Item Description Page

PART I

1.
Financial Statements (unaudited)

1
2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

53
3.
Quantitative and Qualitative Disclosures About Market Risk

76
4.
Controls and Procedures

77

PART II

1.
Legal Proceedings

77
2.
Unregistered Sales of Equity Securities and Use of Proceeds

78
6.
Exhibits

78

Signatures

79

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Medtronic plc

Consolidated Statements of Income

(Unaudited)


	Three months ended						Nine months ended
(in millions, except per share data)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Net sales	$	7,717	$	7,546	$	22,916	$	22,411
Costs and expenses:
Cost of products sold	2,400		2,265		7,160		6,672
Research and development expense	573		561		1,763		1,736
Selling, general, and administrative expense	2,587		2,596		7,750		7,798
Amortization of intangible assets	436		436		1,317		1,327
Restructuring charges, net	13		26		87		112
Certain litigation charges	108		63		276		166

Other operating (income) expense, net	(39)		57		88		278
Operating profit	1,639		1,542		4,475		4,322
Other non-operating income, net	(96)		(71)		(305)		(309)
Interest expense	156		243		930		726
Income before income taxes	1,579		1,370		3,850		3,905
Income tax provision	(340)		99		(317)		437
Net income	1,919		1,271		4,167		3,468
Net income attributable to noncontrolling interests	(4)		(2)		(24)		(9)
Net income attributable to Medtronic	$	1,915	$	1,269	$	4,143	$	3,459
Basic earnings per share	$	1.43	$	0.95	$	3.09	$	2.57
Diluted earnings per share	$	1.42	$	0.94	$	3.07	$	2.54
Basic weighted average shares outstanding	1,340.5		1,342.8		1,340.7		1,348.1
Diluted weighted average shares outstanding	1,351.5		1,352.7		1,351.6		1,359.5

Three months ended Nine months ended
(in millions, except per share data) January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Net sales $ 7,369
$ 7,283
$ 21,809
$ 21,794

Costs and expenses:

Cost of products sold 2,191
2,268
6,660
6,855
Research and development expense 558
530
1,661
1,640
Selling, general, and administrative expense 2,499
2,388
7,422
7,232
Amortization of intangible assets 461
497
1,375
1,484
Restructuring charges, net 7
21
23
162
Acquisition-related items 26
68
77
148
Certain litigation charges 61
218
61
300
Divestiture-related items —
—
114
—
Gain on sale of businesses —
—
(697 ) —
Special charge —
100
80
100
Other expense, net 140
46
317
174
Operating profit 1,426
1,147
4,716
3,699

Investment loss 227
—
227
—

Interest income (98 ) (88 ) (290 ) (272 )
Interest expense 270
268
829
804
Interest expense, net 172
180
539
532
Income before income taxes 1,027
967
3,950
3,167
Income tax provision 2,419
147
2,320
307
Net (loss) income (1,392 ) 820
1,630
2,860
Net loss attributable to noncontrolling interests 3
1
14
5
Net (loss) income attributable to Medtronic $ (1,389 ) $ 821
$ 1,644
$ 2,865

Basic (loss) earnings per share $ (1.03 ) $ 0.60
$ 1.21
$ 2.07

Diluted (loss) earnings per share $ (1.03 ) $ 0.59
$ 1.20
$ 2.05

Basic weighted average shares outstanding 1,354.0
1,372.2
1,357.2
1,381.9

Diluted weighted average shares outstanding 1,354.0
1,383.1
1,368.9
1,394.7

Cash dividends declared per ordinary share $ 0.46
$ 0.43
$ 1.38
$ 1.29

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

Medtronic plc

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three months ended						Nine months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Net income	$	1,919	$	1,271	$	4,167	$	3,468

Other comprehensive income (loss), net of tax:
Unrealized gain on investment securities	20		32		93		23
Translation adjustment	32		128		(116)		(1,127)
Net investment hedge	35		—		187		—
Net change in retirement obligations	13		17		38		65
Unrealized (loss) gain on cash flow hedges	(35)		(23)		(37)		317
Other comprehensive income (loss)	65		154		165		(722)
Comprehensive income including noncontrolling interests	1,984		1,425		4,332		2,746
Comprehensive income attributable to noncontrolling interests	(4)		(2)		(24)		(6)
Comprehensive income attributable to Medtronic	$	1,980	$	1,423	$	4,308	$	2,740

Three months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Net (loss) income $ (1,392 ) $ 820
$ 1,630
$ 2,860

Other comprehensive income (loss), net of tax:

Unrealized (loss) gain on available-for-sale securities (14 ) (115 ) 41
(40 )
Currency translation 897
(553 ) 1,525
(1,239 )
Net change in retirement obligations (3 ) 22
11
66
Unrealized (loss) gain on derivatives (202 ) 95
(346 ) 202
Other comprehensive income (loss) 678
(551 ) 1,231
(1,011 )
Comprehensive (loss) income including noncontrolling interests (714 ) 269
2,861
1,849
Comprehensive loss attributable to noncontrolling interests 3
1
14
5
Comprehensive (loss) income attributable to Medtronic $ (711 ) $ 270
$ 2,875
$ 1,854

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

Medtronic plc

Consolidated Balance Sheets

(Unaudited)


(in millions)	January 24, 2020		April 26, 2019
ASSETS

Current assets:
Cash and cash equivalents	$	3,709	$	4,393
Investments	7,919		5,455
Accounts receivable, less allowances of $205 and $190, respectively	6,248		6,222
Inventories, net	4,122		3,753
Other current assets	2,045		2,144
Total current assets	24,043		21,967

Property, plant, and equipment	11,507		10,920
Accumulated depreciation	(6,743)		(6,245)
Property, plant, and equipment, net	4,764		4,675
Goodwill	40,091		39,959
Other intangible assets, net	19,456		20,560
Tax assets	2,272		1,519
Other assets	2,196		1,014
Total assets	$	92,822	$	89,694

LIABILITIES AND EQUITY

Current liabilities:
Current debt obligations	$	844	$	838
Accounts payable	1,945		1,953
Accrued compensation	1,909		2,189
Accrued income taxes	457		567
Other accrued expenses	3,580		2,925
Total current liabilities	8,735		8,472

Long-term debt	24,732		24,486
Accrued compensation and retirement benefits	1,598		1,651
Accrued income taxes	2,738		2,838
Deferred tax liabilities	1,282		1,278
Other liabilities	1,784		757
Total liabilities	40,869		39,482

Commitments and contingencies (Note 17)

Shareholders’ equity:
Ordinary shares— par value $0.0001, 2.6 billion shares authorized, 1,340,786,042 and 1,340,697,595 shares issued and outstanding, respectively	—		—
Additional paid-in capital	26,144		26,532
Retained earnings	28,210		26,270
Accumulated other comprehensive loss	(2,546)		(2,711)
Total shareholders’ equity	51,808		50,091
Noncontrolling interests	145		121
Total equity	51,953		50,212
Total liabilities and equity	$	92,822	$	89,694

(in millions) January 26, 2018 April 28, 2017
ASSETS

Current assets:

Cash and cash equivalents $ 6,358
$ 4,967
Investments 8,078
8,741
Accounts receivable, less allowances of $183 and $155, respectively 5,775
5,591
Inventories, net 3,751
3,338
Other current assets 2,645
1,865
Current assets held for sale —
371
Total current assets 26,607
24,873

Property, plant, and equipment 10,006
9,691
Accumulated depreciation (5,489 ) (5,330 )
Property, plant, and equipment, net 4,517
4,361
Goodwill 39,795
38,515
Other intangible assets, net 22,178
23,407
Tax assets 1,537
1,509
Other assets 1,166
1,232
Noncurrent assets held for sale —
5,919
Total assets $ 95,800
$ 99,816

LIABILITIES AND EQUITY

Current liabilities:

Current debt obligations $ 2,902
$ 7,520
Accounts payable 1,809
1,731
Accrued compensation 1,645
1,860
Accrued income taxes 925
633
Other accrued expenses 3,652
2,442
Current liabilities held for sale —
34
Total current liabilities 10,933
14,220

Long-term debt 25,918
25,921
Accrued compensation and retirement benefits 1,524
1,641
Accrued income taxes 4,758
2,405
Deferred tax liabilities 1,363
2,978
Other liabilities 964
1,515
Noncurrent liabilities held for sale —
720
Total liabilities 45,460
49,400

Commitments and contingencies (Note 17)

Shareholders’ equity:

Ordinary shares— par value $0.0001, 2.6 billion shares authorized, 1,355,260,722 and 1,369,424,818 shares issued and outstanding, respectively —
—
Additional paid-in capital 28,190
29,551
Retained earnings 23,426
23,356
Accumulated other comprehensive loss (1,382 ) (2,613 )
Total shareholders’ equity 50,234
50,294
Noncontrolling interests 106
122
Total equity 50,340
50,416
Total liabilities and equity $ 95,800
$ 99,816

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

Medtronic plc

Consolidated Statements of ~~Cash Flows~~Equity

(Unaudited)


	Ordinary Shares					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity		Noncontrolling Interests		Total Equity
(in millions)	Number	Par Value
April 26, 2019	1,341	$	—	$	26,532	$	26,270	$	(2,711)	$	50,091	$	121	$	50,212
Net income	—	—		—		864		—		864		13		877
Other comprehensive income	—	—		—		—		227		227		—		227
Dividends to shareholders ($0.54 per ordinary share)	—	—		—		(724)		—		(724)		—		(724)
Issuance of shares under stock purchase and award plans	3	—		205		—		—		205		—		205
Repurchase of ordinary shares	(3)	—		(328)		—		—		(328)		—		(328)
Stock-based compensation	—	—		61		—		—		61		—		61
Cumulative effect of change in accounting principle⁽¹⁾	—	—		—		(33)		—		(33)		—		(33)
July 26, 2019	1,341	$	—	$	26,470	$	26,377	$	(2,484)	$	50,363	$	134	$	50,497
Net income	—	—		—		1,364		—		1,364		7		1,371
Other comprehensive (loss)	—	—		—		—		(127)		(127)		—		(127)
Dividends to shareholders ($0.54 per ordinary share)	—	—		—		(723)		—		(723)		—		(723)
Issuance of shares under stock purchase and award plans	4	—		145		—		—		145		—		145
Repurchase of ordinary shares	(5)	—		(552)		—		—		(552)		—		(552)
Stock-based compensation	—	—		108		—		—		108		—		108


October 25, 2019	1,340	$	—	$	26,171	$	27,018	$	(2,611)	$	50,578	$	141	$	50,719
Net income	—	—		—		1,915		—		1,915		4		1,919
Other comprehensive income	—	—		—		—		65		65		—		65
Dividends to shareholders ($0.54 per ordinary share)	—	—		—		(723)		—		(723)		—		(723)
Issuance of shares under stock purchase and award plans	3	—		143		—		—		143		—		143
Repurchase of ordinary shares	(2)	—		(236)		—		—		(236)		—		(236)
Stock-based compensation	—	—		66		—		—		66		—		66


January 24, 2020	1,341	$	—	$	26,144	$	28,210	$	(2,546)	$	51,808	$	145	$	51,953

Nine months ended
(in millions) January 26, 2018 January 27, 2017
Operating Activities:

Net income $ 1,630
$ 2,860
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 1,980
2,199
Amortization of debt premium, discount, and issuance costs (17 ) 21
Acquisition-related items (37 ) (43 )
Provision for doubtful accounts 36
31
Deferred income taxes (1,042 ) (404 )
Stock-based compensation 270
272
Gain on sale of businesses (697 ) —
Investment loss 227
—
Other, net 66
(113 )
Change in operating assets and liabilities, net of acquisitions and divestitures:

Accounts receivable, net 19
18
Inventories, net (318 ) (261 )
Accounts payable and accrued liabilities 13
32
Other operating assets and liabilities 1,516
495
Net cash provided by operating activities 3,646
5,107
Investing Activities:

Acquisitions, net of cash acquired (111 ) (1,328 )
Proceeds from sale of businesses 6,058
—
Additions to property, plant, and equipment (776 ) (924 )
Purchases of investments (2,479 ) (3,354 )
Sales and maturities of investments 3,060
4,286
Other investing activities, net (5 ) 21
Net cash provided by (used in) investing activities 5,747
(1,299 )
Financing Activities:

Acquisition-related contingent consideration (43 ) (58 )
Change in current debt obligations, net (391 ) 1,118
Repayment of short-term borrowings (maturities greater than 90 days) (44 ) (2 )
Proceeds from short-term borrowings (maturities greater than 90 days) 1
4
Issuance of long-term debt 21
131
Payments on long-term debt (4,167 ) (361 )
Dividends to shareholders (1,870 ) (1,782 )
Issuance of ordinary shares 333
309
Repurchase of ordinary shares (1,964 ) (3,409 )
Other financing activities (2 ) 80
Net cash used in financing activities (8,126 ) (3,970 )
Effect of exchange rate changes on cash and cash equivalents 124
54
Net change in cash and cash equivalents 1,391
(108 )
Cash and cash equivalents at beginning of period 4,967
2,876
Cash and cash equivalents at end of period $ 6,358
$ 2,768
Supplemental Cash Flow Information

Cash paid for:

Income taxes $ 911
$ 474
Interest 651
626

(1) See Note 2 to the consolidated financial statements for discussion regarding the adoption of accounting standards during the first quarter of fiscal year 2020. 

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

Medtronic plc

Consolidated Statements of Equity

(Unaudited)


	Ordinary Shares					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity		Noncontrolling Interests		Total Equity
(in millions)	Number	Par Value
April 27, 2018	1,354	$	—	$	28,127	$	24,379	$	(1,786)	$	50,720	$	102	$	50,822
Net income	—	—		—		1,075		—		1,075		2		1,077
Other comprehensive (loss)	—	—		—		—		(584)		(584)		—		(584)
Dividends to shareholders ($0.50 per ordinary share)	—	—		—		(677)		—		(677)		—		(677)
Issuance of shares under stock purchase and award plans	7	—		446		—		—		446		—		446
Repurchase of ordinary shares	(9)	—		(820)		—		—		(820)		—		(820)
Stock-based compensation	—	—		64		—		—		64		—		64
Changes to noncontrolling ownership interests	—	—		—		—		—		—		1		1
Cumulative effect of change in accounting principle⁽¹⁾	—	—		—		(47)		47		—		—		—
July 27, 2018	1,352	$	—	$	27,817	$	24,730	$	(2,323)	$	50,224	$	105	$	50,329
Net income	—	—		—		1,115		—		1,115		5		1,120
Other comprehensive (loss)	—	—		—		—		(289)		(289)		(3)		(292)
Dividends to shareholders ($0.50 per ordinary share)	—	—		—		(674)		—		(674)		—		(674)
Issuance of shares under stock purchase and award plans	7	—		298		—		—		298		—		298
Repurchase of ordinary shares	(13)	—		(1,171)		—		—		(1,171)		—		(1,171)
Stock-based compensation	—	—		104		—		—		104		—		104


October 26, 2018	1,346	$	—	$	27,048	$	25,171	$	(2,612)	$	49,607	$	107	$	49,714
Net income	—	—		—		1,269		—		1,269		2		1,271
Other comprehensive income	—	—		—		—		154		154		—		154
Dividends to shareholders ($0.50 per ordinary share)	—	—		—		(671)		—		(671)		—		(671)
Issuance of shares under stock purchase and award plans	2	—		82		—		—		82		—		82
Repurchase of ordinary shares	(7)	—		(672)		—		—		(672)		—		(672)
Stock-based compensation	—	—		60		—		—		60		—		60
Changes to noncontrolling ownership interests	—	—		—		—		—		—		3		3

January 25, 2019	1,341	$	—	$	26,518	$	25,769	$	(2,458)	$	49,829	$	112	$	49,941

(1) The cumulative effect of change in accounting principle during the first quarter of fiscal year 2019 resulted from the adoption of accounting guidance that requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. As a result of the adoption, the Company reclassified $47 million from accumulated other comprehensive loss to the opening balance of retained earnings as of April 28, 2018.

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

Medtronic plc

Consolidated Statements of Cash Flows

(Unaudited)


	Nine months ended
(in millions)	January 24, 2020		January 25, 2019
Operating Activities:
Net income	$	4,167	$	3,468
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,991		1,992


Provision for doubtful accounts	67		55
Deferred income taxes	(793)		(205)
Stock-based compensation	235		228
Loss on debt extinguishment	406		—


Other, net	140		111
Change in operating assets and liabilities, net of acquisitions and divestitures:
Accounts receivable, net	(119)		(140)
Inventories, net	(346)		(367)
Accounts payable and accrued liabilities	103		211
Other operating assets and liabilities	(67)		(433)


Net cash provided by operating activities	5,784		4,920
Investing Activities:
Acquisitions, net of cash acquired	(199)		(1,615)

Additions to property, plant, and equipment	(877)		(799)
Purchases of investments	(8,249)		(1,987)
Sales and maturities of investments	5,791		4,159
Other investing activities	(34)		(3)
Net cash used in investing activities	(3,568)		(245)
Financing Activities:

Change in current debt obligations, net	17		(696)


Issuance of long-term debt	5,568		3
Payments on long-term debt	(5,606)		(29)
Dividends to shareholders	(2,170)		(2,022)
Issuance of ordinary shares	585		891
Repurchase of ordinary shares	(1,208)		(2,728)
Other financing activities	(74)		10
Net cash used in financing activities	(2,888)		(4,571)
Effect of exchange rate changes on cash and cash equivalents	(12)		(70)
Net change in cash and cash equivalents	(684)		34
Cash and cash equivalents at beginning of period	4,393		3,669
Cash and cash equivalents at end of period	$	3,709	$	3,703

Supplemental Cash Flow Information
Cash paid for:
Income taxes	$	639	$	1,206
Interest	348		540

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

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements of Medtronic plc and its subsidiaries (Medtronic plc, Medtronic, or the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.) (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the consolidated financial statements include all of the adjustments necessary for a fair statement in conformity with U.S. GAAP. Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year.

Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates.

The accompanying unaudited 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.

The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended April ~~28, 2017.~~26, 2019. The Company’s fiscal years ~~2018, 2017,~~2020, 2019, and ~~2016~~2018 will end or ended on April 24, 2020, April 26, 2019, and April 27, 2018, respectively. The Company's fiscal year 2021 is a 53-week year, with the extra week occurring during the first quarter, and will end on April ~~28, 2017, and April 29, 2016, respectively.~~30, 2021.

2. New Accounting Pronouncements

Recently Adopted

In March 2016, the Financial Accounting Standards Board (FASB) issued guidance to simplify the accounting for share-based payment transactions by requiring all excess tax benefits and deficiencies to be recognized in income tax expense or benefit in earnings; eliminating the requirement to classify the excess tax benefits and deficiencies as additional paid-in capital. Cash flows related to excess tax benefits are to be classified in operating activities in the statement of cash flows rather than financing. Under the new guidance, an entity makes an accounting policy election to either estimate the expected forfeiture awards or account for forfeitures as they occur. The standard also allows an entity to withhold up to the maximum statutory tax rate and classify the awards as equity. The Company prospectively adopted this guidance in the first quarter of fiscal year 2018. The Company has elected to continue to estimate forfeitures. The adoption of this guidance resulted in no cumulative adjustment to retained earnings and, including the impacts of U.S. Tax Reform, decreases to net loss and diluted loss per share of $9 million and $0.01, respectively, for the three months ended January 26, 2018, and increases to net income and diluted earnings per share of $50 million and $0.04, respectively, for the nine months ended January 26, 2018.

In October 2016, the FASB issued guidance that requires the tax effect of intra-entity transactions, other than sales of inventory, to be recognized when the transaction occurs. Previously, U.S. GAAP prohibited the recognition of current and deferred income taxes associated with an intra-entity asset transfer until an asset had been sold to a third-party. This update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, such as equipment or intangibles, when the transfer occurs. The adoption of this guidance is to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company has early adopted this guidance, as permitted, in the first quarter of fiscal year 2018. As a result of this adoption, the Company increased its beginning retained earnings by $296 million. The adoption of this guidance, not considering the impacts of U.S. Tax Reform, resulted in an increase to net loss of $5 million and no change to diluted loss per share for the three months ended January 26, 2018, and increases to net income and diluted earnings per share of $552 million and $0.40, respectively, for the nine months ended January 26, 2018.

~~Not Yet Adopted~~

In May 2014, the FASB issued amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue in an amount that reflects the consideration to which an entity expects to be entitled in exchange for the transfer of goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This accounting guidance is effective for the Company beginning in the first quarter of fiscal year 2019, and may be applied either retrospectively to each prior reporting period presented

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

(full retrospective method), or retrospectively with the cumulative effect of the change recognized at the date of initial application (modified retrospective method). The Company intends to adopt this guidance under the modified retrospective method. Based on the Company's current evaluation of the amended revenue recognition guidance, the Company does not expect the adoption of the amended guidance to have a material impact on the Company's consolidated financial statements. The Company is continuing to evaluate the impact of the amended guidance as it pertains to presentation and disclosure. The Company will continue to monitor any modifications, clarifications, and interpretations communicated by the FASB that may impact its conclusions.

In January 2016, the FASB issued guidance which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The guidance also includes a simplified impairment assessment of equity investments without readily determinable fair values and presentation and disclosure changes. This accounting guidance is effective for the Company beginning in the first quarter of fiscal year 2019. The Company is unable to estimate the impact of the future adoption of this guidance on its financial statements as it will depend on the equity investments at the adoption date.Leases

In February 2016, the FASB issued guidance which requires lessees to recognize right-of-use assets and lease liabilities on the balance sheet. This guidance also requires additional qualitative and quantitative lease related disclosures in the notes to the consolidated financial statements. The Company adopted this guidance ~~is to be applied~~ using athe modified retrospective ~~approach at the beginning of the earliest comparative period in the financial statements and is effective for the Company beginning~~method in the first quarter of fiscal year 2020. ~~Early~~

During the implementation of this recently adopted accounting standard, the Company elected the package of practical expedients available under the transition guidance that allowed an entity not to reassess whether any expired or existing contracts are or contain leases, the classification for any expired or existing leases or any initial direct costs for existing leases. Further, the Company made accounting policy elections to not apply the recognition requirements to short-term leases and to account for lease and nonlease components as a single lease component.

The adoption ~~is permitted.~~of this guidance resulted in the recognition of right-of-use assets and lease liabilities in an amount of approximately $1.0 billion, an immaterial cumulative-effect adjustment to retained earnings as of April 27, 2019, and expansion of lease related disclosures.The adoption of this guidance did not have a material impact on the Company's consolidated statements of income or consolidated statements of cash flows.

Others

In August 2017, the FASB issued guidance to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The Company ~~is evaluating~~adopted this guidance in the ~~impact~~first quarter of ~~the lease~~fiscal year 2020. The adoption of this guidance resulted in expanded disclosures and did not have an impact on the Company's consolidated financial statements and anticipates recording additional assets and corresponding liabilities on its consolidated balance sheets related to operating leases within its lease portfolio upon adoption of the guidance.statements.

Not Yet Adopted

In ~~January 2017,~~June 2016, the FASB issued guidance which ~~simplifies~~changes the ~~accounting for goodwill impairment. The guidance requires a goodwill impairment~~methodology to be ~~measured as~~used to measure credit losses for certain financial instruments and financial assets, including trade receivables. The new methodology requires the ~~amount by which a reporting unit's carrying value exceeds its fair value, not~~recognition of an allowance that reflects the current estimate of credit losses expected to ~~exceed~~be incurred over the ~~carrying amount~~life of ~~goodwill.~~the financial asset. The new standard will be effective for the Company ~~is required to adopt this guidance beginning~~ in the first quarter of fiscal year 2021. ~~Early~~The Company does not expect the adoption ~~is permitted, and~~of the guidance ~~must be applied prospectively. The Company is unable~~ to ~~estimate the~~have a material impact ~~of the future adoption of this guidance on its financial statements, as it is dependent~~ on the ~~specific facts and circumstances of any future impairments, if applicable.~~Company’s consolidated financial statements.

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

3. ~~Acquisitions and Acquisition-Related Items~~Revenue

The ~~Company had acquisitions~~Company's revenues are principally derived from device-based medical therapies and services related to cardiac rhythm disorders, cardiovascular disease, renal 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 hospitals, clinics, third-party health care providers, distributors, and other ~~acquisition-related activity during~~institutions, including governmental health care programs and group purchasing organizations.

The table below illustrates net sales by segment and division for the three and nine months ended January 24, 2020 and January 25, 2019:


	Three months ended⁽¹⁾						Nine months ended⁽¹⁾
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Cardiac Rhythm & Heart Failure	$	1,393	$	1,397	$	4,201	$	4,295
Coronary & Structural Heart	948		913		2,844		2,736
Aortic, Peripheral, & Venous	478		476		1,420		1,424
Cardiac and Vascular Group	2,819		2,786		8,464		8,455
Surgical Innovations	1,474		1,434		4,345		4,224
Respiratory, Gastrointestinal, & Renal	702		690		2,073		1,999
Minimally Invasive Therapies Group	2,176		2,124		6,418		6,223
Brain Therapies	795		732		2,307		2,107
Spine	674		655		2,023		1,963
Specialty Therapies	340		325		996		956
Pain Therapies	303		314		910		942
Restorative Therapies Group	2,111		2,026		6,235		5,968
Diabetes Group	610		610		1,798		1,765
Total	$	7,717	$	7,546	$	22,916	$	22,411

(1) Revenue amounts have intentionally been rounded to the nearest million and, therefore, may not sum.

During the first quarter of fiscal year 2020, the Company realigned its divisions within the Restorative Therapies Group, which included a movement of revenue from Transformative Solutions product lines previously included in Specialty Therapies to a product line under Brain Therapies. As a result, net sales for fiscal year 2019 have been recast to adjust for this realignment.

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

The table below illustrates net sales by market geography for each segment for the three and nine months ended January 24, 2020 and January 25, 2019:


	U.S.⁽¹⁾⁽⁴⁾						Non-U.S. Developed Markets⁽²⁾⁽⁴⁾						Emerging Markets⁽³⁾⁽⁴⁾
	Three months ended						Three months ended						Three months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Cardiac and Vascular Group	$	1,366	$	1,369	$	915	$	924	$	538	$	493
Minimally Invasive Therapies Group	934		930		791		796		451		398
Restorative Therapies Group	1,409		1,354		436		435		266		237
Diabetes Group	312		348		236		213		63		49
Total	$	4,021	$	4,001	$	2,377	$	2,368	$	1,318	$	1,177

	U.S.⁽¹⁾⁽⁴⁾						Non-U.S. Developed Markets⁽²⁾⁽⁴⁾						Emerging Markets⁽³⁾⁽⁴⁾
	Nine months ended						Nine months ended						Nine months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Cardiac and Vascular Group	$	4,182	$	4,240	$	2,735	$	2,766	$	1,547	$	1,449
Minimally Invasive Therapies Group	2,769		2,659		2,364		2,396		1,285		1,168
Restorative Therapies Group	4,187		4,005		1,278		1,275		770		688
Diabetes Group	930		1,006		693		619		176		140
Total	$	12,068	$	11,910	$	7,069	$	7,056	$	3,778	$	3,445

(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)Revenue amounts have intentionally been rounded to the nearest million and, therefore, may not sum.

The amount of revenue recognized is reduced by sales rebates and returns. Adjustments to rebates and returns reserves are recorded as increases or decreases of revenue. At January 24, 2020, $862 million of rebates were classified as other accrued expenses and$447 million of rebates were classified as a reduction of accounts receivable in the consolidated balance sheets. At April 26, ~~2018.~~2019, $764 million of rebates were classified as other accrued expenses and $432 million of rebates were classified as a reduction of accounts receivable in the consolidated balance sheets. The Company includes obligations for returns in other accrued expenses in the consolidated balance sheets and the right-of-return asset in other current assets in the consolidated balance sheets. The right-of-return asset and liability at January 24, 2020 and April 26, 2019 were not material. For the three and nine months ended January 24, 2020 and January 25, 2019, 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.

Deferred Revenue and Remaining Performance Obligations

The Company records a deferred revenue liability if a customer pays consideration before the Company transfers a good or service to the customer. Deferred revenue at January 24, 2020 and April 26, 2019 was $303 million and $315 million, respectively. At January 24, 2020 and April 26, 2019, $212 million and $211 million, respectively, was included in other accrued expenses and $91 million and $104 million, respectively, was included in other liabilities. During the nine months ended January 24, 2020, the Company recognized $192 million of revenue that was included in deferred revenue as of April 26, 2019.

Remaining performance obligations include deferred revenue and amounts the Company expects to receive for goods and services that have not yet been delivered or provided under existing, noncancellable contracts with minimum purchase commitments. At January 24, 2020, 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 $1.2 billion. The Company expects to recognize revenue on the majority of these remaining performance obligations over the next four years.

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

4. Acquisitions

The Company had acquisitions during the nine months ended January 24, 2020 and January 25, 2019 that were accounted for ~~the acquisitions~~ as business ~~combinations using the acquisition method of accounting.~~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 pro forma impact of these acquisitions was not significant, either individually or in the aggregate, to the consolidated results of the Company for the three and nine months ended January ~~26, 2018.~~24, 2020 and January 25, 2019. 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.

~~HeartWare International, Inc.~~Fiscal Year 2020

The acquisition date fair value of net assets acquired during the nine months ended January 24, 2020 was $272 million, consisting of $324 million of assets acquired and $52 million of liabilities assumed. Based upon preliminary valuations, assets acquired were primarily comprised of $139 million of technology-based intangible assets and $26 million of customer-related intangible assets with estimated useful lives ranging from 8 to 16 years, $92 million of goodwill, and $40 million of inventory. The goodwill is not deductible for tax purposes. The Company recognized $65 million of contingent consideration liabilities in connection with business combinations during the nine months ended January 24, 2020, which are comprised of revenue milestone-based payments. For the nine months ended January 24, 2020, purchase price allocation adjustments for fiscal year 2020 business combinations were not significant.

Fiscal Year 2019

Mazor Robotics

On ~~August 23, 2016,~~December 18, 2018, the Company's ~~Cardiac and Vascular~~Restorative Therapies Group acquired ~~HeartWare International, Inc. (HeartWare)~~Mazor Robotics (Mazor), a ~~medical device company that develops~~pioneer in the field of robotic guidance systems. The acquisition of Mazor strengthened the Company's position as a global leader in enabling technologies for spine surgery. The Company offers a fully-integrated procedural solution for surgical planning, execution and ~~manufactures miniaturized implantable heart pumps, or ventricular assist devices, to treat patients around~~confirmation by combining the ~~world suffering from advanced heart failure.~~Company's spine implants, navigation, and intra-operative imaging technology with Mazor's robotic-assisted surgery systems. Total consideration for the transaction, net of cash acquired, was ~~approximately $1.1 billion. The Company~~$1.6 billion, consisting of $1.3 billion of cash and $246 million of a previously-held equity investment in Mazor. Net assets acquired ~~$602~~includes $383 million of technology-based ~~and customer-related~~ intangible assets and ~~$23~~$16 million of tradenames with estimated useful lives of 1510 years. Goodwill was primarily attributable to pull-through revenue, future yet to be defined technologies, and ~~5 years, respectively,~~an assembled workforce and ~~$481 million of goodwill. The acquired goodwill is~~was not deductible for tax purposes. ~~In addition,~~

During the three and nine months ended January 25, 2019, the Company ~~acquired $245~~recognized $51 million of ~~debt through~~costs incurred in connection with the acquisition of Mazor, including payouts for unvested stock options and investment banker and other transaction fees, which were recognized in selling, general, and administrative expense in the consolidated statements of income.

The Company ~~redeemed $203 million as part~~made certain adjustments to the allocation of purchase price for the Mazor acquisition during the fourth quarter of fiscal year 2019 and nine months ended January 24, 2020, primarily related to estimates for certain contingent liabilities and deferred taxes, which resulted in a ~~cash tender offer in August 2016, and~~net increase to goodwill of $105 million. The measurement period for the ~~remaining $42 million of debt acquired was repaid in December 2017.~~Mazor acquisition closed during the quarter ended January 24, 2020.

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

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


(in millions)	Mazor Robotics
Cash and cash equivalents	$	109
Investments	52
Accounts receivable	9
Inventory	5
Other current assets	1
Property, plant, and equipment	3
Goodwill	1,318
Other intangible assets	399
Tax assets	9
Total assets acquired	1,905

Current liabilities	210

Deferred tax liabilities	21
Total liabilities assumed	231
Net assets acquired	$	1,674

(in millions) HeartWare International, Inc. All Other
Other current assets $ 351
$ 3
Property, plant, and equipment 14
6
Other intangible assets 625
93
Goodwill 481
27
Other assets 84
—
Total assets acquired 1,555
129

Current liabilities 143
2
Deferred tax liabilities 6
3
Long-term debt 245
—
Other liabilities 89
—
Total liabilities assumed 483
5
Net assets acquired $ 1,072
$ 124
Other Fiscal Year 2019 Acquisitions

~~See Note 2~~The remaining acquisition date fair value of net assets acquired during the nine months ended January 25, 2019 was $377 million, consisting of $427 million of assets acquired and $50 million of liabilities assumed. Assets acquired were primarily comprised of $146 million of goodwill, $161 million of technology-based intangible assets with estimated useful lives ranging from 4 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended April 28, 2017 for additional information on the Company's fiscal year 2017 acquisitions.

~~Acquisition-Related Items~~

~~Acquisition-related items includes expenses incurred in connection~~15 years, and $40 million of customer-related intangible assets with ~~the integration~~estimated useful lives ranging from 10 to 13 years. The Company recognized $51 million of ~~Covidien, the Company's $50.0 billion acquisition completed in the fourth quarter of fiscal year 2015, expenses incurred~~contingent consideration liabilities in connection with business ~~acquisitions,~~combinations during the nine months ended January 25, 2019. For the nine months ended January 25, 2019, purchase price allocation adjustments were not significant.

Acquired In-Process Research & Development

In-process research and ~~changes in fair value~~development (IPR&D) acquired outside of ~~contingent consideration.~~a business combination is expensed immediately. During the three and nine months ended January ~~26, 2018,~~25, 2019, the Company acquired $15 million of IPR&D in connection with an asset acquisition, which was recognized ~~acquisition-related items~~in other operating (income) expense, ~~of $30 million and $101 million, respectively, including $4 million and $24 million, respectively, recognized within~~ ~~cost of products sold~~ netin the consolidated statements of income. ~~For~~The Company did 0t acquire any IPR&D in connection with an asset acquisition during the three and nine months ended January 26, 2018, acquisition-related items expense includes $48 million and $137 million, respectively, of costs associated with the integration of Covidien manufacturing, distribution, and administrative facilities as well as information technology system implementation and benefits harmonization. For the three and nine months ended January 26, 2018, acquisition-related items expenses were partially offset by changes in fair value of contingent consideration as a result of revised revenue forecasts and the timing of anticipated regulatory payments.24, 2020.

During the three and nine months ended January 27, 2017, the Company recognized acquisition-related items expense of $68 million and $148 million, respectively. For the three and nine months ended January 27, 2017, acquisition-related items expense includes $51 million and $154 million, respectively, of costs associated with the integration of Covidien manufacturing, distribution, and administrative facilities as well as information technology system implementation and benefits harmonization, and $5 million and $21 million, respectively, of accelerated and incremental stock compensation expense. For the nine months ended January 27, 2017, acquisition-related items expenses were partially offset by changes in fair value of contingent consideration as a result of revised revenue forecasts and the timing of anticipated regulatory payments.

Contingent Consideration

Certain of the Company’s business combinations and intangible asset acquisitions involve potential ~~payments~~payment of future consideration that ~~are~~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, ~~using Level 3 inputs,~~ and the change in fair value is recognized within ~~acquisition-related items~~other operating (income) expense, net in the consolidated statements of income. Contingent consideration payments made soon after the acquisition date are classified as investing activities in the consolidated statements of cash flows. Contingent consideration payments not made 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 in excess of the original acquisition date fair value are reported as operating activities in the consolidated statements of cash flows.

The fair value of contingent consideration at January 24, 2020 and April 26, 2019 was $304 million and $222 million,respectively. At January 24, 2020, $147 million was recorded in other accrued expenses and $157 million was recorded in other liabilities in the consolidated balance sheets. At April 26, 2019, $73 million was recorded in other accrued expenses and $149 million was recorded in other liabilities in the consolidated balance sheets.

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

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


	Three months ended						Nine months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Beginning balance	$	260	$	203	$	222	$	173
Purchase price contingent consideration	45		5		110		51
Payments	(3)		(1)		(32)		(8)
Change in fair value	2		(59)		4		(68)
Ending balance	$	304	$	148	$	304	$	148

The fair value of contingent consideration is measured using projected payment dates, discount rates, probabilities of payment, and projected revenues (for revenue-based consideration). Projected revenues are based on the Company's most recent internal operational budgets and long-range strategic plans. Changes in projected ~~revenues,~~payment dates, discount rates, probabilities of payment, ~~discount rates,~~ and projected ~~payment dates~~revenues may result in adjustments to the fair value measurement. The recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs:

Fair Value at

(in millions)

January ~~26, 2018~~24, 2020

Valuation Technique

Unobservable Input

Range

Discount rate

~~11%~~11.5% - 32.5%

~~Revenue-based~~Revenue and other performance-based payments

$88123

Discounted cash flow

Probability of payment

30% - 100%

Projected fiscal year of payment

~~2018~~2020 - 2026

Discount rate

5.5%

Product development and other milestone-based payments

$83181

Discounted cash flow

Probability of payment

75% - 100%

Projected fiscal year of payment

~~2018~~2020 - ~~2025~~2027

~~The fair value of contingent consideration at January 26, 2018 and April 28, 2017 was $171 million and $246 million, respectively. At January 26, 2018, $80 million was recorded in~~ ~~other liabilities~~ ~~and $91 million was recorded in~~ ~~other accrued expenses~~ ~~in the consolidated balance sheets. At April 28, 2017, $180 million was recorded in~~ ~~other liabilities~~ ~~and $66 million was recorded in~~ ~~other accrued expenses~~ ~~in the consolidated balance sheets.~~

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

Three months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Beginning Balance $ 190
$ 285
$ 246
$ 377
Purchase price contingent consideration 13
(4 ) 28
28
Payments (20 ) (23 ) (66 ) (62 )
Change in fair value (12 ) 4
(37 ) (81 )
Ending Balance $ 171
$ 262
$ 171
$ 262

~~4. Divestiture and Divestiture-Related Items~~

~~Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency Businesses~~

In April 2017, the Company entered into a definitive agreement for the sale of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses within the Minimally Invasive Therapies Group segment to Cardinal Health, Inc. (Cardinal)5. ~~The divestiture was completed on July 29, 2017. As a result of the transaction, the Company received proceeds of $6.1 billion, which was recorded in~~ ~~proceeds from sale of businesses~~ ~~in the consolidated statements of cash flows and recognized a before-tax gain of $697 million, which was recognized within~~ ~~gain on sale of businesses~~ in the consolidated statements of income. Among the product lines included in the divestiture were the dental and animal health, chart paper, wound care, incontinence, electrodes, SharpSafety, thermometry, perinatal protection, blood collection, compression, and enteral feeding offerings. The divestiture also included 17 dedicated manufacturing sites. In connection with the transaction, the Company entered into Transition Service Agreements (TSAs) and Transition Manufacturing Agreements (TMAs) with Cardinal designed to ensure and facilitate an orderly transfer of business operations. The TSAs are primarily related to administrative services and continue for 12 months from the divestiture date, with an ability to extend upon mutual agreement of both parties. Certain of the TSAs have been extended beyond the initial 12 month period in accordance with the provisions of the original agreement. Under the TMAs, both the Company and Cardinal will manufacture and supply certain products to each other for a transition period of up to 5 years.

