What changed in this filing

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Item 1. Financial Statements

2024-02-27 compared with 2023-11-30 · 230 added, 202 removed, 825 unchanged (34% of the section changed)

2 unchanged sentences

Consolidated Statements of Income

Three months ended Six months ended

(in millions, except per share data) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Three months ended Nine months ended

(in millions, except per share data) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Net sales $ 8,089 $ 7,727 $ 23,775 $ 22,682

6 unchanged sentences

Certain litigation charges — — 105 —

Other operating income, net ( 31 ) ( 97 ) ( 30 ) ( 62 )

Other operating expense (income), net 17 ( 125 ) ( 13 ) ( 187 )

Operating profit 1,483 1,392 4,091 3,920

13 unchanged sentences

Consolidated Statements of Comprehensive Income

Three months ended Six months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Three months ended Nine months ended

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Net income $ 1,337 $ 1,229 $ 3,045 $ 2,595

Other comprehensive (loss) income, net of tax:

Unrealized loss on investment securities ( 19 ) ( 167 ) ( 38 ) ( 183 )

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on investment securities 111 107 73 ( 76 )

Translation adjustment 450 1,689 ( 461 ) ( 20 )

1 unchanged sentence

Net change in retirement obligations 2 ( 2 ) 6 2

Unrealized gain on cash flow hedges 324 158 294 378

Other comprehensive income (loss) 295 ( 424 ) 120 ( 100 )

Unrealized (loss) gain on cash flow hedges ( 220 ) ( 760 ) 74 ( 382 )

Other comprehensive (loss) income ( 81 ) ( 824 ) 39 ( 924 )

Comprehensive income including noncontrolling interests 1,257 405 3,084 1,671

4 unchanged sentences

Consolidated Balance Sheets

(in millions) October 27, 2023 April 28, 2023

(in millions) January 26, 2024 April 28, 2023

Current assets:

61 unchanged sentences

October 27, 2023 1,330 $ — $ 24,580 $ 30,256 $ ( 3,377 ) $ 51,460 $ 187 $ 51,647

Net income — — — 1,322 — 1,322 15 1,337

Other comprehensive (loss) income — — — — ( 82 ) ( 82 ) 1 ( 81 )

Dividends to shareholders ($ 0.69 per ordinary share)

— — — ( 917 ) — ( 917 ) — ( 917 )

Issuance of shares under stock purchase and award plans 1 — 49 — — 49 — 49

Repurchase of ordinary shares ( 2 ) — ( 124 ) — — ( 124 ) — ( 124 )

Stock-based compensation — — 85 — — 85 — 85

January 26, 2024 1,330 $ — $ 24,589 $ 30,661 $ ( 3,459 ) $ 51,792 $ 204 $ 51,996

Ordinary Shares Additional Paid-in Capital Retained

21 unchanged sentences

October 28, 2022 1,330 $ — $ 24,442 $ 29,799 $ ( 2,361 ) $ 51,880 $ 177 $ 52,057

Net income — — — 1,222 — 1,222 6 1,229

Other comprehensive (loss) income — — — — ( 828 ) ( 828 ) 4 ( 824 )

Dividends to shareholders ($ 0.68 per ordinary share)

— — — ( 904 ) — ( 904 ) — ( 904 )

Issuance of shares under stock purchase and award plans 1 — 48 — — 48 — 48

Repurchase of ordinary shares ( 1 ) — ( 63 ) — — ( 63 ) — ( 63 )

Stock-based compensation — — 81 — — 81 — 81

Changes to noncontrolling ownership interests — — 5 — — 5 ( 11 ) ( 6 )

January 27, 2023 1,330 $ — $ 24,513 $ 30,117 $ ( 3,189 ) $ 51,441 $ 177 $ 51,618

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

1 unchanged sentence

Consolidated Statements of Cash Flows

Six months ended

(in millions) October 27, 2023 October 28, 2022

Nine months ended

(in millions) January 26, 2024 January 27, 2023

Operating Activities:

29 unchanged sentences

Other financing activities ( 44 ) ( 276 )

Net cash (used in) provided by financing activities ( 591 ) 2,064

Net cash used in financing activities ( 2,091 ) ( 70 )

Effect of exchange rate changes on cash and cash equivalents ( 170 ) 317

30 unchanged sentences

The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements.

