded over the performance period, which will be reassessed each reporting period based on the probability of achieving the various performance conditions. The number of shares earned at the end of the three-year period will vary, based on only actual performance, from 0% to 200% of the target number of performance share units granted. Performance share units are subject to forfeiture if employment terminates prior to the lapse of the restrictions. Performance share units are not considered issued or outstanding ordinary shares of the Company. Dividend equivalent units are accumulated on performance share units for each component of the award during the vesting period.

The Company calculates the fair value of the performance share units for each component individually. The fair value of the rTSR metric will be determined using the Monte Carlo valuation model. The fair value of the revenue growth and ROIC metrics are equal to the closing stock price on the grant date.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following table summarizes performance share unit activity during fiscal year 2024:


	Units (in thousands)	Wtd. Avg. Grant Price
Nonvested at April 28, 2023	2,043	$	119.88
Granted	1,283	104.78
Vested	(249)	129.49
Performance adjustments (1)	(455)	147.92
Forfeited/Cancelled	(200)	113.57
Nonvested at April 26, 2024	2,422	106.50

(1)Performance adjustments are adjustments to grants where the performance period has ended and actual performance is known.

The following table summarizes the weighted-average grant date fair value of performance share units granted, total fair value of performance share units vested and related tax benefit during fiscal year 2024, 2023, and 2022:


	Fiscal Year
(in millions, except per share data)	2024		2023		2022
Weighted-average grant-date fair value per performance share units	$	104.78	$	98.17	$	149.16
Fair value of performance share units vested	78		—		—
Tax benefit related to performance share units vested	3		—		—

Unrecognized compensation expense related to performance share units as of April 26, 2024 was $89 million and is expected to be recognized over a weighted average period of 1.6 years.

Employees Stock Purchase Plan (ESPP) The Company's shareholders approved the Medtronic plc 2024 Employee Stock Purchase Plan (2024 Plan) on October 19, 2023, which provides for a maximum of 30 million ordinary shares to be purchased by participating employees. The 2024 Plan replaced the Medtronic plc Amended and Restated 2014 Employees Stock Purchase Plan (2014 Plan) starting January 1, 2024. The 2024 Plan allows participating employees to purchase the Company's ordinary shares at a discount through payroll deductions. The expense recognized for shares purchased under the Company’s 2014 Plan and 2024 Plan is equal to the 15 percent discount the employee receives. Employees purchased 3 million shares at an average price of $71.10 per share in fiscal year 2024. At April 26, 2024, approximately 29 million ordinary shares were available for future purchase under the 2024 Plan.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

13. Income Taxes

The income tax provision is based on income before income taxes reported for financial statement purposes. The components of income before income taxes, based on tax jurisdiction, are as follows:


	Fiscal Year
(in millions)	2024		2023		2022
U.S.	$	750	$	1,295	$	436
International	4,087		4,069		5,081
Income before income taxes	$	4,837	$	5,364	$	5,517

The income tax provision consists of the following:


	Fiscal Year
(in millions)	2024		2023		2022
Current tax expense:
U.S.	$	756	$	1,303	$	467
International	905		530		599
Total current tax expense	1,661		1,833		1,066
Deferred tax (benefit) expense:
U.S.	(435)		(336)		(402)
International	(93)		83		(209)
Net deferred tax benefit	(528)		(253)		(611)
Income tax provision	$	1,133	$	1,580	$	456

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Tax assets (liabilities), shown before jurisdictional netting of deferred tax assets (liabilities), are comprised of the following:


(in millions)	April 26, 2024		April 28, 2023
Deferred tax assets:
Net operating loss, capital loss, and credit carryforwards	$	11,775	$	10,803
Intangible assets	2,858		2,259
Capitalization of research and development	1,255		971
Other accrued liabilities	404		458
Accrued compensation	374		312
Pension and post-retirement benefits	—		66
Stock-based compensation	147		141
Inventory	138		135
Deferred revenue	172		37
Lease obligations	157		150
Federal and state benefit on uncertain tax positions	21		79
Interest limitation	608		377
Unrealized gain on available-for-sale securities and derivative financial instruments	13		39
Other	355		240
Gross deferred tax assets	18,277		16,067
Valuation allowance	(13,271)		(11,311)
Total deferred tax assets	5,006		4,756
Deferred tax liabilities:
Intangible assets	(1,406)		(1,551)
Realized loss on derivative financial instruments	(70)		(70)
Right of use leases	(149)		(147)

Accumulated depreciation	(110)		(109)
Outside basis difference of subsidiaries	(90)		(119)
Pension and post-retirement benefits	(45)		—
Other	(90)		(80)
Total deferred tax liabilities	(1,960)		(2,076)
Prepaid income taxes	520		480
Income tax receivables	406		494
Tax assets, net	$	3,972	$	3,654
Reported as (after valuation allowance and jurisdictional netting):
Other current assets	$	830	$	885
Tax assets	3,657		3,477
Deferred tax liabilities	(515)		(708)
Tax assets, net	$	3,972	$	3,654

No deferred taxes have been provided on the approximately $86.3 billion and $83.7 billion of undistributed earnings of the Company’s subsidiaries at April 26, 2024 and April 28, 2023, respectively, since these earnings have been, and under current plans will continue to be, permanently reinvested in these subsidiaries. Due to the number of legal entities and jurisdictions involved, the complexity of the legal entity structure of the Company, and the complexity of the tax laws in the relevant jurisdictions, the Company believes it is not practicable to estimate, within any reasonable range, the amount of additional taxes which may be payable upon distribution of these undistributed earnings.

At April 26, 2024, the Company had approximately $11.3 billion of tax effected net operating loss carryforwards in certain non-U.S. jurisdictions, of which $5.1 billion have no expiration, and the remaining $6.2 billion will expire during fiscal years 2025 through 2041.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Included in these net operating loss carryforwards are $4.0 billion of tax effected net operating losses generated in fiscal year 2008 as a result of the receipt of a favorable tax ruling from certain non-U.S. taxing authorities; and $5.1 billion of tax effected net operating losses generated during fiscal year 2023 as a result of an intercompany reorganization. The Company has recorded a full valuation allowance against these net operating losses, as management does not believe that it is more likely than not that these net operating losses will be utilized. Certain of the remaining non-U.S. net operating loss carryforwards of $2.2 billion have a valuation allowance recorded against the carryforwards, as management does not believe that it is more likely than not that these net operating losses will be utilized.

At April 26, 2024, the Company had $81 million of tax effected U.S. federal net operating loss carryforwards, of which $56 million have no expiration. The remaining loss carryforwards will expire during fiscal years 2025 through 2036. For U.S. state purposes, the Company had $90 million of tax effected net operating loss carryforwards at April 26, 2024, $12 million of which have no expiration. The remaining U.S. state loss carryforwards will expire during fiscal years 2025 through 2042.

At April 26, 2024, the Company also had $292 million of tax credits available to reduce future income taxes payable, of which $122 million have no expiration. The remaining credits will expire during fiscal years 2025 through 2043.