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses did not meet the criteria to be classified as discontinued operations, as such, the results of operations of these businesses were included within net income through the date of the divestiture. The Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses met the criteria to be classified as held for sale in the fourth quarter of fiscal year 2017, at which time the Company ceased depreciation and amortization of property, plant, and equipment and intangible assets classified as held for sale. The following table presents information related to the assets and liabilities that were classified as held for sale in the consolidated balance sheets:

(in millions) April 28, 2017
Inventories, net $ 371
Property, plant, and equipment, net 689
Goodwill 2,910
Other intangible assets, net 2,320
Total assets held for sale $ 6,290

Other accrued expenses $ 34
Accrued compensation and retirement benefits 12
Deferred tax liabilities 707
Other liabilities 1
Total liabilities held for sale $ 754

~~Divestiture-Related Items~~

Divestiture-related items includes expenses incurred in connection with the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses. During the nine months ended January 26, 2018, the Company recognized divestiture-related items expense of $114 million, primarily comprised of expenses incurred for professional services, including banker, legal, tax, and advisory fees, as well as $16 million of accelerated stock compensation expense related to the acceleration of the vesting period for employees that transferred with the divestiture. There were no divestiture-related items expenses for the three months ended January 26, 2018 and for the three and nine months ended January 27, 2017.

~~5. Special Charge~~

During the nine months ended January 26, 2018, continuing the Company's commitment to improve the health of people and communities throughout the world, the Company recognized a charge of $80 million for a commitment to fund the Medtronic Foundation. During the three months ended January 26, 2018, the Company did not recognize a special charge. During the three and nine months ended January 27, 2017, the Company recognized a charge of $100 million for a charitable cash contribution to the Medtronic Foundation.

6. Restructuring

~~Enterprise Excellence~~

In the third quarter of fiscal year 2018, the Company announced its Enterprise Excellence restructuring program, which is expected to leverage the Company's global size and scale, as well as enhance the customer and employee experience, with a focus on three objectives: global operations, functional optimization, and commercial optimization. Primary activities of the restructuring program include integrating and enhancing global manufacturing and supply processes, systems and site ~~presence;~~presence, enhancing and leveraging global operating models across several enabling ~~functions;~~functions, and optimizing certain commercial processes, systems, and models.

The Company estimates that, in connection with its Enterprise Excellence restructuring program, it will recognize pre-tax exit and disposal costs and other costs ~~associated with the restructuring program~~ across all ~~reportable~~ segments of approximately $1.6 billion to $1.8 billion, the majority of which are expected to be incurred by the end of fiscal year 2022. Approximately half of the estimated charges are related to employee termination benefits. The remaining ~~restructuring~~ charges are costs associated with the restructuring program, such as salaries for employees supporting the program and consulting expenses. These charges are recognized within restructuring charges, net, cost of products sold,, and selling, general, and administrative expensein the consolidated statements of ~~income~~.income.

For the three and nine months ended January ~~26, 2018,~~24, 2020, the Company recognized ~~$32~~charges of $97 million and $328 million, respectively. Additionally, the Company incurred accrual adjustments of $13 million for the nine months ended January 24, 2020, related to certain employees identified for termination finding other positions within Medtronic. For the three and nine months ended January 24, 2020, charges included $50 million and $117 million, respectively, recognized within cost of products sold and $34 million and $111 million, respectively, recognized within selling, general, and administrative expensein ~~charges.~~the consolidated statements of income.

For the three and nine months ended January 25, 2019, the Company recognized charges of $69 million and $264 million, respectively. Additionally, the Company incurred accrual adjustments of $3 million and $8 million for the three and nine months ended January 25, 2019, respectively, related to certain employees identified for termination finding other positions within Medtronic. For the three and nine months ended January 25, 2019, charges included $21 million and $58 million,

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

respectively, recognized within cost of products sold and $19 million and $86 million, respectively, recognized within selling, general, and administrative expense in the consolidated statements of income.

The following table summarizes the activity related to ~~employee termination benefits liability and~~ the ~~associated costs~~Enterprise Excellence restructuring program for the nine months ended January ~~26, 2018:~~24, 2020:


(in millions)	Employee Termination Benefits		Associated Costs⁽¹⁾		Asset Write-Downs⁽²⁾		Other Costs		Total
April 26, 2019	$	101	$	9	$	—	$	12	$	122
Charges	91		223		6		8		328
Cash payments	(118)		(223)		—		(8)		(349)
Settled non-cash	—		—		(6)		—		(6)
Accrual adjustments	(5)		—		—		(8)		(13)
January 24, 2020	$	69	$	9	$	—	$	4	$	82

(in millions) Employee Termination Benefits
Associated Costs⁽¹⁾
Total
April 28, 2017 $ —
$ —
$ —
Charges 9
23
32
Cash payments —
(23 ) (23 )
January 26, 2018 $ 9
$ —
$ 9

~~(1)~~

(1)Associated costs include costs incurred as a direct result ~~of the restructuring program, such as salaries for employees supporting the program and consulting expenses. For the three months ended January 26, 2018, $13 million was recognized within~~ ~~cost of products sold~~ ~~and $10 million was recognized within~~ ~~selling, general and administrative expense~~ ~~in the consolidated statements of income.~~

~~Cost Synergies~~

The cost synergies program related to administrative office optimization, manufacturing and supply chain infrastructure, and certain general and administrative savings and completed in the third quarter of fiscal year 2018. Restructuring charges incurred throughout the life of the initiative were primarily related to employee termination costs and costs related to manufacturing and facility closures and affect all reportable segments.

~~A summary~~ of the restructuring ~~accrual~~program, such as salaries for employees supporting the program and ~~related activity is presented below:~~consulting expenses.

(in millions) Employee Termination Benefits Other Costs Total
April 28, 2017 $ 261
$ 30
$ 291
Charges 25
20
45
Cash payments (119 ) (30 ) (149 )
Accrual adjustments (17 ) 2
(15 )
January 26, 2018 $ 150
$ 22
$ 172

For the three months ended January 26, 2018, the Company recognized no charges, and for the nine months ended January 26, 2018, the Company recognized $45 million in charges. During the three and nine months ended January 26, 2018, the Company recognized accrual adjustments of $2 million and $15 million, respectively. Accrual adjustments relate to certain employees identified for termination finding other positions(2)Recognized within the Company, cancellations of employee terminations, and employee termination benefits being less than initially estimated. For the nine months ended January 26, 2018, charges included $12 million recognized within cost of products sold ~~and $4 million recognized within~~ ~~selling, general and administrative expense~~ in the consolidated statements of income.

For the three and nine months ended January 27, 2017, the Company recognized $56 million and $214 million in charges, respectively, which were partially offset by accrual adjustments of $35 million and $42 million, respectively. Accrual adjustments relate to certain employees identified for termination finding other positions within the Company and employee termination benefits being less than initially estimated. For the three months and nine months ended January 27, 2017, charges included asset disposal write-downs of $1 million and $8 million, respectively, related to property, plant, and equipment. For the nine months ended January 27, 2017, asset disposal write-downs included $10 million related to inventory write-offs of discontinued product lines, which were recognized within ~~cost of products sold~~ ~~in the consolidated statements of income.~~

76. Financial Instruments

Debt Securities

The Company holds investments ~~including~~in marketable debt ~~and equity~~ securities that are classified and accounted for as available-for-sale and are remeasured on a recurring basis. The Company also holds cost method, equity method, and other investments which are measured at fair value on a nonrecurring basis. For information regarding the valuation techniques and inputs used in the fair value measurements, refer to Note 1 to the consolidated financial statements included infollowing tables summarize the Company's ~~Annual Report on Form 10-K for the fiscal year ended April 28, 2017.~~

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~The following table summarizes the Company's~~ investments in available-for-sale debt securities by significant investment category and the related consolidated balance sheet classification at January 24, 2020 and April 26, ~~2018~~:2019:


	January 24, 2020
	Valuation												Balance Sheet Classification
(in millions)	Cost		Unrealized Gains		Unrealized Losses		Fair Value		Investments		Other Assets
Level 1:
U.S. government and agency securities	$	623	$	17	$	—	$	640	$	640	$	—
Level 2:
Corporate debt securities	5,155		52		(8)		5,199		5,199		—
U.S. government and agency securities	900		—		—		900		900		—
Mortgage-backed securities	655		13		(13)		655		655		—
Non-U.S. government and agency securities	13		—		—		13		13		—
Other asset-backed securities	511		3		(2)		512		512		—
Total Level 2	7,234		68		(23)		7,279		7,279		—
Level 3:

Auction rate securities	36		—		(3)		33		—		33

Total available-for-sale debt securities	$	7,893	$	85	$	(26)	$	7,952	$	7,919	$	33

Valuation Balance Sheet Classification
(in millions) Cost
Unrealized
Gains

Unrealized
Losses
Fair Value Investments Other Assets
Available-for-sale securities:

Level 1:
U.S. government and agency securities $ 618
$ —
$ (16 ) $ 602
$ 602
$ —
Marketable equity securities 69
126
(2 ) 193
—
193
Total Level 1 687
126
(18 ) 795
602
193
Level 2:
Corporate debt securities 4,254
42
(30 ) 4,266
4,266
—
U.S. government and agency securities 882
—
(18 ) 864
864
—
Mortgage-backed securities 753
3
(26 ) 730
730
—
Foreign government and agency securities 66
—
(1 ) 65
65
—
Other asset-backed securities 337
1
(2 ) 336
336
—
Debt funds 939
7
(126 ) 820
820
—
Total Level 2 7,231
53
(203 ) 7,081
7,081
—
Level 3:
Corporate debt securities 1
—
—
1
—
1
Auction rate securities 47
—
(3 ) 44
—
44
Total Level 3 48
—
(3 ) 45
—
45
Investments measured at net asset value⁽¹⁾:

Debt funds 400
—
(5 ) 395
395
—
Total available-for-sale securities 8,366
179
(229 ) 8,316
8,078
238
Cost method, equity method, and other investments:
Level 3:
Cost method, equity method, and other investments 407
—
—
N/A
—
407
Total Level 3 407
—
—
N/A
—
407
Total cost method, equity method, and other investments 407
—
—
N/A
—
407
Total investments $ 8,773
$ 179
$ (229 ) $ 8,316
$ 8,078
$ 645

(1) Certain investments that are measured at the net asset value per share (or its equivalent) as a practical expedient are excluded from the fair value hierarchy. The fair value amounts presented herein are intended to permit reconciliation to the consolidated balance sheets.

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)


	April 26, 2019
	Valuation												Balance Sheet Classification
(in millions)	Cost		Unrealized Gains		Unrealized Losses		Fair Value		Investments		Other Assets
Level 1:
U.S. government and agency securities	$	529	$	1	$	(7)	$	523	$	523	$	—
Level 2:
Corporate debt securities	3,500		14		(21)		3,493		3,493		—
U.S. government and agency securities	387		1		(7)		381		381		—
Mortgage-backed securities	537		3		(20)		520		520		—
Non-U.S. government and agency securities	11		—		—		11		11		—
Other asset-backed securities	529		1		(3)		527		527		—
Total Level 2	4,964		19		(51)		4,932		4,932		—
Level 3:
Auction rate securities	47		—		(3)		44		—		44
Total available-for-sale debt securities	$	5,540	$	20	$	(61)	$	5,499	$	5,455	$	44

~~The following table summarizes the Company's investments by significant investment category and the related consolidated balance sheet classification at April 28, 2017:~~

Valuation Balance Sheet Classification
(in millions) Cost
Unrealized
Gains

Unrealized
Losses
Fair Value Investments Other Assets
Available-for-sale securities:

Level 1:
U.S. government and agency securities $ 613
$ 2
$ (5 ) $ 610
$ 610
$ —
Marketable equity securities 58
49
(4 ) 103
—
103
Total Level 1 671
51
(9 ) 713
610
103
Level 2:
Corporate debt securities 4,643
62
(23 ) 4,682
4,682
—
U.S. government and agency securities 860
—
(10 ) 850
850
—
Mortgage-backed securities 766
9
(16 ) 759
759
—
Foreign government and agency securities 49
—
—
49
49
—
Other asset-backed securities 228
1
(1 ) 228
228
—
Debt funds 1,246
4
(178 ) 1,072
1,072
—
Total Level 2 7,792
76
(228 ) 7,640
7,640
—
Level 3:
Corporate debt securities 1
—
—
1
—
1
Auction rate securities 47
—
(3 ) 44
—
44
Total Level 3 48
—
(3 ) 45
—
45
Investments measured at net asset value⁽¹⁾:

Debt funds 497
—
(6 ) 491
491
—
Total available-for-sale securities 9,008
127
(246 ) 8,889
8,741
148
Cost method, equity method, and other investments:
Level 3:
Cost method, equity method, and other investments 589
—
—
N/A
—
589
Total Level 3 589
—
—
N/A
—
589
Total cost method, equity method, and other investments 589
—
—
N/A
—
589
Total investments $ 9,597
$ 127
$ (246 ) $ 8,889
$ 8,741
$ 737

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~Marketable Debt and Equity Securities~~

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 January 24, 2020 and April 26, ~~2018~~ ~~and~~ ~~April 28, 2017~~:2019:


	January 24, 2020
	Less than 12 months						More than 12 months
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government and agency securities	$	96	$	—	$	40	$	—
Corporate debt securities	371		(3)		65		(5)
Mortgage-backed securities	82		(1)		63		(12)

Other asset-backed securities	23		—		165		(2)
Auction rate securities	—		—		33		(3)
Total	$	572	$	(4)	$	366	$	(22)

January 26, 2018
Less than 12 months More than 12 months
(in millions) Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Corporate debt securities $ 1,675
$ (19 ) $ 295
$ (11 )
Auction rate securities —
—
44
(3 )
Mortgage-backed securities 435
(9 ) 107
(17 )
U.S. government and agency securities 658
(20 ) 454
(14 )
Foreign government and agency securities —
—
36
(1 )
Debt funds —
—
1,001
(131 )
Other asset-backed securities 184
(1 ) 61
(1 )
Marketable equity securities —
—
1
(2 )
Total $ 2,952
$ (49 ) $ 1,999
$ (180 )

April 28, 2017
Less than 12 months More than 12 months
(in millions) Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Corporate debt securities $ 1,263
$ (19 ) $ 46
$ (4 )
Auction rate securities —
—
44
(3 )
Mortgage-backed securities 276
(4 ) 95
(12 )
U.S. government and agency securities 896
(15 ) —
—
Other asset-backed securities 127
(1 ) —
—
Debt funds 173
(1 ) 1,125
(183 )
Marketable equity securities 14
(3 ) 2
(1 )
Total $ 2,749
$ (43 ) $ 1,312
$ (203 )

~~The following table presents the unobservable inputs utilized in the fair value measurement of the auction rate securities classified as Level 3 at January 26, 2018:~~



	~~Valuation Technique~~	~~Unobservable Input~~	~~Range (Weighted Average)~~
~~Auction rate securities~~	~~Discounted cash flow~~	~~Years to principal recovery~~	~~2 yrs. - 12 yrs. (3 yrs.)~~
~~Auction rate securities~~	~~Discounted cash flow~~	~~Illiquidity premium~~	6%


	April 26, 2019
	Less than 12 months						More than 12 months
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government and agency securities	$	130	$	(1)	$	649	$	(13)
Corporate debt securities	582		(5)		1,153		(16)
Mortgage-backed securities	73		(1)		250		(19)

Other asset-backed securities	290		(2)		85		(1)
Auction rate securities	—		—		44		(3)
Total	$	1,075	$	(9)	$	2,181	$	(52)

The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company’s policy is to recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal quarter in which the actual event or change in circumstances that caused the transfer occurs. There were no transfers between Level 1, Level 2, or Level 3 during the three and nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017.~~25, 2019. 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

(Unaudited)

During the three and nine months ended January 24, 2020, the Company redeemed $11 million worth of level 3 investments at par value. NaN gain or loss was recognized on the redemption. There were no purchases, sales, settlements, or gains or losses recognized in earnings or other comprehensive income for available-for-sale securities classified as Level 3 during the three and nine months ended January ~~26, 2018 and January 27, 2017.~~25, 2019.

Activity related to the Company’s ~~investment~~debt securities portfolio is as follows:


	Three months ended
	January 26, 2018						January 27, 2017							Three months ended						Nine months Ended
(in millions)	Debt⁽¹⁾			Equity⁽²⁾			Debt⁽¹⁾			Equity⁽²⁾			(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Proceeds from sales	$	667		$	39		$	661		$	1		Proceeds from sales	$	2,531	$	1,301	$	5,789	$	3,217
Gross realized gains	3			8			10			—			Gross realized gains	9		9		17		17
Gross realized losses	(2		)	—			(7		)	—			Gross realized losses	(2)		(36)		(13)		(55)
Impairment losses recognized	—			(227		)	—			(10		)

	Nine months ended
	January 26, 2018						January 27, 2017
(in millions)	Debt⁽¹⁾			Equity⁽²⁾			Debt⁽¹⁾			Equity⁽²⁾
Proceeds from sales	$	3,021		$	39		$	4,203		$	83
Gross realized gains	22			15			74			29
Gross realized losses	(17		)	—			(56		)	—
Impairment losses recognized	—			(228		)	—			(20		)


~~(1)~~	~~Includes available-for-sale debt securities and debt funds.~~


~~(2)~~	~~Includes marketable equity securities and cost and equity method investments.~~

Credit losses represent the difference between the present value of cash flows expected to be collected on certain mortgage-backed securities and auction rate securities and the amortized cost of these securities. Based on the Company’s assessment of the credit quality of the underlying collateral and credit support available to each of the remaining securities in which the Company is invested, the Company believes it has recognized all necessary other-than-temporary impairments, as the Company does not have the intent to sell, nor is it more likely than not that the Company will be required to sell, before recovery of the amortized cost.

At January ~~26, 2018~~24, 2020 and April ~~28, 2017,~~26, 2019, the credit loss portion of other-than-temporary impairments on debt securities was ~~not~~0t significant. ~~The total reductions of~~NaN available-for-sale ~~debt~~ securities were sold for significantly less than carrying value during the three and nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017 were not significant.~~25, 2019.

The January ~~26, 2018~~24, 2020 balance of available-for-sale debt securities ~~excluding debt funds which have no single maturity date,~~ by contractual maturity is shown in the following table. Within the table, maturities of mortgage-backed securities have been allocated based upon timing of estimated cash flows assuming no change in the current interest rate environment. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.


(in millions)	January 24, 2020
Due in one year or less	$	3,595
Due after one year through five years	2,727
Due after five years through ten years	1,577
Due after ten years	53
Total	$	7,952

(in millions) January 26, 2018
Due in one year or less $ 885
Due after one year through five years 2,748
Due after five years through ten years 3,161
Due after ten years 114
Total $ 6,908
Equity Securities, Equity Method Investments, and Other Investments

~~The Company holds investments in marketable equity securities, which are classified as~~ ~~other assets~~ in the consolidated balance sheets. The aggregate carrying amount of these investments was $193 million and $103 million at January 26, 2018 and April 28, 2017, respectively. The Company did not recognize any significant impairment charges related to marketable equity securities during the three and nine months ended January 26, 2018 and January 27, 2017.

~~Cost method, equity method, and other investments~~

The Company holds investments in equity securities with and without readily determinable fair values, investments accounted for under the equity method, and other investments. Equity securities ~~that~~with readily determinable fair values are ~~accounted for using the cost or equity method, which are classified as~~ ~~other assets~~included in ~~the consolidated balance sheets. At January 26, 2018 and April 28, 2017, the aggregate carrying amount~~Level 1 of equity and other securities accounted for using the cost or equity method was $407 million and $589 million, respectively. Cost and equity method investments are measured at fair value on a nonrecurring basis. Changes in circumstance or the occurrence of

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~events that suggest the Company’s investment may not be recoverable are assessed quarterly. If events or changes in circumstances are identified that may have a material adverse effect on~~ the fair value ~~of the investment, the investment is assessed for impairment. Cost~~hierarchy, as they are measured using quoted market prices. Equity method investments and ~~equity method~~ investments without readily determinable fair values 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 all pertinent financial information available related to the investees, including financial statements, market participant valuations from recent and proposed equity offerings, and other third-party data.

~~During~~The following table summarizes the ~~three months ended~~Company's equity and other investments at January 24, 2020 and April 26, ~~2018,~~2019, which are classified as other assets in the ~~Company received bids from potential buyers and investors for some or all of its ownership in a~~consolidated balance sheets:


(in millions)	January 24, 2020		April 26, 2019
Investments with readily determinable fair value (marketable equity securities)	$	39	$	—
Investments without readily determinable fair values	373		308
Equity method and other investments	68		64
Total equity and other investments	$	480	$	372

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

The table below includes activity related to the Company’s portfolio of ~~selected~~equity and other investments. Gains and losses on equity and other investments ~~which indicated that the fair values of certain of the underlying cost and equity method investments~~ are recognized in other non-operating income, net in the portfolio may be below the respective carrying values. The Company determined that the decline in the fair values was other-than-temporary given the uncertainty regarding the Company’s intent to hold the investmentsconsolidated statements of income.


	Three months ended						Nine months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Proceeds from sales	$	—	$	33	$	2	$	941
Gross gains	1		8		16		131
Gross losses	—		(1)		—		(30)
Impairment losses recognized	(1)		—		(5)		(12)

Net gains recognized for ~~a period of time that would be sufficient to recover the carrying values. As a result, the Company recognized impairment charges of $227 million during~~ the three and nine months ended January ~~26, 2018, which~~24, 2020 were ~~recognized within~~ ~~investment loss~~ ~~in the consolidated statements~~$1 million and $16 million, respectively, comprised of ~~income. The fair values of the~~unrealized gains on equity and other investments ~~were determined based on Level 3 inputs. The carrying values of the investments prior to recognizing the impairment charges was $317 million. There were no other significant impairments charges~~still held at January 24, 2020. Net gains recognized during the three months ended January 25, 2019 were $7 million, comprised of $1 million net realized gains on equity and other investments sold during the period and $6 million of net unrealized gains on equity and other investments still held at January 25, 2019. Net gains recognized during the nine months ended January ~~26, 2018.~~

~~During the three~~25, 2019 were $101 million, comprised of $71 million of net realized gains on equity and ~~nine months ended January 27, 2017, the Company determined that the fair values of certain cost method~~other investments were below their carrying values and that the carrying values of these investments were not expected to be recoverable within a reasonable period of time. As a result, the Company recognized $10 million and $20 million in impairment chargessold during the ~~three~~period and ~~nine months ended~~$30 million of net unrealized gains on equity and other investments still held at January ~~27, 2017, respectively, which were recognized in~~ ~~other expense, net~~ ~~in the consolidated statements of income.~~25, 2019.

8. 7. Financing Arrangements

Commercial Paper

The Company maintains a commercial paper program that allows the Company to have a maximum of ~~$3.5~~$3.5 billion in commercial paper outstanding. ~~Commercial~~NaN commercial paper was outstanding at both January 24, 2020 and April 26, 2018 was $504 million, as compared to $901 million at April 28, 2017. During the three and nine months ended January 26, 2018, the weighted average original maturity of the commercial paper outstanding was approximately 24 and 29 days, respectively, and the weighted average interest rate was 1.44 percent and 1.33 percent, respectively.2019. The issuance of commercial paper reduces the amount of credit available under the Company’s existing Credit Facility, as defined below.

Line of Credit

The Company has a ~~$3.5~~$3.5 billionfive ~~year~~-year unsecured revolving ~~syndicated line of~~ credit facility (Credit Facility) which provides back-up funding for the commercial paper program described above. At January ~~26, 2018~~24, 2020 and April ~~28, 2017, no~~26, 2019, 0 amounts were ~~outstanding.~~outstanding under the Credit Facility.

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 ~~agreements~~agreement also ~~contain~~contains customary covenants, all of which the Company ~~remained~~was in compliance with at January ~~26, 2018.~~24, 2020.

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Debt Obligations

The Company's debt obligations consisted of the following:


(in millions, except interest rates)	Maturity by Fiscal Year	January 26, 2018			April 28, 2017
(in millions)								(in millions)	Maturity by Fiscal Year	January 24, 2020		April 26, 2019
Current debt obligations	2018 - 2019	$	2,902		$	7,520		Current debt obligations	2020 - 2021	$	844	$	838

Long-term debt								Long-term debt
5.600 percent ten-year 2009 senior notes	2019	400			400
1.700 percent two-year 2017 senior notes	2019	1,000			1,000
4.450 percent ten-year 2010 senior notes	2020	766			766
2.500 percent five-year 2015 senior notes	2020	2,500			2,500
Floating rate five-year 2015 senior notes	2020	500			500
4.200 percent ten-year 2010 CIFSA senior notes	2021	600			600
4.125 percent ten-year 2011 senior notes	2021	500			500
3.125 percent ten-year 2012 senior notes	2022	675			675
3.150 percent seven-year 2015 senior notes	2022	2,500			2,500
3.200 percent ten-year 2012 CIFSA senior notes	2023	650			650
2.750 percent ten-year 2013 senior notes	2023	530			530
2.950 percent ten-year 2013 CIFSA senior notes	2024	310			310
3.625 percent ten-year 2014 senior notes	2024	850			850
3.500 percent ten-year 2015 senior notes	2025	4,000			4,000
3.350 percent ten-year 2017 senior notes	2027	850			850
4.375 percent twenty-year 2015 senior notes	2035	2,382			2,382
6.550 percent thirty-year 2008 CIFSA senior notes	2038	374			374
6.500 percent thirty-year 2009 senior notes	2039	300			300
5.550 percent thirty-year 2010 senior notes	2040	500			500
4.500 percent thirty-year 2012 senior notes	2042	400			400
4.000 percent thirty-year 2013 senior notes	2043	325			325
4.625 percent thirty-year 2014 senior notes	2044	650			650
4.625 percent thirty-year 2015 senior notes	2045	4,150			4,150
Interest rate swaps (Note 9)	2021 - 2022	10			40
Capital lease obligations	2019 - 2025	22			23
0.000 percent two-year 2019 senior notes								0.000 percent two-year 2019 senior notes	2021	1,662		1,681
Floating rate two-year 2019 senior notes								Floating rate two-year 2019 senior notes	2021	831		560
4.125 percent ten-year 2011 senior notes								4.125 percent ten-year 2011 senior notes	2021	—		500
3.150 percent seven-year 2015 senior notes								3.150 percent seven-year 2015 senior notes	2022	1,534		2,500
3.125 percent ten-year 2012 senior notes								3.125 percent ten-year 2012 senior notes	2022	—		675
3.200 percent ten-year 2012 CIFSA senior notes								3.200 percent ten-year 2012 CIFSA senior notes	2023	650		650
0.375 percent four-year 2019 senior notes								0.375 percent four-year 2019 senior notes	2023	1,662		1,681
2.750 percent ten-year 2013 senior notes								2.750 percent ten-year 2013 senior notes	2023	530		530
0.000 percent four-year 2019 senior notes								0.000 percent four-year 2019 senior notes	2023	831		—
2.950 percent ten-year 2013 CIFSA senior notes								2.950 percent ten-year 2013 CIFSA senior notes	2024	310		310
3.625 percent ten-year 2014 senior notes								3.625 percent ten-year 2014 senior notes	2024	432		850
3.500 percent ten-year 2015 senior notes								3.500 percent ten-year 2015 senior notes	2025	2,700		4,000
0.250 percent seven-year 2019 senior notes								0.250 percent seven-year 2019 senior notes	2026	1,108		—
1.125 percent eight-year 2019 senior notes								1.125 percent eight-year 2019 senior notes	2027	1,662		1,681
3.350 percent ten-year 2017 senior notes								3.350 percent ten-year 2017 senior notes	2027	368		850
1.625 percent twelve-year 2019 senior notes								1.625 percent twelve-year 2019 senior notes	2031	1,108		1,121
1.000 percent thirteen-year 2019 senior notes								1.000 percent thirteen-year 2019 senior notes	2032	1,108		—
4.375 percent twenty-year 2015 senior notes								4.375 percent twenty-year 2015 senior notes	2035	1,931		2,382
6.550 percent thirty-year 2007 CIFSA senior notes								6.550 percent thirty-year 2007 CIFSA senior notes	2038	253		284
2.250 percent twenty-year 2019 senior notes								2.250 percent twenty-year 2019 senior notes	2039	1,108		1,121
6.500 percent thirty-year 2009 senior notes								6.500 percent thirty-year 2009 senior notes	2039	158		183
5.550 percent thirty-year 2010 senior notes								5.550 percent thirty-year 2010 senior notes	2040	224		306
1.500 percent twenty-year 2019 senior notes								1.500 percent twenty-year 2019 senior notes	2040	1,108		—
4.500 percent thirty-year 2012 senior notes								4.500 percent thirty-year 2012 senior notes	2042	105		129
4.000 percent thirty-year 2013 senior notes								4.000 percent thirty-year 2013 senior notes	2043	305		325
4.625 percent thirty-year 2014 senior notes								4.625 percent thirty-year 2014 senior notes	2044	127		177
4.625 percent thirty-year 2015 senior notes								4.625 percent thirty-year 2015 senior notes	2045	1,813		1,963
1.750 percent thirty-year 2019 senior notes								1.750 percent thirty-year 2019 senior notes	2050	1,108		—
Bank borrowings	2019 - 2021	165			139			Bank borrowings	2021 - 2022	70		83
Debt premium, net	2019 - 2045	123			135
Debt (discount) premium, net								Debt (discount) premium, net	2020 - 2050	(15)		29
Finance lease obligations								Finance lease obligations	2021 - 2033	47		10
Interest rate swaps								Interest rate swaps	N/A	—		9
Deferred financing costs	2019 - 2045	(114		)	(128		)	Deferred financing costs	2020 - 2050	(106)		(104)
Long-term debt		$	25,918		$	25,921		Long-term debt		$	24,732	$	24,486

U.S. Non-U.S.
Three months ended Three months ended
(in millions) January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Service cost $ 29
$ 29
$ 17
$ 19
Interest cost 29
27
7
6
Expected return on plan assets (51 ) (47 ) (13 ) (12 )
Amortization of net actuarial loss 20
23
4
4
Plan settlement 15
—
—
—
Net periodic benefit cost $ 42
$ 32
$ 15
$ 17

U.S. Non-U.S.
Nine months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Service cost $ 87
$ 87
$ 51
$ 57
Interest cost 89
81
21
18
Expected return on plan assets (155 ) (141 ) (39 ) (36 )
Amortization of net actuarial loss 60
69
12
12
Plan settlement 15
—
—
—
Net periodic benefit cost $ 96
$ 96
$ 45
$ 51

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

15. 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 leasestypically 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 the three and nine months ended January 24, 2020 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 are not material to the consolidated financial statements at or for the three and nine months ended January 24, 2020. 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.

Additionally, from time to time, the Company subleases portions of its real-estate property, resulting in sublease income. Sublease income and the related assets and cash flows were not material to the consolidated financial statements at or for the three and nine months ended January 24, 2020.

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 January 24, 2020:


(in millions)	Balance Sheet Classification	January 24, 2020

Right-of-use assets	Other assets	$	995
Current liability	Other accrued expenses	169
Non-current liability	Other liabilities	851

The following table summarizes the weighted-average remaining lease term and weighted-average discount rate for the Company's operating leases at January 24, 2020:


						January 24, 2020
Weighted-average remaining lease term						7.5 years



Weighted-average discount rate						3.0%

The following table summarizes the components of total operating lease cost for the three and nine months ended January 24, 2020:


	Three months ended		Nine months ended
(in millions)	January 24, 2020		January 24, 2020
Operating lease cost	$	59	$	170
Short-term lease cost	10		32

Total operating lease cost	$	69	$	202

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

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 the nine months ended January 24, 2020:


	Nine months ended
(in millions)	January 24, 2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	167
Right-of-use assets obtained in exchange for operating lease liabilities	178

The following table summarizes the maturities of the Company's operating leases at January 24, 2020:


(in millions) Fiscal Year	Operating Leases
Remaining 2020	$	81
2021	203
2022	171
2023	147
2024	125
Thereafter	448
Total expected lease payments	1,175
Less: Imputed interest	(155)
Total lease liability	$	1,020

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 three and nine months ended January 24, 2020.

As disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended April 26, 2019, minimum payments under non-cancelable operating leases at April 26, 2019 were:


(in millions) Fiscal Year	Operating Leases
2020	$	216
2021	157
2022	103		��
2023	61
2024	34
Thereafter	81
Total minimum lease payments	$	652

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

16. Accumulated Other Comprehensive ~~Income and Supplemental Equity Disclosure~~Loss

The following table provides changes in AOCI, net of tax, and by ~~component.~~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 26, 2019	$	(45)	$	(1,383)	$	(169)	$	(1,308)	$	194	$	(2,711)
Other comprehensive income (loss) before reclassifications	94		(116)		187		(1)		106		270
Reclassifications	(1)		—		—		39		(143)		(105)
Other comprehensive income (loss)	93		(116)		187		38		(37)		165
January 24, 2020	$	48	$	(1,499)	$	18	$	(1,270)	$	157	$	(2,546)


(in millions)	Unrealized (Loss) Gain on Investment Securities		Cumulative Translation Adjustment		Net Investment Hedges		Net Change in Retirement Obligations		Unrealized (Loss) Gain on Cash Flow Hedges		Total Accumulated Other Comprehensive (Loss) Income
April 27, 2018	$	(194)	$	(11)	$	(257)	$	(1,117)	$	(207)	$	(1,786)
Other comprehensive (loss) income before reclassifications	(7)		(1,124)		—		—		353		(778)
Reclassifications	30		—		—		65		(36)		59
Other comprehensive income (loss)	23		(1,124)		—		65		317		(719)
Cumulative effect of change in accounting principle⁽¹⁾	47		—		—		—		—		47
January 25, 2019	$	(124)	$	(1,135)	$	(257)	$	(1,052)	$	110	$	(2,458)

(in millions) Unrealized (Loss) Gain on Available-for-Sale Securities Cumulative Translation Adjustment Net Change in Retirement Obligations Unrealized (Loss) Gain on Derivative Financial Instruments Total Accumulated Other Comprehensive (Loss) Income
April 28, 2017 $ (69 ) $ (1,452 ) $ (1,129 ) $ 37
$ (2,613 )
Other comprehensive income (loss) before reclassifications 50
1,559
(38 ) (351 ) 1,220
Reclassifications (9 ) (34 ) 49
5
11
Other comprehensive income (loss) 41
1,525
11
(346 ) 1,231
January 26, 2018 $ (28 ) $ 73
$ (1,118 ) $ (309 ) $ (1,382 )

(in millions) Unrealized (Loss) Gain on Available-for-Sale Securities Cumulative Translation Adjustment Net Change in Retirement Obligations Unrealized (Loss) Gain on Derivative Financial Instruments Total Accumulated Other Comprehensive (Loss) Income
April 29, 2016 $ (107 ) $ (474 ) $ (1,197 ) $ (90 ) $ (1,868 )
Other comprehensive income (loss) before reclassifications (25 ) (1,239 ) —
255
(1,009 )
Reclassifications (15 ) —
66
(53 ) (2 )
Other comprehensive income (loss) (40 ) (1,239 ) 66
202
(1,011 )
January 27, 2017 $ (147 ) $ (1,713 ) $ (1,131 ) $ 112
$ (2,879 )
(1) The cumulative effect of change in accounting principle during the first quarter of fiscal year 2019 resulted from the adoption of accounting guidance that requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. As a result of the adoption, the Company reclassified $47 million from accumulated other comprehensive loss to the opening balance of retained earnings as of April 28, 2018.

The income tax on gains and losses on ~~available-for-sale~~investment securities in other comprehensive income before reclassifications during the nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017~~25, 2019 was an expense of ~~$33~~$7 million and $5a benefit of $2 million, respectively. During the nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017,~~25, 2019, realized gains and losses on ~~available-for-sale~~investment securities reclassified from AOCI were reduced by income taxes of $4$1 million and $8$2 million, respectively. When realized, gains and losses on ~~available-for-sale~~investment securities reclassified from AOCI are recognized within other ~~expense,~~non-operating income, net. Refer to Note 76 to the consolidated financial statements for additional information.

For the nine months ended January ~~26, 2018,~~24, 2020, there was no0 income tax impact on cumulative translation adjustments. However, due to recently enacted U.S. Tax Reform and change in permanently reinvested assertion with respect to certain earnings, the Company continues to evaluate the tax impact these events may have on cumulative translation adjustments. For the nine months ended January ~~27, 2017, taxes were not provided~~25, 2019, there was a $8 million income tax benefit on cumulative translation ~~adjustments as substantially all translation adjustments relate~~adjustments.

During the nine months ended January 24, 2020 and January 25, 2019, there were 0 tax impacts on net investment hedges. Refer to ~~earnings that were intended~~Note 8 to ~~be indefinitely reinvested outside~~ the ~~U.S.~~consolidated financial statements for additional information.

The net change in retirement obligations in other comprehensive income includes ~~net~~ 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 the nine months ended January 26, 2018 was a benefit of $6 million.~~ During the nine months ended January ~~27, 2017,~~24, 2020 and January 25, 2019, there ~~was no~~were 0 income tax ~~impact~~impacts on the net change in retirement obligations in other comprehensive income before reclassifications. During the nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017,~~25, 2019, the gains and losses on defined benefit and pension items reclassified from AOCI were reduced by income taxes of ~~$21~~$9 million and $15 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 1514 to the consolidated financial statements for additional information.

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

The income tax on unrealized gains and losses on ~~derivative financial instruments~~cash flow hedges in other comprehensive income before reclassifications during the nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017~~25, 2019 was ~~a benefit of $156 million and~~ an expense of ~~$145~~$38 million and $116 million, respectively. During the nine months ended January ~~26, 2018, there was no income tax impact on the~~24, 2020 and January 25, 2019, gains and losses on ~~derivative financial instruments reclassified from AOCI. During the nine months ended January 27, 2017, gains and losses on derivative financial instruments~~cash flow hedges reclassified from AOCI were reduced by income taxes of ~~$32 million.~~$47 million and $16 million, respectively. When realized, ~~cash flow hedge~~ gains and losses on currency exchange rate contracts reclassified from AOCI are recognized within other operating (income) expense, net, and gains and losses on forward starting interest rate ~~derivative financial instrument gains and losses~~derivatives reclassified from AOCI are recognized within interest ~~expense, net~~.expense. Refer to Note 98 to the consolidated financial statements for additional information.