As of October 27, 2023, there are no recently issued but not yet adopted accounting pronouncements that are expected to materially impact our consolidated financial statements .

Not Yet Adopted

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Improvements to Segment Reporting (Topic 280), which requires incremental disclosures on reportable segments, primarily through enhanced disclosures on significant segment expenses.

The Company will adopt this guidance beginning in the fourth quarter of fiscal year 2025 for our annual report and for interim periods starting in fiscal year 2026.

We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which requires incremental annual disclosures on income taxes, including rate reconciliations, income taxes paid, and other disclosures.

The Company will adopt this guidance beginning in the fourth quarter of fiscal year 2026 for our annual report.

We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

The Company's revenues are principally derived from device-based medical therapies and services related to cardiac rhythm disorders, cardiovascular disease, neurological disorders and diseases, spinal conditions and musculoskeletal trauma, chronic pain, urological and digestive disorders, ear, nose, and throat conditions, and diabetes conditions as well as advanced and general surgical care products, respiratory and monitoring solutions, and neurological surgery technologies.

1 unchanged sentence

Prior period revenue has been recast to reflect the new reporting structure, which primarily includes allocating certain prior Medical Surgical businesses to the Other line.

Refer to Note 17 to the consolidated financial statements for additional information regarding the Company's new reporting structure.

Refer to Note 17 to the consolidated financial statements for additional information regarding the Company's reporting structure.

Medtronic plc

Notes to Consolidated Financial Statements

The table below illustrates net sales by segment and division for the three and six months ended October 27, 2023 and October 28, 2022:

The table below illustrates net sales by segment and division for the three and nine months ended January 26, 2024 and January 27, 2023:

Three months ended

Six months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Nine months ended

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Cardiac Rhythm & Heart Failure $ 1,470 $ 1,419 $ 4,408 $ 4,217

12 unchanged sentences

(1) Includes revenue from the divested Renal Care Solutions business and Transition Manufacturing Agreements from previously divested businesses.

The table below illustrates net sales by market geography for each segment for the three and six months ended October 27, 2023 and October 28, 2022:

The table below illustrates net sales by market geography for each segment for the three and nine months ended January 26, 2024 and January 27, 2023:

Developed Markets (2)

1 unchanged sentence

Three months ended Three months ended Three months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Cardiovascular $ 1,373 $ 1,363 $ 950 $ 859 $ 607 $ 538

6 unchanged sentences

Emerging Markets (3)

Six months ended Six months ended Six months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Nine months ended Nine months ended Nine months ended

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Cardiovascular $ 4,149 $ 4,059 $ 2,818 $ 2,553 $ 1,734 $ 1,607

13 unchanged sentences

Adjustments to rebates and returns reserves are recorded as increases or decreases to revenue.

At October 27, 2023, $ 1.1 billion of rebates were classified as other accrued expenses , and $ 605 million of rebates were classified as a reduction of accounts receivable in the consolidated balance sheet.

At January 26, 2024, $ 1.1 billion of rebates were classified as other accrued expenses , and $ 575 million of rebates were classified as a reduction of accounts receivable in the consolidated balance sheet.

At April 28, 2023, $ 1.1 billion of rebates were classified as other accrued expenses, and $ 555 million of rebates were classified as a reduction of accounts receivable in the consolidated balance sheet.

Deferred Revenue and Remaining Performance Obligations

Deferred revenue at October 27, 2023 and April 28, 2023 was $ 435 million and $ 405 million, respectively.

At October 27, 2023 and April 28, 2023, $ 336 million and $ 314 million was included in other accrued expenses, respectively, and $ 99 million and $ 91 million was included in other liabilities, respectively.

During the six months ended October 27, 2023, the Company recognized $ 216 million of revenue that was included in deferred revenue as of April 28, 2023.