The Company has established valuation allowances of $13.3 billion and $11.3 billion at April 26, 2024 and April 28, 2023, respectively, primarily related to the uncertainty of the utilization of certain deferred tax assets which are primarily comprised of tax loss and credit carryforwards in various jurisdictions. The increase in the valuation allowance during fiscal year 2024 is primarily related to the finalization of certain tax returns as well as an increase in the Swiss Cantonal tax rate applied to previously recorded deferred tax assets and associated valuation allowances. These valuation allowances would result in a reduction to the income tax provision in the consolidated statements of income if they are ultimately not required.

The Company’s effective income tax rate varied from the U.S. federal statutory tax rate as follows:


	Fiscal Year
	2024		2023		2022
U.S. federal statutory tax rate	21.0	%	21.0	%	21.0	%
Increase (decrease) in tax rate resulting from:
U.S. state taxes, net of federal tax benefit	0.2		0.1		0.2
Research and development credit	(2.2)		(1.9)		(1.3)
Puerto Rico excise tax	—		(1.0)		(1.1)
International	(6.7)		(8.0)		(10.9)
Stock based compensation	0.3		0.2		(0.8)

Uncertain tax positions and interest	1.3		1.2		0.2
Base erosion anti-abuse tax	0.3		—		0.9
Foreign derived intangible income benefit	(1.7)		(1.2)		(1.0)
Certain tax adjustments	6.2		17.0		(0.9)

U.S. tax on foreign earnings	3.5		2.5		2.2
Other, net	1.2		(0.4)		(0.2)
Effective tax rate	23.4	%	29.5	%	8.3	%

The Israeli Central-Lod District Court issued its decision in Medtronic Ventor Technologies Ltd (Ventor) v. Kfar Saba Assessing Office in June 2023. The court determined that there was a deemed taxable transfer of intellectual property. As a result, the Company recorded a $187 million income tax charge during fiscal year 2024 and filed an appeal with the Supreme Court of Israel.

During fiscal year 2024, the net cost from certain tax adjustments of $299 million, recognized in income tax provision in the consolidated statement of income, included the following:

A cost of $187 million associated with a reserve adjustment related to the Israeli Central-Lod District Court decision with respect to a deemed taxable transfer of intellectual property.
A cost of $124 million related to a change in valuation allowance on previously recorded net operating losses.
A benefit of $95 million related to a Swiss Cantonal tax rate change on previously recorded deferred tax assets.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

A cost of $50 million associated with the amortization of the previously established deferred tax assets from intercompany intellectual property transactions.
A cost of $33 million associated with a change in the Company’s permanent reinvestment assertion on certain historical earnings.

During fiscal year 2023, the net benefit from certain tax adjustments of $910 million, recognized in income tax provision in the consolidated statement of income, included the following:

A net cost of $764 million associated with the August 18, 2022 U.S. Tax Court (Tax Court) Opinion on the previously disclosed litigation regarding the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico for fiscal years 2005 and 2006 (Opinion). While the Opinion rejected the IRS’s position and the Tax Court determined the methodology advanced by Medtronic was appropriate for purposes of determining the intercompany royalty rate between Puerto Rico and the U.S., it determined that the royalty rate should be higher, thereby increasing income allocated to the U.S. and consequently subject to U.S. tax. This case relates only to fiscal years 2005 and 2006. The Company has assumed the Tax Court findings will be applied for all years following fiscal year 2006.
A cost of $55 million related to the disallowance of certain interest deductions.
A cost of $30 million related to the change in reporting currency for certain carryover attributes.
A cost of $28 million associated with the amortization of the previously established deferred tax assets from intercompany intellectual property transactions.
A net cost of $33 million primarily associated with the sale of half of the Company’s RCS business.

During fiscal year 2022, the net benefit from certain tax adjustments of $50 million, recognized in income tax provision in the consolidated statement of income, included the following:

A benefit of $82 million associated with a step up in tax basis for Swiss Cantonal purposes.
A benefit of $82 million related to a change in tax rates on intangible assets.
A cost of $47 million associated with the amortization of the previously established deferred tax assets from intercompany intellectual property transactions.
A cost of $41 million associated with a change in the Company’s permanent reinvestment assertion on certain historical earnings.
A net cost of $26 million primarily associated with an intercompany sale of assets.

Currently, the Company’s operations in Puerto Rico, Singapore, Dominican Republic, Costa Rica, and China have various tax holidays and tax incentive grants. The tax reductions as compared to the local statutory rate favorably impacted earnings by $229 million, $115 million, and $248 million in fiscal years 2024, 2023, and 2022, respectively, and diluted earnings per share by $0.17, $0.09, and $0.18, in fiscal years 2024, 2023, and 2022, respectively. The tax holidays are conditional upon the Company meeting certain thresholds required under statutory law. The tax incentive grants, unless extended, will expire between fiscal years 2025 and 2049. The tax incentive grants which expired during fiscal year 2024 did not have a material impact on the Company's consolidated financial statements.

The Organization for Economic Co-operation and Development (OECD) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15% in each jurisdiction in which the group operates. A number of countries, including Ireland, have enacted legislation to implement the core elements of Pillar Two, which will be effective for the Company in fiscal year 2025. The Company is continuing to evaluate the potential impacts of proposed and enacted legislative changes as new guidance becomes available. There are no impacts of this global minimum tax in the consolidated financial statements for the fiscal year ended April 26, 2024.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The Company had $2.8 billion, $2.7 billion, and $1.7 billion of gross unrecognized tax benefits at April 26, 2024, April 28, 2023, and April 29, 2022, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits for fiscal years 2024, 2023, and 2022 is as follows:


	Fiscal Year
(in millions)	2024		2023		2022
Gross unrecognized tax benefits at beginning of fiscal year	$	2,682	$	1,661	$	1,668
Gross increases:
Prior year tax positions	121		980		1
Current year tax positions	85		89		40
Gross decreases:
Prior year tax positions	(2)		(12)		(29)
Settlements	(55)		(4)		(8)
Statute of limitation lapses	(7)		(32)		(11)
Gross unrecognized tax benefits at end of fiscal year	2,824		2,682		1,661
Cash advance paid to taxing authorities	(934)		(918)		(859)
Gross unrecognized tax benefits at end of fiscal year, net of cash advance	$	1,890	$	1,764	$	802

If all of the Company’s unrecognized tax benefits at April 26, 2024, April 28, 2023, and April 29, 2022 were recognized, $2.7 billion, $2.5 billion, and $1.6 billion would impact the Company’s effective tax rate, respectively. Although the Company believes that it has adequately reserved for liabilities resulting from tax assessments by taxing authorities, positions taken by these tax authorities could have a material impact on the Company’s effective tax rate in future periods. The Company has recorded gross unrecognized tax benefits, net of cash advance, of $1.8 billion as a noncurrent liability. The Company estimates that within the next 12 months it is reasonably possible that its uncertain tax positions, excluding interest, could decrease by as much as $15 million, net as a result of statute of limitation lapses.

The Company recognizes interest and penalties related to income tax matters in income tax provision in the consolidated statements of income and records the liability in the current or noncurrent accrued income taxes in the consolidated balance sheets, as appropriate. During fiscal years 2024, 2023, and 2022, the Company recognized gross interest expense of $134 million, $86 million, and $17 million, respectively, in income tax provision in the consolidated statements of income. The Company had $19 million, $61 million, and $117 million of accrued gross interest and penalties at April 26, 2024, April 28, 2023, and April 29, 2022, respectively.