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~The supplemental equity schedule below presents changes in the Company's total shareholders' equity and noncontrolling interests for the nine months ended January 26, 2018 and January 27, 2017.~~

(in millions) Total Shareholders' Equity Noncontrolling Interests Total Equity
April 28, 2017 $ 50,294
$ 122
$ 50,416
Net income (loss) 1,644
(14 ) 1,630
Other comprehensive income 1,231
—
1,231
Dividends to shareholders (1,870 ) —
(1,870 )
Issuance of shares under stock purchase and award plans 266
—
266
Repurchase of ordinary shares (1,897 ) —
(1,897 )
Stock-based compensation 270
—
270
Cumulative effect of change in accounting principle 296
—
296
Additions (reductions) of noncontrolling ownership interests —
(2 ) (2 )
January 26, 2018 $ 50,234
$ 106
$ 50,340

(in millions) Total Shareholders' Equity Noncontrolling Interests Total Equity
April 29, 2016 $ 52,063
$ —
$ 52,063
Net income (loss) 2,865
(5 ) 2,860
Other comprehensive loss (1,011 ) —
(1,011 )
Dividends to shareholders (1,782 ) —
(1,782 )
Issuance of shares under stock purchase and award plans 309
—
309
Repurchase of ordinary shares (3,409 ) —
(3,409 )
Tax benefit from exercise of stock-based awards

80
—
80
Stock-based compensation 272
—
272
Additions (reductions) of noncontrolling ownership interests —
111
111
January 27, 2017 $ 49,387
$ 106
$ 49,493

17. Commitments and Contingencies

Legal Matters

The Company and its affiliates are involved in a number of legal actions involving product liability, intellectual property and commercial disputes, shareholder related matters, environmental proceedings, ~~income~~ 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 litigation charges and gains related to significant legal matters as certain litigation charges. During the three and nine months ended January 24, 2020, the Company recognized $108 million and $276 million, respectively, of certain litigation charges related to probable and estimable damages for significant legal matters. During the three and nine months ended January 25, 2019, the Company recognized $63 million and $166 million, respectively, of certain litigation charges. At January ~~26, 2018~~24, 2020 and April ~~28, 2017,~~26, 2019, accrued litigation was approximately ~~$1.0~~$0.6 billion and ~~$1.1~~

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

$0.5 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.

Product Liability Matters

~~Sprint Fidelis~~

In 2007, a putative class action was filed in the Ontario Superior Court of Justice in Canada seeking damages for personal injuries allegedly related to the Company's Sprint Fidelis family of defibrillation leads. On October 20, 2009, the court certified a class proceeding but denied class certification on plaintiffs' claim for punitive damages. Pretrial proceedings are underway. The Company has recognized an expense for probable and estimable damages related to this matter, and accrued expenses for this matter are included within accrued litigation as discussed above.

~~INFUSE Litigation~~

The Company estimated law firms representing approximately 6,000 claimants asserted or intended to assert personal injury claims against Medtronic in the U.S. state and federal courts involving the INFUSE bone graft product. As of June 1, 2017, the Company had reached agreements to settle substantially all of these claims, resolving this litigation. The Company's accrued expenses for this matter are included within accrued litigation as discussed above.

Pelvic Mesh Litigation

The Company ~~through the acquisition of Covidien,~~ is currently involved in litigation in various state and federal courts against manufacturers of pelvic mesh products alleging personal injuries resulting from the implantation of those products. ~~Two~~NaN subsidiaries of Covidien supplied pelvic mesh products to ~~one~~1 of the manufacturers, C.R. Bard (Bard), named in the litigation. The litigation includes a federal multi-district litigation in the U.S. District Court for the Northern District of West Virginia and cases in various state courts and jurisdictions outside the U.S. Generally, complaints allege design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. In fiscal year 2016, Bard paid the Company $121 million towards the settlement of 11,000 of these claims. In May 2017, the agreement with Bard was amended to extend the terms to apply to up to an additional 5,000 claims. That agreement does not resolve the dispute between the Company and Bard with respect to claims that do not settle, if any. As part of the agreement, the Company and Bard agreed to dismiss without prejudice their pending litigation with respect to Bard’s obligation to defend and indemnify the Company. The Company estimates law firms representing approximately ~~15,800~~16,000 claimants have asserted or may assert claims involving products manufactured by Covidien’s subsidiaries. As of ~~March 1, 2018,~~February 5, 2020, the Company had reached agreements to settle

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

approximately ~~13,400~~15,400 of these claims. The Company's accrued expenses for this matter are included within accrued litigation as discussed above.

Patent Litigation

Ethicon

On December 14, 2011, Ethicon filed an action against Covidien in the U.S. District Court for the Southern District of Ohio, alleging patent infringement and seeking monetary damages and injunctive relief. On January 22, 2014, the district court entered summary judgment in Covidien's favor, and the majority of this ruling was affirmed by the Federal Circuit on August 7, 2015.Following appeal, the case was remanded back to the District Court with respect to ~~one~~1 patent. On January 21, 2016, Covidien filed a second action in the U.S. District Court for the Southern District of Ohio, seeking a declaration of non-infringement with respect to a second set of patents held by Ethicon. The court consolidated this second action with the remaining patent issues from the first action. Following consolidation of the cases, Ethicon dismissed ~~six~~6 of the asserted patents, leaving a single asserted patent. In addition to claims of non-infringement, the Company asserts an affirmative defense of invalidity. The Company has not recognized an expense related to damages in connection with this matter, because any potential loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from this matter.

~~Medtronic plc~~Sasso

~~Notes~~The Company is involved in litigation in Indiana relating to ~~Consolidated Financial Statements~~

~~(Unaudited)~~

certain patent and royalty disputes with Dr. Sasso under agreements originally entered into in 1999 and 2001. On November 28, 2018, a jury in Indiana state court returned a verdict against the Company for approximately $112 million. The Company has strong arguments to appeal the verdict and has filed post-trial motions and appeals with the appropriate appellate courts. The Company's accrued expenses for this matter are included within accrued litigation as discussed above.

Shareholder Related Matters

~~INFUSE~~Covidien Acquisition

On March 12, 2012, Charlotte Kokocinski (Kokocinski) filed a shareholder derivative action against both Medtronic, Inc. and certain of its current and former officers and directors in the U.S. District Court for the District of Minnesota, setting forth certain allegations, including a claim that defendants violated various purported duties in connection with the INFUSE bone graft product and otherwise. On March 25, 2013, the District Court dismissed the case without prejudice, and Kokocinski subsequently filed an amended complaint. On March 30, 2015, the District Court granted defendants’ motion to dismiss the amended complaint, dismissing the case with prejudice. Kokocinski sought reconsideration of that decision, and, on September 30, 2015, the District Court denied Kokocinski’s request for reconsideration. Kokocinski appealed the District Court’s decision to the U.S. Court of Appeals for the Eighth Circuit. On March 1, 2017, the Eighth Circuit Court of Appeals affirmed the lower Court’s dismissal of the case with prejudice, and on April 11, 2017, the Eighth Circuit rejected Kokocinski’s request for reconsideration. In September 2017, Kokocinski filed a petition for certiorari requesting review of the Eighth Circuit decision by the United States Supreme Court. On January 18, 2018, the United States Supreme Court denied Kokocinski’s petition for certiorari, allowing the lower court’s dismissal of the case with prejudice to stand and bringing this matter to a conclusion.

West Virginia Pipe Trades and Phil Pace, on June 27, 2013 and July 3, 2013, respectively, filed putative class action complaints against Medtronic, Inc. and certain of its officers in the U.S. District Court for the District of Minnesota, alleging that the defendants made false and misleading public statements and engaged in a scheme to defraud regarding the INFUSE Bone Graft product during the period of December 8, 2010 through August 3, 2011. The matters were consolidated in September 2013, and in the consolidated complaint plaintiffs alleged a class period of September 28, 2010 through August 3, 2011. On September 30, 2015, the District Court granted defendants’ motion for summary judgment in the consolidated matters. Plaintiffs appealed the dismissal to the U.S. Court of Appeals for the Eighth Circuit, and in December of 2016 the Eighth Circuit Court reversed and remanded the case to the District Court for further proceedings. On January 30, 2018, the District Court issued an order certifying a class for the period of September 8, 2010 through June 28, 2011. The Company has not recognized an expense related to damages in connection with this matter, because any potential loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.

~~COVIDIEN ACQUISITION~~

On July 2, 2014, Lewis Merenstein filed a putative shareholder class action in Hennepin County, Minnesota, District Court seeking to enjoin the then-potential acquisition of Covidien. The lawsuit named Medtronic, Inc., Covidien, and each member of the Medtronic, Inc. Board of Directors at the time as defendants, and alleged that the directors breached their fiduciary duties to shareholders with regard to the then-potential acquisition. On August 21, 2014, Kenneth Steiner filed a putative shareholder class action in Hennepin County, Minnesota, District Court, also seeking an injunction to prevent the potential Covidien acquisition. In September 2014, the Merenstein and Steiner matters were consolidated and in December 2014, the plaintiffs filed a preliminary injunction motion seeking to enjoin the Covidien transaction. On December 30, 2014, a hearing was held on plaintiffs’ motion for preliminary injunction and on defendants’ motion to dismiss. On January 2, 2015, the District Court denied the plaintiffs’ motion for preliminary injunction and on January 5, 2015 issued its opinion. On March 20, 2015, the District Court issued ~~its~~an order and opinion granting Medtronic’s motion to dismiss the case. In May of 2015, the plaintiffs filed an appeal, and, in January of 2016, the Minnesota State Court of Appeals affirmed in part, and reversed in part, and remanded the case to the District Court for further proceedings. In February of 2016, the Company petitioned the Minnesota Supreme Court to review the decision of the Minnesota State Court of Appeals, and onpart. On April 19, 2016 the Minnesota Supreme Court granted the Company’s petition onto review the issue of whether most of the original claims are properly characterized as direct or derivative under Minnesota law. In August of 2017, the Minnesota Supreme Court affirmed the decision of the Minnesota State Court of Appeals, sending the matter back to the trial court for further ~~proceedings.~~proceedings, which are ongoing. The Company has not recognized an expense related to damages in connection with this matter, because any potential loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.

~~HEARTWARE~~

On January 22, 2016, the St. Paul Teachers’ Retirement Fund Association filed a putative class action complaint (the “Complaint”) in the United States District Court for the Southern District of New York against HeartWare on behalf of all persons and entities who purchased or otherwise acquired shares of HeartWare from June 10, 2014 through January 11, 2016 (the “Class Period”). The Complaint was amended on June 29, 2016 and claims HeartWare and one of its executives violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false and misleading statements about, among other things, HeartWare’s response to a June 2014 U.S. FDA warning letter, the development of the Miniaturized Ventricular Assist Device (MVAD) System and the proposed acquisition of Valtech Cardio Ltd. The Complaint seeks to recover damages on behalf of all purchasers or acquirers of

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~HeartWare’s stock during the Class Period. In August of 2016 the Company acquired HeartWare. The Company's accrued expenses for this matter are included within accrued litigation as discussed above.~~

Environmental Proceedings

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

The Company is a successor to a company which owned and operated a chemical manufacturing facility in Orrington, Maine from 1967 until 1982, and is responsible for the costs of completing an environmental site investigation as required by the Maine Department of Environmental Protection (MDEP). MDEP served a compliance order on Mallinckrodt LLC and U.S. Surgical Corporation, subsidiaries of Covidien, in December 2008, which included a directive to remove a significant volume of soils at the site. After a hearing on the compliance order before the Maine Board of Environmental Protection (Maine Board) to challenge the terms of the compliance order, the Maine Board modified the MDEP order and issued a final order requiring

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

removal of ~~two~~2 landfills, capping of the remaining ~~three~~3 landfills, installation of a groundwater extraction system and long-term monitoring of the site and the ~~three~~3 remaining landfills.

The Company has proceeded with implementation of the investigation and remediation at the site in accordance with the MDEP order as modified by the Maine Board order.

~~The~~

Since the early 2000s, the Company ~~has~~or its predecessors have also been involved in a lawsuit filed in the U.S. District Court for the District of Maine by the Natural Resources Defense Council and the Maine People’s Alliance. Plaintiffs sought an injunction requiring ~~Covidien~~the Company's predecessor to conduct extensive studies of mercury contamination of the Penobscot River and Bay and options for remediating such contamination, and to perform appropriate remedial activities, if necessary.

~~On July 29, 2002, following~~

Following a trial in March 2002, ~~trial,~~ the ~~District~~ Court ~~entered an opinion and order which~~ held that conditions in the Penobscot River and Bay may pose an imminent and substantial endangerment and that ~~Covidien~~the Company’s predecessor was liable for the cost of performing a study of the ~~river~~River and ~~bay. The District~~Bay. Following a second trial in June 2014, the Court ~~subsequently appointed an independent study panel to oversee the study and~~ ordered Covidien to pay costs associated with the study. A report issued by the study panel contains recommendations for a variety of potential remedial options which could be implemented individually or in a variety of combinations, and included preliminary cost estimates for a variety of potential remedial options, which the report describes as “very rough estimates of cost,” ranging from $25 million to $235 million. The report indicates that these costs are subject to uncertainties, and that before any remedial option is implemented, further engineering studies and engineering design work are necessary to determine the feasibility of the proposed remedial options. In June of 2014, a trial was held to determine if remediation was necessary and feasible, and on September 2, 2015, the District Court issued an order concluding that further engineering study and engineering design work ~~is appropriate~~was needed to determine the nature and extent of remediation in the Penobscot River and Bay. ~~In January of 2016, the~~The Court also appointed an engineering firm to conduct such studies and issue a report on potential remediation alternatives. In connection with these proceedings, reports have been produced including a variety of cost estimates for a variety of potential remedial options. A third trial to determine the ~~next phase~~course of ~~the study. The study~~remediation to be pursued is ~~targeted for completion~~scheduled to occur in ~~calendar~~fiscal year ~~2018.~~2021.

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

Government Matters

Medtronic received subpoenas or document requests from the Attorneys General in Massachusetts, California, Oregon, Illinois, and Washington seeking information regarding sales, marketing, clinical, and other information relating to the INFUSE bone graft product. In DecemberSince 2017, ~~Medtronic and the states reached agreement to resolve these matters. Medtronic admitted no wrongdoing in connection with the agreement.~~

~~Since 2011,~~ the Company has ~~responded~~been responding to requests from the Department of Justice and U.S. Department of ~~Justice~~Health and Human Services for information about business practices relating to ~~several~~a neurovascular ~~products. The requests seek information dating back to 2010, in connection with neurovascular products~~product developed and first marketed by ~~Covidien or one of its predecessors, including ev3.~~ev3 and Covidien. The Company has ~~fully cooperated~~provided information in response to these requests and ~~continues to cooperate~~is cooperating with the ~~requests, which are at various stages. The Company’s accrued expenses for the matters are included within accrued litigation as discussed above.~~

Since 2014, the Company has responded to requests from the U.S. Department of Health and Human Services and the U.S. Department of Justice for information about business practices relating to several peripheral vascular products. The requests seek information dating back to 2009, in connection with peripheral vascular products developed and first marketed by Covidien or one of its predecessors, including ev3. The Company has fully cooperated and continues to cooperate with the requests, which are at various stages.inquiry. The Company has not recognized an expense ~~related to damages~~ in connection with ~~this matter~~any ongoing investigation, because any

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

such potential loss is not currently probable or reasonably estimable under U.S. GAAP. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from ~~this matter.~~the ongoing information requests.

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. On December 23, 2010, the IRS issued a statutory notice of deficiency with respect to the remaining issues. Medtronic, Inc. filed a petition with the U.S. Tax Court on March 21, 2011 objecting to the deficiency. During October and November 2012, Medtronic, Inc. reached resolution with the IRS on various matters, including the deductibility of a settlement payment. Medtronic, Inc. and the IRS agreed to hold one issue, the calculation of amounts eligible for the one-time repatriation holiday, because such specific issue was being addressed by other taxpayers in litigation with the IRS. The remaining unresolved issue for fiscal years 2005 and 2006 relates to the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico, which is one of the Company's key manufacturing sites. The U.S. Tax Court ~~proceeding with respect to~~reviewed this ~~issue began~~dispute, and on ~~February 3, 2015 and ended on March 12, 2015. On~~ June 9, 2016, ~~the U.S. Tax court~~ issued its opinion with respect to the allocation of income between ~~Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico~~the parties for fiscal years 2005 and 2006. The U.S. Tax Court generally rejected the IRS’s position, but also made certain modifications to the Medtronic, Inc. tax returns as filed. During November 2016, Medtronic and the IRS entered into a Stipulation of Settled Issues with the Tax Court which resolved the one-time repatriation holiday as an outstanding issue unless either party decided to appeal the Tax Court Opinion and a final decision is inconsistent with the U.S. Tax Court Opinion. The U.S. Tax Court entered their final decision on January 25, 2017. On April 21, 2017, the IRS filed their Notice of Appeal to the U.S. Court of Appeals for the 8th Circuit regarding the Tax Court Opinion. Oral argument for the Appeal ~~has been scheduled for~~occurred on March 14, 2018. The 8th Circuit Court of Appeals issued their opinion on August 16, 2018, and remanded the case back to the U.S. Tax Court for additional factual findings. U.S. Tax Court trial is scheduled to occur in April of 2020.

In October 2011, the IRS issued its audit report on Medtronic, Inc. for fiscal years 2007 and 2008. Medtronic, Inc. reached agreement with the IRS on some, but not all matters related to these fiscal years. During the first quarter of fiscal year 2016, the Company finalized its agreement with the IRS on the proposed adjustments associated with the tax effects of the Company's acquisition of Kyphon Inc. (Kyphon). The settlement was consistent with the certain tax adjustment recorded during the fourth quarter of fiscal year 2015. During the first quarter of fiscal year 2017, an expected settlement was reached with the IRS for all outstanding issuesremaining unresolved issue for fiscal years 2007 and 2008 ~~except for~~relates to 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 Case for fiscal years 2005 and 2006.

In April 2014, the IRS issued its audit report on Medtronic, Inc. for fiscal years 2009, 2010, and 2011. Medtronic, Inc. reached agreement with the IRS on some but not all matters related to these fiscal years. ~~During the first quarter of fiscal year 2017, an expected settlement was reached with the IRS for all outstanding issues~~The remaining unresolved issue for fiscal years 2009, 2010, and 2011 ~~except for~~relates to 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 Case for fiscal years 2005 and 2006.

In May 2017, the IRS issued its audit report on Medtronic, Inc. for fiscal years 2012, 2013, and 2014. Medtronic, Inc. reached agreement with the IRS on some but not all matters related to these fiscal years. The significant issues that remain unresolved relate to the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico, and proposed adjustments associated with the utilization of certain net operating losses. The Company disagrees with the IRS and will attempt to resolve these matters at the IRS Appellate level.

Medtronic, Inc.’s fiscal years 2015 and 2016 U.S. federal income tax returns are currently being audited by the IRS.

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Covidien and the IRS have concluded and reached agreement on its audit of Covidien’s U.S. federal income tax returns for all tax years through ~~2009. The IRS continues to audit Covidien’s U.S. federal income tax returns for the years 2010 through~~ 2012. The statute of limitations for Covidien’s 2013 and 2014 U.S. federal income tax returns lapsed during the first quarter of fiscal years 2018 and 2019, respectively. Covidien's fiscal year ~~2018.~~2015 U.S. federal income tax returns are currently being audited by the IRS. The statute of limitations for Covidien's 2016 U.S. federal income tax return lapsed during the third quarter of fiscal year 2020.

While 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.

~~See~~Refer to Note 1211 for additional discussion of income taxes.

Guarantees

As a result of the acquisition of Covidien, the Company has a guarantee ~~commitments and indemnifications with Tyco International, TE Connectivity Ltd. (TE Connectivity), and Mallinckrodt plc (Mallinckrodt) which relate~~commitment related to certain contingent tax ~~liabilities.~~

~~On June 29, 2007, Covidien entered into~~liabilities as a party to the Tax Sharing Agreement ~~under which~~that was entered into on June 29, 2007, between Covidien, ~~shares responsibility for~~Tyco International (now Johnson Controls), and Tyco Electronics (now TE Connectivity), associated with the spin-off from Tyco. The Tax Sharing Agreement covers certain ~~of its, Tyco International’s and TE Connectivity’s~~ income tax liabilities for periods prior to ~~Covidien’s 2007 separation from Tyco~~

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~International (2007 separation). Covidien, Tyco International~~and including the spin-off. Medtronic’s share of the income tax liabilities for these periods is 42 percent, with Johnson Controls and TE Connectivity share ~~42 percent,~~being 27 percent, and 31 percent, respectively, of U.S. income tax liabilities that arise from adjustments made by tax authorities to Covidien's, Tyco International’s and TE Connectivity’s U.S. income tax returns, certain income tax liabilities arising from adjustments made by tax authorities to intercompany transactions or similar adjustments, and certain taxes attributable to internal transactions undertaken in anticipation of the 2007 separation.respectively. If ~~Tyco International~~Johnson Controls and TE Connectivity default on their obligations to the Company under the Tax Sharing Agreement, the Company would be liable for the entire amount of these liabilities. All costs and expenses associated with the management of these tax liabilities are being shared equally among the parties.

~~In connection~~ The most significant amounts at risk under this Tax Sharing Agreement were resolved with the 2007 separation, all tax liabilities associated with Covidien business became Covidien’s tax liabilities. Following Covidien’s spin-off of its Pharmaceuticals business to Covidien shareholders through a distribution of all the outstanding ordinary shares of Mallinkrodt (2013 separation), Mallinckrodt became the primary obligor to the taxing authorities for the tax liabilities attributable to its subsidiaries, a significant portion of which relate to periods prior to the 2007 separation.U.S. Tax Court and IRS Appeals resolutions reached in May 2016. However, Covidien remains the sole party subject to the Tax Sharing Agreement. Accordingly, Mallinckrodt does not share in the Company’s liability to Tyco International and TE Connectivity, nor in the receivable that the Company has from Tyco International and TE Connectivity.

~~If any party to~~ the Tax Sharing Agreement ~~were~~remains in place with respect to default in its obligation to another party to pay its share of the distribution taxes that arise as a result of no party’s fault, each non-defaulting party would be required to pay, equally with any other non-defaulting party, the amounts in default. In addition, if another party to the Tax Sharing Agreement that is responsible for all or a portion of an income tax ~~liability were to default in its payment~~liabilities that are not the subject of such ~~liability to a taxing authority, the Company could be legally liable under applicable~~resolution, including certain state and international tax law for such liabilities and be required to make additional tax payments. Accordingly, under certain circumstances, the Company may be obligated to pay amounts in excess of the Company’s agreed upon share of Covidien's, Tyco International’s and TE Connectivity’s tax liabilities.matters that remain open.

The Company has used available information to develop its best estimates for certain assets and liabilities related to periods prior to the 2007 separation, including amounts subject to or impacted by the provisions of the Tax Sharing Agreement. The actual amounts that the Company may be required to ultimately accrue or pay under the Tax Sharing Agreement, however, could vary depending upon the outcome of the unresolved tax matters. Final determination of the balances will be made in subsequent periods, primarily related to ~~certain pre-2007 separation tax liabilities and~~ tax years that remain open for examination. These balances will also be impacted by the filing of final or amended income tax returns in certain jurisdictions where those returns include a combination of Tyco International, Covidien and/or ~~TE Connectivity~~Tyco Electronics legal entities for periods prior to the 2007 separation. ~~The resolutions with the U.S. Tax Court and IRS Appeals for fiscal years 1997 through 2007 were finalized during May 2016. However, the Tax Sharing Agreement remains in place with respect~~

Refer to ~~income tax liabilities that are not the subject of such resolution.~~

In conjunction with the 2013 separation, Mallinckrodt assumed the tax liabilities that are attributable to its subsidiaries, and Covidien indemnified Mallinckrodt to the extent that such tax liabilities arising from periods prior to 2013 exceed $200 million, net of certain tax benefits realized. In addition, in connection with the 2013 separation, Covidien entered into certain other guarantee commitments and indemnifications with Mallinckrodt.

~~See~~ Note 1 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended April ~~28, 2017~~26, 2019 for additional information.

As part of the Company’s ~~Minimally Invasive Therapies Group~~ sale of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses to Cardinal on July 29, 2017, the Company has indemnified Cardinal for certain contingent tax liabilities related to the divested businesses that existed prior to the date of divestiture. The actual amounts that the Company may be required to ultimately accrue or pay could vary depending upon the outcome of the unresolved tax matters. ~~Final determination of the balances will be made in subsequent periods, the majority of which the Company expects to be resolved within fiscal year 2018.~~

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, or cash flows.

18. Segment and Geographic Information

Segment disclosures are on a performance basis consistent with internal management reporting. Net sales of the Company's reportable segments include end-customer revenues from the sale of products the segment develops, manufactures, and distributes. There are certain corporate and centralized expenses that are not allocated to the segments.

The Company’s management evaluates performance of the segments and allocates resources based on segment operating profit. Segment operating profit represents income before income taxes, excluding interest expense, amortization of intangible assets, centralized distribution costs, non-operating income or expense items, certain corporate charges, and other items not allocated

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

18. ~~Segment and Geographic Information~~

~~Segment Information~~

to the segments. The ~~Company’s management evaluates segment~~financial information that is regularly reviewed by the Company's chief operating decision maker to assess performance and ~~allocates~~allocate resources ~~based~~changed during the first quarter of fiscal year 2020 to remove the impact of non-service pension and post-retirement benefit costs from segment results. This change did not have a material impact on ~~net sales and earnings before interest expense, net, income tax provision, and amortization~~the segment results reviewed. As a result of ~~intangible assets, not including centralized distribution costs and corporate charges, as presented in~~ the ~~table below.~~ change, the Company has revised the disclosure for the prior period to align with the current presentation.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in Note 1 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended April ~~28, 2017.~~26, 2019. 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.

The following tables present reconciliations of financial information ~~that is regularly reviewed by~~from the segments to the applicable line items in the Company's chief operating decision maker to assess performance and allocate resources changed during fiscal year 2017. As a result, the Company has revised the disclosure for the prior period to align with current presentation.consolidated financial statements:

Net sales of the Company’s reportable segments include end-customer revenues from the sale of products each reportable segment develops and manufactures or distributes. Segment disclosures are on a performance basis consistent with internal management reporting. Certain corporate and centralized expenses are not allocatedSales


	Three months ended⁽¹⁾						Nine months ended⁽¹⁾
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Cardiac and Vascular Group	$	2,819	$	2,786	$	8,464	$	8,455
Minimally Invasive Therapies Group	2,176		2,124		6,418		6,223
Restorative Therapies Group	2,111		2,026		6,235		5,968
Diabetes Group	610		610		1,798		1,765
Total	$	7,717	$	7,546	$	22,916	$	22,411

(1) The data in this schedule has been intentionally rounded to the ~~segments. Net sales~~nearest million and, ~~earnings before interest expense, net, income tax provision, and amortization of intangible assets,~~therefore, may not ~~including centralized distribution costs and corporate charges by reportable segment are as follows:~~sum.

Three months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Cardiac and Vascular Group $ 2,800
$ 2,548
$ 8,219
$ 7,650
Minimally Invasive Therapies Group 2,041
2,417
6,479
7,314
Restorative Therapies Group 1,944
1,817
5,616
5,415
Diabetes Group 584
501
1,495
1,415
Net Sales $ 7,369
$ 7,283
$ 21,809
$ 21,794

Three months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Cardiac and Vascular Group $ 1,082
$ 965
$ 3,197
$ 2,936
Minimally Invasive Therapies Group 797
820
2,433
2,530
Restorative Therapies Group 756
717
2,186
2,087
Diabetes Group 187
185
389
502
Reportable segments' EBITA before other adjustments 2,822
2,687
8,205
8,055
Amortization of intangible assets (461 ) (497 ) (1,375 ) (1,484 )
Restructuring and associated costs (30 ) (21 ) (62 ) (172 )
Acquisition-related items (30 ) (68 ) (101 ) (148 )
Certain litigation charges (61 ) (218 ) (61 ) (300 )
IPR&D impairment (46 ) —
(46 ) —
Divestiture-related items —
—
(115 ) —
Gain on sale of businesses —
—
697
—
Special charge —
(100 ) (80 ) (100 )
Hurricane Maria —
—
(34 ) —
Impact of inventory step-up —
—
—
(38 )
Centralized distribution costs (471 ) (364 ) (1,399 ) (1,211 )
Interest expense, net (172 ) (180 ) (539 ) (532 )
Corporate (524 ) (272 ) (1,140 ) (903 )
Income before income taxes $ 1,027
$ 967
$ 3,950
$ 3,167

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Segment Operating Profit


	Three months ended						Nine months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Cardiac and Vascular Group	$	1,101	$	1,076	$	3,284	$	3,262
Minimally Invasive Therapies Group	860		828		2,453		2,396
Restorative Therapies Group	898		824		2,531		2,394
Diabetes Group	158		190		456		538
Segment operating profit	3,017		2,918		8,724		8,590
Interest expense	(156)		(243)		(930)		(726)
Other non-operating income, net	96		71		305		309
Amortization of intangible assets	(436)		(436)		(1,317)		(1,327)
Corporate	(348)		(331)		(1,005)		(974)
Centralized distribution costs	(348)		(383)		(1,117)		(1,313)
Restructuring and associated costs	(97)		(66)		(315)		(256)
Acquisition-related items	(28)		(17)		(74)		(57)
Certain litigation charges	(108)		(63)		(276)		(166)
IPR&D charges	—		(11)		—		(26)
Exit of businesses	—		(69)		(41)		(149)
Debt tender premium and other charges	—		—		7		—
Medical device regulations	(13)		—		(31)		—
Contribution to Medtronic Foundation	—		—		(80)		—

Income before income taxes	$	1,579	$	1,370	$	3,850	$	3,905

Geographic Information

Net sales are attributed to ~~external customers by geography~~the country based on the location of the customer taking possession of the products or in which the services are ~~as follows:~~

Three months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Americas ⁽¹⁾
$ 4,202
$ 4,417
$ 12,659
$ 13,185
EMEA ⁽²⁾
1,895
1,652
5,319
4,895
Asia-Pacific 815
818
2,506
2,530
Greater China 457
396
1,325
1,184
Net Sales $ 7,369
$ 7,283
$ 21,809
$ 21,794

~~(1)~~rendered. The ~~U.S., which is included in the Americas, had~~following table presents net sales ~~to external customers of $3.9 billion and $11.7 billion~~ for the three and nine months ended January ~~26, 2018, respectively, compared to $4.1 billion~~24, 2020 and ~~$12.3 billion~~January 25, 2019 for the ~~three~~Company's country of domicile, countries with significant concentrations, and ~~nine months ended January 27, 2017, respectively.~~all other countries:

~~(2) EMEA consists of Europe, Middle East, and Africa. Sales~~


	Three months ended						Nine months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Ireland	$	22	$	24	$	66	$	68

United States	4,021		4,001		12,068		11,910
Rest of world	3,674		3,521		10,782		10,433
Total other countries, excluding Ireland	7,695		7,522		22,850		22,343
Total	$	7,717	$	7,546	$	22,916	$	22,411

Medtronic plc

Notes to ~~Ireland were insignificant during all periods presented.~~Consolidated Financial Statements

(Unaudited)

19. Guarantor Financial Information

Medtronic plc and Medtronic Global Holdings S.C.A. (Medtronic Luxco), a wholly-owned subsidiary guarantor, each have provided full and unconditional guarantees of the obligations of Medtronic, Inc., a wholly-owned subsidiary issuer, under the Senior Notes (Medtronic Senior Notes) and full and unconditional guarantees of the obligations of Covidien International Finance S.A. (CIFSA), a wholly-owned subsidiary issuer, under the Senior Notes (CIFSA Senior Notes). The guarantees of the CIFSA Senior Notes are in addition to the guarantees of the CIFSA Senior Notes by Covidien Ltd. and Covidien Group Holdings Ltd., both of which are wholly-owned subsidiary guarantors of the CIFSA Senior Notes. ~~Effective March 28, 2017,~~Additionally, Medtronic plc and Medtronic, Inc. each have provided a full and unconditional guarantee of the obligations of Medtronic Luxco under the Medtronic Luxco Senior Notes. The following is a summary of these guarantees:

Guarantees of Medtronic Senior Notes

•Parent Company Guarantor - Medtronic plc

•Subsidiary Issuer - Medtronic, Inc.

•Subsidiary Guarantor - Medtronic Luxco

Guarantees of Medtronic Luxco Senior Notes

•Parent Company Guarantor - Medtronic plc

•Subsidiary Issuer - Medtronic Luxco

•Subsidiary Guarantor - Medtronic, Inc.

Guarantees of CIFSA Senior Notes

•Parent Company Guarantor - Medtronic plc

•Subsidiary Issuer - CIFSA

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

The following presents the Company’s consolidating statements of comprehensive income for the three and nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017,~~25, 2019, condensed consolidating balance sheets at January ~~26, 2018~~24, 2020 and April ~~28, 2017,~~26, 2019, and condensed consolidating statements of cash flows for the nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017.~~25, 2019. The guarantees provided by the parent company guarantor and subsidiary guarantors are joint and several. Condensed consolidating financial information for Medtronic plc, Medtronic Luxco, Medtronic, Inc., CIFSA, and CIFSA Subsidiary Guarantors, on a stand-alone basis, is presented using the equity method of accounting for subsidiaries. The Company has presented the provisional tax impacts related to the Tax Act within the condensed consolidating financial statements for the three and nine months ended January 26, 2018, at the subsidiary which the Company reasonably expects to be affected by the Tax Act. Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year.

The Company made revisions to its condensed consolidating balance sheets of the guarantees of the Medtronic Senior Notes, Medtronic Luxco Senior Notes and the CIFSA Senior Notes, as previously presented in Note 23 in the Company’s Annual Report on Form 10-K for the year ended April 28, 2017. An approximate $16.0 billion revision was made to decrease the investment in subsidiaries and shareholders' equity balances in the Medtronic, Inc. column for the Medtronic Senior Notes and Medtronic Luxco

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Senior Notes, as well as an approximate $16.0 billion revision to increase the investment in subsidiaries and shareholders' equity balances in the CIFSA column for the CIFSA Senior Notes. Both revisions were primarily related to an incorrect presentation of an intercompany asset sale. There is no impact to the consolidated financial statements of Medtronic plc as previously filed in the 2017 Annual Report on Form 10-K or Quarterly Reports on Form 10-Q.

During the ~~third quarter of fiscal year 2018,~~nine months ended January 24, 2020, the Company undertook certain steps to reorganize ownership of various subsidiaries. The transactions were entirely among subsidiaries under the common control of Medtronic. This reorganization has been reflected as of the beginning of the earliest period presented.