Deferred revenue at January 26, 2024 and April 28, 2023 was $ 447 million and $ 405 million, respectively.

At January 26, 2024 and April 28, 2023, $ 350 million and $ 314 million was included in other accrued expenses, respectively, and $ 97 million and $ 91 million was included in other liabilities, respectively.

During the nine months ended January 26, 2024, the Company recognized $ 274 million of revenue that was included in deferred revenue as of April 28, 2023.

Remaining performance obligations include goods and services that have not yet been delivered or provided under existing, noncancellable contracts with minimum purchase commitments.

At October 27, 2023, the estimated revenue expected to be recognized in future periods related to unsatisfied performance obligations for executed contracts with an original duration of one year or more was approximately $ 0.5 billion.

At January 26, 2024, the estimated revenue expected to be recognized in future periods related to unsatisfied performance obligations for executed contracts with an original duration of one year or more was approximately $ 0.5 billion.

The Company expects to recognize revenue on the majority of these remaining performance obligations over the next three years .

Acquisitions and Dispositions

During the three and six months ended October 27, 2023 and October 28, 2022 the Company had acquisitions that were accounted for as business combinations.

During the nine months ended January 26, 2024 and January 27, 2023, the Company had acquisitions that were accounted for as business combinations.

The assets and liabilities of the businesses acquired were recorded and consolidated on the acquisition date at their respective fair values.

Goodwill resulting from business combinations is largely attributable to future, yet to be defined technologies, new customer relationships, existing workforce of the acquired businesses, and synergies expected to arise after the Company's acquisition of these businesses.

The 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 six months ended October 27, 2023 and October 28, 2022.

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, 2024 and January 27, 2023.

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.

For the three and six months ended October 27, 2023 and October 28, 2022, purchase price allocation adjustments were not significant.

For the three and nine months ended January 26, 2024 and January 27, 2023, purchase price allocation adjustments were not significant.

Fiscal Year 2024

During the three and six months ended October 27, 2023, acquisitions that were accounted for as business combinations were not significant.

The acquisition date fair value of net assets acquired during the nine months ended January 26, 2024 was $ 107 million.

Based on preliminary valuations, assets acquired were primarily comprised of $ 51 million of goodwill and $ 29 million of technology-based intangible assets with estimated useful lives of 10 years.

The goodwill is deductible for tax purposes.

The Company recognized $ 25 million of non-cash contingent consideration liabilities in connection with these business combinations during the nine months ended January 26, 2024, which are comprised of revenue and product development milestone-based payments.

Fiscal Year 2023

5 unchanged sentences

The goodwill is not deductible for tax purposes.

Revenue and net loss attributable to Intersect ENT since the date of acquisition as well as costs incurred in connection with the acquisition included in the consolidated statements of income were not significant for the three and six months ended October 28, 2022.

Medtronic plc

Notes to Consolidated Financial Statements

On August 30, 2022, the Company acquired Affera, Inc.

5 unchanged sentences

The Company recognized $ 201 million of contingent consideration liabilities in connection with the acquisition, which are comprised of product development milestone-based payments.

Revenue and net loss attributable to Affera since the date of acquisition as well as costs incurred in connection with the acquisition included in the consolidated statements of income were not significant for the three months ended October 28, 2022.

Medtronic plc

Notes to Consolidated Financial Statements

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

12 unchanged sentences

Other acquisitions

For acquisitions, other than Intersect ENT and Affera, the acquisition date fair value of net assets acquired during the six months ended October 28, 2022, was $ 123 million.

For acquisitions, other than Intersect ENT and Affera, the acquisition date fair value of net assets acquired during the nine months ended January 27, 2023 was $ 123 million.

Assets acquired were primarily comprised of $ 66 million of goodwill and $ 57 million of technology-based intangible assets with estimated useful lives of 16 years.

The goodwill is deductible for tax purposes.

The Company recognized $ 73 million of non-cash contingent consideration liabilities in connection with these acquisitions during the six months ended October 28, 2022, which are comprised of revenue and product development milestone-based payments.