The Company reserves for uncertain tax positions related to unresolved matters with the IRS and other taxing authorities. These reserves are subject to a high degree of estimation and management judgment. Resolution of these significant unresolved matters, or positions taken by the IRS or other tax authorities during future tax audits, could have a material impact on the Company’s financial results in future periods. The Company continues to believe that its reserves for uncertain tax positions are appropriate and that it has meritorious defenses for its tax filings and will vigorously defend them during the audit process, appellate process, and through litigation in courts, as necessary.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The major tax jurisdictions where the Company conducts business which remain subject to examination are as follows:


Jurisdiction						Earliest Year Open
United States - federal and state						2005
Australia						2023
Brazil						2018
Canada						2013
China						2015
Costa Rica						2020
Dominican Republic						2020
France						2021
Germany						2017
India						2002
Ireland						2020
Israel						2010
Italy						2019
Japan						2020
Korea						2022
Luxembourg						2019
Mexico						2018
Puerto Rico						2014
Singapore						2019
Switzerland						2010
United Kingdom						2020

See Note 18 for additional information regarding the status of current tax audits and proceedings.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

14. Earnings Per Share

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

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


	Fiscal Year
(in millions, except per share data)	2024		2023		2022
Numerator:
Net income attributable to ordinary shareholders	$	3,676	$	3,758	$	5,039
Denominator:
Basic – weighted average shares outstanding	1,327.7		1,329.8		1,342.4
Effect of dilutive securities:
Employee stock options	0.7		1.5		6.6
Employee restricted stock units	1.4		1.0		1.6
Employee performance share units	0.4		0.5		0.8
Diluted – weighted average shares outstanding	1,330.2		1,332.8		1,351.4

Basic earnings per share	$	2.77	$	2.83	$	3.75
Diluted earnings per share	$	2.76	$	2.82	$	3.73

The calculation of weighted average diluted shares outstanding excludes options to purchase approximately 28 million, 23 million, and 5 million ordinary shares in fiscal year 2024, 2023, and 2022, respectively because their effect would have been anti-dilutive on the Company’s earnings per share.

15. Retirement Benefit Plans

The Company sponsors various retirement benefit plans, including defined benefit pension plans, post-retirement medical plans, defined contribution savings plans, and termination indemnity plans, covering substantially all U.S. employees and many employees outside the U.S. The net expense related to these plans was $451 million, $494 million, and $459 million in fiscal years 2024, 2023, and 2022, respectively.

In the U.S., the Company maintains qualified pension plans designed to provide guaranteed minimum retirement benefits to all eligible U.S. participants. Pension coverage for non-U.S. employees is provided, to the extent deemed appropriate, through separate plans. In addition to the benefits provided under the qualified pension plan, retirement benefits associated with wages in excess of the IRS allowable limits are provided to certain employees under a non-qualified plan. U.S. and Puerto Rico employees are also eligible to receive a medical benefit component, in addition to normal retirement benefits, through the Company’s post-retirement benefits.

At April 26, 2024 and April 28, 2023, the funded status of the Company’s benefit plans was $484 million overfunded and $103 million overfunded, respectively.

During fiscal year 2023, the Company offered certain eligible U.S. employees voluntary early retirement packages, resulting in charges of $94 million, primarily related to U.S. pension benefits. The charges were recognized in restructuring charges, net in the consolidated statements of income. See Note 4 for additional information on restructuring charges.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Defined Benefit Pension Plans The change in benefit obligation and funded status of the Company’s U.S. and Non-U.S. pension benefits are as follows:


	U.S. Pension Benefits(1)				Non-U.S. Pension Benefits
	Fiscal Year				Fiscal Year
(in millions)	2024		2023		2024		2023
Accumulated benefit obligation at end of year:	$	3,144	$	3,348	$	1,513	$	1,422
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	3,451	$	3,526	$	1,499	$	1,740
Service cost	61		77		42		43
Interest cost	162		142		53		38
Employee contributions	—		—		9		9
Plan curtailments, settlements, and amendments	—		(19)		(10)		(8)
Actuarial (gain) loss(2)	(245)		(210)		116		(303)
Benefits paid	(234)		(140)		(65)		(63)
Special termination benefits(3)	—		74		—		—
Currency exchange rate changes and other	—		—		(41)		43
Projected benefit obligation at end of year	$	3,194	$	3,451	$	1,604	$	1,499
Change in plan assets:
Fair value of plan assets at beginning of year	$	3,398	$	3,559	$	1,614	$	1,732
Actual return on plan assets	356		(43)		103		(163)
Employer contributions	32		22		40		57
Employee contributions	—		—		9		9
Plan settlements	—		—		(7)		(8)
Benefits paid	(234)		(140)		(65)		(63)
Currency exchange rate changes and other	—		—		(36)		50
Fair value of plan assets at end of year	$	3,551	$	3,398	$	1,659	$	1,614
Funded status at end of year:
Fair value of plan assets	$	3,551	$	3,398	$	1,659	$	1,614
Benefit obligations	3,194		3,451		1,604		1,499
Over (under) funded status of the plans	357		(53)		54		115
Recognized asset (liability)	$	357	$	(53)	$	54	$	115
Amounts recognized on the consolidated balance sheets consist of:
Non-current assets	$	617	$	221	$	296	$	350
Current liabilities	(30)		(24)		(7)		(6)
Non-current liabilities	(230)		(250)		(235)		(228)
Recognized asset (liability)	$	357	$	(53)	$	54	$	115
Amounts recognized in accumulated other comprehensive loss:
Prior service (credit) cost	$	(16)	$	(19)	$	(3)	$	(3)
Net actuarial loss	534		891		161		76
Ending balance	$	517	$	873	$	158	$	73

(1)As of April 24, 2020, the Company announced the freezing of the U.S. pension benefits beginning Plan year 2028. Employees will continue to earn benefits as required by the Medtronic Retirement Plan until April 30, 2027, after which date benefits will no longer be earned and employees will earn benefits through the Medtronic Savings and Investment Plan.

(2)Actuarial gains and losses result from changes in actuarial assumptions (such as changes in the discount rate and revised mortality rates). The actuarial gains and losses were primarily driven by increases and decreases in discount rates, respectively.

(3)This represents a portion of the total voluntary early retirement package charges for fiscal year 2023.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

In certain countries outside the U.S., fully funding pension plans is not a common practice, as funding provides no income tax benefit. Consequently, certain pension plans were partially funded at April 26, 2024 and April 28, 2023. U.S. and non-U.S. pension plans with accumulated benefit obligations in excess of plan assets consist of the following:


	Fiscal Year
(in millions)	2024		2023
Accumulated benefit obligation	$	773	$	731
Projected benefit obligation	809		772
Plan assets at fair value	334		301

U.S. and non-U.S. pension plans with projected benefit obligations in excess of plan assets consist of the following:


	Fiscal Year
(in millions)	2024		2023
Projected benefit obligation	$	1,321	$	1,285
Plan assets at fair value	819		776

The net periodic benefit cost of the plans includes the following components:


	U.S. Pension Benefits						Non-U.S. Pension Benefits
	Fiscal Year						Fiscal Year
(in millions)	2024		2023		2022		2024		2023		2022
Service cost	$	61	$	77	$	98	$	42	$	43	$	64
Interest cost	162		142		102		53		38		26
Expected return on plan assets	(261)		(224)		(226)		(72)		(58)		(64)
Amortization of prior service cost	(2)		—		—		(1)		(1)		(1)
Amortization of net actuarial loss (gain)	18		20		64		(1)		2		22
Settlement and curtailment (gain) loss	—		—		—		(3)		2		(10)
Special termination benefits	—		74		—		—		—		—
Net periodic benefit (credit) cost	$	(22)	$	89	$	39	$	18	$	26	$	37

Components of net periodic benefit cost other than the service component are recognized in other non-operating income, net in the consolidated statements of income.