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Consolidating Statement of Comprehensive Income

Three Months Ended January ~~26, 2018~~24, 2020

Medtronic Senior Notes and Medtronic Luxco Senior Notes


(in millions)	Medtronic plc		Medtronic, Inc.		Medtronic Luxco		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Net sales	$	—	$	344	$	—	$	7,717	$	(344)	$	7,717

Costs and expenses:
Cost of products sold	—		337		—		2,294		(231)		2,400
Research and development expense	—		154		—		419		—		573
Selling, general, and administrative expense	3		432		—		2,152		—		2,587
Amortization of intangible assets	—		6		—		430		—		436
Restructuring charges, net	—		3		—		10		—		13
Certain litigation charges	—		—		—		108		—		108
Other operating expense (income), net	12		(569)		—		624		(106)		(39)
Operating profit (loss)	(15)		(19)		—		1,680		(7)		1,639
Other non-operating (income) expense, net	—		(50)		(174)		(415)		543		(96)
Interest expense	66		316		141		176		(543)		156
Equity in net (income) loss of subsidiaries	(1,994)		(1,707)		(1,961)		—		5,662		—
Income (loss) before income taxes	1,913		1,422		1,994		1,919		(5,669)		1,579
Income tax provision	(2)		(40)		—		(298)		—		(340)
Net income (loss)	1,915		1,462		1,994		2,217		(5,669)		1,919
Net income attributable to noncontrolling interests	—		—		—		(4)		—		(4)
Net income (loss) attributable to Medtronic	1,915		1,462		1,994		2,213		(5,669)		1,915
Other comprehensive income (loss), net of tax	65		58		65		18		(141)		65
Comprehensive income attributable to noncontrolling interests	—		—		—		(4)		—		(4)
Total comprehensive income (loss)	$	1,980	$	1,520	$	2,059	$	2,231	$	(5,810)	$	1,980

(in millions) Medtronic plc Medtronic, Inc. Medtronic Luxco Subsidiary Non-guarantors Consolidating
Adjustments Total
Net sales $ —
$ 275
$ —
$ 7,369
$ (275 ) $ 7,369

Costs and expenses:
Cost of products sold —
243
—
2,126
(178 ) 2,191
Research and development expense —
165
—
393
—
558
Selling, general, and administrative expense 4
346
—
2,149
—
2,499
Amortization of intangible assets —
2
—
459
—
461
Restructuring charges, net —
—
—
7
—
7
Acquisition-related items —
27
—
(1 ) —
26
Certain litigation charges —
24
—
37
—
61
Other (income) expense, net 10
(768 ) —
1,006
(108 ) 140
Operating profit (loss) (14 ) 236
—
1,193
11
1,426
Investment loss —
172
—
55
—
227
Interest income —
(90 ) (133 ) (410 ) 535
(98 )
Interest expense 63
464
73
205
(535 ) 270
Interest expense, net 63
374
(60 ) (205 ) —
172
Equity in net (income) loss of subsidiaries 1,314
1,161
1,374
—
(3,849 ) —
Income (loss) before income taxes (1,391 ) (1,471 ) (1,314 ) 1,343
3,860
1,027
Income tax (benefit) provision (2 ) 316
—
2,105
—
2,419
Net income (loss) (1,389 ) (1,787 ) (1,314 ) (762 ) 3,860
(1,392 )
Net loss attributable to noncontrolling interests —
—
—
3
—
3
Net income (loss) attributable to Medtronic (1,389 ) (1,787 ) (1,314 ) (759 ) 3,860
(1,389 )
Other comprehensive income (loss), net of tax 678
428
678
664
(1,770 ) 678
Other comprehensive loss attributable to
noncontrolling interests
—
—
—
3
—
3
Total comprehensive income (loss) $ (711 ) $ (1,359 ) $ (636 ) $ (95 ) $ 2,090
$ (711 )

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Consolidating Statement of Comprehensive Income

Nine Months Ended January ~~26, 2018~~24, 2020

Medtronic Senior Notes and Medtronic Luxco Senior Notes


(in millions)	Medtronic plc		Medtronic, Inc.		Medtronic Luxco		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Net sales	$	—	$	1,155	$	—	$	22,916	$	(1,155)	$	22,916

Costs and expenses:
Cost of products sold	—		1,013		—		6,999		(852)		7,160
Research and development expense	—		500		—		1,263		—		1,763
Selling, general, and administrative expense	9		1,241		1		6,499		—		7,750
Amortization of intangible assets	—		12		—		1,305		—		1,317
Restructuring charges, net	—		13		—		74		—		87
Certain litigation charges	—		5		—		271		—		276

Other operating expense (income), net	39		(1,637)		(7)		1,977		(284)		88
Operating profit (loss)	(48)		8		6		4,528		(19)		4,475
Other non-operating (income) expense, net	—		(184)		(660)		(1,245)		1,784		(305)
Interest expense	350		1,372		424		568		(1,784)		930
Equity in net (income) loss of subsidiaries	(4,535)		(2,899)		(4,293)		—		11,727		—
Income (loss) before income taxes	4,137		1,719		4,535		5,205		(11,746)		3,850
Income tax provision	(6)		(199)		—		(112)		—		(317)
Net income (loss)	4,143		1,918		4,535		5,317		(11,746)		4,167
Net income attributable to noncontrolling interests	—		—		—		(24)		—		(24)
Net income (loss) attributable to Medtronic	4,143		1,918		4,535		5,293		(11,746)		4,143
Other comprehensive income (loss), net of tax	165		29		165		(65)		(129)		165
Comprehensive income attributable to noncontrolling interests	—		—		—		(24)		—		(24)
Total comprehensive income (loss)	$	4,308	$	1,947	$	4,700	$	5,228	$	(11,875)	$	4,308

(in millions) Medtronic plc Medtronic, Inc. Medtronic Luxco Subsidiary Non-guarantors Consolidating
Adjustments Total
Net sales $ —
$ 879
$ —
$ 21,807
$ (877 ) $ 21,809

Costs and expenses:
Cost of products sold —
693
—
6,548
(581 ) 6,660
Research and development expense —
492
—
1,169
—
1,661
Selling, general, and administrative expense 9
1,020
—
6,393
—
7,422
Amortization of intangible assets —
6
—
1,369
—
1,375
Restructuring charges, net —
2
—
21
—
23
Acquisition-related items —
45
—
32
—
77
Certain litigation charges —
24
—
37
—
61
Divestiture-related items —
15
—
99
—
114
Gain on sale of businesses —
—
—
(697 ) —
(697 )
Special charge —
80
—
—
—
80
Other (income) expense, net 35
(1,397 ) —
2,001
(322 ) 317
Operating profit (loss) (44 ) (101 ) —
4,835
26
4,716

Investment loss —
172
—
55
—
227
Interest income —
(225 ) (344 ) (1,091 ) 1,370
(290 )
Interest expense 172
1,330
155
542
(1,370 ) 829
Interest expense, net 172
1,105
(189 ) (549 ) —
539
Equity in net (income) loss of subsidiaries (1,855 ) (1,599 ) (1,666 ) —
5,120
—
Income (loss) before income taxes 1,639
221
1,855
5,329
(5,094 ) 3,950
Income tax (benefit) provision (5 ) 3
—
2,322
—
2,320
Net income (loss) 1,644
218
1,855
3,007
(5,094 ) 1,630
Net loss attributable to noncontrolling interests —
—
—
14
—
14
Net income (loss) attributable to Medtronic 1,644
218
1,855
3,021
(5,094 ) 1,644
Other comprehensive income (loss), net of tax 1,231
948
1,231
1,194
(3,373 ) 1,231
Other comprehensive loss attributable to
noncontrolling interests
—
—
—
14
—
14
Total comprehensive income (loss) $ 2,875
$ 1,166
$ 3,086
$ 4,215
$ (8,467 ) $ 2,875

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Consolidating Statement of Comprehensive Income

Three Months Ended January ~~27, 2017~~25, 2019

Medtronic Senior Notes and Medtronic Luxco Senior Notes


(in millions)	Medtronic plc		Medtronic, Inc.		Medtronic Luxco		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Net sales	$	—	$	281	$	—	$	7,546	$	(281)	$	7,546

Costs and expenses:
Cost of products sold	—		223		—		2,206		(164)		2,265
Research and development expense	—		152		—		409		—		561
Selling, general, and administrative expense	2		362		—		2,232		—		2,596
Amortization of intangible assets	—		2		—		434		—		436
Restructuring charges, net	—		3		—		23		—		26
Certain litigation charges	—		12		—		51		—		63
Other operating expense (income), net	15		(827)		—		987		(118)		57
Operating profit (loss)	(17)		354		—		1,204		1		1,542
Other non-operating (income) expense, net	—		(151)		(200)		(480)		760		(71)
Interest expense	125		501		133		244		(760)		243
Equity in net (income) loss of subsidiaries	(1,410)		(678)		(1,343)		—		3,431		—
Income (loss) before income taxes	1,268		682		1,410		1,440		(3,430)		1,370
Income tax provision	(1)		40		—		60		—		99
Net income (loss)	1,269		642		1,410		1,380		(3,430)		1,271
Net income attributable to noncontrolling interests	—		—		—		(2)		—		(2)
Net income (loss) attributable to Medtronic	1,269		642		1,410		1,378		(3,430)		1,269
Other comprehensive income (loss), net of tax	154		45		154		132		(331)		154
Comprehensive income attributable to noncontrolling interests	—		—		—		(2)		—		(2)
Total comprehensive income (loss)	$	1,423	$	687	$	1,564	$	1,510	$	(3,761)	$	1,423

(in millions) Medtronic plc Medtronic, Inc. Medtronic Luxco Subsidiary Non-guarantors Consolidating
Adjustments Total
Net sales $ —
$ 237
$ —
$ 7,283
$ (237 ) $ 7,283

Costs and expenses:
Cost of products sold —
214
—
2,207
(153 ) 2,268
Research and development expense —
147
—
383
—
530
Selling, general, and administrative expense 4
264
—
2,120
—
2,388
Amortization of intangible assets —
3
—
494
—
497
Restructuring charges, net —
22
—
(1 ) —
21
Acquisition-related items —
36
—
32
—
68
Certain litigation charges —
—
—
218
—
218
Special charge —
100
—
—
—
100
Other (income) expense, net 80
(462 ) —
526
(98 ) 46
Operating profit (loss) (84 ) (87 ) —
1,304
14
1,147
Interest income —
(62 ) (157 ) (294 ) 425
(88 )
Interest expense 32
397
18
246
(425 ) 268
Interest expense, net 32
335
(139 ) (48 ) —
180
Equity in net (income) loss of subsidiaries (937 ) (594 ) (798 ) —
2,329
—
Income (loss) before income taxes 821
172
937
1,352
(2,315 ) 967
Income tax (benefit) provision —
(105 ) —
252
—
147
Net income (loss) 821
277
937
1,100
(2,315 ) 820
Net loss attributable to noncontrolling interests —
—
—
1
—
1
Net income (loss) attributable to Medtronic 821
277
937
1,101
(2,315 ) 821
Other comprehensive income (loss), net of tax (551 ) (183 ) (551 ) (584 ) 1,318
(551 )
Other comprehensive loss attributable to
noncontrolling interests
—
—
—
1
—
1
Total comprehensive income (loss) $ 270
$ 94
$ 386
$ 517
$ (997 ) $ 270

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Consolidating Statement of Comprehensive Income

Nine Months Ended January ~~27, 2017~~25, 2019

Medtronic Senior Notes and Medtronic Luxco Senior Notes


(in millions)	Medtronic plc		Medtronic, Inc.		Medtronic Luxco		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Net sales	$	—	$	1,007	$	—	$	22,411	$	(1,007)	$	22,411

Costs and expenses:
Cost of products sold	—		776		—		6,538		(642)		6,672
Research and development expense	—		496		—		1,240		—		1,736
Selling, general, and administrative expense	8		1,142		—		6,648		—		7,798
Amortization of intangible assets	—		6		—		1,321		—		1,327
Restructuring charges, net	—		14		—		98		—		112
Certain litigation charges	—		90		—		76		—		166
Other operating expense (income), net	40		(1,759)		—		2,336		(339)		278
Operating profit (loss)	(48)		242		—		4,154		(26)		4,322
Other non-operating (income) expense, net	—		(445)		(539)		(1,411)		2,086		(309)
Interest expense	333		1,444		349		686		(2,086)		726
Equity in net (income) loss of subsidiaries	(3,835)		(2,176)		(3,645)		—		9,656		—
Income (loss) before income taxes	3,454		1,419		3,835		4,879		(9,682)		3,905
Income tax provision	(5)		(79)		—		521		—		437
Net income (loss)	3,459		1,498		3,835		4,358		(9,682)		3,468
Net income attributable to noncontrolling interests	—		—		—		(9)		—		(9)
Net income (loss) attributable to Medtronic	3,459		1,498		3,835		4,349		(9,682)		3,459
Other comprehensive income (loss), net of tax	(719)		(965)		(719)		(779)		2,460		(722)
Comprehensive income attributable to noncontrolling interests	—		—		—		(6)		—		(6)
Total comprehensive income (loss)	$	2,740	$	533	$	3,116	$	3,573	$	(7,222)	$	2,740

(in millions) Medtronic plc Medtronic, Inc. Medtronic Luxco Subsidiary Non-guarantors Consolidating
Adjustments Total
Net sales $ —
$ 919
$ —
$ 21,793
$ (918 ) $ 21,794

Costs and expenses:
Cost of products sold —
706
—
6,775
(626 ) 6,855
Research and development expense —
469
—
1,171
—
1,640
Selling, general, and administrative expense 9
828
—
6,395
—
7,232
Amortization of intangible assets —
9
—
1,475
—
1,484
Restructuring charges, net —
40
—
122
—
162
Acquisition-related items —
96
—
52
—
148
Certain litigation charges —
—
—
300
—
300
Special charge —
100
—
—
—
100
Other (income) expense, net 5
(1,431 ) —
1,906
(306 ) 174
Operating profit (loss) (14 ) 102
—
3,597
14
3,699
Interest income —
(183 ) (477 ) (719 ) 1,107
(272 )
Interest expense 74
1,203
31
603
(1,107 ) 804
Interest expense, net 74
1,020
(446 ) (116 ) —
532
Equity in net (income) loss of subsidiaries (2,949 ) (2,785 ) (2,503 ) —
8,237
—
Income (loss) before income taxes 2,861
1,867
2,949
3,713
(8,223 ) 3,167
Income tax (benefit) provision (4 ) (179 ) —
490
—
307
Net income (loss) 2,865
2,046
2,949
3,223
(8,223 ) 2,860
Net loss attributable to noncontrolling interests —
—
—
5
—
5
Net income (loss) attributable to Medtronic 2,865
2,046
2,949
3,228
(8,223 ) 2,865
Other comprehensive income (loss), net of tax (1,011 ) (472 ) (1,011 ) (1,085 ) 2,568
(1,011 )
Other comprehensive loss attributable to
noncontrolling interests
—
—
—
5
—
5
Total comprehensive income (loss) $ 1,854
$ 1,574
$ 1,938
$ 2,143
$ (5,655 ) $ 1,854

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Balance Sheet

January ~~26, 2018~~24, 2020

Medtronic Senior Notes and Medtronic Luxco Senior Notes


(in millions)	Medtronic plc		Medtronic, Inc.		Medtronic Luxco		Subsidiary Non-guarantors		Consolidating Adjustments		Total
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—	$	185	$	3,524	$	—	$	3,709
Investments	—		—		—		7,919		—		7,919
Accounts receivable, net	—		—		—		6,248		—		6,248
Inventories, net	—		211		—		4,159		(248)		4,122
Intercompany receivable	42		8,807		5		34,982		(43,836)		—

Other current assets	10		195		2		1,838		—		2,045

Total current assets	52		9,213		192		58,670		(44,084)		24,043
Property, plant, and equipment, net	—		1,536		—		3,228		—		4,764
Goodwill	—		2,009		—		38,082		—		40,091
Other intangible assets, net	—		197		—		19,259		—		19,456
Tax assets	—		508		—		1,764		—		2,272
Investment in subsidiaries	58,753		75,008		77,989		—		(211,750)		—
Intercompany loans receivable	—		22		18,296		21,072		(39,390)		—
Other assets	—		377		—		1,819		—		2,196

Total assets	$	58,805	$	88,870	$	96,477	$	143,894	$	(295,224)	$	92,822
LIABILITIES AND EQUITY
Current liabilities:
Current debt obligations	$	—	$	500	$	—	$	344	$	—	$	844
Accounts payable	—		507		—		1,438		—		1,945
Intercompany payable	—		21,383		13,599		8,854		(43,836)		—
Accrued compensation	20		785		—		1,104		—		1,909
Accrued income taxes	—		—		—		457		—		457

Other accrued expenses	25		287		98		3,170		—		3,580

Total current liabilities	45		23,462		13,697		15,367		(43,836)		8,735
Long-term debt	—		9,786		13,522		1,424		—		24,732
Accrued compensation and retirement benefits	—		1,025		—		573		—		1,598
Accrued income taxes	10		760		—		1,968		—		2,738
Intercompany loans payable	6,942		9,012		9,729		13,707		(39,390)		—
Deferred tax liabilities	—		—		—		1,282		—		1,282
Other liabilities	—		262		—		1,522		—		1,784

Total liabilities	6,997		44,307		36,948		35,843		(83,226)		40,869
Shareholders’ equity	51,808		44,563		59,529		107,906		(211,998)		51,808
Noncontrolling interests	—		—		—		145		—		145
Total equity	51,808		44,563		59,529		108,051		(211,998)		51,953
Total liabilities and equity	$	58,805	$	88,870	$	96,477	$	143,894	$	(295,224)	$	92,822

(in millions) Medtronic plc Medtronic, Inc. Medtronic Luxco Subsidiary Non-guarantors Consolidating
Adjustments Total
ASSETS
Current assets:
Cash and cash equivalents $ —
$ 38
$ 61
$ 6,259
$ —
$ 6,358
Investments —
—
—
8,078
—
8,078
Accounts receivable, net —
—
—
5,775
—
5,775
Inventories, net —
166
—
3,739
(154 ) 3,751
Intercompany receivable 40
14,773
—
33,103
(47,916 ) —
Other current assets 5
313
—
2,327
—
2,645
Total current assets 45
15,290
61
59,281
(48,070 ) 26,607
Property, plant, and equipment, net —
1,378
—
3,139
—
4,517
Goodwill —
—
—
39,795
—
39,795
Other intangible assets, net —
13
—
22,165
—
22,178
Tax assets —
564
—
973
—
1,537
Investment in subsidiaries 59,130
58,914
59,923
—
(177,967 ) —
Intercompany loans receivable 3,000
6,520
18,357
32,510
(60,387 ) —
Other assets —
267
—
899
—
1,166
Total assets $ 62,175
$ 82,946
$ 78,341
$ 158,762
$ (286,424 ) $ 95,800
LIABILITIES AND EQUITY
Current liabilities:
Current debt obligations $ —
$ 2,000
$ 504
$ 398
$ —
$ 2,902
Accounts payable —
368
—
1,441
—
1,809
Intercompany payable —
25,285
7,833
14,798
(47,916 ) —
Accrued compensation 18
624
—
1,003
—
1,645
Accrued income taxes 14
—
—
911
—
925
Other accrued expenses 2
640
15
2,995
—
3,652
Total current liabilities 34
28,917
8,352
21,546
(47,916 ) 10,933
Long-term debt —
21,771
1,843
2,304
—
25,918
Accrued compensation and retirement benefits —
988
—
536
—
1,524
Accrued income taxes 10
1,710
—
3,038
—
4,758
Intercompany loans payable 11,897
14,885
16,023
17,582
(60,387 ) —
Deferred tax liabilities —
—
—
1,363
—
1,363
Other liabilities —
64
—
900
—
964
Total liabilities 11,941
68,335
26,218
47,269
(108,303 ) 45,460
Shareholders’ equity 50,234
14,611
52,123
111,387
(178,121 ) 50,234
Noncontrolling interests —
—
—
106
—
106
Total equity 50,234
14,611
52,123
111,493
(178,121 ) 50,340
Total liabilities and equity $ 62,175
$ 82,946
$ 78,341
$ 158,762
$ (286,424 ) $ 95,800

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Balance Sheet

April ~~28, 2017~~26, 2019

Medtronic Senior Notes and Medtronic Luxco Senior Notes


(in millions)	Medtronic plc		Medtronic, Inc.		Medtronic Luxco		Subsidiary Non-guarantors		Consolidating Adjustments		Total
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	18	$	1	$	4,374	$	—	$	4,393
Investments	—		—		—		5,455		—		5,455
Accounts receivable, net	—		—		—		6,222		—		6,222
Inventories, net	—		188		—		3,792		(227)		3,753
Intercompany receivable	40		9,407		6		19,170		(28,623)		—
Other current assets	10		190		3��		1,941		—		2,144
Total current assets	50		9,803		10		40,954		(28,850)		21,967
Property, plant, and equipment, net	—		1,480		—		3,195		—		4,675
Goodwill	—		2,009		—		37,950		—		39,959
Other intangible assets, net	—		99		—		20,461		—		20,560
Tax assets	—		568		—		951		—		1,519
Investment in subsidiaries	64,352		71,123		65,012		—		(200,487)		—
Intercompany loans receivable	3,000		21		27,858		35,398		(66,277)		—
Other assets	—		216		—		798		—		1,014
Total assets	$	67,402	$	85,319	$	92,880	$	139,707	$	(295,614)	$	89,694
LIABILITIES AND EQUITY
Current liabilities:
Current debt obligations	$	—	$	500	$	—	$	338	$	—	$	838
Accounts payable	—		481		—		1,472		—		1,953
Intercompany payable	—		11,971		7,200		9,452		(28,623)		—
Accrued compensation	3		913		—		1,273		—		2,189
Accrued income taxes	—		—		—		567		—		567
Other accrued expenses	20		331		53		2,521		—		2,925
Total current liabilities	23		14,196		7,253		15,623		(28,623)		8,472
Long-term debt	—		14,418		8,621		1,447		—		24,486
Accrued compensation and retirement benefits	—		1,069		—		582		—		1,651
Accrued income taxes	10		692		—		2,136		—		2,838
Intercompany loans payable	17,278		12,613		19,682		16,704		(66,277)		—
Deferred tax liabilities	—		—		—		1,278		—		1,278
Other liabilities	—		133		—		624		—		757
Total liabilities	17,311		43,121		35,556		38,394		(94,900)		39,482
Shareholders' equity	50,091		42,198		57,324		101,192		(200,714)		50,091
Noncontrolling interests	—		—		—		121		—		121
Total equity	50,091		42,198		57,324		101,313		(200,714)		50,212
Total liabilities and equity	$	67,402	$	85,319	$	92,880	$	139,707	$	(295,614)	$	89,694

(in millions) Medtronic plc Medtronic, Inc. Medtronic Luxco Subsidiary Non-guarantors
Consolidating
Adjustments
Total
ASSETS
Current assets:
Cash and cash equivalents $ —
$ 45
$ 5
$ 4,917
$ —
$ 4,967
Investments —
—
—
8,741
—
8,741
Accounts receivable, net —
—
—
5,591
—
5,591
Inventories, net —
155
—
3,361
(178 ) 3,338
Intercompany receivable 51
16,301
—
30,475
(46,827 ) —
Other current assets 10
227
—
1,628
—
1,865
Current assets held for sale —
—
—
371
—
371
Total current assets 61
16,728
5
55,084
(47,005 ) 24,873
Property, plant, and equipment, net —
1,311
—
3,050
—
4,361
Goodwill —
—
—
38,515
—
38,515
Other intangible assets, net —
20
—
23,387
—
23,407
Tax assets —
727
—
782
—
1,509
Investment in subsidiaries 55,833
55,811
52,618
—
(164,262 ) —
Intercompany loans receivable 3,000
6,530
16,114
25,621
(51,265 ) —
Other assets —
434
—
798
—
1,232
Noncurrent assets held for sale —
—
—
5,919
—
5,919
Total assets $ 58,894
$ 81,561
$ 68,737
$ 153,156
$ (262,532 ) $ 99,816
LIABILITIES AND EQUITY
Current liabilities:
Current debt obligations $ —
$ 5,000
$ 901
$ 1,619
$ —
$ 7,520
Accounts payable —
304
—
1,427
—
1,731
Intercompany payable —
23,380
7,111
16,336
(46,827 ) —
Accrued compensation 9
734
—
1,117
—
1,860
Accrued income taxes 13
—
—
620
—
633
Other accrued expenses —
352
4
2,086
—
2,442
Current liabilities held for sale —
—
—
34
—
34
Total current liabilities 22
29,770
8,016
23,239
(46,827 ) 14,220
Long-term debt —
21,782
1,842
2,297
—
25,921
Accrued compensation and retirement benefits —
1,120
—
521
—
1,641
Accrued income taxes 10
1,658
—
737
—
2,405
Intercompany loans payable 8,568
13,109
10,049
19,539
(51,265 ) —
Deferred tax liabilities —
—
—
2,978
—
2,978
Other liabilities —
153
—
1,362
—
1,515
Noncurrent liabilities held for sale —
—
—
720
—
720
Total liabilities 8,600
67,592
19,907
51,393
(98,092 ) 49,400
Shareholders' equity 50,294
13,969
48,830
101,641
(164,440 ) 50,294
Noncontrolling interests —
—
—
122
—
122
Total equity 50,294
13,969
48,830
101,763
(164,440 ) 50,416
Total liabilities and equity $ 58,894
$ 81,561
$ 68,737
$ 153,156
$ (262,532 ) $ 99,816

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Statement of Cash Flows

Nine Months Ended January ~~26, 2018~~24, 2020

Medtronic Senior Notes and Medtronic Luxco Senior Notes


(in millions)	Medtronic plc		Medtronic, Inc.		Medtronic Luxco		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Operating Activities:
Net cash provided by (used in) operating activities	$	130	$	(1,315)	$	365	$	6,604	$	—	$	5,784
Investing Activities:
Acquisitions, net of cash acquired	—		2		—		(201)		—		(199)

Additions to property, plant, and equipment	—		(236)		—		(641)		—		(877)
Purchases of investments	—		—		—		(8,249)		—		(8,249)
Sales and maturities of investments	—		12		—		5,779		—		5,791




Capital contribution paid	—		—		(9,000)		(800)		9,800		—
Return of capital	10,000		—		(3,000)		(7,000)		—		—
Other investing activities	—		(56)		(5)		27		—		(34)
Net cash provided by (used in) investing activities	10,000		(278)		(12,005)		(11,085)		9,800		(3,568)
Financing Activities:

Change in current debt obligations, net	—		—		—		17		—		17


Issuance of long-term debt	—		—		5,567		1		—		5,568
Payments on long-term debt	—		(5,016)		(515)		(75)		—		(5,606)
Dividends to shareholders	(2,170)		—		—		—		—		(2,170)
Issuance of ordinary shares	585		—		—		—		—		585
Repurchase of ordinary shares	(1,208)		—		—		—		—		(1,208)
Net intercompany loan borrowings (repayments)	(7,337)		6,591		6,010		(5,264)		—		—

Capital contribution received	—		—		800		9,000		(9,800)		—
Other financing activities	—		—		(38)		(36)		—		(74)
Net cash provided by (used in) financing activities	(10,130)		1,575		11,824		3,643		(9,800)		(2,888)
Effect of exchange rate changes on cash and cash equivalents	—		—		—		(12)		—		(12)
Net change in cash and cash equivalents	—		(18)		184		(850)		—		(684)
Cash and cash equivalents at beginning of period	—		18		1		4,374		—		4,393
Cash and cash equivalents at end of period	$	—	$	—	$	185	$	3,524	$	—	$	3,709

(in millions) Medtronic plc Medtronic, Inc. Medtronic Luxco Subsidiary Non-guarantors Consolidating
Adjustments Total
Operating Activities:
Net cash provided by (used in) operating activities $ 172
$ (958 ) $ 200
$ 4,232
$ —
$ 3,646
Investing Activities:
Acquisitions, net of cash acquired —
—
—
(111 ) —
(111 )
Proceeds from sale of businesses —
—
—
6,058
—
6,058
Additions to property, plant, and equipment —
(234 ) —
(542 ) —
(776 )
Purchases of investments —
—
—
(2,479 ) —
(2,479 )
Sales and maturities of investments —
—
—
3,060
—
3,060
Capital contribution paid —
(59 ) (4,200 ) —
4,259
—
Other investing activities, net —
—
—
(5 ) —
(5 )
Net cash provided by (used in) investing activities —
(293 ) (4,200 ) 5,981
4,259
5,747
Financing Activities:
Acquisition-related contingent consideration —
—
—
(43 ) —
(43 )
Change in current debt obligations, net —
—
(397 ) 6
—
(391 )
Repayment of short-term borrowings (maturities greater than 90 days) —
—
—
(44 ) —
(44 )
Proceeds from short-term borrowings (maturities greater than 90 days) —
—
—
1
—
1
Issuance of long-term debt —
—
—
21
—
21
Payments on long-term debt —
(3,000 ) —
(1,167 ) —
(4,167 )
Dividends to shareholders (1,870 ) —
—
—
—
(1,870 )
Issuance of ordinary shares 333
—
—
—
—
333
Repurchase of ordinary shares (1,964 ) —
—
—
—
(1,964 )
Net intercompany loan borrowings (repayments) 3,329
4,244
4,453
(12,026 ) —
—
Capital contribution received —
—
—
4,259
(4,259 ) —
Other financing activities —
—
—
(2 ) —
(2 )
Net cash provided by (used in) financing activities (172 ) 1,244
4,056
(8,995 ) (4,259 ) (8,126 )
Effect of exchange rate changes on cash and cash equivalents —
—
—
124
—
124
Net change in cash and cash equivalents —
(7 ) 56
1,342
—
1,391
Cash and cash equivalents at beginning of period —
45
5
4,917
—
4,967
Cash and cash equivalents at end of period $ —
$ 38
$ 61
$ 6,259
$ —
$ 6,358

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

~~Condensed Consolidating Statement of Cash Flows~~

~~Nine Months Ended January 27, 2017~~

~~Medtronic Senior Notes~~

(in millions) Medtronic plc Medtronic, Inc. Medtronic Luxco Subsidiary Non-guarantors
Consolidating
Adjustments
Total
Operating Activities:
Net cash provided by (used in) operating activities $ 834
$ 933
$ 161
$ 3,179
$ —
$ 5,107
Investing Activities:
Acquisitions, net of cash acquired —
(940 ) —
(388 ) —
(1,328 )
Additions to property, plant, and equipment —
(257 ) —
(667 ) —
(924 )
Purchases of investments —
—
—
(3,516 ) 162
(3,354 )
Sales and maturities of investments —
210
—
4,238
(162 ) 4,286
Capital contribution paid —
(241 ) —
—
241
—
Other investing activities, net —
—
—
21
—
21
Net cash provided by (used in) investing activities —
(1,228 ) —
(312 ) 241
(1,299 )
Financing Activities:
Acquisition-related contingent consideration —
—
—
(58 ) —
(58 )
Change in current debt obligations, net —
—
1,099
19
—
1,118
Repayment of short-term borrowings (maturities greater than 90 days) —
—
—
(2 ) —
(2 )
Proceeds from short-term borrowings (maturities greater than 90 days) —
—
—
4
—
4
Issuance of long-term debt —
—
—
131
—
131
Payments on long-term debt —
(29 ) —
(332 ) —
(361 )
Dividends to shareholders (1,782 ) —
—
—
—
(1,782 )
Issuance of ordinary shares 309
—
—
—
—
309
Repurchase of ordinary shares (3,409 ) —
—
—
—
(3,409 )
Net intercompany loan borrowings (repayments) 4,048
275
(1,260 ) (3,063 ) —
—
Capital contribution received —
—
—
241
(241 ) —
Other financing activities —
34
—
46
—
80
Net cash provided by (used in) financing activities (834 ) 280
(161 ) (3,014 ) (241 ) (3,970 )
Effect of exchange rate changes on cash and cash equivalents —
—
—
54
—
54
Net change in cash and cash equivalents —
(15 ) —
(93 ) —
(108 )
Cash and cash equivalents at beginning of period —
55
—
2,821
—
2,876
Cash and cash equivalents at end of period $ —
$ 40
$ —
$ 2,728
$ —
$ 2,768

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~Consolidating Statement of Comprehensive Income~~

~~Three Months Ended January 26, 2018~~

~~CIFSA Senior Notes~~

(in millions) Medtronic plc CIFSA CIFSA Subsidiary Guarantors Subsidiary Non-guarantors
Consolidating
Adjustments
Total
Net sales $ —
$ —
$ —
$ 7,369
$ —
$ 7,369

Costs and expenses:
Cost of products sold —
—
—
2,191
—
2,191
Research and development expense —
—
—
558
—
558
Selling, general, and administrative expense 4
—
—
2,495
—
2,499
Amortization of intangible assets —
—
—
461
—
461
Restructuring charges, net —
—
—
7
—
7
Acquisition-related items —
—
—
26
—
26
Certain litigation charges —
—
—
61
—
61
Other (income) expense, net 10
—
—
130
—
140
Operating profit (loss) (14 ) —
—
1,440
—
1,426
Investment loss —
—
—
227
—
227
Interest income —
(13 ) (137 ) (154 ) 206
(98 )
Interest expense 63
19
73
321
(206 ) 270
Interest expense, net 63
6
(64 ) 167
—
172
Equity in net (income) loss of subsidiaries 1,314
(765 ) 1,378
—
(1,927 ) —
Income (loss) before income taxes (1,391 ) 759
(1,314 ) 1,046
1,927
1,027
Income tax (benefit) provision (2 ) —
—
2,421
—
2,419
Net income (loss) (1,389 ) 759
(1,314 ) (1,375 ) 1,927
(1,392 )
Net loss attributable to noncontrolling interests —
—
—
3
—
3
Net income (loss) attributable to Medtronic (1,389 ) 759
(1,314 ) (1,372 ) 1,927
(1,389 )
Other comprehensive income (loss), net of tax 678
245
678
678
(1,601 ) 678
Other comprehensive loss attributable to
non-controlling interests
—
—
—
3
—
3
Total comprehensive income (loss) $ (711 ) $ 1,004
$ (636 ) $ (694 ) $ 326
$ (711 )

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~Consolidating Statement of Comprehensive Income~~

~~Nine Months Ended January 26, 2018~~

~~CIFSA Senior Notes~~

(in millions) Medtronic plc CIFSA CIFSA Subsidiary Guarantors Subsidiary Non-guarantors Consolidating
Adjustments Total
Net sales $ —
$ —
$ —
$ 21,809
$ —
$ 21,809

Costs and expenses:
Cost of products sold —
—
—
6,660
—
6,660
Research and development expense —
—
—
1,661
—
1,661
Selling, general, and administrative expense 9
—
1
7,412
—
7,422
Amortization of intangible assets —
—
—
1,375
—
1,375
Restructuring charges, net —
—
—
23
—
23
Acquisition-related items —
—
—
77
—
77
Certain litigation charges —
—
—
61
—
61
Divestiture-related items —
—
—
114
—
114
Gain on sale of businesses —
—
—
(697 ) —
(697 )
Special charge —
—
—
80
—
80
Other (income) expense, net 35
1
—
281
—
317
Operating profit (loss) (44 ) (1 ) (1 ) 4,762
—
4,716
Investment loss —
—
—
227
—
227
Interest income —
(45 ) (355 ) (392 ) 502
(290 )
Interest expense 172
63
156
940
(502 ) 829
Interest expense, net 172
18
(199 ) 548
—
539
Equity in net (income) loss of subsidiaries (1,855 ) (1,938 ) (1,657 ) —
5,450
—
Income (loss) before income taxes 1,639
1,919
1,855
3,987
(5,450 ) 3,950
Income tax (benefit) provision (5 ) —
—
2,325
—
2,320
Net income (loss) 1,644
1,919
1,855
1,662
(5,450 ) 1,630
Net loss attributable to noncontrolling interests —
—
—
14
—
14
Net income (loss) attributable to Medtronic 1,644
1,919
1,855
1,676
(5,450 ) 1,644
Other comprehensive income (loss), net of tax 1,231
314
1,231
1,231
(2,776 ) 1,231
Other comprehensive loss attributable to
noncontrolling interests
—
—
—
14
—
14
Total comprehensive income (loss) $ 2,875
$ 2,233
$ 3,086
$ 2,907
$ (8,226 ) $ 2,875

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~Consolidating Statement of Comprehensive Income~~

~~Three Months Ended January 27, 2017~~

~~CIFSA Senior Notes~~

(in millions) Medtronic plc CIFSA CIFSA Subsidiary Guarantors Subsidiary Non-guarantors Consolidating
Adjustments Total
Net sales $ —
$ —
$ —
$ 7,283
$ —
$ 7,283

Costs and expenses:
Cost of products sold —
—
—
2,268
—
2,268
Research and development expense —
—
—
530
—
530
Selling, general, and administrative expense 4
—
—
2,384
—
2,388
Amortization of intangible assets —
—
—
497
—
497
Restructuring charges, net —
—
—
21
—
21
Acquisition-related items —
—
—
68
—
68
Certain litigation charges —
—
—
218
—
218
Special charge —
—
—
100
—
100
Other (income) expense, net 80
—
—
(34 ) —
46
Operating profit (loss) (84 ) —
—
1,231
—
1,147
Interest income —
(23 ) (158 ) (108 ) 201
(88 )
Interest expense 32
26
18
393
(201 ) 268
Interest expense, net 32
3
(140 ) 285
—
180
Equity in net (income) loss of subsidiaries (937 ) (434 ) (797 ) —
2,168
—
Income (loss) before income taxes 821
431
937
946
(2,168 ) 967
Income tax (benefit) provision —
—
—
147
—
147
Net income (loss) 821
431
937
799
(2,168 ) 820
Net loss attributable to noncontrolling interests —
—
—
1
—

1
Net income (loss) attributable to Medtronic 821
431
937
800
(2,168 )
821
Other comprehensive income (loss), net of tax (551 ) (358 ) (551 ) (551 ) 1,460
(551 )
Other comprehensive loss attributable to
noncontrolling interests —
—
—
1
—
1
Total comprehensive income (loss) $ 270
$ 73
$ 386
$ 249
$ (708 ) $ 270

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~Consolidating Statement of Comprehensive Income~~

~~Nine Months Ended January 27, 2017~~

~~CIFSA Senior Notes~~

(in millions) Medtronic plc CIFSA CIFSA Subsidiary Guarantors Subsidiary Non-guarantors Consolidating
Adjustments Total
Net sales $ —
$ —
$ —
$ 21,794
$ —
$ 21,794

Costs and expenses:
Cost of products sold —
—
—
6,855
—
6,855
Research and development expense —
—
—
1,640
—
1,640
Selling, general, and administrative expense 9
1
2
7,220
—
7,232
Amortization of intangible assets —
—
—
1,484
—
1,484
Restructuring charges, net —
—
—
162
—
162
Acquisition-related items —
—
—
148
—
148
Certain litigation charges —
—
—
300
—
300
Special charge —
—
—
100
—
100
Other (income) expense, net 5
1
—
168
—
174
Operating profit (loss) (14 ) (2 ) (2 ) 3,717
—
3,699
Interest income —
(71 ) (482 ) (315 ) 596
(272 )
Interest expense 74
81
30
1,215
(596 ) 804
Interest expense, net 74
10
(452 ) 900
—
532
Equity in net (income) loss of subsidiaries (2,949 ) (1,462 ) (2,499 ) —
6,910
—
Income (loss) before income taxes 2,861
1,450
2,949
2,817
(6,910 ) 3,167
Income tax (benefit) provision (4 ) —
—
311
—
307
Net income (loss) 2,865
1,450
2,949
2,506
(6,910 ) 2,860
Net loss attributable to noncontrolling interests —
—
—
5
—
5
Net income (loss) attributable to Medtronic 2,865
1,450
2,949
2,511
(6,910 ) 2,865
Other comprehensive income (loss), net of tax (1,011 ) (385 ) (1,011 ) (1,011 ) 2,407
(1,011 )
Other comprehensive loss attributable to
non-controlling interests —
—
—
5
—
5
Total comprehensive income (loss) $ 1,854
$ 1,065
$ 1,938
$ 1,500
$ (4,503 ) $ 1,854

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~Condensed Consolidating Balance Sheet~~

~~January 26, 2018~~

~~CIFSA Senior Notes~~

(in millions) Medtronic plc CIFSA CIFSA Subsidiary Guarantors Subsidiary Non-guarantors Consolidating
Adjustments Total
ASSETS
Current assets:
Cash and cash equivalents $ —
$ —
$ 61
$ 6,297
$ —
$ 6,358
Investments —
—
—
8,078
—
8,078
Accounts receivable, net —
—
—
5,775
—
5,775
Inventories, net —
—
—
3,751
—
3,751
Intercompany receivable 40
—
1,338
7,855
(9,233 ) —
Other current assets 5
—
—
2,640
—
2,645
Total current assets 45
—
1,399
34,396
(9,233 ) 26,607
Property, plant, and equipment, net —
—
—
4,517
—
4,517
Goodwill —
—
—
39,795
—
39,795
Other intangible assets, net —
—
—
22,178
—
22,178
Tax assets —
—
—
1,537
—
1,537
Investment in subsidiaries 59,130
53,153
58,590
—
(170,873 ) —
Intercompany loans receivable 3,000
2,316
18,357
16,123
(39,796 ) —
Other assets —
—
—
1,166
—
1,166
Total assets $ 62,175
$ 55,469
$ 78,346
$ 119,712
$ (219,902 ) $ 95,800
LIABILITIES AND EQUITY
Current liabilities:
Current debt obligations $ —
$ —
$ 504
$ 2,398
$ —
$ 2,902
Accounts payable —
—
—
1,809
—
1,809
Intercompany payable —
1,278
7,833
122
(9,233 ) —
Accrued compensation 18
—
—
1,627
—
1,645
Accrued income taxes 14
—
—
911
—
925
Other accrued expenses 2
12
19
3,619
—
3,652
Total current liabilities 34
1,290
8,356
10,486
(9,233 ) 10,933
Long-term debt —
2,117
1,843
21,958
—
25,918
Accrued compensation and retirement benefits —
—
—
1,524
—
1,524
Accrued income taxes 10
—
—
4,748
—
4,758
Intercompany loans payable 11,897
100
16,023
11,776
(39,796 ) —
Deferred tax liabilities —
—
—
1,363
—
1,363
Other liabilities —
—
1
963
—
964
Total liabilities 11,941
3,507
26,223
52,818
(49,029 ) 45,460
Shareholders’ equity 50,234
51,962
52,123
66,788
(170,873 ) 50,234
Noncontrolling interests —
—
—
106
—
106
Total equity 50,234
51,962
52,123
66,894
(170,873 ) 50,340
Total liabilities and equity $ 62,175
$ 55,469
$ 78,346
$ 119,712
$ (219,902 ) $ 95,800

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~Condensed Consolidating Balance Sheet~~

~~April 28, 2017~~

~~CIFSA Senior Notes~~

(in millions) Medtronic plc CIFSA CIFSA Subsidiary Guarantors Subsidiary Non-guarantors
Consolidating
Adjustments
Total
ASSETS
Current assets:
Cash and cash equivalents $ —
$ 33
$ 5
$ 4,929
$ —
$ 4,967
Investments —
—
—
8,741
—
8,741
Accounts receivable, net —
—
—
5,591
—
5,591
Inventories, net —
—
—
3,338
—
3,338
Intercompany receivable 51
—
1,329
7,111
(8,491 ) —
Other current assets 10
—
—
1,855
—
1,865
Current assets held for sale —
—
—
371
—
371
Total current assets 61
33
1,334
31,936
(8,491 ) 24,873
Property, plant, and equipment, net —
—
—
4,361
—
4,361
Goodwill —
—
—
38,515
—
38,515
Other intangible assets, net —
—
—
23,407
—
23,407
Tax assets —
—
—
1,509
—
1,509
Investment in subsidiaries 55,833
47,248
51,294
—
(154,375 ) —
Intercompany loans receivable 3,000
2,978
16,114
10,149
(32,241 ) —
Other assets —
—
—
1,232
—
1,232
Noncurrent assets held for sale —
—
—
5,919
—
5,919
Total assets $ 58,894
$ 50,259
$ 68,742
$ 117,028
$ (195,107 ) $ 99,816
LIABILITIES AND EQUITY
Current liabilities:
Current debt obligations $ —
$ 1,176
$ 901
$ 5,443
$ —
$ 7,520
Accounts payable —
—
—
1,731
—
1,731
Intercompany payable —
1,269
7,111
111
(8,491 ) —
Accrued compensation 9
—
—
1,851
—
1,860
Accrued income taxes 13
—
—
620
—
633
Other accrued expenses —
23
8
2,411
—
2,442
Current liabilities held for sale —
—
—
34
—
34
Total current liabilities 22
2,468
8,020
12,201
(8,491 ) 14,220
Long-term debt —
2,133
1,842
21,946
—
25,921
Accrued compensation and retirement benefits —
—
—
1,641
—
1,641
Accrued income taxes 10
—
—
2,395
—
2,405
Intercompany loans payable 8,568
100
10,050
13,523
(32,241 ) —
Deferred tax liabilities —
—
—
2,978
—
2,978
Other liabilities —
—
—
1,515
—
1,515
Noncurrent liabilities held for sale —
—
—
720
—
720
Total liabilities 8,600
4,701
19,912
56,919
(40,732 ) 49,400
Shareholders' equity 50,294
45,558
48,830
59,987
(154,375 ) 50,294
Noncontrolling interests —
—
—
122
—
122
Total Equity 50,294
45,558
48,830
60,109
(154,375 ) 50,416
Total liabilities and equity $ 58,894
$ 50,259
$ 68,742
$ 117,028
$ (195,107 ) $ 99,816