The Company recognized $ 73 million of non-cash contingent consideration liabilities in connection with these acquisitions during the nine months ended January 27, 2023, which are comprised of revenue and product development milestone-based payments.

Acquired In-Process Research & Development (IPR&D)

IPR&D with no alternative future use acquired outside of a business combination is expensed immediately.

During the three and six months ended October 27, 2023, and the six months ended October 28, 2022, IPR&D acquired in connection with asset acquisitions of technology not yet approved was not significant.

The Company did not acquire any IPR&D in connection with asset acquisitions of technology not yet approved during the three months ended October 28, 2022.

The Company did not acquire any IPR&D in connection with asset acquisitions of technology not yet approved during the three months ended January 26, 2024 and January 27, 2023.

During the nine months ended January 26, 2024 and January 27, 2023, IPR&D acquired in connection with asset acquisitions of technology not yet approved was not significant.

Contingent Consideration

1 unchanged sentence

A liability is recorded for the estimated fair value of the contingent consideration on the acquisition date.

The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized within other operating income, net in the consolidated statements of income.

The fair value of contingent consideration liabilities at October 27, 2023 and April 28, 2023 was $ 220 million and $ 206 million, respectively.

At October 27, 2023, $ 30 million was recorded in other accrued expenses , and $ 190 million was recorded in other liabilities in the consolidated balance sheet.

The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized within other operating expense (income), net in the consolidated statements of income.

The fair value of contingent consideration liabilities at January 26, 2024 and April 28, 2023 was $ 172 million and $ 206 million, respectively.

At January 26, 2024, $ 118 million was recorded in other accrued expenses , and $ 55 million was recorded in other liabilities in the consolidated balance sheet.

At April 28, 2023, $ 34 million was recorded in other accrued expenses , and $ 171 million was recorded in other liabilities in the consolidated balance sheet.

Medtronic plc

Notes to Consolidated Financial Statements

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

Three months ended Six months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Three months ended Nine months ended

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Beginning balance $ 220 $ 349 $ 206 $ 119

3 unchanged sentences

Ending balance $ 172 $ 308 $ 172 $ 308

Medtronic plc

Notes to Consolidated Financial Statements

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) October 27, 2023 Unobservable Input Range Weighted Average (1)

(in millions) January 26, 2024 Unobservable Input Range Weighted Average (1)

Revenue and other performance-based payments $ 76 Discount rate 11.2 % - 31.0 %

7 unchanged sentences

In connection with the sale, the Company may be entitled to receive additional consideration based on the achievement of certain revenue, regulatory, and profitability milestones, with potential payouts starting in fiscal year 2025 through 2029.

The fair value of the contingent consideration receivable at October 27, 2023 and April 28, 2023 was $ 152 million and $ 195 million, respectively, and was recorded in other assets in the consolidated balance sheet.

The fair value of the contingent consideration receivable at January, 26, 2024 and April 28, 2023 was $ 150 million and $ 195 million, respectively, and was recorded in other assets in the consolidated balance sheet.

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

October 27, 2023

(in millions) Three months ended Six months ended

January 26, 2024

(in millions) Three months ended Nine months ended

Beginning balance $ 152 $ 195

2 unchanged sentences

Renal Care Solutions Disposition

On May 25, 2022, the Company and DaVita entered into a definitive agreement for the Company to sell half of its RCS business, and on April 1, 2023, completed the transaction, as further discussed above.

This sale is part of an agreement between Medtronic and DaVita to form a new, independent kidney care-focused medical device company (“Mozarc Medical” or "Mozarc") with equal equity ownership.

2 unchanged sentences

For the contingent consideration receivables, the maximum consideration the Company could receive in the future is $ 300 million based on the achievement of the aforementioned milestones.

The Company recorded non-cash pre-tax charges of $ 14 million and $ 81 million, primarily related to impairment of goodwill and changes in the carrying amount of the disposal group, in the three and six months ended October 28, 2022, respectively, recognized in o ther operating income, net in the consolidated statements of income.