The other changes in plan assets and projected benefit obligations recognized in other comprehensive income for fiscal year 2024 are as follows:


(in millions)	U.S. Pension Benefits		Non-U.S. Pension Benefits
Net actuarial (gain) loss	$	(339)	$	86
Prior service cost	—		(1)
Amortization of prior service cost	2		1
Amortization and settlement recognition of actuarial (gain) loss	(18)		3
Effect of exchange rates	—		(3)
Total recognized in other comprehensive income	(355)		85
Total recognized in net periodic benefit cost and other comprehensive income	$	(378)	$	103

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The actuarial assumptions are as follows:


	U.S. Pension Benefits						Non-U.S. Pension Benefits
	Fiscal Year						Fiscal Year
	2024		2023		2022		2024		2023		2022
Critical assumptions – projected benefit obligation:
Discount rate	5.54% - 5.75%		4.73% - 4.99%		4.23% - 4.48%		1.40% - 26.40%		1.30% - 10.70%		0.60% - 25.40%
Rate of compensation increase	3.90	%	3.90	%	4.83	%	2.85	%	2.75	%	2.70	%
Critical assumptions – net periodic benefit cost:
Discount rate – benefit obligation	4.73% - 4.99%		4.23% - 4.48%		2.80% - 3.46%		1.30% - 10.70%		0.60% - 25.40%		0.25% - 12.80%
Discount rate – service cost	4.68% - 5.07%		4.12% - 4.51%		2.50% - 3.51%		1.30% - 10.70%		0.60% - 25.40%		0.24% - 12.80%
Discount rate – interest cost	4.73% - 4.90%		3.90% - 4.23%		2.08% - 2.87%		1.30% - 10.70%		0.60% - 25.40%		0.08% - 12.80%
Expected return on plan assets	6.40% - 8.10%		5.30% - 7.20%		5.60% - 7.40%		4.07	%	3.48	%	3.67	%
Rate of compensation increase	3.90	%	3.90	%	3.90% - 4.83%		2.75	%	2.70	%	2.90	%

The Company utilizes a full yield curve approach methodology to estimate the service and interest cost components of net periodic pension cost and net periodic post-retirement benefit cost for the Company’s pension and other post-retirement benefits. The full yield curve approach applies specific spot rates along the yield curve to their underlying projected cash flows in estimation of the cost components. The current yield curves represent high quality, long-term fixed income instruments.

The expected long-term rate of return on plan assets assumptions are determined using a building block approach, considering historical averages and real returns of each asset class. In certain countries, where historical returns are not meaningful, consideration is given to local market expectations of long-term returns.

Retirement Benefit Plan Investment Strategy The Company sponsors trusts that hold the assets for U.S. pension plans and other U.S. post-retirement benefit plans, primarily retiree medical benefits. For investment purposes, the Medtronic U.S. pension and other U.S. post-retirement benefit plans employ similar investment strategies with different asset allocation targets.

The Company has a Qualified Plan Committee (the Plan Committee) that sets investment guidelines for U.S. pension plans and other U.S. post-retirement benefit plans with the assistance of external consultants. These guidelines are established based on market conditions, risk tolerance, funding requirements, and expected benefit payments. The Plan Committee also oversees the investment allocation process, selects the investment managers, and monitors asset performance. As pension liabilities are long-term in nature, the Company employs a long-term total return approach to maximize the long-term rate of return on plan assets for a prudent level of risk. An annual analysis on the risk versus the return of the investment portfolio is conducted to justify the expected long-term rate of return assumption.

The investment portfolios contain a diversified allocation of investment categories, including equities, fixed income securities, hedge funds, and private equity. Securities are also diversified in terms of domestic and international, short- and long-term, growth and value styles, large cap and small cap stocks, and active and passive management.

Outside the U.S., pension plan assets are typically managed by decentralized fiduciary committees. There is significant variation in policy asset allocation from country to country. Local regulations, funding rules, and financial and tax considerations are part of the funding and investment allocation process in each country. The weighted average target asset allocations at April 26, 2024 for the plans are 42% equity securities, 34% debt securities, and 24% other.

The plans did not hold any investments in the Company’s ordinary shares at April 26, 2024 or April 28, 2023.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The Company’s U.S. plans target asset allocations at April 26, 2024, compared to the U.S. plans actual asset allocations at April 26, 2024 and April 28, 2023 by asset category, are as follows:


U.S. Plans	Target Allocation		Actual Allocation
	April 26, 2024		April 26, 2024		April 28, 2023
Asset Category:
Equity securities	34	%	39	%	36	%
Debt securities	51		40		46
Other	15		21		19
Total	100	%	100	%	100	%

Strong performance on equity securities during the fiscal year resulted in asset allocations different than targets. Management expects to move the allocations closer to target over the intermediate term.

Retirement Benefit Plan Asset Fair Values The following is a description of the valuation methodologies used for retirement benefit plan assets measured at fair value:

Short-term investments: Short-term investments include money market funds. These investments are valued at the closing price reported in the active markets in which the individual security is traded.

Mutual funds: Comprised of investments in equity and fixed income securities held in pooled investment vehicles. The valuations of mutual funds are based on the respective net asset values which are determined by the fund daily at market close. The net asset values are calculated based on the valuation of the underlying assets which are determined using observable inputs. The net asset values are publicly reported.

Equity commingled trusts: Comprised of investments in equity securities held in pooled investment vehicles. The valuations of equity commingled trusts are based on the respective net asset values which are determined by the fund daily at market close. The net asset values are calculated based on the valuation of the underlying assets which are determined using observable inputs. The net asset values are not publicly reported, and funds are valued at the net asset value practical expedient.

Fixed income commingled trusts: Comprised of investments in fixed income securities held in pooled investment vehicles. The valuations of fixed income commingled trusts are based on the respective net asset values which are determined by the fund, either daily or monthly depending on the investment, at market close. The net asset values are reported by the investment manager based on the valuation of the underlying assets held by the fund, less its liabilities. The net asset values are not publicly reported, and funds are valued at the net asset value practical expedient.

Partnership units: Partnership units include investment partnerships that provide exposure to long/short equity, absolute return strategies, private equity investments, and real estate investments. The net asset values are reported by the investment manager based on the valuation of the underlying assets held by the partnerships, less its liabilities. The net asset values are not publicly reported, and funds are valued at the net asset value practical expedient.

Registered investment companies: Valued at net asset values which are not publicly reported. The net asset values are calculated based on the valuation of the underlying assets. The underlying assets are valued at the quoted market prices of shares held by the plan at year-end in the active market on which the individual securities are traded.