~~Medtronic plc~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Condensed Consolidating Statement of Cash Flows

Nine Months Ended January ~~26, 2018~~25, 2019

~~CIFSA~~Medtronic Senior Notes and Medtronic Luxco Senior Notes


(in millions)	Medtronic plc		Medtronic, Inc.		Medtronic Luxco		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Operating Activities:
Net cash provided by (used in) operating activities	$	100	$	(619)	$	200	$	5,239	$	—	$	4,920
Investing Activities:
Acquisitions, net of cash acquired	—		—		—		(1,615)		—		(1,615)

Additions to property, plant, and equipment	—		(207)		—		(592)		—		(799)
Purchases of investments	—		—		—		(1,987)		—		(1,987)
Sales and maturities of investments	—		76		—		4,083		—		4,159
Capital contribution paid	(18)		(47)		—		—		65		—
Other investing activities	—		—		—		(3)		—		(3)
Net cash provided by (used in) investing activities	(18)		(178)		—		(114)		65		(245)
Financing Activities:

Change in current debt obligations, net	—		—		(696)		—		—		(696)


Issuance of long-term debt	—		—		—		3		—		3
Payments on long-term debt	—		—		—		(29)		—		(29)
Dividends to shareholders	(2,022)		—		—		—		—		(2,022)
Issuance of ordinary shares	891		—		—		—		—		891
Repurchase of ordinary shares	(2,728)		—		—		—		—		(2,728)
Net intercompany loan borrowings (repayments)	3,777		793		814		(5,384)		—		—

Capital contribution received	—		—		—		65		(65)		—
Other financing activities	—		—		17		(7)		—		10
Net cash provided by (used in) financing activities	(82)		793		135		(5,352)		(65)		(4,571)
Effect of exchange rate changes on cash and cash equivalents	—		—		—		(70)		—		(70)
Net change in cash and cash equivalents	—		(4)		335		(297)		—		34
Cash and cash equivalents at beginning of period	—		20		1		3,648		—		3,669
Cash and cash equivalents at end of period	$	—	$	16	$	336	$	3,351	$	—	$	3,703

(in millions) Medtronic plc CIFSA CIFSA Subsidiary Guarantors Subsidiary Non-guarantors
Consolidating
Adjustments
Total
Operating Activities:
Net cash provided by (used in) operating activities $ 172
$ 978
$ 210
$ 3,334
$ (1,048 ) $ 3,646
Investing Activities:
Acquisitions, net of cash acquired —
—
—
(111 ) —
(111 )
Proceeds from sale of businesses —
—
—
6,058
—
6,058
Additions to property, plant, and equipment —
—
—
(776 ) —
(776 )
Purchases of investments —
—
—
(2,479 ) —
(2,479 )
Sales and maturities of investments —
—
—
3,060
—
3,060
Capital contribution paid —
(531 ) (4,200 ) —
4,731
—
Other investing activities, net —
—
—
(5 ) —
(5 )
Net cash provided by (used in) investing activities —
(531 ) (4,200 ) 5,747
4,731
5,747
Financing Activities:
Acquisition-related contingent consideration —
—
—
(43 ) —
(43 )
Change in current debt obligations, net —
—
(397 ) 6
—
(391 )
Repayment of short-term borrowings (maturities greater than 90 days) —
—
—
(44 ) —
(44 )
Proceeds from short-term borrowings (maturities greater than 90 days) —
—
—
1
—
1
Issuance of long-term debt —
—
—
21
—
21
Payments on long-term debt —
(1,150 ) —
(3,017 ) —
(4,167 )
Dividends to shareholders (1,870 ) —
—
—
—
(1,870 )
Issuance of ordinary shares 333
—
—
—
—
333
Repurchase of ordinary shares (1,964 ) —
—
—
—
(1,964 )
Net intercompany loan borrowings (repayments) 3,329
670
4,443
(8,442 ) —
—
Intercompany dividend paid —
—
—
(1,048 ) 1,048
—
Capital contribution received —
—
—
4,731
(4,731 ) —
Other financing activities —
—
—
(2 ) —
(2 )
Net cash provided by (used in) financing activities (172 ) (480 ) 4,046
(7,837 ) (3,683 ) (8,126 )
Effect of exchange rate changes on cash and cash equivalents —
—
—
124
—
124
Net change in cash and cash equivalents —
(33 ) 56
1,368
—
1,391
Cash and cash equivalents at beginning of period —
33
5
4,929
—
4,967
Cash and cash equivalents at end of period $ —
$ —
$ 61
$ 6,297
$ —
$ 6,358

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Consolidating Statement of Comprehensive Income

Three Months Ended January 24, 2020

CIFSA Senior Notes


(in millions)	Medtronic plc		CIFSA		CIFSA Subsidiary Guarantors		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Net sales	$	—	$	—	$	—	$	7,717	$	—	$	7,717

Costs and expenses:
Cost of products sold	—		—		—		2,400		—		2,400
Research and development expense	—		—		—		573		—		573
Selling, general, and administrative expense	3		—		1		2,583		—		2,587
Amortization of intangible assets	—		—		—		436		—		436
Restructuring charges, net	—		—		—		13		—		13

Certain litigation charges	—		—		—		108		—		108



Other operating expense (income), net	12		—		—		(51)		—		(39)
Operating profit (loss)	(15)		—		(1)		1,655		—		1,639
Other non-operating (income) expense, net	—		(27)		(179)		(372)		482		(96)
Interest expense	66		189		141		242		(482)		156
Equity in net (income) loss of subsidiaries	(1,994)		(448)		(1,957)		—		4,399		—
Income (loss) before income taxes	1,913		286		1,994		1,785		(4,399)		1,579
Income tax provision	(2)		—		—		(338)		—		(340)
Net income (loss)	1,915		286		1,994		2,123		(4,399)		1,919
Net income attributable to noncontrolling interests	—		—		—		(4)		—		(4)
Net income (loss) attributable to Medtronic	1,915		286		1,994		2,119		(4,399)		1,915
Other comprehensive income (loss), net of tax	65		(35)		65		30		(60)		65
Comprehensive income attributable to noncontrolling interests	—		—		—		(4)		—		(4)
Total comprehensive income (loss)	$	1,980	$	251	$	2,059	$	2,149	$	(4,459)	$	1,980

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Consolidating Statement of Comprehensive Income

Nine Months Ended January 24, 2020

CIFSA Senior Notes


(in millions)	Medtronic plc		CIFSA		CIFSA Subsidiary Guarantors		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Net sales	$	—	$	—	$	—	$	22,916	$	—	$	22,916

Costs and expenses:
Cost of products sold	—		—		—		7,160		—		7,160
Research and development expense	—		—		—		1,763		—		1,763
Selling, general, and administrative expense	9		1		2		7,738		—		7,750
Amortization of intangible assets	—		—		—		1,317		—		1,317
Restructuring charges, net	—		—		—		87		—		87
Certain litigation charges	—		—		—		276		—		276

Other operating expense (income), net	39		—		(7)		56		—		88
Operating profit (loss)	(48)		(1)		5		4,519		—		4,475
Other non-operating (income) expense, net	—		(122)		(680)		(1,132)		1,629		(305)
Interest expense	350		601		424		1,184		(1,629)		930
Equity in net (income) loss of subsidiaries	(4,535)		(2,635)		(4,274)		—		11,444		—
Income (loss) before income taxes	4,137		2,155		4,535		4,467		(11,444)		3,850
Income tax provision	(6)		—		—		(311)		—		(317)
Net income (loss)	4,143		2,155		4,535		4,778		(11,444)		4,167
Net income attributable to noncontrolling interests	—		—		—		(24)		—		(24)
Net income (loss) attributable to Medtronic	4,143		2,155		4,535		4,754		(11,444)		4,143
Other comprehensive income (loss), net of tax	165		(46)		165		(23)		(96)		165
Comprehensive income attributable to noncontrolling interests	—		—		—		(24)		—		(24)
Total comprehensive income (loss)	$	4,308	$	2,109	$	4,700	$	4,731	$	(11,540)	$	4,308

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Consolidating Statement of Comprehensive Income

Three Months Ended January 25, 2019

CIFSA Senior Notes


(in millions)	Medtronic plc		CIFSA		CIFSA Subsidiary Guarantors		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Net sales	$	—	$	—	$	—	$	7,546	$	—	$	7,546

Costs and expenses:
Cost of products sold	—		—		—		2,265		—		2,265
Research and development expense	—		—		—		561		—		561
Selling, general, and administrative expense	2		—		1		2,593		—		2,596
Amortization of intangible assets	—		—		—		436		—		436
Restructuring charges, net	—		—		—		26		—		26
Certain litigation charges	—		—		—		63		—		63
Other operating expense, net	15		—		—		42		—		57
Operating profit (loss)	(17)		—		(1)		1,560		—		1,542

Other non-operating (income) expense, net	—		(9)		(207)		(190)		335		(71)
Interest expense	125		23		132		298		(335)		243
Equity in net (income) loss of subsidiaries	(1,410)		(656)		(1,336)		—		3,402		—
Income (loss) before income taxes	1,268		642		1,410		1,452		(3,402)		1,370
Income tax provision	(1)		—		—		100		—		99
Net income (loss)	1,269		642		1,410		1,352		(3,402)		1,271
Net income attributable to noncontrolling interests	—		—		—		(2)		—		(2)
Net income (loss) attributable to Medtronic	1,269		642		1,410		1,350		(3,402)		1,269
Other comprehensive income (loss), net of tax	154		104		154		154		(412)		154
Comprehensive income attributable to noncontrolling interests	—		—		—		(2)		—		(2)
Total comprehensive income (loss)	$	1,423	$	746	$	1,564	$	1,504	$	(3,814)	$	1,423

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Consolidating Statement of Comprehensive Income

Nine Months Ended January 25, 2019

CIFSA Senior Notes


(in millions)	Medtronic plc		CIFSA		CIFSA Subsidiary Guarantors		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Net sales	$	—	$	—	$	—	$	22,411	$	—	$	22,411

Costs and expenses:
Cost of products sold	—		—		—		6,672		—		6,672
Research and development expense	—		—		—		1,736		—		1,736
Selling, general, and administrative expense	8		1		2		7,787		—		7,798
Amortization of intangible assets	—		—		—		1,327		—		1,327
Restructuring charges, net	—		—		—		112		—		112
Certain litigation charges	—		—		—		166		—		166
Other operating expense, net	40		—		—		238		—		278
Operating profit (loss)	(48)		(1)		(2)		4,373		—		4,322
Other non-operating (income) expense, net	—		(29)		(559)		(614)		893		(309)
Interest expense	333		66		348		872		(893)		726
Equity in net (income) loss of subsidiaries	(3,835)		(2,277)		(3,626)		—		9,738		—
Income (loss) before income taxes	3,454		2,239		3,835		4,115		(9,738)		3,905
Income tax provision	(5)		—		—		442		—		437
Net income (loss)	3,459		2,239		3,835		3,673		(9,738)		3,468
Net income attributable to noncontrolling interests	—		—		—		(9)		—		(9)
Net income (loss) attributable to Medtronic	3,459		2,239		3,835		3,664		(9,738)		3,459
Other comprehensive income (loss), net of tax	(719)		287		(719)		(722)		1,151		(722)
Comprehensive income attributable to non-controlling interests	—		—		—		(6)		—		(6)
Total comprehensive income (loss)	$	2,740	$	2,526	$	3,116	$	2,945	$	(8,587)	$	2,740

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Balance Sheet

January 24, 2020

CIFSA Senior Notes


(in millions)	Medtronic plc		CIFSA		CIFSA Subsidiary Guarantors		Subsidiary Non-guarantors			Consolidating Adjustments		Total
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—	$	185	$	3,524		$	—	$	3,709
Investments	—		—		—		7,919			—		7,919
Accounts receivable, net	—		—		—		6,248			—		6,248
Inventories, net	—		—		—		4,122			—		4,122
Intercompany receivable	42		—		1,333		13,623			(14,998)		—
Other current assets	10		—		3		2,032			—		2,045

Total current assets	52		—		1,521		37,468			(14,998)		24,043
Property, plant, and equipment, net	—		—		—		4,764			—		4,764
Goodwill	—		—		—		40,091			—		40,091
Other intangible assets, net	—		—		—		19,456			—		19,456
Tax assets	—		—		—		2,272			—		2,272
Investment in subsidiaries	58,753		68,723		76,908		—			(204,384)		—
Intercompany loans receivable	—		3,545		18,296		37,018			(58,859)		—
Other assets	—		—		—		2,196			—		2,196

Total assets	$	58,805	$	72,268	$	96,725	$	143,265		$	(278,241)	$	92,822
LIABILITIES AND EQUITY
Current liabilities:
Current debt obligations	$	—	$	—	$	—	$	844		$	—	$	844
Accounts payable	—		—		—		1,945		��	—		1,945
Intercompany payable	—		1,327		13,599		72			(14,998)		—
Accrued compensation	20		—		—		1,889			—		1,909
Accrued income taxes	—		—		—		457			—		457
Other accrued expenses	25		8		104		3,443			—		3,580

Total current liabilities	45		1,335		13,703		8,650			(14,998)		8,735
Long-term debt	—		1,307		13,522		9,903			—		24,732
Accrued compensation and retirement benefits	—		—		—		1,598			—		1,598
Accrued income taxes	10		—		—		2,728			—		2,738
Intercompany loans payable	6,942		27,048		9,970		14,899			(58,859)		—
Deferred tax liabilities	—		—		—		1,282			—		1,282
Other liabilities	—		—		1		1,783			—		1,784

Total liabilities	6,997		29,690		37,196		40,843			(73,857)		40,869
Shareholders’ equity	51,808		42,578		59,529		102,277			(204,384)		51,808
Noncontrolling interests	—		—		—		145			—		145
Total equity	51,808		42,578		59,529		102,422			(204,384)		51,953
Total liabilities and equity	$	58,805	$	72,268	$	96,725	$	143,265		$	(278,241)	$	92,822

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Balance Sheet

April 26, 2019

CIFSA Senior Notes


(in millions)	Medtronic plc		CIFSA		CIFSA Subsidiary Guarantors		Subsidiary Non-guarantors		Consolidating Adjustments		Total
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	—	$	1	$	4,392	$	—	$	4,393
Investments	—		—		—		5,455		—		5,455
Accounts receivable, net	—		—		—		6,222		—		6,222
Inventories, net	—		—		��		3,753		—		3,753
Intercompany receivable	40		—		1,374		7,212		(8,626)		—
Other current assets	10		—		3		2,131		—		2,144

Total current assets	50		—		1,378		29,165		(8,626)		21,967
Property, plant, and equipment, net	—		—		—		4,675		—		4,675
Goodwill	—		—		—		39,959		—		39,959
Other intangible assets, net	—		—		—		20,560		—		20,560
Tax assets	—		—		—		1,519		—		1,519
Investment in subsidiaries	64,352		39,563		63,651		—		(167,566)		—
Intercompany loans receivable	3,000		4,119		27,858		29,002		(63,979)		—
Other assets	—		—		—		1,014		—		1,014

Total assets	$	67,402	$	43,682	$	92,887	$	125,894	$	(240,171)	$	89,694
LIABILITIES AND EQUITY
Current liabilities:
Current debt obligations	$	—	$	—	$	—	$	838	$	—	$	838
Accounts payable	—		—		—		1,953		—		1,953
Intercompany payable	—		1,308		7,199		119		(8,626)		—
Accrued compensation	3		—		—		2,186		—		2,189
Accrued income taxes	—		—		—		567		—		567
Other accrued expenses	20		11		60		2,834		—		2,925

Total current liabilities	23		1,319		7,259		8,497		(8,626)		8,472
Long-term debt	—		1,354		8,621		14,511		—		24,486
Accrued compensation and retirement benefits	—		—		—		1,651		—		1,651
Accrued income taxes	10		—		—		2,828		—		2,838
Intercompany loans payable	17,278		9,320		19,682		17,699		(63,979)		—
Deferred tax liabilities	—		—		—		1,278		—		1,278
Other liabilities	—		—		1		756		—		757

Total liabilities	17,311		11,993		35,563		47,220		(72,605)		39,482
Shareholders' equity	50,091		31,689		57,324		78,553		(167,566)		50,091
Noncontrolling interests	—		—		—		121		—		121
Total Equity	50,091		31,689		57,324		78,674		(167,566)		50,212
Total liabilities and equity	$	67,402	$	43,682	$	92,887	$	125,894	$	(240,171)	$	89,694

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Statement of Cash Flows

Nine Months Ended January ~~27, 2017~~24, 2020

CIFSA Senior Notes


(in millions)	Medtronic plc		CIFSA		CIFSA Subsidiary Guarantors		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Operating Activities:
Net cash provided by (used in) operating activities	$	130	$	(497)	$	441	$	5,710	$	—	$	5,784
Investing Activities:
Acquisitions, net of cash acquired	—		—		—		(199)		—		(199)

Additions to property, plant, and equipment	—		—		—		(877)		—		(877)
Purchases of investments	—		—		—		(8,249)		—		(8,249)
Sales and maturities of investments	—		—		—		5,791		—		5,791

Capital contribution paid	—		(9,348)		(9,301)		(800)		19,449		—
Return of capital	10,000		—		(3,000)		(7,000)		—		—
Other investing activities	—		—		(5)		(29)		—		(34)
Net cash provided by (used in) investing activities	10,000		(9,348)		(12,306)		(11,363)		19,449		(3,568)
Financing Activities:

Change in current debt obligations, net	—		—		—		17		—		17


Issuance of long-term debt	—		—		5,567		1		—		5,568
Payments on long-term debt	—		(44)		(515)		(5,047)		—		(5,606)
Dividends to shareholders	(2,170)		—		—		—		—		(2,170)
Issuance of ordinary shares	585		—		—		—		—		585
Repurchase of ordinary shares	(1,208)		—		—		—		—		(1,208)
Net intercompany loan borrowings (repayments)	(7,337)		588		6,231		518		—		—

Capital contribution received	—		9,301		800		9,348		(19,449)		—
Other financing activities	—		—		(34)		(40)		—		(74)
Net cash provided by (used in) financing activities	(10,130)		9,845		12,049		4,797		(19,449)		(2,888)
Effect of exchange rate changes on cash and cash equivalents	—		—		—		(12)		—		(12)
Net change in cash and cash equivalents	—		—		184		(868)		—		(684)
Cash and cash equivalents at beginning of period	—		—		1		4,392		—		4,393
Cash and cash equivalents at end of period	$	—	$	—	$	185	$	3,524	$	—	$	3,709

Medtronic plc

Notes to Consolidated Financial Statements

(Unaudited)

(in millions) Medtronic plc CIFSA CIFSA Subsidiary Guarantors Subsidiary Non-guarantors
Consolidating
Adjustments
Total
Operating Activities:
Net cash provided by (used in) operating activities $ 834
$ 867
$ 15
$ 4,311
$ (920 ) $ 5,107
Investing Activities:
Acquisitions, net of cash acquired —
—
—
(1,328 ) —
(1,328 )
Additions to property, plant, and equipment —
—
—
(924 ) —
(924 )
Purchases of investments —
—
—
(3,354 ) —
(3,354 )
Sales and maturities of investments —
—
—
4,286
—
4,286
Capital contributions paid —
(537 ) —
—
537
—
Other investing activities, net —
—
—
21
—
21
Net cash provided by (used in) investing activities —
(537 ) —
(1,299 ) 537
(1,299 )
Financing Activities:
Acquisition-related contingent consideration —
—
—
(58 ) —
(58 )
Change in current debt obligations, net —
—
1,099
19
—
1,118
Repayment of short-term borrowings (maturities greater than 90 days) —
—
—
(2 ) —
(2 )
Proceeds from short-term borrowings (maturities greater than 90 days) —
—
—
4
—
4
Issuance of long-term debt —
—
—
131
—
131
Payments on long-term debt —
—
—
(361 ) —
(361 )
Dividends to shareholders (1,782 ) —
—
—
—
(1,782 )
Issuance of ordinary shares 309
—
—
—
—
309
Repurchase of ordinary shares (3,409 ) —
—
—
—
(3,409 )
Net intercompany loan borrowings (repayments) 4,048
(457 ) (1,114 ) (2,477 ) —
—
Intercompany dividend paid —
—
—
(920 ) 920
—
Capital contributions received —
—
—
537
(537 ) —
Other financing activities —
—
—
80
—
80
Net cash provided by (used in) financing activities (834 ) (457 ) (15 ) (3,047 ) 383
(3,970 )
Effect of exchange rate changes on cash and cash equivalents —
—
—
54
—
54
Net change in cash and cash equivalents —
(127 ) —
19
—
(108 )
Cash and cash equivalents at beginning of period —
208
—
2,668
—
2,876
Cash and cash equivalents at end of period $ —
$ 81
$ —
$ 2,687
$ —
$ 2,768
Condensed Consolidating Statement of Cash Flows

Nine Months Ended January 25, 2019

CIFSA Senior Notes


(in millions)	Medtronic plc		CIFSA		CIFSA Subsidiary Guarantors		Subsidiary Non-guarantors		Consolidating Adjustments		Total
Operating Activities:
Net cash provided by (used in) operating activities	$	100	$	(62)	$	219	$	4,663	$	—	$	4,920
Investing Activities:
Acquisitions, net of cash acquired	—		—		—		(1,615)		—		(1,615)

Additions to property, plant, and equipment	—		—		—		(799)		—		(799)
Purchases of investments	—		—		—		(1,987)		—		(1,987)
Sales and maturities of investments	—		—		—		4,159		—		4,159
Capital contributions paid	(18)		(187)		—		—		205		—
Other investing activities	—		—		—		(3)		—		(3)
Net cash provided by (used in) investing activities	(18)		(187)		—		(245)		205		(245)
Financing Activities:

Change in current debt obligations, net	—		—		(696)		—		—		(696)


Issuance of long-term debt	—		—		—		3		—		3
Payments on long-term debt	—		—		—		(29)		—		(29)
Dividends to shareholders	(2,022)		—		—		—		—		(2,022)
Issuance of ordinary shares	891		—		—		—		—		891
Repurchase of ordinary shares	(2,728)		—		—		—		—		(2,728)
Net intercompany loan borrowings (repayments)	3,777		249		795		(4,821)		—		—

Capital contributions received	—		—		—		205		(205)		—
Other financing activities	—		—		17		(7)		—		10
Net cash provided by (used in) financing activities	(82)		249		116		(4,649)		(205)		(4,571)
Effect of exchange rate changes on cash and cash equivalents	—		—		—		(70)		—		(70)
Net change in cash and cash equivalents	—		—		335		(301)		—		34
Cash and cash equivalents at beginning of period	—		—		1		3,668		—		3,669
Cash and cash equivalents at end of period	$	—	$	—	$	336	$	3,367	$	—	$	3,703

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

UNDERSTANDING OUR FINANCIAL INFORMATION

The following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of Medtronic plc and its subsidiaries (Medtronic plc, Medtronic, or the Company, or we, us, or our). For a full understanding of financial condition and results of operations, you should read this discussion along with ~~management’s discussion~~Management’s Discussion and ~~analysis~~Analysis of ~~financial condition~~Financial Condition and ~~results~~Results of ~~operations~~Operations in our Annual Report on Form 10-K for the fiscal year ended April ~~28, 2017.~~26, 2019. In addition, you should read this discussion along with our consolidated financial statements and related notes thereto at and for the three and nine months ended January ~~26, 2018.~~24, 2020.

In June 2017, we experienced a temporary information technology system disruption that affected our customer ordering, distribution, and manufacturing processes globally. We concluded that the system disruption impact was not material to our revenue or earnings per share for the nine months ended January 26, 2018.

Financial Trends

Throughout this Management’s Discussion and Analysis, we present certain financial measures that ~~management uses~~we use to evaluate the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not presented in our financial statements prepared in accordance with accounting principles generally accepted ~~accounting principles~~ in the United States (U.S.) (U.S. GAAP). These financial measures are considered "non-GAAP financial ~~measures."~~measures" and are intended to supplement, and should not be considered as superior to, financial measures presented in accordance with U.S. GAAP. We generally use non-GAAP financial measures to facilitate management's review of the operational performance of the Company and as a basis for strategic planning. ~~Management believes~~We believe that non-GAAP financial measures provide information useful to investors in understanding the Company's underlying operational performance and trends and tomay facilitate comparisons with the performance of other companies in the medical technologies industry.

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

In the event there is a Non-GAAP Adjustment recognized in our operating results, the tax cost or benefit attributable to that item is separately calculated and reported. Because the effective rate can be significantly impacted by the Non-GAAP Adjustments that take place during the period, we often refer to our tax rate using both the effective rate and the non-GAAP nominal tax rate (Non-GAAP Nominal Tax Rate). The Non-GAAP Nominal Tax Rate is calculated as the ~~provision for~~ income ~~taxes,~~tax provision, adjusted for the impact of Non-GAAP Adjustments, as a percentage of income before ~~provision for~~ income taxes, excluding Non-GAAP Adjustments.

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

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

EXECUTIVE LEVEL OVERVIEW

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

The table below presents ~~our~~ net ~~(loss)~~ income attributable to Medtronic and our diluted ~~(loss)~~ earnings per share for the three and nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017:~~25, 2019:


	Three months ended										Nine months ended
(in millions, except per share data)	January 24, 2020		January 25, 2019		% Change		January 24, 2020		January 25, 2019		% Change
Net income attributable to Medtronic	$	1,915	$	1,269	51	%	$	4,143	$	3,459	20	%
Diluted earnings per share	$	1.42	$	0.94	51	%	$	3.07	$	2.54	21	%

Three months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 % Change January 26, 2018 January 27, 2017 % Change
Net (loss) income attributable to Medtronic $ (1,389 ) $ 821
(269 )% $ 1,644
$ 2,865
(43 )%
Diluted (loss) earnings per share $ (1.03 ) $ 0.59
(275 )% $ 1.20
$ 2.05
(41 )%

~~Diluted loss per share (LPS)~~The increase in net income attributable to Medtronic and diluted earnings per share (EPS) for the three ~~and nine~~ months ended January ~~26, 2018, respectively, were unfavorably affected by the tax charge related to the enactment of U.S. comprehensive tax legislation commonly referred to~~

~~as the Tax Cuts and Jobs Act (the "Tax Act"), which had a significant effect on the income tax provision in the current periods~~24, 2020, as compared to the corresponding ~~periods~~period in the prior fiscal ~~year. Further,~~year, was primarily attributable to a $558 million tax benefit related to a valuation allowance release and a decrease in interest expense.

The increase in net income attributable to Medtronic and diluted ~~LPS~~EPS for the nine months ended January 24, 2020, as compared to the corresponding period in the prior fiscal year, was primarily attributable to a $558 million tax benefit related to a valuation allowance release and the change in other operating (income) expense, net, offset by the increase in interest expense due to the tender and early redemption of senior notes during the period. Refer to the "Costs and Expenses" section of this Management's Discussion and Analysis for more information on the items impacting net income attributable to Medtronic and diluted EPS ~~for~~during the three and nine months ended January 26, 2018, respectively, were unfavorably affected by an investment loss related to the impairment of certain cost and equity method investments of $227 million, along with impairments of IPR&D of $63 million. Additionally, for the three and nine months ended January 26, 2018, diluted LPS and EPS were unfavorably affected by the sale of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses within the Minimally Invasive Therapies Group. Net sales of these businesses were $0.6 billion for the three months ended July 29, 2017, and $0.6 billion and $1.8 billion for the three and nine months ended January 27, 2017, respectively. For the nine months ended January 26, 2018, diluted EPS was partially offset by the favorable impact of a $697 million gain on the sale of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.24, 2020.

GAAP to Non-GAAP Reconciliations The tables below present our GAAP to Non-GAAP reconciliations for the three and nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017:~~25, 2019:


	Three months ended January 24, 2020
(in millions, except per share data)	Income Before Income Taxes		Income Tax Provision		Net Income Attributable to Medtronic		Diluted EPS⁽¹⁾		Effective Tax Rate
GAAP	$	1,579	$	(340)	$	1,915	$	1.42	(21.5)	%
Non-GAAP Adjustments:
Restructuring and associated costs ⁽²⁾	97		16		81		0.06		16.5
Acquisition-related items ⁽³⁾	28		3		25		0.02		10.7
Certain litigation charges	108		1		107		0.08		0.9

Medical device regulations ⁽⁵⁾	13		2		11		0.01		15.4
Amortization of intangible assets	436		68		368		0.27		15.6
Certain tax adjustments, net ⁽⁶⁾	—		558		(558)		(0.41)		—
Non-GAAP	$	2,261	$	308	$	1,949	$	1.44	13.6	%

	Three months ended January 25, 2019
(in millions, except per share data)	Income Before Income Taxes		Income Tax Provision		Net Income Attributable to Medtronic		Diluted EPS⁽¹⁾		Effective Tax Rate
GAAP	$	1,370	$	99	$	1,269	$	0.94	7.2	%
Non-GAAP Adjustments:
Restructuring and associated costs ⁽²⁾	66		12		54		0.04		18.2
Acquisition-related items	17		5		12		0.01		29.4
Certain litigation charges	63		12		51		0.04		19.0
(Gain)/loss on minority investments ⁽⁴⁾	(7)		(1)		(6)		—		14.3
IPR&D charges ⁽⁷⁾	11		3		8		0.01		27.3
Exit of businesses ⁽⁸⁾	69		13		56		0.04		18.8
Amortization of intangible assets	436		65		371		0.27		14.9
Certain tax adjustments, net ⁽⁹⁾	—		64		(64)		(0.05)		—
Non-GAAP	$	2,025	$	272	$	1,751	$	1.29	13.4	%

Three months ended January 26, 2018
(in millions) Income Before Income Taxes
Income
tax provision (benefit)⁽¹⁾
Net (Loss) Income attributable to Medtronic
Diluted
(LPS)
EPS ⁽²⁾⁽³⁾
Effective Tax Rate
GAAP $ 1,027
$ 2,419
$ (1,389 ) $ (1.03 ) 235.5 %
Non-GAAP Adjustments:
Restructuring and associated costs ⁽⁴⁾
30
4
26
0.02
13.3
Acquisition-related items 30
13
17
0.01
43.3
Certain litigation charges 61
8
53
0.04
13.1
Investment loss ⁽⁵⁾
227
(1 ) 228
0.17
(0.4 )
IPR&D impairment 46
5
41
0.03
10.9
Amortization of intangible assets 461
87
374
0.27
18.9
Certain tax adjustments, net ⁽⁶⁾
—
(2,242 ) 2,242
1.64
—
Non-GAAP $ 1,882
$ 293
$ 1,592
$ 1.17
15.6 %

Three months ended January 27, 2017
(in millions) Income Before Income Taxes
Income
tax provision (benefit)⁽¹⁾
Net Income attributable to Medtronic
Diluted
EPS ⁽³⁾
Effective Tax Rate
GAAP $ 967
$ 147
$ 821
$ 0.59
15.2 %
Non-GAAP Adjustments:
Special charge ⁽⁷⁾
100
37
63
0.05
37.0
Restructuring charges, net 21
2
19
0.01
9.5
Certain litigation charges 218
80
138
0.10
36.7
Acquisition-related items 68
16
52
0.04
23.5
Amortization of intangible assets 497
123
374
0.27
24.7
Certain tax adjustment ⁽⁸⁾
—
(86 ) 86
0.06
—
Non-GAAP $ 1,871
$ 319
$ 1,553
$ 1.12
17.0 %
(1)Amounts in this column have been intentionally rounded to the nearest $0.01 and, therefore, may not sum.


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

~~(2)~~

GAAP diluted LPS for the three months ended January 26, 2018 is calculated using diluted weighted average shares of 1,354.0 million, which is the same as basic weighted average shares, due to the net loss resulting from the tax charge as discussed in footnote (6). Non-GAAP diluted EPS for the respective period is calculated using diluted weighted average shares of 1,364.5 million as we had non-GAAP net income for the period.


~~(3)~~	~~The data in this schedule has been intentionally rounded to the nearest $0.01 and, therefore, may not sum.~~


~~(4)~~	~~Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.~~

~~(5)~~

~~The charge was~~

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

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

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

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

(6)The benefit relates to the release of a valuation allowance on certain net operating losses.

(7)The charges were recognized in connection with the impairment of in-process research and development ("IPR&D") assets.

(8)The net charge relates to business exits and is primarily comprised of intangible asset impairments.

(9)The net benefit relates to the impact of U.S. tax reform, intercompany legal entity restructuring, and the finalization of certain ~~cost and equity method investments.~~


~~(6)~~	The net charge primarily relates to the impact from U.S. tax reform, inclusive of the transition tax, remeasurement of deferred tax assets and liabilities, and the decrease in the U.S. statutory tax rate.


~~(7)~~	~~The charge represents a contribution to the Medtronic Foundation.~~


~~(8)~~	~~The charge relates to the IRS's disallowance of the utilization of certain net operating losses and the recording of a valuation allowance against the net operating loss deferred tax asset.~~

Nine months ended January 26, 2018
(in millions) Income Before Income Taxes
Income
tax provision (benefit)⁽¹⁾
Net Income attributable to Medtronic
Diluted
EPS ⁽²⁾
Effective Tax Rate
GAAP $ 3,950
$ 2,320
$ 1,644
$ 1.20
58.7 %
Non-GAAP Adjustments:
Restructuring and associated costs ⁽³⁾
62
10
52
0.04
16.1
Acquisition-related items 101
35
66
0.05
34.7
Divestiture-related items ⁽⁴⁾
115
12
103
0.08
10.4
Certain litigation charges 61
8
53
0.04
13.1
Investment loss ⁽⁵⁾
227
(1 ) 228
0.17
(0.4 )
IPR&D impairment 46
5
41
0.03
10.9
Gain on sale of businesses ⁽⁶⁾
(697 ) —
(697 ) (0.51 ) —
Hurricane Maria ⁽⁷⁾
34
1
33
0.02
2.9
Special charge ⁽⁸⁾
80
26
54
0.04
32.5
Amortization of intangible assets 1,375
241
1,134
0.83
17.5
Certain tax adjustments, net ⁽⁹⁾
—
(1,877 ) 1,877
1.37
—
Non-GAAP $ 5,354
$ 780
$ 4,588
$ 3.35
14.6 %

Nine months ended January 27, 2017
(in millions) Income Before Income Taxes
Income
tax provision (benefit)⁽¹⁾
Net Income attributable to Medtronic
Diluted
EPS ⁽²⁾
Effective Tax Rate
GAAP $ 3,167
307
$ 2,865
$ 2.05
9.7 %
Non-GAAP Adjustments:
Impact of inventory step-up ⁽¹⁰⁾
38
14
24
0.02
36.8
Special charge ⁽¹¹⁾
100
37
63
0.05
37.0
Restructuring charges, net 172
40
132
0.09
23.3
Certain litigation charges 300
110
190
0.14
36.7
Acquisition-related items 148
55
93
0.07
37.2
Amortization of intangible assets 1,484
349
1,135
0.81
23.5
Certain tax adjustments, net ⁽¹²⁾
—
(55 ) 55
0.04
—
Non-GAAP $ 5,409
$ 857
$ 4,557
$ 3.27
15.8 %


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


~~(2)~~	~~The data in this schedule has been intentionally rounded to the nearest $0.01 and, therefore, may not sum.~~


~~(3)~~	~~Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.~~


~~(4)~~	~~The transaction expenses incurred in connection with the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.~~


~~(5)~~	~~The charge was recognized in connection with the impairment of certain cost and equity method investments.~~


~~(6)~~	~~The gain on the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.~~


~~(7)~~	~~The charges represent idle facility costs, asset write-downs, and humanitarian efforts related to Hurricane Maria.~~


~~(8)~~	~~The charge represents a commitment to fund the Medtronic Foundation.~~

~~(9)~~

The net charge primarily relates to the impact of U.S. tax reform, inclusive of the transition tax, remeasurement of deferred tax assets and liabilities, and the decrease in the U.S. statutory tax rate. Additionally, the net charge includes the impacts from the divestiture of our Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses, partially offset by the tax effects from the intercompany sale of intellectual property.


~~(10)~~	~~Represents amortization of step-up in fair value of inventory acquired in connection with the HeartWare acquisition.~~


~~(11)~~	~~The charge represents a contribution to the Medtronic Foundation.~~

~~(12)~~

The net charge relates to the IRS's disallowance of the utilization of certain net operating losses and the recording of a valuation allowance against the net operating loss deferred tax asset, and other certain tax charges recorded in connection with the redemption of an intercompany minority interest, partially offset by a benefit related to the resolution of various tax positions from prior years.

Non-GAAP diluted EPS for the three and nine months ended January 26, 2018 was favorably affected by operating profit improvements realized through efficiencies in selling, general, and administrative expenses, excluding Non-GAAP Adjustments, along with a decrease in our non-GAAP income tax ~~provision.~~aspects of the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses within the Minimally Invasive Therapies Group on July 29, 2017.


	Nine months ended January 24, 2020
(in millions, except per share data)	Income Before Income Taxes		Income Tax Provision		Net Income Attributable to Medtronic		Diluted EPS⁽¹⁾		Effective Tax Rate
GAAP	$	3,850	$	(317)	$	4,143	$	3.07	(8.2)	%
Non-GAAP Adjustments:
Restructuring and associated costs ⁽²⁾	315		47		268		0.20		14.9
Acquisition-related items ⁽³⁾	74		9		65		0.05		12.2
Certain litigation charges	276		33		243		0.18		12.0
(Gain)/loss on minority investments ⁽⁴⁾	(11)		(2)		(9)		(0.01)		18.2
Debt tender premium and other charges ⁽⁵⁾	406		86		320		0.24		21.2
Medical device regulations ⁽⁶⁾	31		4		27		0.02		12.9
Exit of businesses ⁽⁷⁾	41		6		35		0.03		14.6
Contribution to the Medtronic Foundation	80		18		62		0.05		22.5
Amortization of intangible assets	1,317		203		1,114		0.82		15.4
Certain tax adjustments, net ⁽⁸⁾	—		839		(839)		(0.62)		—
Non-GAAP	$	6,379	$	926	$	5,429	$	4.02	14.5	%

	Nine months ended January 25, 2019
(in millions, except per share data)	Income Before Income Taxes		Income Tax Provision		Net Income Attributable to Medtronic		Diluted EPS⁽¹⁾		Effective Tax Rate
GAAP	$	3,905	$	437	$	3,459	$	2.54	11.2	%
Non-GAAP Adjustments:
Restructuring and associated costs ⁽²⁾	256		40		216		0.16		15.6
Acquisition-related items	57		13		44		0.03		22.8
Certain litigation charges	166		24		142		0.10		14.5
(Gain)/loss on minority investments ⁽⁴⁾	(92)		(9)		(83)		(0.06)		9.8
IPR&D charges ⁽⁹⁾	26		3		23		0.02		11.5
Exit of businesses⁽⁷⁾	149		31		118		0.09		20.8
Amortization of intangible assets	1,327		199		1,128		0.83		15.0
Certain tax adjustments, net ⁽¹⁰⁾	—		35		(35)		(0.03)		—
Non-GAAP	$	5,794	$	773	$	5,012	$	3.69	13.3	%

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

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

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

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

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

(8)The net benefit primarily relates to the release of a valuation allowance on certain net operating losses and the impact of tax reform in Switzerland and the United States.

(9)The charges represent acquired IPR&D in connection with an asset acquisition.

(10)The net benefit relates to the impact of U.S. tax reform, intercompany legal entity restructuring, and the finalization of certain income tax aspects of the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses within the Minimally Invasive Therapies Group on July 29, 2017.

NET SALES

Segment and Division

The table below illustrates net sales by segment and division for the three and nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017:~~25, 2019:


	Three months ended⁽¹⁾								Nine months ended⁽¹⁾
(in millions)	January 24, 2020		January 25, 2019		% Change		January 24, 2020		January 25, 2019		% Change
Cardiac Rhythm & Heart Failure	$	1,393	$	1,397	—	%	$	4,201	$	4,295	(2)	%
Coronary & Structural Heart	948		913		4		2,844		2,736		4
Aortic, Peripheral, & Venous	478		476		—		1,420		1,424		—
Cardiac and Vascular Group	2,819		2,786		1		8,464		8,455		—
Surgical Innovations	1,474		1,434		3		4,345		4,224		3
Respiratory, Gastrointestinal, & Renal	702		690		2		2,073		1,999		4
Minimally Invasive Therapies Group	2,176		2,124		2		6,418		6,223		3
Brain Therapies	795		732		9		2,307		2,107		10
Spine	674		655		3		2,023		1,963		3
Specialty Therapies	340		325		5		996		956		4
Pain Therapies	303		314		(4)		910		942		(3)
Restorative Therapies Group	2,111		2,026		4		6,235		5,968		5
Diabetes Group	610		610		—		1,798		1,765		2
Total	$	7,717	$	7,546	2	%	$	22,916	$	22,411	2	%

Three months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 % Change January 26, 2018 January 27, 2017 % Change
Cardiac Rhythm & Heart Failure $ 1,457
$ 1,371
6 % $ 4,314
$ 4,105
5 %
Coronary & Structural Heart 886
751
18
2,557
2,266
13
Aortic & Peripheral Vascular 457
426
7
1,348
1,279
5
Cardiac and Vascular Group 2,800
2,548
10
8,219
7,650
7
Surgical Innovations⁽¹⁾
1,384
1,255
10
4,024
3,785
6
Respiratory, Gastrointestinal, & Renal⁽¹⁾
657
1,162
(43 ) 2,455
3,529
(30 )
Minimally Invasive Therapies Group 2,041
2,417
(16 ) 6,479
7,314
(11 )
Spine 661
657
1
1,969
1,965
—
Brain Therapies 585
518
13
1,682
1,513
11
Specialty Therapies 398
370
8
1,132
1,095
3
Pain Therapies 300
272
10
833
842
(1 )
Restorative Therapies Group 1,944
1,817
7
5,616
5,415
4
Diabetes Group 584
501
17
1,495
1,415
6
Total $ 7,369
$ 7,283
1 % $ 21,809
$ 21,794
— %

~~(1)~~

During the second quarter of fiscal year 2018, the Surgical Solutions and Patient Monitoring & Recovery divisions of the Minimally Invasive Therapies Group were realigned into the Surgical Innovations and Respiratory, Gastrointestinal, & Renal divisions. Refer(1) Revenue amounts have intentionally been rounded to the "Minimally Invasive Therapies Group" discussion within this Management's Discussion and Analysis for more information on the composition of the Surgical Innovations and Respiratory, Gastrointestinal, & Renal divisions.

~~For~~ the ~~three~~nearest million and, nine months ended January 26, 2018, total net sales was unfavorably affected by the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses within the Minimally Invasive Therapies Group. therefore, may not sum.

Our performance ~~continues to be fueled by~~displays our continued execution against our three growth strategies: therapy innovation, globalization, and economic value. We ~~are creating~~continue to allocate our capital to higher growth markets and new opportunities that create competitive advantages and ~~capitalizing~~capitalize on the long-term trends in healthcare: namely, the desire to improve clinical outcomes; the growing demand for expanded access to care; and the optimization of cost and efficiency within healthcare systems. ~~In our therapy innovation growth strategy, we~~

We continue to see ~~clear~~an acceleration in our innovation cycle within our therapy innovation growth strategy. Our segments invest in a pipeline of groundbreaking medical technology, with several ~~important new~~recent product launches ~~during the third quarter~~and adoption of ~~fiscal year 2018 across all of~~new therapies contributing to net sales growth. We remain focused on our ~~segments. In~~ globalization strategy, as net sales in emerging markets grew 12 percent and 1110 percent during the three and nine months ended January ~~26, 2018,~~24, 2020, respectively, as compared to the corresponding periods in the prior fiscal year. Our ~~consistent~~ emerging market performance continues to benefit from geographic diversification, with strong, balanced results in these markets around the world. InFinally, in our third growth strategy, economic value, we continue to execute our value-based healthcare signature programs and aggressively develop unique, value-based healthcare solutions that directly link our therapies to improving outcomes ~~across each of our segments.~~and deliver improved economic value to the payers and providers. We remain focused on leading the shift to healthcare payment systems that reward value and improved patient outcomes over volume.

During the first quarter of fiscal year 2020, we realigned our divisions within the Restorative Therapies Group, which included a movement of revenue from Transformative Solutions product lines previously included in Specialty Therapies to a product line under Brain Therapies. As a result, the fiscal year 2019 results have been recast to adjust for this realignment.

Segment and Market Geography

The ~~tables~~table below ~~include~~includes net sales by market geography for each of our segments for the three and nine months ended January ~~26, 2018~~24, 2020 and January ~~27, 2017:~~

25, 2019:


	U.S.⁽¹⁾						Non-U.S. Developed Markets⁽²⁾						Emerging Markets⁽³⁾							U.S.⁽¹⁾⁽⁴⁾										Non-U.S. Developed Markets⁽²⁾⁽⁴⁾								Emerging Markets⁽³⁾⁽⁴⁾
	Three months ended						Three months ended						Three months ended							Three months ended										Three months ended								Three months ended
(in millions)	January 26, 2018		January 27, 2017		% Change		January 26, 2018		January 27, 2017		% Change		January 26, 2018		January 27, 2017		% Change		(in millions)	January 24, 2020		January 25, 2019		% Change		January 24, 2020		January 25, 2019		% Change		January 24, 2020		January 25, 2019		% Change
Cardiac and Vascular Group	$	1,395	$	1,320	6	%	$	934	$	815	15	%	$	471	$	413	14	%	Cardiac and Vascular Group	$	1,366	$	1,369	—	%	$	915	$	924	(1)	%	$	538	$	493	9	%
Minimally Invasive Therapies Group	862		1,234		(30	)	807		842		(4	)	372		341		9		Minimally Invasive Therapies Group	934		930		—		791		796		(1)		451		398		13
Restorative Therapies Group	1,300		1,242		5		429		384		12		215		191		13		Restorative Therapies Group	1,409		1,354		4		436		435		—		266		237		12
Diabetes Group	355		310		15		185		152		22		44		39		13		Diabetes Group	312		348		(10)		236		213		11		63		49		29
Total	$	3,912	$	4,106	(5	)%	$	2,355	$	2,193	7	%	$	1,102	$	984	12	%	Total	$	4,021	$	4,001	—	%	$	2,377	$	2,368	—	%	$	1,318	$	1,177	12	%

																				U.S.⁽¹⁾⁽⁴⁾										Non-U.S. Developed Markets⁽²⁾⁽⁴⁾								Emerging Markets⁽³⁾⁽⁴⁾
																				Nine months ended										Nine months ended								Nine months ended
(in millions)																			(in millions)	January 24, 2020		January 25, 2019		% Change		January 24, 2020		January 25, 2019		% Change		January 24, 2020		January 25, 2019		% Change
Cardiac and Vascular Group																			Cardiac and Vascular Group	$	4,182	$	4,240	(1)	%	$	2,735	$	2,766	(1)	%	$	1,547	$	1,449	7	%
Minimally Invasive Therapies Group																			Minimally Invasive Therapies Group	2,769		2,659		4		2,364		2,396		(1)		1,285		1,168		10
Restorative Therapies Group																			Restorative Therapies Group	4,187		4,005		5		1,278		1,275		—		770		688		12
Diabetes Group																			Diabetes Group	930		1,006		(8)		693		619		12		176		140		26
Total																			Total	$	12,068	$	11,910	1	%	$	7,069	$	7,056	—	%	$	3,778	$	3,445	10	%

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

U.S.⁽¹⁾

Non-U.S. Developed Markets⁽²⁾

Emerging Markets⁽³⁾
Nine months ended Nine months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 % Change January 26, 2018 January 27, 2017 % Change January 26, 2018 January 27, 2017 % Change
Cardiac and Vascular Group $ 4,151
$ 3,970
5 % $ 2,716
$ 2,467
10 % $ 1,352
$ 1,213
11 %
Minimally Invasive Therapies Group 2,902
3,735
(22 ) 2,455
2,558
(4 ) 1,122
1,021
10
Restorative Therapies Group 3,779
3,710
2
1,217
1,151
6
620
554
12
Diabetes Group 856
845
1
521
457
14
118
113
4
Total $ 11,688
$ 12,260
(5 )% $ 6,909
$ 6,633
4 % $ 3,212
$ 2,901
11 %
(2)Non-U.S. developed markets include Japan, Australia, New Zealand, Korea, Canada, and the countries within Western Europe.


~~(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 of 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)Revenue amounts have intentionally been rounded to the nearest million and, therefore, may not sum.

Net sales ~~declines~~ in the U.S. for the three months ended January 24, 2020 remained flat, which was attributable to growth in our Restorative Therapies Group, partially offset by declines in our Diabetes Group. Net sales increases in the U.S. for the nine months ended January 24, 2020 were primarily attributable to growth in our Restorative Therapies and Minimally Invasive Therapies Groups, offset by declines in our Diabetes and Cardiac and Vascular Groups. Currency had an unfavorable effect on net sales in non-U.S. developed markets and emerging markets for the three and nine months ended January ~~26, 2018 were impacted by the divestiture~~24, 2020 of ~~our Patient Care, Deep Vein Thrombosis,~~$46 million and ~~Nutritional Insufficiency businesses, partially offset by growth in the Cardiac and Vascular Group and Restorative Therapies Group.~~$289 million, respectively. Net sales ~~growth~~remained nearly flat in non-U.S. developed markets for the three and nine months ended January ~~26, 2018 was led~~24, 2020, attributable to sales declines in Western Europe, offset by net sales growth in Japan. Net sales growth in emerging markets continues to reflect our broad diversification as we experienced strong performance across the market geography in ~~Japan, South Korea, and Canada. Emerging market sales growth was driven by solid performance in all~~each of our ~~groups, with strong performance~~segments.

Regarding the Covid-19 outbreak (COVID-19), our top concern is the health and well-being of our employees in China ~~Latin America,~~ and across the ~~Middle East & Africa. Currency had~~globe. We have activated response teams in China, the Asia Pacific region, and globally, and we remain vigilant in monitoring COVID-19. As the Chinese healthcare system is focused on containing the spread of the virus, hospitals in China have experienced a ~~favorable effect~~slowing of ~~$177 million~~medical device procedure rates, and, ~~$179 million~~consequently, we are seeing procedure delays. We expect COVID-19 to have a negative impact on ~~net sales for~~our fourth quarter financial results, but given the ~~three~~fluidity of the situation, the duration and ~~nine months ended January 26, 2018, respectively.~~magnitude of the impact are difficult to assess or predict at this time. China comprises approximately seven percent of the Company’s revenue. We purchase many of the components, raw materials, and services needed to globally manufacture our products from numerous suppliers in various countries, including China. Although we work closely with our suppliers to try to ensure continuity of supply while maintaining high quality and reliability, the supply of these components, raw materials, and services may be interrupted or insufficient, in certain instances, as a direct result of the COVID-19 outbreak.

Looking ahead, our segments are likely to face competitive product launches and pricing pressure, geographic macro-economic risks, reimbursement challenges, impacts from changes in the mix of our product offerings and timing of product registration

approvals, replacement cycle challenges, and fluctuations in currency exchange rates. Additionally, changes in procedural volumes could affect our Cardiac and Vascular, Minimally Invasive Therapies, and Restorative Therapies Groups.

Cardiac and Vascular Group

The Cardiac and Vascular Group’s products include pacemakers, insertable and external cardiac monitors, cardiac resynchronization therapy devices (CRT-D), implantable cardioverter defibrillators (ICD), leads and delivery systems, ventricular assist systems, ablation products, electrophysiology catheters, products for the treatment of atrial fibrillation, information systems for the management of patients with Cardiac Rhythm & Heart Failure devices, products designed to reduce surgical site infections, coronary and peripheral stents and related delivery systems, balloons and related delivery systems, endovascular stent graft systems, heart valve replacement technologies, cardiac tissue ablation systems, and open heart and coronary bypass grafting surgical products. The Cardiac and Vascular Group also includes Care Management Services and Cath Lab Managed Services (CLMS) within the Cardiac Rhythm & Heart Failure division. The Cardiac and Vascular Group’s net sales for the three ~~and~~months ended January 24, 2020 were $2.8 billion, which represents growth of 1 percent compared to the three months ended January 25, 2019. Net sales for the nine months ended January ~~26, 2018~~24, 2020 were ~~$2.8~~$8.5 billion, ~~and $8.2 billion, respectively, an increase of 10 percent and 7 percent, respectively, as~~which were flat compared to the ~~corresponding periods in the prior fiscal year.~~nine months ended January 25, 2019. Currency had ~~a favorable~~an unfavorable impact on net sales for the three and nine months ended January ~~26, 2018~~24, 2020 of ~~$77~~$18 million and ~~$81~~$116 million, respectively. The Cardiac and Vascular Group's net sales for the

three and nine months ended January ~~26, 2018,~~24, 2020, as compared to the corresponding periods in the prior fiscal year, ~~benefited from strong net sales~~were primarily driven by growth in ~~all three divisions. See the more detailed discussion of each division's performance below.~~Coronary & Structural Heart offset by decreases in Cardiac Rhythm & Heart Failure.

Cardiac Rhythm & Heart Failure net sales for the three and nine months ended January ~~26, 2018~~24, 2020 were ~~$1.5~~$1.4 billion and ~~$4.3~~$4.2 billion, respectively, ~~an increase of 6 percent and 5 percent, respectively, as~~which was flat compared to the ~~corresponding periods in~~three months ended January 25, 2019 and a decline of 2 percent compared to the ~~prior fiscal year.~~nine months ended January 25, 2019. Cardiac Rhythm & Heart Failure net sales ~~growth~~ for the three and nine months ended January ~~26, 2018 was~~24, 2020 were driven by ~~strong growth~~declines in ~~Arrhythmia Management~~ICDs and ~~Heart Failure. The strong growth~~CRT-Ds due to replacement cycles and LVAD headwinds as a result of competitive pressures in ~~Arrhythmia Management was driven~~the U.S. These declines were partially offset by growth in ~~Diagnostics, driven by the continued global demand of~~ Pacing, AF Solutions, and the Reveal LINQ insertable cardiac ~~monitor, and~~monitoring system. The growth in ~~AF Solutions, as well as~~Pacing was due to the continued strong adoption of the Micra transcatheter pacing ~~system and the TYRX absorbable antibacterial envelope, which, for the three months ended January 26, 2018, were partially offset by declines in implantable cardiac defibrillators.~~system. The ~~strong net sales~~ growth in ~~Heart Failure for the three and nine months ended January 26, 2018~~AF Solutions was driven by strong growth in Mechanical Circulatory Support from sales of the HVAD system, as well as continued demand for the CRT-P quadripolar pacing system, which launched in the U.S. in the first quarter of fiscal year 2018.Arctic Front cryoblation products.

Coronary & Structural Heart net sales for the three and nine months ended January ~~26, 2018~~24, 2020 were ~~$886~~$948 million and ~~$2.6~~ $2.8 billion, respectively, an increase of 184 percent ~~and 13 percent, respectively,~~ as compared to the corresponding periods in the prior fiscal year. Coronary & Structural Heart net sales growth for the three and nine months ended January ~~26, 2018~~24, 2020 was ~~largely~~ driven by transcathether aortic valves, reflecting expansion into the ~~continued strong customer adoption of the Evolut PRO Transcatheter Aortic Valve system (Evolut PRO) and the Evolut R 34mm transcatheter aortic heart valve,~~low risk patient population, as well as ~~continued penetration into intermediate risk in the U.S., which received approval late in the first quarter~~growth of ~~fiscal year 2018. Net sales~~our guide catheters. This growth was ~~also driven~~partially offset by ~~the continued strong demand for the Resolute Onyx~~declines in drug-eluting ~~stent in the U.S. and Japan, which launched in the first quarter of fiscal year 2018.~~stents.

Aortic, Peripheral, & ~~Peripheral Vascular~~Venous net sales for the three and nine months ended January ~~26, 2018~~24, 2020 were ~~$457~~$478 million and ~~$1.3~~$1.4 billion, respectively, ~~an increase of 7 percent and 5 percent, respectively, as~~which was flat when compared to the corresponding periods in the prior fiscal ~~year.~~year, with growth in Aortic ~~& Peripheral Vascular~~and Venous offsetting declines in Peripheral. Aortic net sales growth for the three and nine months ended January ~~26, 2018~~24, 2020 was driven by ~~strong performance in Percutaneous Transluminal Angioplasty (PTA) balloons and drug-coated balloons, as well as~~ the ~~performance~~continued momentum from the launch of the Valiant ~~Captivia~~Navion thoracic stent graft ~~systems. Net~~system. Venous net sales growth for the three and nine months ended January ~~26, 2018~~24, 2020 was ~~also~~ driven by ~~stronger performance~~the ongoing adoption of the VenaSeal vein closure ~~system,~~system. Peripheral net sales decline for ~~which final approval for reimbursement payment in~~ the ~~U.S. from the Centers for Medicare & Medicaid Services (CMS) was received in January 2018. For the~~three and nine months ended January ~~26, 2018, net sales growth~~24, 2020 was ~~further driven by both~~due to drug-coated balloons, as uncertainty around Paclitaxel continues to impact the ~~success of the Heli-FX EndoAnchor System and continued strong adoption of the HawkOne 6 French directional atherectomy system.~~market.

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

Changes in procedural volumes, competitive product launches and pricing pressure, geographic macro-economic risks, reimbursement challenges, impacts from changes in the mix of our product offerings, the timing of product registration approvals, replacement cycle challenges, and fluctuations in currency exchange rates.

•Continued acceptance and ~~future~~growth from penetration of the self-expanding CoreValve Evolut transcatheter aortic valve replacement platform into intermediate risk indication globally.

•Acceptance and growth of the self-expanding CoreValve Evolut transcatheter aortic valve replacement platform for the treatment of patients determined to be at low risk with surgery.

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

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

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

•Continued acceptance and growth of the CRT-P quadripolar pacing system, which received CE Mark approval in February 2017 and launched in Europe during the fourth quarter of fiscal year 2017. In the U.S., we received Food and Drug Administration (FDA) approval in May 2017, and launched in the first quarter of fiscal year 2018.system.

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

•Acceptance and growth of the Cobalt and Crome portfolio of ICDs and CRT-Ds, both of which ~~launched in Japan during~~received CE Mark approval after the end of the third ~~quarter of fiscal year 2018.~~quarter.

•Continued ~~future growth from the Reveal LINQ insertable cardiac monitor.~~

~~Continued future~~ growth of our Micra transcatheter pacing system. Micra ~~is a miniaturized single chamber pacemaker system that is delivered through~~AV received U.S. FDA approval the ~~femoral vein and is implanted in the right ventricle~~last week of the ~~heart. The system does not use a lead~~third quarter, which expands the Micra target population from 15 percent to 55 percent of pacemaker patients.

•Continued acceptance and does not have a subcutaneous device pocket underneath the skin as with conventional pacemaker systems. We received final approval for reimbursement in the U.S. from the CMS and in Japan from the Ministry of Health, Labour, and Welfare during the fourth quarter of fiscal year 2017 and during the second quarter of fiscal year 2018, respectively, for this transformative therapy, which we expect will continue to accelerate sales in the U.S. and in Japan.

~~Acceptance and future~~ growth from the Azure XT and S SureScan pacing ~~systems, which launched in the U.S. during the third quarter of fiscal year 2018.~~systems. Azure pacemakers feature Medtronic-exclusive BlueSync technology, which enables automatic, secure wireless remote monitoring with increased device longevity.

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

•Continued growth, adoption, and utilization of the TYRX Envelope for implantable devices driven by the favorable results of the WRAP-IT clinical study.

•Continued acceptance ~~and future growth~~ of the HVAD System as a Destination Therapy for patients with advanced heart failure who are not candidates for heart transplants. The HVAD System, a left ventricular assist device or LVAD, helps the heart pump and increases the amount of blood that flows through the body. In the U.S., we received FDA approval in September 2017 for this Destination Therapy indication, and expect to receive thoracotomy indication during fiscal year 2019. Further, we expect to launch the HVAD system in Japan during fiscal year 2019.

~~Continued acceptance and future growth from~~ Care Management Services as post-acute care services ~~become~~becoming even more critical in bundled payment models for different interventions or therapies.

•Continued acceptance and ~~future~~ growth from ~~Evolut R 34mm transcatheter aortic heart valve, our next-generation recapturable~~the VenaSeal vein closure system ~~with differentiated 16 French equivalent delivery system, which was launched in the U.S. in the third quarter of fiscal year 2017.~~

~~Acceptance and future growth from penetration of~~ t~~he self-expanding CoreValve Evolut Transcatheter Aortic Valve Replacement platform into intermediate risk indication~~ in the U.S., for which ~~received FDA approval during~~reimbursement payment was established in January 2018 and payer coverage has been gradually increasing. The VenaSeal system is a unique non-thermal solution to address superficial venous disease that provides improved patient comfort, reduces the ~~first quarter~~recovery time, and eliminates the risk of ~~fiscal year 2018.~~

thermal nerve injury.

•Continued acceptance and future growth from Evolut PRO, which provides control during deployment to assist with accurate positioning with the ability to recapture and reposition the valve. Evolut PRO received U.S. FDA approval and launched in the fourth quarter of fiscal year 2017. Evolut PRO also received CE Mark approval at the end of the first quarter of fiscal year 2018 and launched in Europe during the second quarter of fiscal year 2018. Further, Evolut PRO is expected to launch in Japan during the first half of fiscal year 2019.

~~Continued acceptance and future~~ growth from the ~~market release~~Valiant family of ~~Resolute Onyx, which launched in~~thoracic stent grafts, including the ~~first quarter~~Valiant Navion.

•Ongoing impact of ~~fiscal year 2018 in the U.S. and in Japan. Resolute Onyx builds on the Resolute Integrity drug-eluting coronary stent with thinner struts to improve deliverability and is the first stent to feature~~Paclitaxel safety concerns affecting our ~~CoreWire technology, allowing greater visibility during procedures.~~drug-coated balloons.

Continued acceptance and future growth from the HawkOne 6 French (6F) for treating patients with peripheral artery disease (PAD), which launched in the U.S. in the third quarter of fiscal year 2017. The HawkOne system is designed to remove plaque from the vessel wall and restore blood flow. The new HawkOne 6F provides an effective and easy-to-use treatment option for patients with PAD both above and below the knee with a single device at a lower profile.

Continued acceptance and future growth from the expansion of the Endurant II used with the Aptus Heli-FX EndoAnchor for the short neck indication in the U.S., which received FDA approval in October 2017.

Minimally Invasive Therapies Group

The Minimally Invasive Therapies Group’s products span the entire continuum of patient care from diagnosis to recovery, with a focus on diseases of the gastrointestinal tract, lungs, pelvic region, kidneys, obesity, and preventable complications. The products include those for advanced and general surgical ~~care,~~products including surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products, hernia mechanical devices, mesh implants, advanced ablation, interventional lung, ventilators, capnography, airway products, sensors, dialysis, and monitors. Net sales for the three months ended July 28, 2017 and the three and nine months ended January 27, 2017 also include sales of compression, enteral feeding, wound care, and medical surgical product lines, which were divested on July 29, 2017. The Minimally Invasive Therapies Group’s net sales for the three and nine months ended January ~~26, 2018~~24, 2020 were ~~$2.0~~$2.2 billion and ~~$6.5~~$6.4 billion, respectively, ~~a decrease~~an increase of 162 percent and 113 percent, respectively, as compared to the corresponding periods in the prior fiscal year. Currency had ~~a favorable~~an unfavorable impact on net sales for the three and nine months ended January ~~26, 2018~~24, 2020 of ~~$53~~$15 million and ~~$47~~$95 million, respectively. ~~The Minimally Invasive Therapies~~Also impacting sales growth was the upgrade of the Group's ~~net sales~~enterprise resource planning (ERP) system in the U.S. and Canada, resulting in a temporary slowdown in the ability to supply customers, which in some cases resulted in lost procedures for the three ~~and nine~~ months ended January ~~26, 2018 were affected by the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses on July 29, 2017.~~

During the second quarter of fiscal year 2018, after the divestiture discussed above, the Surgical Solutions and Patient Monitoring & Recovery divisions were realigned into the Surgical Innovations and Respiratory, Gastrointestinal, & Renal divisions. The Surgical Innovations division consists of the Advanced Surgical and General Surgical businesses. The Advanced Surgical business includes the Advanced Stapling, Advanced Energy, Hernia, Gynecology, and Interventional Lung product lines. The General Surgical business includes the Wound Closure, Electosurgery and Instruments product lines.

The Respiratory, Gastrointestinal, & Renal business consists of the Respiratory & Monitoring Solutions and Renal Care Solutions businesses. The Respiratory & Monitoring Solutions business includes the Patient Monitoring, Respiratory Solutions, Advanced

~~Ablation, and GI Solutions product lines. The Renal Care Solutions business includes the Renal Access and Dialyzers product lines.~~24, 2020.

Surgical Innovations net sales for the three and nine months ended January ~~26, 2018~~24, 2020 were ~~$1.4~~$1.5 billion and ~~$4.0~~$4.3 billion, respectively, ~~an increase~~increases of 103 percent ~~and 6 percent, respectively,~~ as compared to the corresponding periods in the prior fiscal year. Surgical Innovations net sales growth was driven primarily by ~~new products~~strong sales in Advanced Energy, led by the LigaSure Exact Dissector and L-Hook Laparoscopic Sealer/Divider, Sonicision curved jaw cordless ultrasonic dissection system, and Valleylab FT10 energy platform. Also driving growth for fiscal year 2020 was growth in Advanced Stapling, led by the Endo GIA and ~~Advanced Energy, including the Signia powered~~EEA circular stapler ~~endo stapling specialty reloads, and Ligasure vessel sealing instruments. Also driving net sales performance was the Valleylab F10 energy platform, stability of procedural volumes,~~platforms with Tri-Staple technology, and growth in ~~emerging markets.~~Wound Closure led by the V-Loc wound closure device and Lung Health with ILLUMISITE and LUNGGPS patient management platforms.

Respiratory, Gastrointestinal, & Renal net sales for the three and nine months ended January ~~26, 2018~~24, 2020 were ~~$657~~$702 million and ~~$2.5~~$2.1 billion, respectively, ~~a decrease~~an increase of 432 percent and 304 percent, respectively, as compared to the corresponding periods in the prior fiscal year. Respiratory, Gastrointestinal, & Renal net sales ~~declined as a result of~~growth was driven by strength in Patient Monitoring, including the ~~July 29, 2017 divestiture of the Patient Care, Deep Vein Thrombosis,~~Nellcor pulse oximetry, BIS brain monitoring consumables, and ~~Nutritional Insufficiency businesses. Apart from the decline in net sales due to the divestiture, net sales performance in Respiratory, Gastrointestinal, & Renal benefited from~~INVOS cerebral oximetry sensor consumables, along with growth in GI ~~Solutions, strength~~& Hepatology, including PillCam capsule endoscopy systems, Bravo calibration-free reflux testing

systems, and EndoFLIP imaging systems. Also driving growth for fiscal year 2020 was growth in ~~Nellcor pulse oximetry products due to~~Respiratory Interventions, including the ~~intensity of the flu season in the U.S., and~~ continued adoption of ~~MicroStream capnography monitoring~~ventilators and video laryngoscopy products. ~~This growth was offset by a decline in Airway and Ventilation net sales.~~

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

Changes in procedural volumes, competitive product launches and pricing pressure, geographic macro-economic risks, reprocessing of our products, reimbursement challenges, impacts from changes in the mix of our product offerings, the timing of product registration approvals, and fluctuations in currency exchange rates.

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

•Continued acceptance and ~~continued therapy innovation to advance MIS.~~

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

•The July 29, 2017 divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses. Net sales of the businesses included in the divestiture were $0.6 billion for the three months ended July 29, 2017, and $0.6 billion and $1.8 billion for the three and nine months ended January 27, 2017, respectively. We have entered into Transition Manufacturing Agreements (TMAs) with Cardinal Health, Inc. (Cardinal). The TMAs will contribute to net sales and are designed to ensure and facilitate an orderly transfer of business operations for a transition period of two to five years, with the ability to extend upon mutual agreement of the parties.

~~Continued acceptance and future growth of the powered stapling and energy platform.~~

•Our ability to execute ongoing strategies in order to address the competitive pressure of reprocessing of our vessel sealing disposables and growth of surgical soft tissue robotics procedures in the U.S.

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

•Continued acceptance and ~~future~~ growth within the end stage renal disease market. The population of patients treated for end stage renal disease globally is expected to double over the next decade. We ~~will~~plan to grow our therapy innovation with scalable and affordable dialysis delivery while investing in vascular creation and maintenance technologies. In addition, the HD multi-pass system reduces infrastructure by requiring less water, less start-up costs, and offers high quality ultrapure dialysate treatment. ~~The system is expected to~~We are expecting regulatory filing in first half of calendar year 2021, with launch following regulatory clearance in ~~late fiscal fiscal year 2020, but timing may shift depending on regulatory requirements.~~targeted countries.

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

•Continued acceptance and growth in ~~respiratory care,~~patient monitoring, airway, and ventilation ~~management, and Patient Monitoring.~~management. Key products in this area include the Puritan Bennett 980 ventilator, Microstream Capnography, ~~bedside capnography monitor, portable monitor with~~ Nellcor pulse oximetry system with OxiMax technology, Shiley tracheostomy and ~~the Nellcor Respiratory Compromise monitor with vital signs of SpO2, pulse rate, End-Tidal CO2,~~endotracheal tubes, and ~~Respiratory Rate.~~McGRATH MAC video laryngoscopes.

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

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

•Expanding the use of less invasive treatments and furthering our commitment to improving options for women with abnormal uterine ~~bleeding with our fiscal year 2017 acquisition of Smith and Nephew's gynecology business. The addition~~bleeding. Our expanded and strengthened ~~the~~ surgical offerings ~~and complemented~~are expected to complement our global gynecology business.

Restorative Therapies Group

The Restorative Therapies Group's products focus on various areas of the spine, bone graft substitutes, biologic products, trauma, implantable neurostimulation therapies and drug delivery systemsfor the treatment of chronic pain, movement disorders, ~~obsessive-compulsive disorder (OCD),~~epilepsy, overactive bladder, urinary retention, fecal incontinence and gastroparesis, as well as products to treat conditions of the ear, nose, and throat (ENT), and systems that incorporate advanced energy surgical instruments. The Restorative Therapies Group also manufactures and sells image-guided surgery and intra-operative imaging systems, robotic guidance systems used in robot assisted spine procedures, and therapies to treat diseases of the vasculature in and around the brain, including coils, neurovascular stents and flow diversion products. The Restorative Therapies Group’s net sales for the three and nine months ended January ~~26, 2018~~24, 2020 were ~~$1.9~~$2.1 billion and ~~$5.6~~$6.2 billion, respectively, an increase of 74 percent and 45 percent, respectively, as compared to the corresponding periods in the prior fiscal year. Currency had ~~a favorable~~an unfavorable impact on net sales for the three and nine months ended January ~~26, 2018~~24, 2020 of ~~$31~~$8 million and ~~$28~~$50 million, respectively. Net sales growth for the three and nine months ended January ~~26, 2018~~24, 2020 was driven by ~~growth in~~the Brain Therapies, Spine, and Specialty ~~Therapies.~~Therapies divisions. Net sales growth ~~for the three months ended January 26, 2018 was also driven by growth in Pain Therapies. See the more detailed discussion of each division’s performance below.~~

~~Spine net sales~~ for the three and nine months ended January ~~26, 2018 were $661 million and $2.0 billion, respectively, an increase of 1 percent and flat, respectively, as compared to the corresponding periods in the prior fiscal year. Spine net sales growth~~24, 2020 was driven by growth in BMP (composed of INFUSE bone graft (InductOs in the European Union)), offset by a slight decline in Core Spine. Core Spine net sales declined due to continued overall market softness in the U.S. and Europe, partially offset by the continued success of our Surgical Synergy strategy, which integrates our spinal implants with enabling technologies such as imaging, navigation, power instruments, nerve monitoring and Mazor robotics sold by our Neurosurgery business, and our "Speed-to-Scale" initiative, which involves faster innovation cycles and the launching of a steady cadence of new products at scale with sets immediately available for the entire market.modest declines in Pain Therapies.

Brain Therapies net sales for the three and nine months ended January ~~26, 2018~~24, 2020 were ~~$585~~$795 million and ~~$1.7~~$2.3 billion, ~~respectively,~~ an increase of 139 percent and 1110 percent, respectively, as compared to the corresponding periods in the prior fiscal year. Brain Therapies net sales growth was driven by strong growth in both Neurovascular and Neurosurgery. Neurovascular net sales growth was driven by continued strength ~~across~~in both the Hemorrhagic and Ischemic stroke businesses. The Hemorrhagic stroke business saw growth in flow diversion products, particularly with our ~~entire~~Pipeline Flex flow diversion system. The Ischemic stroke ~~portfolio, including~~business saw continued strong ~~sales~~adoption of the recently launched Solitaire X stent retriever products as well as our ~~Solitaire family of revascularization devices for acute ischemic stroke.~~Riptide aspiration system and React catheters. Neurosurgery net sales growth was driven by continued strong ~~sales of~~demand for the StealthStation S8 surgical navigation ~~system, O-arm surgical imaging system,~~systems, O-Arm Imaging Systems, and ~~Midas disposables,~~Mazor X Stealth robotic guidance systems, as well as ~~disposables revenue from placement~~strong uptake of ~~capital equipment through our distributor agreement with Mazor. Net~~the Midas Rex MR8 high-speed drill system fully launched in the U.S. during the second quarter of fiscal year 2020.

Spine net sales ~~growth in Neurovascular and Neurosurgery~~ for the three and nine months ended January ~~26, 2018~~24, 2020 were $674 million and $2.0 billion, respectively, an increase of 3 percent as compared to the corresponding periods in the prior fiscal year. Net sales growth for the three and nine months ended January 24, 2020 was driven by continued success of our Surgical Synergy strategy, which integrates our spinal implants with enabling technologies such as imaging, navigation, power instruments, nerve monitoring and Mazor robotics sold by our Neurosurgery business. These enabling technologies also contributed to the strong performance in Neurosurgery within our Brain Therapies division. Core Spine also contributed to sales growth through new product penetration from recently launched products, including the Infinity OCT System, T2 Stratosphere, and Prestige LP cervical disc system. Also contributing to growth in Core Spine was the acquisition of Titan Spine in the first quarter of fiscal year 2020. For the three months ended January 24, 2020, growth was partially offset by ~~slight~~ declines in ~~Brain Modulation due to competitive pressures in every major market.~~bone morphogenetic protein (BMP).

Specialty Therapies net sales for the three and nine months ended January ~~26, 2018~~24, 2020 were ~~$398~~$340 million and ~~$1.1 billion,~~$996 million, respectively, an increase of 85 percent and 4 percent, respectively, as compared to the corresponding periods in the prior fiscal year. Net sales growth was driven by capital equipment sales of the StealthStation ENT surgical navigation system, intraoperative NIM nerve monitoring system, and powered ENT instruments in ENT. For the three months ended January 24, 2020, growth in ENT was partially offset by modest declines in Pelvic Health.

Pain Therapies net sales for the three and nine months ended January 24, 2020 were $303 million and $910 million, respectively, a decrease of 4 percent and 3 percent, respectively, as compared to the corresponding periods in the prior fiscal year. Specialty Therapies net sales growth for the three months ended January 26, 2018 was driven by growth in Pelvic Health due to strong InterStim sales in the U.S. and in ENT due to growth in power disposables. Specialty Therapies net sales growth for the nine months ended January 26, 2018 was driven by growth in ENT Navigation and in Transformative Solutions driven by the Aquamantys Transcollation and PEAK PlasmaBlade technologies.

~~Pain Therapies net sales for~~For the three and nine months ended January ~~26, 2018 were $300 million and $833 million, respectively, an increase of 10 percent and a decrease of 1 percent, respectively, as compared to~~24, 2020, the corresponding periods in the prior fiscal year. The increase in net sales for the three months ended January 26, 2018 was driven by strong sales of the recently launched Intellis spinal cord stimulation platform, continued success of the OsteoCool RF Spinal Tumor ablation system, and growth in pumps following the lifting of the FDA distribution restrictions during the second quarter of fiscal year 2018. The decrease in net sales ~~for the nine months ended January 26, 2018~~ was ~~primarily~~ driven by ~~decreases in our Spinal Cord Stimulation products due to competitive pressures~~the continued overall slowdown in the U.S. ~~and Europe~~spinal cord stimulation market, partially offset by growth in ~~the first half of the fiscal year as we awaited the full launch of our Intellis platform.~~emerging markets.

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

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

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

•Continued growth from Neurosurgery StealthStation and O-Arm Imaging Systems, Midas, and ENT ~~power systems.~~Navigation and Power Systems.

•Continued sales of Mazor robotic units and associated market adoption of robot-assisted spine procedures, ~~under an exclusive worldwide distributor agreement with~~including the Mazor ~~Robotics.~~X Stealth, our integrated robotics and navigation platform, which received U.S. FDA approval in November 2018.

~~Continued market acceptance~~

•Strengthening of our ~~new~~position as a global leader in enabling technologies for spine surgery as a result of the December 2018 acquisition of Mazor Robotics.

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

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

Continued success of our "Speed-to-Scale" program launches, which involves faster innovation cycles and launching a steady cadence of new products at scale with sets immediately available for the entire market.

•Market acceptance and continued global adoption of innovative new Spine products and procedural solutions, such as our ~~CD Horizon Solera Voyager system, our ELEVATE expandable interbody cages,~~Infinity OCT System and ~~our OLIF25 and OLIF51 procedural solutions.~~Prestige LP cervical disc system.

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

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

•Acceptance and ~~Evolve workflow algorithm have received positive customer reaction since their launch in the second quarter~~future growth of ~~fiscal year 2018.~~our Percept PC deep brain stimulation (DBS) device with Brainsense technology.

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

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

•Continued acceptance and growth of our Specialty Therapies, including our InterStim therapy with InterStim II and InterStim Micro neurostimulators for the treatment of the symptoms of overactive bladder, urinary retention, and bowel incontinence, and ~~Transformative Solutions products~~capital equipment sales of the Stealth Station ENT surgical navigation system and ~~strategies to focus on its four core markets of orthopedic, spine, breast surgery, and Cardiac Rhythm Disease Management device replacements.~~

intraoperative NIM nerve monitoring system.