Insurance contracts: Comprised of investments in collective (group) insurance contracts, consisting of individual insurance policies. The policyholder is the employer, and each member is the owner/beneficiary of their individual insurance policy. These policies are a part of the insurance company’s general portfolio and participate in the insurer’s profit-sharing policy on an excess yield basis.

Measurement using net asset value as a practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported net asset value.

The methods described above may produce fair values that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following tables provide information by level for the retirement benefit plan assets that are measured at fair value, as defined by U.S. GAAP. Certain investments for which the fair value is measured using the net asset value per share (or its equivalent) practical expedient are not presented within the fair value hierarchy. The fair value amounts presented for these investments are intended to permit reconciliation to the total fair value of plan assets at April 26, 2024 and April 28, 2023.

U.S. Pension Benefits


	Fair Value at
	Fair Value Measurements Using Inputs Considered as									Investments Measured at Net Asset Value
(in millions)	April 26, 2024		Level 1			Level 2			Level 3
Short-term investments	$	80		$	80		$	—		$	—	$	—
Mutual funds	106			106			—			—		—
Equity commingled trusts	942			—			—			—		942
Fixed income commingled trusts	1,273			—			—			—		1,273
Partnership units	1,151			—			—			—		1,151
	$	3,551		$	186		$	—		$	—	$	3,366


	Fair Value at			Fair Value Measurements Using Inputs Considered as								Investments Measured at Net Asset Value
(in millions)	April 28, 2023		Level 1			Level 2			Level 3
Short-term investments	$	114		$	114		$	—		$	—	$	—
Mutual funds	114			114			—			—		—
Equity commingled trusts	1,211			—			—			—		1,211
Fixed income commingled trusts	968			—			—			—		968
Partnership units	992			—			—			992		—
	$	3,398		$	227		$	—		$	992	$	2,179

The following tables provide a reconciliation of the beginning and ending balances of U.S. pension benefit assets measured at fair value that used significant unobservable inputs (Level 3):


(in millions)	Partnership Units
April 29, 2022	$	1,011
Total realized gains, net	67
Total unrealized gains, net	151
Purchases and sales, net	(238)
April 28, 2023	$	992

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Non-U.S. Pension Benefits


	Fair Value at			Fair Value Measurements Using Inputs Considered as								Investments Measured at Net Asset Value
(in millions)	April 26, 2024		Level 1			Level 2			Level 3
Registered investment companies	$	1,617		$	—		$	—		$	—	$	1,617
Insurance contracts	42			—			—			42		—
	$	1,659		$	—		$	—		$	42	$	1,617


	Fair Value at			Fair Value Measurements Using Inputs Considered as								Investments Measured at Net Asset Value
(in millions)	April 28, 2023		Level 1			Level 2			Level 3
Registered investment companies	$	1,571		$	—		$	—		$	—	$	1,571
Insurance contracts	44			—			—			44		—
	$	1,614		$	—		$	—		$	44	$	1,571

Non-U.S. pension benefit assets that are valued using significant unobservable inputs (Level 3) was $42 million and $44 million as of April 26, 2024 and April 28, 2023, respectively.

The Company reviews the fair value hierarchy classification on an annual basis. During the year, the Company reclassified certain investments in the U.S. pension plan from Level 3 to investments measured using net asset value as a practical expedient. Outside of the reclassification, there were no transfers into or out of Level 3 for both the U.S. and non-U.S. pension plans during the fiscal years ended April 26, 2024 and April 28, 2023.

Retirement Benefit Plan Funding It is the Company’s policy to fund retirement costs within the limits of allowable tax deductions. During fiscal year 2024, the Company made discretionary contributions of approximately $32 million to the U.S. pension plan. Internationally, the Company contributed approximately $40 million for pension benefits during fiscal year 2024. The Company anticipates that it will make contributions of $30 million and $45 million to its U.S. pension benefit plans and non-U.S. pension benefit plans, respectively, in fiscal year 2025. Based on the guidelines under the U.S. Employee Retirement Income Security Act of 1974 and the various guidelines which govern the plans outside the U.S., the majority of anticipated fiscal year 2025 contributions will be discretionary. The Company believes that pension assets, returns on invested pension assets, and Company contributions will be able to meet its pension and other post-retirement obligations in the future.

Retiree benefit payments, which reflect expected future service, are anticipated to be paid as follows:


(in millions)	Gross Payments
Fiscal Year	U.S. Pension Benefits		Non-U.S. Pension Benefits
2025	$	184	$	71
2026	193		61
2027	201		66
2028	211		68
2029	218		74
2030 – 2034	1,165		417

Post-retirement Benefit Plans The net periodic benefit cost associated with the Company’s post-retirement benefit plans was income of $16 million, $11 million, and $20 million in fiscal years 2024, 2023, and 2022, respectively. The Company’s projected benefit obligation for all post-retirement benefit plans was $235 million and $261 million at April 26, 2024 and April 28, 2023, respectively. The Company’s fair value of plan assets for all post-retirement benefit plans was $308 million and $302 million at April 26, 2024 and April 28, 2023, respectively. The post-retirement benefit plan assets at both April 26, 2024 and April 28, 2023 primarily comprised of equity and fixed commingled trusts, consistent with the U.S. retirement benefit plan assets outlined in the fair value leveling tables above.

Defined Contribution Savings Plans The Company has defined contribution savings plans that cover substantially all U.S. employees and certain non-U.S. employees. The general purpose of these plans is to provide additional financial security during retirement by providing employees with an incentive to make regular savings. Company contributions to the plans are based on employee contributions

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

and Company performance. Expense recognized under these plans was $471 million, $390 million, and $403 million in fiscal years 2024, 2023, and 2022, respectively.

16. Leases

The Company leases office, manufacturing, and research facilities and warehouses, as well as transportation, data processing, and other equipment. The Company determines whether a contract is a lease or contains a lease at inception date. Upon commencement, the Company recognizes a right-of-use asset and lease liability. Right-of-use assets represent the Company's right to use the underlying asset for the lease term. Lease liabilities are the Company's obligation to make the lease payments arising from a lease. As the Company’s leases typically do not provide an implicit rate, the Company’s lease liabilities are measured on a discounted basis using the Company's incremental borrowing rate. Lease terms used in the recognition of right-of-use assets and lease liabilities include only options to extend the lease that are reasonably certain to be exercised. Additionally, lease terms underlying the right-of-use assets and lease liabilities consider terminations that are reasonably certain to be executed.

The Company's lease agreements include leases that have both lease and associated nonlease components. The Company has elected to account for lease components and the associated nonlease components as a single lease component. The consolidated balance sheets do not include recognized assets or liabilities for leases that, at the commencement date, have a term of twelve months or less and do not include an option to purchase the underlying asset that is reasonably certain to be exercised. The Company recognizes such leases in the consolidated statements of income on a straight-line basis over the lease term. Additionally, the Company recognizes variable lease payments not included in its lease liabilities in the period in which the obligation for those payments is incurred. Variable lease payments for fiscal year 2024, 2023, and 2022 were not material.

The Company's lease agreements include leases accounted for as operating leases and those accounted for as finance leases. The right-of-use assets, lease liabilities, lease costs, cash flows, and lease maturities associated with the Company's finance leases were not material to the consolidated financial statements at April 26, 2024 or April 28, 2023 or for fiscal year 2024, 2023 and 2022. Finance lease right-of-use assets are included in property, plant, and equipment, net, and finance lease liabilities are included in current debt obligations and long-term debt on the consolidated balance sheets.