Diabetes Group

The Diabetes Group's products include insulin pumps, continuous glucose monitoring (CGM) systems, and insulin pump ~~consumables, and therapy management software.~~consumables. The Diabetes Group’s net sales for the three and nine months ended January ~~26, 2018~~24, 2020 were ~~$584~~$610 million and ~~$1.5~~$1.8 billion, respectively, which was flat and an increase of ~~17 percent and 6~~2 percent, respectively, as compared to the corresponding periods in the prior fiscal year. ~~The Diabetes Group's~~Currency had an unfavorable impact on net sales ~~increased~~ for the three and nine months ended January ~~26, 2018,~~24, 2020 of $5 million and $28 million, respectively. For the nine months ended January 24, 2020, the Diabetes Group's net sales growth was primarily attributable to growth in international markets resulting from sustained strong consumer demand for the MiniMed 670G. For the three months ended January 24, 2020, international growth was offset by declines in our U.S. business as a result of ~~an increase in~~increased competition, while for the nine months ended January 24, 2020 these US. declines only partially offset international growth. Global sales inof integrated CGM sensors contributed to sales for both the ~~U.S. due to continued growth in our customer base through~~three and nine months ended January 24, 2020, driven by sensor attachment rates associated with the ~~continued~~global adoption of sensor-augmented insulin pump systems. We also launched our Next Tech Pathway program during the ~~MiniMed 670G hybrid closed loop system. Further, we experienced continued growth in international markets due~~three months ended January 24, 2020 to ~~strong sales of the MiniMed 640G system in Europe and Asia Pacific.~~ensure eligible patients have access to upcoming product innovations.

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

~~Competitive and pricing pressure, reimbursement challenges, impacts from changes~~•Increasing pump competition in ~~the mix of our product offerings, the timing of product registration approvals, and fluctuations in currency exchange rates.~~an expanding U.S. market.

•Continued ~~increases in sensor manufacturing capacity, along with higher than expected demand. We continue to ramp manufacturing and expect these new lines to be ready~~patient demand for ~~commercial production by the fourth quarter of fiscal year 2018, at which time we expect to have the unconstrained capacity needed to meet the rapidly growing sensor demand.~~

~~Continued acceptance and future growth of~~ the MiniMed 670G system, the first hybrid closed loop system in the world. The system ~~features our most advanced~~is powered by SmartGuard ~~algorithm,~~technology, which ~~enables improved glucose control~~mimics some of the functions of a healthy pancreas by providing two levels of automated insulin delivery, maximizing Time in Range with reduced user input. ~~The~~Approximately 237,000 trained, active users are benefiting from SmartGuard technology.

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

strong sensor attachment rates. Reimbursement in Germany was received in September 2019 and we expect additional launches outside the U.S. ~~FDA approval during~~in the ~~second~~fourth quarter of fiscal year ~~2017 and launched in the U.S. in June 2017.~~2020.

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

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

•Continued acceptance and ~~future~~ growth of the MiniMed 640G system with SmartGuard Suspend before Low technology, which has launched in Europe, Australia, and select countries in Latin America and Asia, and the MiniMed 620G system, the first integrated system customized for the Japanese market.

~~Continued acceptance and future growth of~~ Guardian Connect CGM system which displays glucose information directly to a smartphone. ~~This system received CE mark in 2016 and has launched internationally, with an expected U.S. launch in the fourth quarter of fiscal year 2018, pending FDA approval.~~

•Continued partnership with UnitedHealthcare as the preferred in-network provider of insulin pumps, giving their members, including pediatric patients 7 years and above, access to our advanced diabetes technology and comprehensive support services.

Continued partnership and future growth of our outcomes-based agreement with Aetna, where a component of our pump reimbursement is based on successfully meeting clinical improvement thresholds as part of our value-based healthcare solutions.

CRITICAL ACCOUNTING ESTIMATES

We have used various accounting policies to prepare the consolidated financial statements in accordance with U.S. GAAP. Our ~~most~~ significant accounting policies are disclosed in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended April ~~28, 2017.~~26, 2019.

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

Our critical accounting estimates include the following:

~~Revenue Recognition~~ Price adjustment rebates are estimated based on sales terms, historical experience, and trend analysis. In estimating rebates, we consider the lag time between the point of sale and the payment of the rebate claim, contractual commitments, including stated rebate rates, and other relevant information. We adjust reserves to reflect differences between estimated and actual experience and recognize such adjustment as a reduction of sales in the period of adjustment. Adjustments to recorded reserves have not been significant. Price adjustment rebates charged against gross sales for the three and nine months ended January 26, 2018 were $593 million and $1.9 billion, respectively, as compared to $745 million and $2.3 billion for the three and nine months ended January 27, 2017, respectively.

Litigation ContingenciesWe are involved in a number of legal actions involving product liability, intellectual property and commercial disputes, shareholder related matters, environmental proceedings, ~~income~~ tax disputes, and governmental proceedings and investigations. The outcomes of these legal actions are not completely within our ~~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 or result in lost revenues or limit our ability to conduct business in the applicable jurisdictions. ~~Estimates of~~Estimating probable losses ~~resulting~~ from our litigation and governmental proceedings ~~involving us are~~is inherently difficult, ~~to predict,~~ particularly when the matters are in early procedural stages, with incomplete scientific facts or legal discovery; involve unsubstantiated or indeterminate claims for damages; potentially involve penalties, fines, or punitive damages; or could result in a change in business practice. Our significant legal proceedings are discussed in Note 17 to the current period's consolidated financial statements. While it is not possible to predict the outcome for most of the matters discussed in Note 17 to the current period's consolidated financial statements, we believe it is possible that costs associated with these matters could have a material adverse impact on our consolidated earnings, financial position, and/or cash flows.

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

On December 22, 2017, the U.S. government enacted the Tax Act, which significantly revises U.S. corporate income taxation by, among other things, lowering the U.S. corporate income tax rate, broadening the base of taxation, and implementing a territorial tax system. We have a measurement period of up to one year after the enactment date of the Tax Act to finalize the recognition of the related tax impacts. The final impact of the Tax Act may differ from the provisional amounts recognized in the current period, possibly materially, due to, among other things, changes in our interpretation of the Tax Act, legislative or administrative actions to clarify the intent of the statutory language provided that differ from our current interpretation, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates we have utilized to calculate the impacts, including changes to current year earnings estimates and applicable foreign exchange rates.

Valuation of Intangible Assets and Goodwill When we acquire a business, the assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date. Goodwill is the excess of the purchase price ~~consideration~~ over the estimated

fair value of net assets of acquired businesses. Intangible assets primarily include patents, trademarks, tradenames, customer relationships, purchased technology, and IPR&D. Determining the fair value of intangible assets acquired as part of a business combination requires us to make significant estimates. These estimates include the amount and timing of projected future cash flows of each project or technology, the discount rate used to discount those cash flows to present value, the assessment of the asset’s life cycle, and the consideration of legal, technical, regulatory, economic, and competitive risks.

The test for goodwill impairment requires us to make several estimates ~~about~~to determine fair value, most of which are based on projected future cash flows. Our estimates associated with the goodwill impairment test are considered critical due to the amount of goodwill recorded on our consolidated balance sheets and the judgment required in determining fair ~~value, including projected future cash flows.~~value. We assess the impairment of goodwill at the reporting unit level annually inas of the first day of the third quarter and whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. ~~Goodwill was $39.8 billion and $38.5 billion at January 26, 2018 and April 28, 2017, respectively.~~

We test definite-lived intangible assets for impairment when an event occurs or circumstances change that would indicate the carrying amount of the assets or asset group may be impaired. Our tests are based on future cash flows that require significant judgment with respect to future revenue and expense growth rates, appropriate discount rates, asset groupings, and other assumptions and estimates. We use estimates that are consistent with our business plans and a market ~~participant~~participant's view of the assets being evaluated. Actual results may differ from our estimates due to a number of factors including, among others, changes in competitive conditions, timing of regulatory approval, results of clinical trials, changes in worldwide economic conditions, and fluctuations in currency exchange rates. ~~Definite-lived intangible assets, net of accumulated amortization, was $21.7 billion and $22.8 billion at January 26, 2018 and April 28, 2017, respectively.~~

We assess the impairment of indefinite-lived ~~intangibles~~intangible assets annually in the third quarter and whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. Our impairment tests of indefinite-lived ~~intangibles~~intangible assets require us to make several estimates ~~about~~to determine fair value, including projected future cash flows and ~~the appropriate~~ discount rates. ~~Indefinite-lived intangible assets was $494 million and $594 million at January 26, 2018 and April 28, 2017, respectively.~~

~~Contingent Consideration~~ ~~Contingent consideration liabilities are recorded at the acquisition date at estimated fair value and are remeasured each reporting period with the change in fair value recognized within~~ ~~acquisition-related items~~ in our consolidated statements of income. Changes to the fair value of contingent consideration may result from changes in the estimated timing and amount of revenue, estimated timing or probability of achieving the milestones which trigger payment, or discount rates. The fair value of contingent consideration liabilities was $171 million and $246 million at January 26, 2018 and April 28, 2017, respectively.

NEW ACCOUNTING PRONOUNCEMENTS

Information regarding new accounting pronouncements is included in Note 2 to the current period's consolidated financial statements.

ACQUISITIONS

Information regarding acquisitions is included in Note 34 to the current period's consolidated financial statements.

COSTS AND EXPENSES

The following is a summary of cost of products sold, research and development, and selling, general, and administrative expenses as a percent of net sales:


	Three months ended						Nine months ended
	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Cost of products sold	31.1	%	30.0	%	31.2	%	29.8	%
Research and development expense	7.4	%	7.4	%	7.7	%	7.7	%
Selling, general, and administrative expense	33.5	%	34.4	%	33.8	%	34.8	%

Three months ended Nine months ended
January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Cost of products sold 29.7 % 31.1 % 30.5 % 31.5 %
Research and development expense 7.6 % 7.3 % 7.6 % 7.5 %
Selling, general, and administrative expense 33.9 % 32.8 % 34.0 % 33.2 %

Cost of Products Sold We continue to focus on reducing our costs of production through supplier management, manufacturing improvements, and optimizing our manufacturing network.

Cost of products sold for the three and nine months ended January 24, 2020 was $2.4 billion and $7.2 billion, respectively. The ~~decrease~~increase in cost of products sold as a percentage of net sales ~~was due primarily to the divestiture of lower-margin products in conjunction with the divestiture of our Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses during~~for the three and nine months ended January ~~26, 2018. For~~24, 2020, as compared to the corresponding periods in the prior fiscal year, was driven by increased restructuring and associated costs and increased duty, driven in part by increased China tariffs on inbound products. Additionally, for the nine months ended January ~~26, 2018,~~24, 2020, we incurred increased expenses to overcome the ~~decrease~~sterilization shortage in ~~cost~~our Minimally Invasive Therapies Group. Cost of products sold ~~as a percentage of sales due to~~for the ~~divestiture was partially offset by the infusion set recall in our Diabetes Group~~three and $17 million of costs recognized in relation to restoring operations at our four Puerto Rico manufacturing sites after Hurricane Maria, including idle facility costs, asset write-downs, and other facility-related costs. During the nine months ended January ~~27, 2017, we incurred a $38~~24, 2020 included $50 million ~~charge related~~and $117 million, respectively, of restructuring and associated costs, as compared to ~~recognition of~~$21 million and $58 million, respectively, for the ~~fair value step-up taken on inventory acquired~~corresponding periods in ~~connection with~~ the ~~HeartWare acquisition.~~prior fiscal year.

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

Research and development expense for the three and nine months ended January ~~26, 2018~~24, 2020 was ~~$558~~$573 million and ~~$1.7~~$1.8 billion, respectively. Research and development expense increased as a percentage of sales for the three and nine months ended January 26, 2018 primarily due to our sales increasing at a slower rate than the increase in research and development following the divestiture of our Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.

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

Selling, general, and administrative expense for the three and nine months ended January ~~26, 2018~~24, 2020 was ~~$2.5~~$2.6 billion and ~~$7.4~~$7.8 billion, respectively. ~~Selling,~~The decrease in selling, general, and administrative expense ~~increased~~ as a percentage of net sales for the three and nine months ended January ~~26, 2018 as compared to~~24, 2020 benefited from our Enterprise Excellence program, cost containment efforts, and continued net sales growth. Selling, general, and administrative expense for the three and nine months ended January ~~27, 2017, respectively, as we~~25, 2019 also included expenses incurred ~~expenses associated with~~to fulfill our Transition Service Agreements (TSAs) ~~and new product launches, against a decline~~that we entered into with Cardinal in ~~revenue following~~conjunction with the July 29, 2017 divestiture of ~~our~~the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.

The following is a summary of other costs and expenses:


	Three months ended						Nine months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Amortization of intangible assets	$	436	$	436	$	1,317	$	1,327
Restructuring charges, net	13		26		87		112
Certain litigation charges	108		63		276		166

Other operating (income) expense, net	(39)		57		88		278
Other non-operating income, net	(96)		(71)		(305)		(309)
Interest expense	156		243		930		726

Three months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Amortization of intangible assets $ 461
$ 497
$ 1,375
$ 1,484
Restructuring charges, net 7
21
23
162
Acquisition-related items 26
68
77
148
Certain litigation charges 61
218
61
300
Divestiture-related items —
—
114
—
Gain on sale of businesses —
—
(697 ) —
Special charge —
100
80
100
Other expense, net 140
46
317
174
Investment loss 227
—
227
—
Interest expense, net 172
180
539
532

Amortization of Intangible Assets Amortization of intangible assets includes the amortization expense of our definite-lived intangible assets, consisting of purchased patents, trademarks, tradenames, customer relationships, purchased technology, and other intangible assets. Amortization expense was ~~$461~~$436 million and ~~$1.4~~$1.3 billion for the three and nine months ended January ~~26, 2018, respectively, as compared to $497 million~~24, 2020, and ~~$1.5 billion for the three and nine months ended~~ January ~~27, 2017,~~25, 2019, respectively. The decrease in amortization expense was primarily attributable to the discontinuation of amortization on the definite-lived intangible assets classified as assets held for sale at April 28, 2017 and through the first quarter of fiscal year 2018 related to the divestiture of our Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses. This divestiture was completed during the second quarter of fiscal year 2018.

Restructuring

~~Enterprise Excellence~~ Charges, Net

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

The Enterprise Excellence Program is focused on three objectives:

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

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

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

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

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

~~During the three and nine months ended January 26, 2018, we recognized restructuring charges of $32 million.~~

For the three and nine months ended January ~~26, 2018, restructuring~~24, 2020, we recognized charges ~~included $9~~of $97 million and $328 million, respectively. Additionally, we incurred accrual adjustments of ~~employee~~$13 million for the nine months ended January 24, 2020, related to certain employees identified for termination ~~benefits recognized~~finding other positions within ~~restructuring charges, net~~ ~~in the consolidated statements of income~~. Medtronic. For the three and nine months ended January ~~26, 2018,~~ 24, 2020, charges included $13 million and $94 million, respectively, recognized within restructuring charges, net in the consolidated statements of income, primarily comprised of employee termination benefits. For the three and nine months ended January 24, 2020, charges also included costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses, including ~~$13~~$50 million and $111 million, respectively, recognized within cost of products sold and ~~$10~~$34 million and $111 million, respectively, recognized within selling, general, and administrative expense ~~in the consolidated statements of income.~~

~~Cost Synergies~~

In the third quarter of fiscal year 2018, we achieved $850 million in cost synergies related to the acquisition of Covidien. The costs synergies related to administrative office optimization, manufacturing and supply chain infrastructure, and certain general and administrative savings. Cash outlays for the cost synergies program are scheduled to be substantially complete by the end of fiscal year 2019.

During the three months ended January 26, 2018, we recognized no restructuring charges, and for the nine months ended January 26, 2018, we recognized restructuring charges of $45 million. During the three and nine months ended January 26, 2018, we recognized accrual adjustments of $2 million and $15 million, respectively. Accrual adjustments relate to certain employees identified for termination finding other positions within Medtronic, cancellations of employee terminations, and employee termination benefits being less than initially estimated. For the nine months ended January 26, 2018, restructuring charges included $29 million of employee termination benefits recognized within ~~restructuring charges, net~~in the consolidated statements of income. For the nine months ended January ~~26, 2018, restructuring charges also included other costs of $12 million recognized within~~ 24, 2020, cost of products sold ~~and $4~~ also included $6 million ~~recognized within~~ ~~selling, general and administrative expense~~.of fixed asset write-downs.

For the three and nine months ended January ~~27, 2017,~~25, 2019, we recognized ~~$56~~charges of $69 million and $214 million in restructuring charges, respectively, which were partially offset reversals of excess reserves of $35 million and $42 million, respectively. Reversals of restructuring reserves relate to certain employees identified for termination finding other positions within Medtronic and employee termination benefits being less than initially estimated. For the three months and nine months ended January 27, 2017, restructuring charges included asset write-downs included $1 million and $8 million, respectively, related to property, plant, and equipment impairments, and $10 million for the nine months ended January 27, 2017 related to inventory write-offs recognized within ~~cost of products sold~~ ~~in the consolidated statements of income.~~

~~For additional information about our restructuring programs, see Note 6 to the current period's consolidated financial statements.~~

~~Acquisition-Related Items~~ Acquisition-related items includes expenses incurred in connection with the integration of Covidien, our $50.0 billion acquisition completed in the fourth quarter of fiscal year 2015, expenses incurred in connection with business acquisitions, and changes in fair value of contingent consideration. During the three and nine months ended January 26, 2018, we recognized acquisition-related items expense of $30 million and $101 million, respectively, including $4 million and $24 million, respectively, recognized within ~~cost of products sold~~ in the consolidated statements of income. For the three and nine months ended January 26, 2018, acquisition-related items expense includes $48 million and $137 million, respectively, of costs associated

with the integration of Covidien manufacturing, distribution, and administrative facilities as well as information technology system implementation and benefits harmonization. For the three and nine months ended January 26, 2018, acquisition-related items expenses were partially offset by changes in fair value of contingent consideration as a result of revised revenue forecasts and the timing of anticipated regulatory payments.

~~During the three and nine months ended January 27, 2017, we recognized acquisition-related items expense of $68 million and $148~~$264 million, respectively. For the three and nine months ended January ~~27, 2017, acquisition-related items expense includes $51~~25, 2019, charges included $29 million and ~~$154~~$120 million, respectively, recognized within restructuring charges, net in the consolidated statements of income, primarily comprised of employee termination benefits. For the three and nine months ended January 25, 2019, charges also included costs ~~associated with~~incurred as a direct result of the ~~integration~~restructuring program, such as salaries for employees supporting the program and consulting expenses, including $21 million and $58 million, respectively, recognized within cost of ~~Covidien manufacturing, distribution,~~products sold and $19 million and $73 million, respectively, recognized within selling, general and administrative ~~facilities as well as information technology system implementation and benefits harmonization, and $5 million and $21 million, respectively,~~expense in consolidated statements of ~~accelerated and incremental stock compensation expense.~~income. For the nine months ended January ~~27, 2017, acquisition-related items expenses were partially offset by changes in fair value~~25, 2019, selling, general and administrative expense also included $13 million of ~~contingent consideration as a result of revised revenue forecasts and~~fixed asset write-downs.

For additional information about our restructuring programs, refer to Note 5 to the ~~timing of anticipated regulatory payments.~~current period's consolidated financial statements.

Certain Litigation Charges We classify litigation charges and gains related to significant legal matters as certain litigation charges. During the three and nine months ended January ~~26, 2018,~~24, 2020 we recognized ~~$61~~$108 million and $276 million, respectively, of certain litigation charges related to probable and estimable damages for significant legal matters. During the three and nine months ended January ~~27, 2017,~~25, 2019, we recognized ~~$218~~$63 million and ~~$300~~$166 million ~~respectively,~~ of certain litigation charges, ~~related to probable and estimable damages for significant legal matters.~~respectively.

~~Divestiture-Related Items~~ Divestiture-related items includes expenses incurred in connection with the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses. During the nine months ended January 26, 2018, we recognized divestiture-related items expense of $114 million, primarily comprised of expenses incurred for professional services, including banker fees and legal, tax, and advisory fees, as well as $16 million of accelerated stock compensation expense related to the acceleration of the vesting period for employees that transferred with the divestiture. There were no divestiture-related items expenses for the three months ended January 26, 2018 or the three or nine months ended January 27, 2017.

~~Gain on Sale of Businesses~~ We recognized a pre-tax gain of $697 million on the sale of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses during the nine months ended January 26, 2018. There were no sales of businesses during the three months ended January 26, 2018 or the three and nine months ended January 27, 2017.

~~Special Charge~~ During the nine months ended January 26, 2018, continuing our commitment to improve the health of people and communities throughout the world, we made an $80 million commitment to fund the Medtronic Foundation. During the three months ended January 26, 2018, we did not recognize a special charge. During the three and nine months ended January 27, 2017, we recognized a charge of $100 million for a charitable cash contribution to the Medtronic Foundation.

Other Operating (Income) Expense, Net Other operating (income) expense, net primarily includes royalty income and expense, ~~realized equity security gains and losses, TSA income, intangible asset impairments,~~ currency ~~transaction~~remeasurement and derivative gains and losses, ~~and~~ Puerto Rico excise ~~tax.~~taxes, changes in the fair value of contingent consideration, TSA income, a commitment to the Medtronic Foundation, and charges associated with business exits. For the three and nine months ended January ~~26, 2018,~~24, 2020, other operating (income) expense, net was ~~$140~~($39) million and ~~$317~~$88 million, respectively, as compared to ~~$46~~$57 million and ~~$174~~$278 million for the three and nine months ended January ~~27, 2017,~~25, 2019, respectively. ~~The increase~~

For the three months ended January 24, 2020 the change in other operating (income) expense, net was driven by our remeasurement and hedging programs, which, combined, resulted in an $82 million gain, compared to a $36 million gain for the three ~~and~~months ended January 25, 2019. Additionally, for three months ended January 25, 2019, other operating (income) expense, net includes $69 million charge related to business exits. There were no charges related to business exits during the three months ended January 24, 2020. These items were partially offset by changes in the fair value of contingent consideration, which resulted in a $59 million gain for the three months ended January 25, 2019, compared to a $2 million loss for the three months ended January 24, 2020.

For the nine months ended January ~~26, 2018~~24, 2020, the change in other operating (income) expense, net was ~~partially attributable to $63 million and $68 million, respectively, related to the impairment of IPR&D assets, offset by TSA income of $24 million and $48 million, respectively. The increase was also~~ driven by our remeasurement ~~as well as our~~and hedging programs, which, combined, resulted in a ~~$44~~gain of $203 million, ~~and $81 million loss for the three and nine months ended January 26, 2018, respectively, as~~ compared to ~~a $35~~$9 million ~~and $19 million~~ gain ~~for the three and nine months ended January 27, 2017, respectively. Additionally, the increase~~ for the nine months ended January ~~26, 2018 as compared to~~25, 2019. For the nine months ended January ~~27, 2017 was~~24, 2020, other operating (income) expense, net includes charges associated with the exit of businesses of $41 million, compared to $149 million for the nine months ended January 25, 2019. These items were partially ~~attributable~~offset by changes in the fair value of contingent consideration, which resulted in a $68 million gain for the nine months ended January 25, 2019, compared to ~~$15~~a $4 million loss for the nine months ended January 24, 2020. Additionally, for the nine months ended January 24, 2020, other operating (income) expense, net includes an $80 million charge associated with our commitment to the Medtronic Foundation.

Other Non-Operating Income, Net Other non-operating income, net includes the non-service component of ~~humanitarian aid provided to our employees affected by Hurricane Maria.~~

~~Investment Loss~~ ~~We recognized a pre-tax loss of $227 million during~~net periodic pension and postretirement benefit cost, investment gains and losses, and interest income. For the three months ended January ~~26, 2018 related~~24, 2020 other non-operating income, net was $96 million, as compared to $71 million for the ~~impairment of certain cost and equity method~~three months January 25, 2019. The change in other non-operating income, net is primarily attributable to interest income, which was $77 million for the three months ended January 24, 2020, as compared to $55 million for the three months ended January 25, 2019, due to an increase in investments. ~~We remain committed~~

For the nine months ended January 24, 2020, other non-operating income, net was $305 million, as compared to ~~future strategic and focused~~$309 million for the nine months ended January 25, 2019. The change in other non-operating income, net is primarily attributable to minority investment gains, partially offset by interest income. Gains on minority investments were $11 million for the nine months ended January 24, 2020, as compared to $92 million for the nine months ended January 25, 2019. Interest income was $238 million for the nine months ended January 24, 2020, as compared to $202 million for the nine months ended January 25, 2019, due to an increase in ~~the areas of medical device technologies, services, and solutions.~~

investments.

Interest Expense ~~Net~~ Interest expense ~~net~~ includes ~~interest earned on our cash, cash equivalents and investments,~~ interest incurred on our outstanding borrowings, amortization of debt issuance costs and debt premiums or discounts, amortization of gains or losses on terminated or de-designated interest rate derivative instruments, and ~~ineffectiveness on interest rate derivative instruments.~~charges recognized in connection with the tender and early redemption of senior notes. For the three and nine months ended January ~~26, 2018,~~24, 2020, interest expense ~~net~~ was ~~$172~~$156 million and ~~$539~~$930 million, respectively, as compared to ~~$180~~$243 million and ~~$532~~$726 million for the three and nine months ended January ~~27, 2017,~~25, 2019, respectively. The decrease in interest expense ~~net~~ during the three months ended January ~~26, 2018~~24, 2020 was primarily ~~driven by an increase in interest income~~ due to ~~higher average cash and invested balances~~a decrease in the weighted-average interest rate of outstanding debt obligations, as compared to the corresponding period in the prior fiscal ~~year.~~year, driven by our debt issuance and tender transactions in the fourth quarter of fiscal year 2019 and first quarter of fiscal year 2020. The increase in interest expense ~~net~~ during the nine months ended January ~~26, 2018~~24, 2020 was primarily driven by ~~modestly higher average interest rates on total debt obligations outstanding,~~$413 million of charges recognized in connection with the tender and early redemption of $5.2 billion of senior notes, partially offset by a ~~slight increase in interest income, as compared to the corresponding period in the prior fiscal year.~~

~~INCOME TAXES~~

Three months ended Nine months ended
(in millions) January 26, 2018 January 27, 2017 January 26, 2018 January 27, 2017
Income tax provision $ 2,419
$ 147
$ 2,320
$ 307
Income before income taxes 1,027
967
3,950
3,167
Effective tax rate 235.5 % 15.2 % 58.7 % 9.7 %

Non-GAAP income tax provision $ 293
$ 319
$ 780
$ 857
Non-GAAP income before income taxes 1,882
1,871
5,354
5,409
Non-GAAP Nominal Tax Rate 15.6 % 17.0 % 14.6 % 15.8 %

Difference between the effective tax rate and Non-GAAP Nominal Tax Rate (219.9 )% 1.8 % (44.1 )% 6.1 %

On December 22, 2017, the U.S. government enacted the Tax Act, which significantly revises U.S. corporate income taxation by, among other things, lowering the U.S. corporate income tax rate from 35.0 percent to 21.0 percent, broadening the base of taxation, implementing a territorial tax system, and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The decrease in the ~~U.S. federal corporate tax rate from 35.0 percent to 21.0 percent results in a blended statutory tax~~weighted-average interest rate of ~~30.5 percent for our fiscal year ended April 27, 2018.~~outstanding debt obligations due to the aforementioned debt issuance and tender transactions.

INCOME TAXES


	Three months ended									Nine months ended
(in millions)	January 24, 2020			January 25, 2019			January 24, 2020			January 25, 2019
Income tax provision	$	(340)		$	99		$	(317)		$	437
Income before income taxes	1,579			1,370			3,850			3,905
Effective tax rate	(21.5)		%	7.2		%	(8.2)		%	11.2		%

Non-GAAP income tax provision	$	308		$	272		$	926		$	773
Non-GAAP income before income taxes	2,261			2,025			6,379			5,794
Non-GAAP Nominal Tax Rate	13.6		%	13.4		%	14.5		%	13.3		%

Difference between the effective tax rate and Non-GAAP Nominal Tax Rate	35.1		%	6.2		%	22.7		%	2.1		%

Many of the countries we operate in have statutory tax rates lower than our ~~blended~~ U.S. statutory rate, thereby resulting in an overall effective tax rate less than the U.S. statutory rate of ~~30.5 percent for the fiscal year ended April 27, 2018.~~21 percent. A significant portion of our earnings are generated from operations in Puerto Rico, Switzerland, and Ireland. The statutory tax rates for these jurisdictions range from 12.5 percent to ~~39.0~~45.1 percent. Our earnings in Puerto Rico and Switzerland are subject to certain tax incentive grants which provide for tax rates lower than the country statutory tax rates. Unless our tax incentive grants are extended, they will expire between fiscal years ~~2018~~2020 and ~~2029.~~2034. The tax incentive grants scheduled to expire during fiscal year ~~2018~~2020 are not expected to have a material impact on our financial results. ~~See~~Refer to Note 1514 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended April ~~28, 2017~~26, 2019 for additional information.

Our effective tax ~~rates~~rate for the three and nine months ended January ~~26, 2018 were 235.5~~24, 2020 was (21.5) percent and ~~58.7~~(8.2) percent, respectively, as compared to ~~15.2~~7.2 percent and ~~9.7~~11.2 percent for the three and nine months ended January ~~27, 2017,~~25, 2019, respectively. The ~~increase~~decrease in the effective tax rate for the three and nine months ended January ~~26, 2018~~24, 2020, as compared to the corresponding periods in the prior fiscal year, was primarily due to the impacts from U.S. tax reform, the divestiture of our Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses, the utilization of non-U.S. special deductions, and the tax effect from the intercompany salesimpact of certain ~~intellectual property.~~tax adjustments described below.

Our Non-GAAP Nominal Tax ~~Rates~~Rate for the three and nine months ended January ~~26, 2018 were15.6~~24, 2020 was 13.6 percent and ~~14.6~~14.5 percent, respectively, as compared to ~~17.0~~13.4 percent and ~~15.8~~13.3 percent for the three and nine months ended January ~~27, 2017,~~25, 2019, respectively. The change in our Non-GAAP Nominal Tax Rate was primarily due to the finalization of certain tax returns, ~~and audits,~~ the impact from

the lapse of afederal statute of limitations, ~~for federal purposes,~~ excess tax benefits related to ~~stock based~~stock-based compensation, ~~due to~~and the ~~adoption~~impact of ~~new guidance, and~~ year-over-year changes in operational results by jurisdiction. An increase in our Non-GAAP Nominal Tax Rate of 1 percent would result in an additional income tax provision for the three and nine months ended January ~~26, 2018~~24, 2020 of approximately ~~$19~~$23 million and ~~$54~~$64 million, respectively.

~~As of January 26, 2018, we had not fully completed our accounting for~~Certain Tax Adjustments

During the tax effects of the enactment of the Tax Act. The final impact of the Tax Act may differ from the provisional amounts recognized in the current period, possibly materially, due to, among other things, changes in our interpretation of the Tax Act, legislative or administrative actions to clarify the intent of the statutory

language provided that differ from our current interpretation, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates we have utilized to calculate the impacts, including changes to current year earnings estimates and applicable foreign exchange rates.

~~Our provision for income taxes for the~~ three ~~and nine~~ months ended January ~~26, 2018 is based on a reasonable estimate~~24, 2020, the benefit from certain tax adjustments of ~~the transition tax and expected reversal of existing deferred tax balances. For the amounts which we were able to reasonably estimate, we~~$558 million, recognized ~~a provisional net tax charge of $2.2 billion within~~in income tax provision in the consolidated statements of ~~income.~~income, included the following:

•A benefit of $558 million related to the release of a valuation allowance previously recorded against certain net operating losses. Luxembourg enacted tax legislation during the quarter which required the Company to reassess the realizability of certain net operating losses. The ~~components~~Company evaluated both the positive and negative evidence and released valuation allowance equal to the expected benefit from the utilization of certain net operating losses in connection with a planned intercompany sale of intellectual property.

During the ~~provisional~~nine months ended January 24, 2020, the net benefit from certain tax ~~amounts are as follows:~~adjustments of $839 million, recognized in income tax provision in the consolidated statements of income, included the following:

•A net benefit of $30 million related to U.S. Treasury’s issuance of certain Final Regulations associated with U.S. Tax Reform. The primary impact of these regulations resulted in the Company re-establishing its permanently reinvested assertion on certain foreign earnings and reversing the previously accrued tax liability. This benefit was partially offset by additional tax associated with a previously executed internal reorganization of certain foreign subsidiaries.

•A benefit of $251 million related to tax legislative changes in Switzerland which abolished certain preferential tax regimes the Company benefited from and replaced them with a new set of internationally accepted measures. The legislation provided for higher effective tax rates but allowed for a transitional period whereby an amortizable asset was created for Swiss federal income tax purposes which will be amortized and deducted over a 10-year period.

•A benefit of $558 million related to the release of a valuation allowance previously recorded against certain net operating losses. Luxembourg enacted tax legislation during the quarter which required the Company to reassess the realizability of certain net operating losses. The Company evaluated both the positive and negative evidence and released valuation allowance equal to the expected benefit from the utilization of certain net operating losses in connection with a planned intercompany sale of intellectual property.

During the three months ended January 25, 2019, the net benefit from certain tax adjustments of $64 million, recognized ~~a provisional~~in income tax ~~charge~~provisionin the consolidated statements of ~~$2.4 billion for~~income, included the following:

•A net benefit of $12 million associated with the transition tax ~~liability. We have not yet completed the calculation of the total post-1986 foreign earnings & profits (E&P)~~liability and the ~~income tax pools for all foreign subsidiaries. Further, the transition tax is based in part~~impacts of U.S. Tax Reform on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalizes the amounts held in cash or other specified assets. In addition, further interpretations from U.S. federal and state governments and regulatory organizations may change the provisional tax liability or the accounting treatment of the provisional tax liability.

~~We recognized a provisional net tax benefit of $155 million to remeasure certain~~ deferred tax assets, liabilities, and valuation ~~allowances as a result~~allowances.

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

•A net benefit of $20 million associated with the ~~enactment~~finalization of ~~the Tax Act. We are still analyzing~~ certain income tax aspects of the ~~Tax Act and refining the estimate~~divestiture of the ~~expected reversal of our deferred tax balances, which could affect the current measurement of these balances or give rise to new deferred tax amounts.~~

Another provision of the Tax Act that we are currently in the process of analyzing is the Global Intangible Low-Taxed Income (GILTI) tax rules. We are allowed to make an accounting policy election of either treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred or factoring such amounts into the measurement of our deferred taxes. We have not yet made a policy decision regarding the treatment of GILTI and have not made any adjustments related to potential GILTI tax in our consolidated financial statements. We are currently in the process of analyzing our structure and are not yet able to reasonably estimate the effect of the GILTI provision of the Tax Act on current and future periods.

During the nine months ended January 26, 2018, we recognized a $1.9 billion net tax charge comprised of a $2.2 billion net tax cost associated with U.S. tax reform, a $398 million net tax benefit associated with the intercompany sales of certain intellectual property and a $37 million net tax charge primarily associated with the sale of our Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses. ~~These net charges were recorded within~~ ~~income tax provision~~ ~~in the consolidated statement of income for the nine months ended January 26, 2018.~~

During the three months ended January 27, 2017, we recognized a charge of $86 million associated with the IRS’s disallowance of the utilization of certain net operating losses, and the recording of a valuation allowance against the net operating loss deferred tax asset.

During the nine months ended January ~~27, 2017, we also~~25, 2019, the net benefit from certain tax adjustments of $35 million, recognized ~~a $371~~in income tax provisionin the consolidated statements of income, included the following:

•A net benefit of $25 million ~~charge~~ associated with the ~~expected resolution~~transition tax liability and the impacts of U.S. Tax Reform on deferred tax assets, liabilities, and valuation allowances

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

•A net benefit of $20 million associated with the ~~IRS for~~finalization of certain income tax aspects of the ~~Ardian, CoreValve, Inc.~~divestiture of the Patient Care, Deep Vein Thrombosis, and ~~Ablation Frontiers, Inc. acquisition-related issues~~Nutritional Insufficiency businesses.

•A charge of $42 million related to the recognition of a prepaid tax expense resulting from the reduction in the U.S. statutory tax rate due to U.S. Tax Reform and the ~~allocation~~sale of ~~income between Medtronic, Inc. and its wholly owned subsidiary operating in Puerto Rico for certain businesses. This resolution does not include the businesses that are the subject~~U.S. manufactured inventory held as of the Medtronic, Inc. U.S. Tax Court case for fiscal years 2005 and 2006. We also recognized a $29 million charge in connection with the redemption of an intercompany minority interest. These charges were partially offset by a $431 million tax benefit recognized as the result of the resolution of Covidien's previously disclosed Tyco International plc intercompany debt issues with the U.S. Tax Court and the Appeals Division of the IRS. These net charges were recorded within ~~income tax provision~~ ~~in the consolidated statement of income for the nine months ended January~~April 27, ~~2017.~~

2018.

LIQUIDITY AND CAPITAL RESOURCES

(in millions) January 26, 2018 April 28, 2017
Working capital $ 15,674
$ 10,316
Current ratio⁽¹⁾
2.4:1.0
1.7:1.0
Cash, cash equivalents, and current investments $ 14,436
$ 13,708
Current debt obligations and long-term debt $ 28,820
$ 33,441


~~(1)~~	~~The ratio of current assets to current liabilities, excluding current assets and current liabilities held for sale at April 28, 2017.~~

Our liquidity and capital structure is evaluated regularly within the context of our annual operating and strategic planning process. We consider the liquidity necessary to fund our operations, which includes working capital needs, investments in research and ~~current ratio at January 26, 2018 increased as compared~~development, property, plant, and equipment, and other operating costs. We also consider capital allocation alternatives that balance returning value to ~~April 28, 2017,~~shareholders through dividends and share repurchases, satisfying maturing debt, and acquiring businesses and technology.

Summary of Cash Flows

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


	Nine months ended
(in millions)	January 24, 2020		January 25, 2019
Cash provided by (used in):
Operating activities	$	5,784	$	4,920
Investing activities	(3,568)		(245)
Financing activities	(2,888)		(4,571)
Effect of exchange rate changes on cash and cash equivalents	(12)		(70)
Net change in cash and cash equivalents	$	(684)	$	34

Operating Activities The $864 million increase in net cash provided was primarily driven by a decrease in cash paid for income taxes and interest, partially offset by an increase in cash paid for Enterprise Excellence restructuring activities, and an increase in cash paid to employees. The decrease in cash paid for income taxes was primarily due to a tax payment associated with the ~~receipt of $6.1 billion of cash proceeds from the~~intercompany sale of ~~our Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses on July 29, 2017. A portion~~intellectual property in the first quarter of ~~the proceeds were used for the repayment of approximately $4.2 billion of our current debt obligations~~fiscal year 2019, a lower transition tax payment made in the second ~~and third quarters~~quarter of fiscal year ~~2018.~~

We believe our balance sheet and liquidity provide us with flexibility in the future, and that our cash, cash equivalents, and short-term investments, as well as our $3.5 billion revolving credit facility and related commercial paper program ($504 million of commercial paper outstanding at January 26, 2018), will satisfy our foreseeable operating needs for at least the next 12 months. We regularly review our capital needs and consider various investing and financing alternatives to support our requirements.