The following table summarizes the balance sheet classification of the Company's operating leases and amounts of the right-of-use assets and lease liabilities at April 26, 2024 and April 28, 2023:


(in millions)	Balance Sheet Classification	April 26, 2024		April 28, 2023
Right-of-use assets	Other assets	$	1,012	$	1,041
Current liability	Other accrued expenses	183		180
Non-current liability	Other liabilities	840		869

The following table summarizes the weighted-average remaining lease term and weighted-average discount rate for the Company's operating leases at April 26, 2024 and April 28, 2023:


	April 26, 2024	April 28, 2023
Weighted-average remaining lease term	8.8 Years	9.1 Years
Weighted-average discount rate	3.4%	2.4%

The following table summarizes the components of total operating lease cost for fiscal year 2024, 2023, and 2022:


	Fiscal Year
(in millions)	2024		2023		2022
Operating lease cost	$	232	$	211	$	195
Short-term lease cost	41		62		65
Total operating lease cost	$	273	$	273	$	260

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the cash paid for amounts included in the measurement of operating lease liabilities and right-of-use assets obtained in exchange for operating lease liabilities for fiscal year 2024, 2023, and 2022:


	Fiscal Year
(in millions)	2024		2023		2022
Cash paid for amounts included in the measurement of operating lease liabilities	$	232	$	210	$	174
Right-of-use assets obtained in exchange for operating lease liabilities	220		417		78

The following table summarizes the maturities of the Company's operating leases at April 26, 2024:


(in millions) Fiscal Year	Operating Leases
2025	$	203
2026	178
2027	151
2028	113
2029	88
Thereafter	444
Total expected lease payments	1,177
Less: Imputed interest	(154)
Total lease liability	$	1,024

The Company makes certain products available to customers under lease arrangements, including arrangements whereby equipment is placed with customers who then purchase consumable products to accompany the use of the equipment. Income arising from arrangements where the Company is the lessor is recognized within net sales in the consolidated statements of income and the Company's net investments in sales-type leases are included in other current assets and other assets in the consolidated balance sheets. Lessor income and the related assets and lease maturities were not material to the consolidated financial statements at or for the fiscal year ended April 26, 2024 and April 28, 2023.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

17. Accumulated Other Comprehensive Loss

The following table provides changes in accumulated other comprehensive loss (AOCI), net of tax, and by component:


(in millions)	Unrealized (Loss) Gain on Investment Securities		Cumulative Translation Adjustments		Net Investment Hedges		Net Change in Retirement Obligations		Unrealized Gain (Loss) on Cash Flow Hedges		Total Accumulated Other Comprehensive (Loss) Income
April 30, 2021	$	92	$	(519)	$	(1,458)	$	(1,347)	$	(253)	$	(3,485)
Other comprehensive income (loss) before reclassifications	(304)		(2,080)		2,299		514		781		1,210
Reclassifications	3		—		—		60		(54)		9
Other comprehensive income (loss)	(301)		(2,080)		2,299		574		727		1,219
April 29, 2022	$	(209)	$	(2,599)	$	841	$	(773)	$	474	$	(2,265)
Other comprehensive income (loss) before reclassifications	(78)		(240)		(596)		26		184		(704)
Reclassifications	29		—		—		6		(565)		(530)
Other comprehensive income (loss)	(49)		(240)		(596)		32		(381)		(1,234)
April 28, 2023	$	(258)	$	(2,839)	$	245	$	(741)	$	93	$	(3,499)
Other comprehensive income (loss) before reclassifications	29		(846)		633		205		438		457
Reclassifications	17		—		—		7		(302)		(278)
Other comprehensive income (loss)	46		(846)		633		212		136		180
April 26, 2024	$	(212)	$	(3,686)	$	878	$	(529)	$	229	$	(3,318)

The income tax on gains and losses on investment securities in other comprehensive income before reclassifications during fiscal years 2024, 2023, and 2022 was an expense of $4 million, a benefit of $21 million, and a benefit of $51 million, respectively. During fiscal years 2024, 2023, and 2022, realized gains and losses on investment securities reclassified from AOCI were reduced by income taxes of $5 million, $9 million and $1 million, respectively. When realized, gains and losses on investment securities reclassified from AOCI are recognized within other non-operating income, net. Refer to Note 5 for additional information.

During fiscal years 2024, 2023, and 2022, the income tax on cumulative translation adjustment was an expense of $3 million, a benefit of $5 million, and a benefit of $8 million, respectively.

During fiscal years 2024, 2023, and 2022, there were no tax impacts on net investment hedges. Refer to Note 7 for additional information.

The net change in retirement obligations in other comprehensive income includes amortization of net actuarial losses included in net periodic benefit cost. The income tax on the net change in retirement obligations in other comprehensive income before reclassifications during fiscal years 2024, 2023, and 2022 resulted in an expense of $79 million, $6 million, and $134 million, respectively. During fiscal years 2024, 2023, and 2022, the gains and losses on defined benefit and pension items reclassified from AOCI were reduced by income taxes of $2 million, $9 million, and $20 million, respectively. When realized, net gains and losses on defined benefit and pension items reclassified from AOCI are recognized within other non-operating income, net. Refer to Note 15 for additional information.

The income tax on unrealized gains and losses on cash flow hedges in other comprehensive income before reclassifications during fiscal years 2024, 2023, and 2022 was an expense of $103 million, $56 million, and $152 million, respectively. Amounts reclassified from AOCI related to cash flow hedges included income taxes of $66 million, $133 million, and $26 million for fiscal years 2024, 2023, and 2022, respectively. When realized, gains and losses on currency exchange rate contracts reclassified from AOCI are recognized within other operating expense (income), net or cost of products sold. Refer to Note 7 for additional information.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

18. Commitments and Contingencies

Legal Matters

The Company and its affiliates are involved in a number of legal actions from time to time involving product liability, employment, intellectual property and commercial disputes, shareholder related matters, environmental proceedings, tax disputes, and governmental proceedings and investigations, including those described below. With respect to governmental proceedings and investigations, like other companies in our industry, the Company is subject to extensive regulation by national, state, and local governmental agencies in the United States and in other jurisdictions in which the Company and its affiliates operate. As a result, interaction with governmental agencies is ongoing. The Company’s standard practice is to cooperate with regulators and investigators in responding to inquiries. The outcomes of legal actions are not within the Company’s complete 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, result in lost revenues, or limit the Company's ability to conduct business in the applicable jurisdictions.

The Company records a liability in the consolidated financial statements on an undiscounted basis for loss contingencies related to legal actions when a loss is known or considered probable and the amount may be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. When determining the estimated loss or range of loss, significant judgment is required. Estimates of probable losses resulting from litigation and governmental proceedings involving the Company are inherently difficult to predict, particularly when the matters are in early procedural stages with incomplete scientific facts or legal discovery, involve unsubstantiated or indeterminate claims for damages, potentially involve penalties, fines or punitive damages, or could result in a change in business practice. The Company classifies certain specified litigation charges and gains related to significant legal matters as certain litigation charges in the consolidated statements of income. During fiscal years 2024, 2023, and 2022, the Company recognized $149 million of certain litigation charges, $30 million of certain litigation income, and $95 million of certain litigation charges, respectively. At April 26, 2024 and April 28, 2023, accrued litigation was approximately $0.2 billion and $0.3 billion, respectively. The ultimate cost to the Company with respect to accrued litigation could be materially different than the amount of the current estimates and accruals and could have a material adverse impact on the Company’s consolidated earnings, financial position, and/or cash flows. The Company includes accrued litigation in other accrued expenses and other liabilities on the consolidated balance sheets. While it is not possible to predict the outcome for most of the legal matters discussed below, the Company believes it is possible that the costs associated with these matters could have a material adverse impact on the Company’s consolidated earnings, financial position, and/or cash flows.

Intellectual Property Matters

At any given time, the Company is involved in litigation relating to patents, trademarks, copyrights, trade secrets, and other intellectual property (IP) rights, and licenses, acquisitions or other agreements relating to such rights. This litigation includes, but is not limited to, alleged infringement or misappropriation of IP rights, or breach of obligations related to IP rights, or other claims asserted by competitors, individuals, or, consistent with a growing trend across technology-intensive industries, other entities created specifically to fund IP litigation. While the outcome of these litigation matters is inherently uncertain, it is possible that the results of such litigation could require the Company to pay significant monetary damages and/or royalty payments, and negatively impact the Company's ability to sell current or future products, which could have a material adverse impact on the Company's business, results of operations, financial condition, and cash flows.

Colibri

The Company is a defendant in patent litigation brought by Colibri Heart Valve LLC (Colibri) in the U.S. District Court for the Central District of California. Colibri alleges infringement of one patent by the Company’s Evolut family of transcatheter aortic valve replacement devices. The patent asserted by Colibri has expired. On February 8, 2023, a jury returned a verdict against the Company for approximately $106 million. In July 2023, the Company filed its appeal with the U.S. Court of Appeals for the Federal Circuit. The Company has not recognized an expense in connection with this matter because it does not currently believe a loss is probable.

Product Liability Matters

Hernia Mesh Litigation

Starting in fiscal year 2020, plaintiffs began filing lawsuits against certain subsidiaries of the Company in U.S. state and federal courts that allege personal injury from hernia mesh products sold by those subsidiaries. As of May 15, 2024, the Company and certain of its subsidiaries have been named as defendants in lawsuits filed on behalf of approximately 8,350 individual plaintiffs, and certain plaintiffs’

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

law firms have advised the Company that they may file additional cases in the future. Approximately 6,700 plaintiffs have pending lawsuits in a coordinated proceeding in Massachusetts state court, where they have been consolidated before a single judge. Approximately 500 plaintiffs have pending lawsuits in a coordinated action in Minnesota state court, and there are approximately 1,150 actions coordinated in a federal Multidistrict Litigation in the U.S. District Court for the District of Massachusetts plus six one-off cases filed in other courts. The pending lawsuits relate almost entirely to hernia mesh products that have not been subject to recalls, withdrawals, or other adverse regulatory action. The Company has not recorded an expense related to damages in connection with these matters because any potential loss is not currently probable and reasonably estimable. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.

Diabetes Pump Retainer Ring Litigation

Starting in fiscal year 2021, plaintiffs began filing lawsuits against the Diabetes operating unit in U.S. state and federal courts alleging personal injury from Series 600 insulin pumps with allegedly defective clear retainer rings that were subject to field corrective actions in 2019 and 2021. As of May 14, 2024, 27 lawsuits have been filed on behalf of a total of 107 individual plaintiffs, and certain plaintiffs’ law firms have notified the Company that they may file additional lawsuits in the future on behalf of thousands of additional claimants. Most of the filed suits are coordinated in California state court. The Company has not recorded an expense related to damages in connection with these matters because any potential loss is not currently probable and reasonably estimable. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.

Environmental Proceedings

The Company is a successor to several investigation and cleanup actions at various stages related to environmental remediation matters at a number of sites, including in Orrington, Maine. These projects relate to a variety of activities, including removal of solvents, metals and other hazardous substances from soil and groundwater. The ultimate cost of site cleanup and timing of future cash flows is difficult to predict given uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup methods.

The Company is also a successor to a party named in a lawsuit filed in the U.S. District Court for the District of Maine in the early 2000's by the Natural Resources Defense Council and the Maine People's Alliance relating to mercury contamination of the Penobscot River and Bay and options for remediating such contamination. In March 2021, the parties notified the court that they had agreed on a settlement in principle of all issues in this matter, and in September 2022 the parties filed a joint motion for final approval by the court. In October 2022, the court issued a final order approving the settlement and the parties are working with consultants on implementation of remedial activities. The final court order did not result in a change to the Company's previous accrual for this matter.

The Company's accrued expenses for these various environmental proceedings are included within accrued litigation as discussed above.

Anti-Corruption Matters

The Company has regular and ongoing interactions with governmental agencies, and its practice is to cooperate with such inquiries. In addition, from time to time, the Company self-discloses potential concerns to governmental regulators. Like many in the medical device industry or with international operations, the Company engages in periodic discussions with the U.S. Securities and Exchange Commission, U.S. Department of Justice, and various authorities in China regarding certain activities, including in China. The Company is committed to regularly evaluating and, as appropriate, strengthening its anti-corruption compliance programs and practices. Any possible future determination that certain of our operations and activities, and/or those of our third-party distributors, are not in compliance with existing laws could result in the imposition of fines, penalties, and equitable remedies in the United States or in other jurisdictions. The Company has not recorded an expense in connection with these matters because any potential loss is not currently probable and reasonably estimable. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.

Income Taxes

In March 2009, the IRS issued its audit report on Medtronic, Inc. for fiscal years 2005 and 2006. Medtronic, Inc. reached agreement with the IRS on some, but not all matters related to these fiscal years. The remaining unresolved issue for fiscal years 2005 and 2006 relates to the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico, which is one of the Company's key manufacturing sites. The U.S. Tax Court (Tax Court) reviewed this dispute, and in June 2016, issued an opinion with respect to the allocation of income between the parties for fiscal years 2005 and 2006 whereby it generally rejected the IRS’s position, but also made certain modifications to the Medtronic, Inc. tax returns as filed. In April 2017, the IRS filed a Notice of Appeal to the U.S. Court of Appeals for the Eighth Circuit regarding the Tax Court opinion. The U.S. Court of Appeals issued its opinion in August 2018 and remanded the case back to the Tax Court for additional factual findings. The Tax Court issued its second opinion in August 2022, the IRS filed a Notice of

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Appeal to the U.S. Court of Appeals for the Eighth Circuit in September 2023, and Medtronic subsequently filed a cross-appeal in October 2023.

The IRS has issued its audit reports on Medtronic, Inc. for fiscal years 2007 through 2016. Medtronic, Inc. and the IRS have reached agreement on all significant issues except for the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico for the businesses that are the subject of the U.S. Tax Court matter for fiscal years 2005 and 2006.

Medtronic, Inc.’s fiscal years 2017, 2018, and 2019 U.S. federal income tax returns are currently being audited by the IRS.

Covidien LP (a wholly owned subsidiary of Medtronic plc) has either reached agreement with the IRS or the statute of limitations has lapsed on its U.S. federal income tax returns through fiscal year 2020.