	~~Agency Rating~~⁽¹⁾
	~~January 26, 2018~~	~~April 28, 2017~~
~~Standard & Poor's Ratings Services~~
~~Long-term debt~~	A	A
~~Short-term debt~~	~~A-1~~	~~A-1~~

~~Moody's Investors Service~~
~~Long-term debt~~	A3	A3
~~Short-term debt~~	~~P-2~~	~~P-2~~


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

~~Standard & Poor's Ratings Services (S&P) and Moody's Investors Service (Moody's) long-term debt ratings and short-term debt ratings at January 26, 2018 were unchanged~~2020 as compared to the ratings at April 28, 2017. We do not expect the S&P and Moody's ratings to have a significant impact on our liquidity or future flexibility to access additional liquidity given our balance sheet and our $3.5 billion revolving credit facility and related commercial paper program.

~~We have future contractual obligations and other minimum commercial commitments that are entered into~~corresponding period in the ~~normal course~~prior year, as well as the timing of ~~business. We believe our off-balance sheet arrangements do not have~~estimated tax payments. Cash paid for interest decreased due to a ~~material current or anticipated future effect on our consolidated earnings, financial position, and/or cash flows.~~decrease in interest expense and change in timing of interest payments resulting from the debt tenders and issuances in the first quarter of fiscal year 2020 and the fourth quarter of fiscal year 2019. Refer to the ~~"Off-Balance Sheet Arrangements and Long-Term Contractual Obligations"~~"Restructuring Charges, Net" section of this Management's Discussion and Analysis ~~for more information on these obligations~~ and ~~commitments.~~

Note 17 to the consolidated financial statements provides information regarding amounts we have accrued related to legal matters. In accordance with U.S. GAAP, we record a liability in our consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. Actual settlements may be different than estimated and could have a material effect on our consolidated earnings, financial position, and/or cash flows.

We record tax liabilities in our consolidated financial statements for amounts that we expect to repatriate from subsidiaries (to the extent the repatriation would be subject to tax); however, no tax liabilities are recorded for amounts that we consider to be permanently reinvested. As a result of the Tax Act, we have removed our permanently reinvested assertion on the historical earnings for legal entities with accumulated earnings subject to the transition tax. We continue to evaluate our permanently reinvested assertion for certain legal entities. We expect to have access to the majority of our cash flows in the future. In addition, we continue to evaluate our legal entity structure supporting our business operations, and to the extent such evaluation results in a change to our overall business structure, we may be required to accrue for additional tax obligations.

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

For the three and nine months ended January 26, 2018, the total other-than-temporary impairment losses on available-for-sale debt securities and funds were not significant. Based on our assessment of the credit quality of the underlying collateral and credit support available to each of the remaining securities in which we are invested, we believe we have recognized all necessary other-than-temporary impairments as we do not have the intent to sell, nor is it more likely than not that we will be required to sell, before recovery of the amortized cost. At January 26, 2018, we have $227 million of gross unrealized losses on our aggregate available-for-sale debt securities and funds of $8.1 billion. If market conditions deteriorate, some of these holdings may experience other-than-temporary impairment in the future, which could adversely affect our financial results. We are required to use estimates and assumptions in our valuation of investments, which requires a high degree of judgment, and therefore, actual results could differ materially from estimates. See Note 75 to the current period's consolidated financial statements for ~~additional~~ information ~~regarding fair value measurements.~~

~~Summary of~~on the Enterprise Excellence program. Cash ~~Flows~~

Nine months ended
(in millions) January 26, 2018 January 27, 2017
Cash provided by (used in):

Operating activities $ 3,646
$ 5,107
Investing activities 5,747
(1,299 )
Financing activities (8,126 ) (3,970 )
Effect of exchange rate changes on cash and cash equivalents 124
54
Net change in cash and cash equivalents $ 1,391
$ (108 )

~~Operating Activities~~ ~~The $1.5 billion decrease in net cash provided was primarily driven by an increase in cash~~ paid for income taxes of $437 million, cash paid for divestiture-related expenses of approximately $100 million, an increase in certain litigation payments of $129 million, and an increase in net cash outflows for collateral related to our derivative instruments of $313 million. The decrease in net cash provided was also attributable to a decrease in cash collected from customers and an increase in cash paid for inventory. The increase in cash paid for income taxes was primarily a result of tax payments related to the intercompany sale of intellectual property and sale of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses as well as settlement payments for U.S federal income taxes for fiscal years 2012 to 2014 and audit settlements outside of the U.S. during the nine months ended January 26, 2018. The decrease in cash collected from customers is partially attributable to reduced salesemployees increased due to higher annual incentive plan payouts compared the ~~July 29, 2017 sale of~~corresponding period in the ~~Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses.~~prior fiscal year.

Investing Activities The $7.0 billion increase in net cash provided was primarily attributable to sale of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses on July 29, 2017 resulting in net proceeds of $6.1 billion and a decrease in cash paid for acquisitions of $1.2 billion primarily due to the acquisition of Heartware during the nine months ended January 27, 2017, partially offset by a decrease in net proceeds from purchases and sales and maturities of investments during the nine months ended January 26, 2018.

~~Financing ActivitiesThe $4.2~~$3.3 billion increase in net cash used was primarily attributable to a decrease in net proceeds from purchases and sales of investments of $4.6 billion and an increase in cash paid for additions of property, plant, and equipment of $78 million during the repayment of our senior unsecured term loan, including accrued interest, for $3.0 billion in August 2017, the repayment of our 6.000 percent ten-year 2008 CIFSA senior notes, including accrued interest, for $1.2 billion in October 2017, and a reduction of commercial paper borrowings,nine months ended January 24, 2020, partially offset by a decrease in cash paid for acquisitions of $1.4 billion as compared to the corresponding period in the prior fiscal year.

Financing ActivitiesThe $1.7 billion decrease in net cash used was primarily attributable to a decrease in net cash used for share repurchases of ~~$1.4 billion.~~$1.5 billion and a net increase in short-term borrowings during the nine months ended January 24, 2020, partially offset by a decrease in the issuance of ordinary shares of $306 million, as compared to the corresponding period in the prior fiscal year. Financing cash flows were also impacted by the issuance of $5.6 billion of Euro-denominated senior notes offset by the tender of $5.2 billion of senior notes for $5.6 billion of total consideration.

Free Cash Flow

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


	Nine months ended
(in millions)	January 24, 2020		January 25, 2019




Net cash provided by operating activities	$	5,784	$	4,920
Additions to property, plant, and equipment	(877)		(799)
Free cash flow	$	4,907	$	4,121

Nine months ended
(in millions) January 26, 2018 January 27, 2017
Net cash provided by operating activities $ 3,646
$ 5,107
Net cash provided by (used in) investing activities 5,747
(1,299 )
Net cash used in financing activities (8,126 ) (3,970 )

Net cash provided by operating activities $ 3,646
$ 5,107
Additions to property, plant, and equipment (776 ) (924 )
Free cash flow $ 2,870
$ 4,183

Dividends to shareholders $ 1,870
$ 1,782
Repurchase of ordinary shares 1,964
3,409
Issuances of ordinary shares (333 ) (309 )
Return to shareholders $ 3,501
$ 4,882
Return of operating cash flow percentage 96 % 96 %
Return of free cash flow percentage 122 % 117 %

~~OFF-BALANCE SHEET ARRANGEMENTS AND LONG-TERM CONTRACTUAL OBLIGATIONS~~

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

Maturity by Fiscal Year
(in millions) Total
Remaining
2018
2019 2020 2021 2022 Thereafter
Contractual obligations related to off-balance sheet arrangements:

Operating leases $ 693
$ 73
$ 203
$ 159
$ 111
$ 71
$ 76
Commitments to fund minority investments, milestone payments, and royalty obligations⁽¹⁾
270
30
106
47
42
43
2
Interest payments⁽²⁾
12,882
467
969
930
806
773
8,937
Other⁽³⁾
620
210
225
98
34
8
45
Contractual obligations related to off-balance sheet arrangements subtotal $ 14,465
$ 780
$ 1,503
$ 1,234
$ 993
$ 895
$ 9,060

Contractual obligations reflected in the balance sheet:
Debt obligations⁽⁴⁾
$ 27,877
$ 2,000
$ 1,403
$ 3,808
$ 1,220
$ 3,175
$ 16,271
Capital leases 22
1
4
4
3
2
8
Contingent consideration⁽⁵⁾
171
11
97
37
13
6
7
Tax obligations⁽⁶⁾
2,528
—
257
197
197
197
1,680
Contractual obligations reflected in the balance sheet subtotal⁽⁷⁾
$ 30,598
$ 2,012
$ 1,761
$ 4,046
$ 1,433
$ 3,380
$ 17,966
Total contractual obligations $ 45,063
$ 2,792
$ 3,264
$ 5,280
$ 2,426
$ 4,275
$ 27,026


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


~~(2)~~	Includes the contractual interest payments on our outstanding debt and excludes the impacts of debt premium and discount amortization and interest rate swap agreements. For further information, see Note 8 to the current period's consolidated financial statements.


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

~~(4)~~

Includes the current and non-current portion of our Senior Notes and non-current portion of our bank borrowings. Excludes debt premium and discount, the fair value impact of outstanding interest rate swap agreements, unamortized gains from terminated interest rate swap agreements, current bank borrowings and commercial paper. For further information, see Note 8 to the current period's consolidated financial statements.


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


~~(6)~~	Represents the tax obligations associated with the transition tax that resulted from U.S. Tax Reform. The transition tax will be paid over an eight-year period and will not accrue interest. For further information, see Note 12 to the current period's consolidated financial statements.

~~(7)~~

Excludes defined benefit plan obligations, guarantee obligations, uncertain tax positions, and non-current tax liabilities for which we cannot make a reliable estimate of the period of cash settlement. For further information, see Note 17 to the consolidated financial statements in the Annual Report on Form 10-K for the year ended April 28, 2017 and Notes 12, 15, and 17 to the current period's consolidated financial statements.

Debt and Capital

Our capital structure consists of equity and interest-bearing debt. We use a combination of bank borrowings and commercial paper issuances to fund our short-term financing needs. Current debt, including the current portion of our long-term debt and capital lease obligations, ~~was $2.9 billion~~ at January ~~26, 2018~~24, 2020 was $844 million as compared to ~~$7.5~~$838 million at April 26, 2019. Long-term debt at January 24, 2020 was $24.7 billion as compared to $24.5 billion at April ~~28, 2017.~~26, 2019. We utilize ~~Senior Notes~~unsecured senior debt obligations to meet our long-term financing needs. ~~Long-term~~From time to time, we may repurchase our outstanding debt ~~was $25.9 billion at both January 26, 2018 and April 28, 2017.~~obligations in the open market or through privately negotiated transactions.

Total debt at January ~~26, 2018~~24, 2020 was ~~$28.8~~$25.6 billion, as compared to ~~$33.4~~$25.3 billion at April ~~28, 2017.~~26, 2019. The ~~decrease~~increase in total debt was primarily driven by the ~~repayment~~net impact of the issuance and cash tender offers described below.

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

We completed the cash tender offer of $4.6 billion of senior notes ~~detailed below, along with~~for $5.0 billion of total consideration in July 2019. We recognized a ~~reduction~~loss on debt extinguishment of $413 million in ~~our commercial paper borrowings~~the first quarter of ~~$397 million.~~

~~During~~fiscal year 2020, which primarily included cash premiums and accelerated amortization of deferred financing costs and debt discounts and premiums. The loss on debt extinguishment also included a $16 million charge for the ~~three months ended October 27, 2017, we used a portion~~estimated early redemption premium for $533 million of the proceeds received in connection with the divestiture of our Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses to repay our senior unsecured term loan, including accrued interest, for $3.0 billion. Additionally, we repaid our 6.000 percent ten-year 2008 CIFSA senior notes ~~including accrued~~ which were redeemed in August 2019. The loss on debt extinguishment was recognized in interest ~~for $1.2 billion.~~expense in the consolidated statements of income.

~~During~~For additional information on the ~~three months ended January 26, 2018, we repaid our 3.500 percent seven-year 2010 HTWR~~issuance of these senior notes ~~including interest, for $43 million.~~and the subsequent cash tender offer and redemption, refer to Note 7 to the current period's consolidated financial statements. For additional information on the Euro-denominated debt designated as a net investment hedge, refer Note 8 to the current period's consolidated financial statements.

We maintain a commercial paper program for short-term financing, which allows us to issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $3.5 billion. At both January 24, 2020 and April 26, ~~2018,~~2019, we had ~~$504 million of~~no commercial paper outstanding, as compared to $901 million at April 28, 2017. During the three and nine months ended January 26, 2018, the weighted average original maturity of the commercial paper outstanding was approximately 24 and 29 days, respectively, and the weighted average interest rate was 1.44 percent and 1.33 percent, respectively.outstanding. The issuance of commercial paper reduces the amount of credit available under our existing line of credit, as explained below.

We also have a $3.5 billion five-year syndicated ~~line of~~ credit facility ~~($3.5 Billion Revolving Credit~~(Credit Facility) which expires in ~~January 2020.~~December 2024. The ~~$3.5 Billion Revolving~~ Credit Facility provides backup funding for the commercial paper program and may also be used for general corporate purposes. The ~~$3.5 Billion Revolving~~ Credit Facility provides us with the ability to increase our borrowing capacity by an additional ~~$500 million~~$1.0 billion at any time during the term of the agreement. At each anniversary date of the ~~$3.5 Billion Revolving~~ Credit Facility, but not more than twice prior to the maturity date, we could also request a one-year extension of the maturity date. At January ~~26, 2018~~24, 2020 and April ~~28, 2017,~~26, 2019, no amounts were outstanding onunder the ~~committed line of credit.~~Credit Facility.

Interest rates on advances of our ~~$3.5 Billion Revolving~~ Credit Facility are determined by a pricing matrix, based on our long-term debt ratings assigned by ~~S&P~~Standard & Poor's Ratings Services (S&P) and ~~Moody’s.~~Moody's Investors Service (Moody’s). For additional information on our credit ratings status by S&P and Moody's, refer to the ~~"Liquidity and Capital Resources"~~"Liquidity" section of this Management's Discussion and Analysis. Facility fees are payable on the ~~credit facility~~Credit Facility and are determined in the same manner as the interest rates. The agreements also contain customary covenants, all of which we ~~remain~~were in compliance with at January ~~26, 2018.~~24, 2020.

We repurchase our ordinary shares from time to time as part of our focus on returning value to our shareholders. In June 2015, our Board of Directors authorized, subject to the ongoing existence of sufficient distributable reserves, the redemption of 80 million of our ordinary shares. At April 28, 2017, we had used 51 million of the 80 million shares authorized under the June 2015 share redemption program. In June 2017, our Board of Directors authorized the expenditure of up to $5.0 billion for new share ~~repurchases, replacing the previous 2015~~repurchases. In March 2019, our Board of Directors authorized an incremental $6.0 billion for repurchase ~~authorization to redeem up to an aggregate number~~ of our ordinary shares. There is no specific time period associated with these repurchase authorizations. During the three and nine months ended January ~~26, 2018,~~24, 2020, we repurchased a total of ~~0.7~~2.1 million and ~~22.5~~10.6 million shares, respectively, at an average price per share of ~~$80.46~~$114.04 and ~~$84.15,~~$105.12, respectively. At January ~~26, 2018,~~24, 2020, we had approximately ~~$4.2~~$6.1 billion remaining under the share repurchase program authorized by our Board of Directors.

For more information on credit arrangements, ~~see the "Liquidity and Capital Resources" section of this Management's Discussion and Analysis,~~refer to Note 87 to the current period's consolidated financial statements and Note 87 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended April ~~28, 2017.~~

26, 2019.

Liquidity

Our liquidity sources at January 24, 2020 include $3.7 billion of cash and cash equivalents and $7.9 billion of current investments. Additionally, we maintain a commercial paper program (no commercial paper outstanding at January 24, 2020) and Credit Facility. See discussion above regarding changes in our cash and cash equivalents and commercial paper program and Credit Facility.

Our investments include available-for-sale debt securities, including U.S. and non-U.S. government and agency securities, corporate debt securities, mortgage-backed securities, other asset-backed securities, and auction rate securities. Some of our investments may experience reduced liquidity due to changes in market conditions and investor demand. For the three and nine months ended January 24, 2020, the total other-than-temporary impairment losses on available-for-sale debt securities were not significant. Based on our assessment of the credit quality of the underlying collateral and credit support available to each of the remaining securities in which we are invested, we believe we have recognized all necessary other-than-temporary impairments as we do not have the intent to sell, nor is it more likely than not that we will be required to sell, before recovery of the amortized cost. At January 24, 2020, we have $26 million of gross unrealized losses on our aggregate available-for-sale debt securities of $8.0 billion. If market conditions deteriorate, some of these holdings may experience other-than-temporary impairment in the future, which could adversely affect our financial results. We are required to use estimates and assumptions in our valuation of investments, which requires a high degree of judgment, and therefore, actual results could differ materially from estimates. Refer to Note 6 to the current period's consolidated financial statements for additional information regarding fair value measurements.

The table below includes our short-term and long-term debt ratings from S&P and Moody's at both January 24, 2020 and April 26, 2019:

Agency Rating⁽¹⁾

January 24, 2020

April 26, 2019

Standard & Poor's Ratings Services

Long-term debt

Short-term debt

A-1

Moody's Investors Service

Long-term debt

Short-term debt

P-2

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

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

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

Note 17 to the current period's consolidated financial statements provides information regarding amounts we have accrued related to legal matters. In accordance with U.S. GAAP, we record a liability in our consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. Actual settlements may be different than estimated and could have a material effect on our consolidated earnings, financial position, and/or cash flows.

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

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

Off-Balance Sheet Arrangements and Long-Term Contractual Obligations

There have been no material changes to our long-term contractual obligations as reported in our most recent Annual Report filed on Form 10-K for the fiscal year ended April 26, 2019.

CAUTIONARY ~~FACTORS THAT MAY AFFECT FUTURE RESULTS~~NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, and other written reports and oral statements made by or with the approval of one of the Company’s executive officers from time to time, may include “forward-looking” statements. ~~Forward-looking~~All statements ~~broadly include~~other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans, objectives of management for future operations and current expectations or forecasts of future ~~results.~~results, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Our forward-looking statements ~~generally relate~~may include statements related to our growth and growth strategies, developments in the markets for our products, therapies and services, financial results, product development launches and effectiveness, research and development strategy, regulatory approvals, competitive strengths, restructuring ~~cost-saving,~~ and ~~global enterprise~~cost-saving initiatives, intellectual property rights, litigation and tax matters, government investigations, mergers and acquisitions, divestitures, market acceptance of our products, therapies and services, accounting estimates, financing activities, ongoing contractual obligations, working capital adequacy, value of our investments, our effective tax rate, our expected returns to shareholders, and sales efforts. ~~Such~~In some cases, such statements may be identified by the use of terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “looking ahead,” “may,” “plan,” “possible,” “potential,” “project,” “should,” “will,” and similar words or expressions. Forward-looking statements in this Quarterly Report include, but are not limited to, statements regarding our ability to drive long-term shareholder value, development and future launches of products and continued or future acceptance of products, therapies and services in our ~~operating~~ segments; expected timing for completion of research studies relating to our products; market positioning and performance of our products, including stabilization of certain product markets; divestitures and the potential benefits thereof; ~~the effect of our global enterprise program;~~ the costs and benefits of integrating previous acquisitions; anticipated timing for U.S. FDA and non-U.S. regulatory approval of new products; increased presence in new markets, including markets outside the U.S.; changes in the market and our market share; acquisitions and investment initiatives, as well as integration of acquired companies into our operations; the resolution of tax matters; ~~the effects of tax reform;~~ the effectiveness of our development activities in reducing patient care costs and hospital stay lengths; our approach towards cost containment; our expectations regarding health care costs, including potential changes to reimbursement policies and pricing pressures; our expectations regarding changes to patient standards of care; our ability to identify and maintain successful business partnerships; the elimination of certain positions or costs related to restructuring initiatives; outcomes in our litigation matters and government investigations; general economic conditions; the adequacy of available working capital and our working capital needs; our payment of dividends and redemption of shares; the continued strength of our balance sheet and liquidity; our accounts receivable exposure; and the potential impact of our compliance with governmental regulations and accounting guidance.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section and elsewhere in our Annual Report on Form 10-K. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. One must carefully consider forward-looking statements and understand that such forward-looking statements ~~may~~are inherently subject to risks and uncertainties, some of which cannot be ~~affected by inaccurate assumptions~~predicted or quantified, and ~~may~~ involve a variety of risks and uncertainties, known and unknown, including, among others, ~~risks~~those discussed in the sections entitled “Government Regulation and Other Considerations” within “Item 1. Business” and “Item 1A. Risk Factors” in our Annual Report on Form 10-K, as well as those related to to:

•competition in the medical device ~~industry,~~ industry;

•reduction or interruption in our ~~supply,~~ supply;

•laws and government regulations;

•quality ~~problems,~~ problems;

•liquidity ~~shortfalls,~~ shortfalls;

•decreasing prices and pricing ~~pressure,~~ pressure;

•fluctuations in currency exchange ~~rates,~~ rates;

•changes in applicable tax ~~rates,~~rates;

•changes in tax laws and regulations as well as positions taken by taxing ~~authorities,~~ authorities;

•adverse regulatory ~~action,~~ action;

•delays in regulatory ~~approvals,~~ approvals;

•litigation ~~results, self-insurance,~~ results;

•self-insurance;

•commercial ~~insurance,~~ insurance;

•health care policy ~~changes,~~ changes;

•international ~~operations,~~ operations;

•cybersecurity incidents;

•failure to complete or achieve the intended benefits of acquisitions or ~~divestitures,~~divestitures; or

•disruption of our current plans and operations, as well as those discussed in the sections entitled “Risk Factors” and “Government Regulation and Other Considerations” in our Annual Report on Form 10-K for the year ended April 28, 2017.operations.

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

~~We undertake no obligation~~ While we may elect to update any statement we make, but investors are advised to consult all other disclosures by us in our filings with the Securities and Exchange Commission, especially on Forms 10-K, 10-Q, and 8-K, in which we discuss in more detail various important factors that could cause actual results to differ from expected or historical results. In addition, actual results may differ materially from those anticipated due to a number of factors, including, among others, those discussedthese forward-looking statements at some point in the ~~section entitled “Risk Factors” in our Annual Report on Form 10-K for~~future, whether as a result of any new information, future events, or otherwise, we have no current intention of doing so except to the year ended April 28, 2017. It is not possible to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks, uncertainties, or potentially inaccurate assumptions.extent required by applicable law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

CURRENCY EXCHANGE RATE RISK

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

cash flows. We use operational and economic hedges, ~~as well as~~including currency exchange rate derivative instruments to manage the impact of currency exchange rate ~~fluctuations on earnings and cash flows.~~fluctuations. In order to minimize earnings and cash flow volatility resulting

from currency exchange rate fluctuations, we enter into derivative instruments, principally forward currency exchange rate contracts. These contracts are designed to hedge anticipated transactions in other currencies and changes in the value of specific assets and liabilities. At inception of the contract, the derivative instrument is designated as either a freestanding derivative or a cash flow hedge. The primary currencies of ~~the~~our derivative instruments are the Euro, Japanese Yen, and British Pound. Fluctuations in the currency exchange rates of currency exposures that are unhedged, such as in certain emerging markets, may result in future earnings and cash flow volatility. We do not enter into currency exchange rate derivative instruments for speculative purposes.

The gross notional amount of all currency exchange rate derivative instruments outstanding at January ~~26, 2018~~24, 2020 and April ~~28, 2017~~26, 2019 was ~~$12.6~~$12.1 billion and ~~$10.8~~$11.1 billion, respectively. At January ~~26, 2018,~~24, 2020, these contracts were in a net unrealized ~~loss~~gain position of ~~$354~~$235 million. A sensitivity analysis of changes in the fair value of all currency exchange rate derivative contracts at January ~~26, 2018~~24, 2020 indicates that, if the U.S. dollar uniformly strengthened/weakened by 10 percent against all currencies, the fair value of these contracts would increase/decrease by approximately ~~$983~~$799 million. Any gains and losses on the fair value of derivative contracts would generally be offset by gains and losses on the underlying transactions. These offsetting gains and losses are not reflected in the above analysis.

In the second quarter of fiscal year 2019, we began accounting for our operations in Argentina as highly inflationary, as the prior three-year cumulative inflation rate exceeded 100 percent. The change did not have a material impact on our results for the three or nine months ended January 24, 2020.

INTEREST RATE RISK

We are subject to interest rate risk on our short-term investments and our borrowings. We manage interest rate risk in the aggregate, while focusing on our immediate and intermediate liquidity needs. Our debt portfolio at January ~~26, 2018~~24, 2020 was comprised of debt predominately denominated in U.S. dollars and Euros, of which ~~approximately 95%~~substantially all is fixed rate ~~debt and approximately 5% is floating-rate~~ debt. We are also exposed to interest rate changes affecting our investments in interest rate sensitive instruments, which include our marketable debt ~~securities, fixed-to-floating interest rate swap agreements, and forward starting interest rate swap agreements.~~securities.

A sensitivity analysis of the impact on our ~~investments in~~ interest ~~rate sensitive~~rate-sensitive financial instruments of a hypothetical 10 basis point change in interest rates, compared to interest rates at January ~~26, 2018,~~24, 2020, indicates that the fair value of these instruments would correspondingly ~~change~~change by ~~$75~~$30 million.

For a discussion of current market conditions and the impact on our financial condition and results of operations, please see the ~~“Liquidity and Capital Resources”~~“Liquidity” section of the current period's Management's Discussion and Analysis. For additional discussion of market risk, ~~see~~refer to Notes 76 and 98 to the current period's consolidated financial statements.

Item 4. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, ~~have~~has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) and changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) are effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

~~The~~During the third quarter of fiscal year 2020, the Company ~~began deployment of~~deployed an enterprise resource planning (ERP) software program, SAP, to the Minimally Invasive Therapies Group ~~during fiscal year 2017. Although no specific implementation activity or related changes~~ in the U.S. and Canada. The internal controls ~~occurred during the period covered by this Quarterly Report on Form 10-Q, the system deployment will continue with projected completion in fiscal year 2020.~~were updated to reflect these changes. There have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

A discussion of the Company’s policies with respect to legal proceedings is included in the management’s discussion and analysis, and our legal proceedings and other loss contingencies are described in Note 17 to the current period's consolidated financial statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about the shares repurchased by the Company during the third quarter of fiscal year ~~2018:~~2020:


Fiscal Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as a Part of Publicly Announced Program ⁽¹⁾	Maximum Approximate Dollar Value of Shares that may yet be Purchased Under the Program ⁽¹⁾
10/26/2019 - 11/22/2019	547,952	$	108.74	547,952	$	6,238,903,103
11/23/2019 - 12/27/2019	471,599	112.28		471,599	6,185,952,813
12/28/2019 - 1/24/2020	1,049,571	117.60		1,049,571	6,062,523,192
Total	2,069,122	$	114.04	2,069,122	$	6,062,523,192

(1)In June 2017, the Company's Board of Directors authorized the repurchase of $5.0 billion of the Company’s ordinary shares. In March 2019, the Company's Board of Directors authorized an incremental $6.0 billion for repurchase of the Company's ordinary shares. There is no specific time-period associated with these repurchase authorizations.

Fiscal Period
Total Number of
Shares Purchased

Average Price
Paid per Share

Total Number of Shares
Purchased as a Part of
Publicly Announced
Program ⁽¹⁾

Maximum Approximate Dollar Value of Shares that may yet be Purchased
Under the Program ⁽²⁾
10/28/2017-11/24/2017 526,032
$ 79.84
526,032
4,206,817,373
11/25/2017-12/29/2017 123,896
80.71
123,896
4,196,819,855
12/30/2017-1/26/2018 120,640
82.89
120,640
4,186,822,325
Total 770,568
$ 80.46
770,568
4,186,822,325

~~(1)~~

In June 2015, the Company’s Board of Directors authorized, subject to the ongoing existence of sufficient distributable reserves, the repurchase of 80 million of the Company’s ordinary shares. As authorized by the Board of Directors, the Company's share redemption program expires when the total number of authorized shares have been redeemed. As noted below, this repurchase authorization was replaced in June 2017 with the repurchase authorization described in footnote (2) below. As such, the maximum number of shares that may yet be purchased under the program is no longer applicable to the repurchase program in place.


~~(2)~~	In June 2017, the Company's Board of Directors authorized the repurchase of $5 billion of the Company’s ordinary shares. This authorization replaces the June 2015 authorization described in footnote (1) above. There is no specific time-period associated with this repurchase authorization.

Item 6. Exhibits

(a)

Exhibits

~~10.1~~

~~Medtronic plc~~ 10.1

Amended and Restated ~~2013 Stock Award and Incentive Plan (incorporated by reference to Exhibit 10.1 to Medtronic plc.’s Current Report on Form 8-K filed with the Commission on~~Credit Agreement (amended as of December 12, ~~2017)~~2019).

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101.INS~~101.SCH

~~XBRL Instance Document.~~

~~101.SCH~~

Inline XBRL Schema Document.

101.CAL

Inline XBRL Calculation Linkbase Document.

101.DEF

Inline XBRL Definition Linkbase Document.

101.LAB

Inline XBRL Label Linkbase Document.

101.PRE

Inline XBRL Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		MEDTRONIC PUBLIC LIMITED COMPANY
		(Registrant)

Date:	~~March 2, 2018~~February 28, 2020	/s/ Omar Ishrak
		Omar Ishrak
		Chairman and Chief Executive Officer

Date:	~~March 2, 2018~~February 28, 2020	/s/ Karen L. Parkhill
		Karen L. Parkhill
		Executive Vice President and
		Chief Financial Officer



x☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	January ~~26, 2018~~24, 2020

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



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

Ireland			98-1183488
(State of incorporation)			(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol	Name of each exchange on which registered
Ordinary shares, par value $0.0001 per share	MDT	New York Stock Exchange
Floating Rate Notes due 2021	MDT/21	New York Stock Exchange
0.000% Senior Notes due 2021	MDT/21A	New York Stock Exchange
0.000% Senior Notes due 2022	MDT/22B	New York Stock Exchange
0.375% Senior Notes due 2023	MDT/23B	New York Stock Exchange
0.25% Senior Notes due 2025	MDT/25	New York Stock Exchange
1.125% Notes due 2027	MDT/27	New York Stock Exchange
1.625% Notes due 2031	MDT/31	New York Stock Exchange
1.00% Senior Notes due 2031	MDT/31A	New York Stock Exchange
2.250% Notes due 2039	MDT/39A	New York Stock Exchange
1.50% Senior Notes due 2039	MDT/39B	New York Stock Exchange
1.75% Senior Notes due 2049	MDT/49	New York Stock Exchange


Item	Description	Page

	PART I
1.	Financial Statements (unaudited)	1
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	54
3.	Quantitative and Qualitative Disclosures About Market Risk	75
4.	Controls and Procedures	76
	PART II
1.	Legal Proceedings	76

2.	Unregistered Sales of Equity Securities and Use of Proceeds	76
6.	Exhibits	77
	Signatures	78



(in millions)	HeartWare International, Inc.		All Other
Other current assets	$	351	$	3
Property, plant, and equipment	14		6
Other intangible assets	625		93
Goodwill	481		27
Other assets	84		—
Total assets acquired	1,555		129

Current liabilities	143		2
Deferred tax liabilities	6		3
Long-term debt	245		—
Other liabilities	89		—
Total liabilities assumed	483		5
Net assets acquired	$	1,072	$	124



	Three months ended January 26, 2018
	Recognized in AOCI			Recognized in Income
(in millions)	Amount			Classification	Amount
Currency exchange rate contracts	$	(287	)	Other expense, net	$	(11	)

	Three months ended January 27, 2017
	Recognized in AOCI			Recognized in Income
(in millions)	Amount			Classification	Amount
Currency exchange rate contracts	$	190		Other expense, net	$	68

	Nine months ended January 26, 2018
	Recognized in AOCI			Recognized in Income
(in millions)	Amount			Classification	Amount
Currency exchange rate contracts	$	(507	)	Other expense, net	$	1

	Nine months ended January 27, 2017
	Recognized in AOCI			Recognized in Income
(in millions)	Amount			Classification	Amount
Currency exchange rate contracts	$	378		Other expense, net	$	89


(in millions)	Carrying Amount of Hedged Assets/(Liabilities)						Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)
Location on the Consolidated Balance Sheet	January 24, 2020		April 26, 2019		January 24, 2020		April 26, 2019
Long-term debt	$	—	$	(1,175)	$	—	$	9


	January 24, 2020
	Derivative Assets				Derivative Liabilities
(in millions)	Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value
Derivatives designated as hedging instruments
Currency exchange rate contracts	Other current assets	$	183	Other accrued expenses	$	11

Currency exchange rate contracts	Other assets	75		Other liabilities	12
Total derivatives designated as hedging instruments		258			23
Derivatives not designated as hedging instruments
Currency exchange rate contracts	Other current assets	9		Other accrued expenses	10
Total return swap	Other current assets	16		Other accrued expenses	—
Cross currency interest rate contracts	Other current assets	1		Other accrued expenses	—


Total derivatives not designated as hedging instruments		26			10
Total derivatives		$	284		$	33


	January 26, 2018												January 24, 2020
				Gross Amount Not Offset on the Balance Sheet											Gross Amount Not Offset on the Balance Sheet
(in millions)	Gross Amount of Recorded Assets (Liabilities)			Financial Instruments			Collateral (Received) Posted		Net Amount			(in millions)	Gross Amount of Recorded Assets (Liabilities)		Financial Instruments		Cash Collateral Posted (Received)		Net Amount
Derivative assets:												Derivative assets:
Currency exchange rate contracts	$	83		$	(56	)	$	—	$	27		Currency exchange rate contracts	$	267	$	(33)	$	(5)	$	229
Interest rate contracts	15			(12		)	—		3

Total return swaps												Total return swaps	16		—		—		16
Cross currency interest rate contracts	6			(2		)	—		4			Cross currency interest rate contracts	1		—		—		1
Stock warrants	29			—			—		29
Total return swap	22			—			—		22
	$	155		$	(70	)	$	—	$	85
													284		(33)		(5)		246
Derivative liabilities:												Derivative liabilities:
Currency exchange rate contracts	$	(435	)	$	66		$	98	$	(271	)	Currency exchange rate contracts	(33)		33		—		—
Interest rate contracts	(5		)	2			1		(2		)
Cross currency interest rate contracts	(8		)	2			—		(6		)

	$	(448	)	$	70		$	99	$	(279	)		(33)		33		—		—
Total	$	(293	)	$	—		$	99	$	(194	)	Total	$	251	$	—	$	(5)	$	246


(in millions)	Amortization Expense
Remaining 2020	$	437
2021	1,741
2022	1,699
2023	1,634
2024	1,605
2025	1,576



(in millions)	Amortization Expense
Remaining 2018	$	433
2019	1,684
2020	1,631
2021	1,611
2022	1,572
2023	1,494


	U.S.						Non-U.S.
	Three months ended						Three months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Service cost	$	26	$	27	$	15	$	15
Interest cost	32		33		7		7
Expected return on plan assets	(56)		(54)		(15)		(14)
Amortization of net actuarial loss	14		19		4		3

Net periodic benefit cost	$	16	$	25	$	11	$	11

	U.S.						Non-U.S.
	Nine months ended						Nine months ended
(in millions)	January 24, 2020		January 25, 2019		January 24, 2020		January 25, 2019
Service cost	$	78	$	81	$	45	$	45
Interest cost	96		99		21		21
Expected return on plan assets	(168)		(162)		(45)		(42)
Amortization of net actuarial loss	42		57		11		9

Net periodic benefit cost	$	48	$	75	$	32	$	33



(in millions)	Unrealized (Loss) Gain on Available-for-Sale Securities			Cumulative Translation Adjustment			Net Change in Retirement Obligations			Unrealized (Loss) Gain on Derivative Financial Instruments			Total Accumulated Other Comprehensive (Loss) Income
April 28, 2017	$	(69	)	$	(1,452	)	$	(1,129	)	$	37		$	(2,613	)
Other comprehensive income (loss) before reclassifications	50			1,559			(38		)	(351		)	1,220
Reclassifications	(9		)	(34		)	49			5			11
Other comprehensive income (loss)	41			1,525			11			(346		)	1,231
January 26, 2018	$	(28	)	$	73		$	(1,118	)	$	(309	)	$	(1,382	)

(in millions)	Unrealized (Loss) Gain on Available-for-Sale Securities			Cumulative Translation Adjustment			Net Change in Retirement Obligations			Unrealized (Loss) Gain on Derivative Financial Instruments			Total Accumulated Other Comprehensive (Loss) Income
April 29, 2016	$	(107	)	$	(474	)	$	(1,197	)	$	(90	)	$	(1,868	)
Other comprehensive income (loss) before reclassifications	(25		)	(1,239		)	—			255			(1,009		)
Reclassifications	(15		)	—			66			(53		)	(2		)
Other comprehensive income (loss)	(40		)	(1,239		)	66			202			(1,011		)
January 27, 2017	$	(147	)	$	(1,713	)	$	(1,131	)	$	112		$	(2,879	)



(in millions)	Total Shareholders' Equity			Noncontrolling Interests			Total Equity
April 28, 2017	$	50,294		$	122		$	50,416
Net income (loss)	1,644			(14		)	1,630
Other comprehensive income	1,231			—			1,231
Dividends to shareholders	(1,870		)	—			(1,870		)
Issuance of shares under stock purchase and award plans	266			—			266
Repurchase of ordinary shares	(1,897		)	—			(1,897		)
Stock-based compensation	270			—			270
Cumulative effect of change in accounting principle	296			—			296
Additions (reductions) of noncontrolling ownership interests	—			(2		)	(2		)
January 26, 2018	$	50,234		$	106		$	50,340

(in millions)	Total Shareholders' Equity			Noncontrolling Interests			Total Equity
April 29, 2016	$	52,063		$	—		$	52,063
Net income (loss)	2,865			(5		)	2,860
Other comprehensive loss	(1,011		)	—			(1,011		)
Dividends to shareholders	(1,782		)	—			(1,782		)
Issuance of shares under stock purchase and award plans	309			—			309
Repurchase of ordinary shares	(3,409		)	—			(3,409		)
Tax benefit from exercise of stock-based awards	80			—			80
Stock-based compensation	272			—			272
Additions (reductions) of noncontrolling ownership interests	—			111			111
January 27, 2017	$	49,387		$	106		$	49,493



	Maturity by Fiscal Year
(in millions)	Total		Remaining 2018		2019		2020		2021		2022		Thereafter
Contractual obligations related to off-balance sheet arrangements:
Operating leases	$	693	$	73	$	203	$	159	$	111	$	71	$	76
Commitments to fund minority investments, milestone payments, and royalty obligations⁽¹⁾	270		30		106		47		42		43		2
Interest payments⁽²⁾	12,882		467		969		930		806		773		8,937
Other⁽³⁾	620		210		225		98		34		8		45
Contractual obligations related to off-balance sheet arrangements subtotal	$	14,465	$	780	$	1,503	$	1,234	$	993	$	895	$	9,060

Contractual obligations reflected in the balance sheet:
Debt obligations⁽⁴⁾	$	27,877	$	2,000	$	1,403	$	3,808	$	1,220	$	3,175	$	16,271
Capital leases	22		1		4		4		3		2		8
Contingent consideration⁽⁵⁾	171		11		97		37		13		6		7
Tax obligations⁽⁶⁾	2,528		—		257		197		197		197		1,680
Contractual obligations reflected in the balance sheet subtotal⁽⁷⁾	$	30,598	$	2,012	$	1,761	$	4,046	$	1,433	$	3,380	$	17,966
Total contractual obligations	$	45,063	$	2,792	$	3,264	$	5,280	$	2,426	$	4,275	$	27,026