Although it is not possible to predict the outcome for most of the income tax matters discussed above, the Company believes it is possible that charges associated with these matters could have a material adverse impact on the Company’s consolidated earnings, financial position, and/or cash flows.

Refer to Note 13 for additional discussion of income taxes.

Guarantees

In the normal course of business, the Company and/or its affiliates periodically enter into agreements that require one or more of the Company and/or its affiliates to indemnify customers or suppliers for specific risks, such as claims for injury or property damage arising as a result of the Company or its affiliates’ products, the negligence of the Company's personnel, or claims alleging that the Company's products infringe on third-party patents or other intellectual property. The Company also offers warranties on various products. The Company’s maximum exposure under these guarantees is unable to be estimated. Historically, the Company has not experienced significant losses on these types of guarantees.

The Company believes the ultimate resolution of the above guarantees is not expected to have a material effect on the Company’s consolidated earnings, financial position, and/or cash flows.

19. Segment and Geographic Information

There were no changes to the reportable segments during the fiscal year ended April 26, 2024. We continue to have four reportable segments: Cardiovascular Portfolio, Neuroscience Portfolio, Medical Surgical Portfolio, and Diabetes Operating Unit. However, there were changes to the operating segments during fiscal year 2024 as a result of how the Chief Operating Decision Maker (CODM) assesses business performance. During the first quarter of fiscal year 2024, the Medical Surgical Portfolio was separated into two operating segments as a result of the previously contemplated separation of the PMRI businesses, which were previously aggregated based upon similar economic and operating characteristics. In addition, during the first quarter of fiscal year 2024, there were certain Medical Surgical businesses that were moved to the Other line, which primarily related to wind-down activity of the Company's Renal Care Solutions business that was contributed to Mozarc Medical in April 2023. Subsequently, as a result of the February 2024 decision to exit the Company's ventilator product line and retain and combine the remaining PMRI businesses into one business unit as further discussed in Note 3, the two operating segments within the Medical Surgical Portfolio were combined into one operating segment, and the Company's ventilator product line, which was in the Medical Surgical Portfolio, was moved to the Other line during the fourth quarter of fiscal year 2024. Prior period amounts have been recast to reflect the new reporting structure.

The Company's management has chosen to organize the entity based upon therapy solutions provided by each segment. The four principal segments are strategic businesses that are managed separately, as each one develops and manufactures products and provides services oriented toward targeted therapy solutions.

The primary products and services from which the Cardiovascular Portfolio segment derives its revenues include products for the diagnosis, treatment, and management of cardiac rhythm disorders and cardiovascular disease, as well as services to diagnose, treat, and manage heart and vascular-related disorders and diseases.

The primary products and services from which the Neuroscience Portfolio segment derives its revenues include those focused on neurostimulation therapies and drug delivery systems for the treatment of chronic pain, as well as various areas of the spine and brain, along with pelvic health and conditions of the ear, nose, and throat.

The primary products and services from which the Medical Surgical Portfolio segment derives its revenues include those focused on diseases of the respiratory system, gastrointestinal tract, lungs, pelvic region, obesity, and other preventable complications.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The primary products from which the Diabetes Operating Unit segment derives its revenues include those focused on diabetes management, including insulin pumps, continuous glucose monitoring systems and sensors, and smart insulin pens.

Segment disclosures are on a performance basis, consistent with internal management reporting. Net sales of the Company's segments include end-customer revenues from the sale of products the segment develops, manufactures, and distributes. Refer to Note 2 for discussion on net sales by segment. There are certain corporate and centralized expenses that are not allocated to the segments. The Company's management evaluates the performance of the segments and allocates resources based on net sales and segment operating profit. Segment operating profit represents income before income taxes, excluding interest income or expense, amortization of intangible assets, centralized distribution costs, currency impact of remeasurement and hedging, non-operating income or expense items, certain corporate charges, stock-based compensation, and other items not allocated to the segments. Prior period amounts have been recast to reallocate certain expenses from segment operating profit to centralized distribution costs to conform to classifications used in the current year as a result in a change to the segment operating profit metric used by the CODM to assess business performance and allocate resources.

The accounting policies of the segments are the same as those described in Note 1. Certain depreciable assets may be recorded by one segment, while the depreciation expense is allocated to another segment. The allocation of depreciation expense is based on the proportion of the assets used by each segment.

Segment Operating Profit


	Fiscal Year
(in millions)	2024		2023		2022
Cardiovascular	$	4,474	$	4,522	$	4,596
Neuroscience	3,940		3,712		3,858
Medical Surgical	3,170		3,048		3,698
Diabetes	394		383		588
Reportable segment operating profit	11,979		11,664		12,740
Other operating segment (1)	10		(89)		(31)
Corporate	(1,784)		(1,763)		(1,724)
Interest expense	(719)		(636)		(553)
Other non-operating income, net	412		515		318
Amortization of intangible assets	(1,693)		(1,698)		(1,733)
Stock-based compensation	(393)		(355)		(358)
Centralized distribution costs	(1,609)		(1,558)		(1,741)
Currency (2)	68		465		70
Restructuring and associated costs	(389)		(647)		(335)
Acquisition and divestiture-related items	(777)		(345)		(838)
Certain litigation charges, net	(149)		30		(95)
IPR&D charges	—		—		(101)
Medical device regulations	(119)		(150)		(102)
Commitments to the Medtronic Foundation and Medtronic LABS	—		(70)		—
Income before income taxes	$	4,837	$	5,364	$	5,517

(1) Includes the historical operations and ongoing transition agreements from businesses the Company has exited or divested, which primarily includes the Company's ventilator product line and the Renal Care Solutions business.

(2) Includes the net impact of remeasurement and the Company's hedging programs recorded in other operating expense (income), net.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Total Assets and Depreciation Expense


	Total Assets				Depreciation Expense
(in millions)	April 26, 2024		April 28, 2023		2024		2023		2022
Cardiovascular	$	16,128	$	16,036	$	199	$	209	$	210
Neuroscience	18,270		18,346		252		267		265
Medical Surgical	33,586		34,926		194		203		186
Diabetes	3,996		3,930		94		80		67
Total reportable segments	71,980		73,238		739		759		728
Other operating segment (1)	547		1,337		—		2		18
Corporate	17,455		16,373		215		238		228
Total	$	89,981	$	90,948	$	954	$	999	$	974

Geographic Information

Net sales are attributed to the country based on the location of the customer taking possession of the products or in which the services are rendered. Geographic property, plant, and equipment are attributed to the country based on the physical location of the assets.

The following table presents net sales for fiscal years 2024, 2023, and 2022, and property, plant, and equipment, net at April 26, 2024 and April 28, 2023 for the Company's country of domicile, countries with significant concentrations, and all other countries:


	Net sales						Property, plant, and equipment, net
(in millions)	2024		2023		2022		April 26, 2024		April 28, 2023
Ireland	$	113	$	98	$	101	$	252	$	184

United States	16,562		16,373		16,135		4,593		4,083
Rest of world	15,689		14,756		15,450		1,286		1,302
Total other countries, excluding Ireland	32,251		31,129		31,585		5,879		5,385
Total	$	32,364	$	31,227	$	31,686	$	6,131	$	5,569

No single customer represented over 10 percent of the Company’s consolidated net sales in fiscal years 2024, 2023, or 2022.

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