The Company recorded non-cash pre-tax charges of $ 81 million, primarily related to impairment of goodwill and changes in the carrying amount of the disposal group, in the nine months ended January 27, 2023, recognized in o ther operating expense (income), net in the consolidated statements of income.

Refer to Note 10 to the consolidated financial statements for additional information on the goodwill impairment.

1 unchanged sentence

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

Medtronic plc

Notes to Consolidated Financial Statements

Restructuring and Other Costs

For the three and six months ended October 27, 2023, the Company incurred $ 91 million and $ 182 million of restructuring and associated costs primarily related to employee termination benefits and facility consolidations to support cost reduction initiatives.

For the three and six months ended October 28, 2022, restructuring charges primarily related to the Enterprise Excellence and Simplification restructuring programs, both of which were substantially completed as of the end of fiscal year 2023.

Enterprise Excellence was designed to leverage the Company’s global size and scale to focus on global operations, and functional and commercial optimization, and had total pre-tax charges of $ 1.8 billion.

Simplification was designed to focus the organization on accelerating innovation, enhancing customer experience, driving revenue growth and winning market share, and had total pre-tax charges of $ 0.5 billion.

For the three and nine months ended January 26, 2024, the Company incurred $ 55 million and $ 237 million, respectively, of restructuring and associated costs primarily related to employee termination benefits and facility consolidations to support cost reduction initiatives.

For the three and nine months ended January 27, 2023, restructuring charges primarily related to the Enterprise Excellence and Simplification restructuring programs, both of which were substantially completed as of the end of fiscal year 2023.

Enterprise Excellence was designed to leverage the Company’s global size and scale to focus on global operations, and functional and commercial optimization, and had total cumulative pre-tax charges of $ 1.8 billion.

Employee-related costs primarily consist of termination benefits provided to employees who have been involuntarily terminated and voluntary early retirement benefits.

Associated and other costs primarily include salaries and wages of employees that are fully-dedicated to restructuring programs, consulting expenses, and asset write-offs.

Medtronic plc

Notes to Consolidated Financial Statements

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

Three months ended Six months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Three months ended Nine months ended

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Cost of products sold $ 12 $ 26 $ 43 $ 67

2 unchanged sentences

Total restructuring and associated costs $ 55 $ 104 $ 237 $ 275

The following table summarizes the activity related to restructuring programs for the six months ended October 27, 2023:

The following table summarizes the activity related to restructuring programs for the nine months ended January 26, 2024:

(in millions) Employee Termination Benefits Associated and Other Costs Total

5 unchanged sentences

( 2 ) — ( 2 )

October 27, 2023 $ 72 $ 5 $ 76

January 26, 2024 $ 54 $ 9 $ 63

(1) Accrual adjustments primarily relate to certain employees identified for termination, finding other positions within the Company.

4 unchanged sentences

The Company holds investments in marketable debt securities that are classified and accounted for as available-for-sale and are remeasured on a recurring basis.

The following tables summarize the Company's investments in available-for-sale debt securities by significant investment category and the related consolidated balance sheet classification at October 27, 2023 and April 28, 2023:

October 27, 2023

January 26, 2024

Valuation Balance Sheet Classification

29 unchanged sentences

Notes to Consolidated Financial Statements

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 October 27, 2023 and April 28, 2023:

October 27, 2023

January 26, 2024

Less than 12 months More than 12 months

19 unchanged sentences

Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

There were no transfers into or out of Level 3 during the three and six months ended October 27, 2023 and October 28, 2022.

There were no transfers into or out of Level 3 during the three and nine months ended January 26, 2024 and January 27, 2023.

When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement.

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

Three months ended Six months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Three months ended Nine months ended

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Proceeds from sales $ 1,794 $ 1,777 $ 5,114 $ 5,365

1 unchanged sentence

Gross realized losses ( 6 ) ( 8 ) ( 22 ) ( 27 )

The October 27, 2023 balance of available-for-sale debt securities by contractual maturity is shown in the following table.

The January 26, 2024 balance of available-for-sale debt securities 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) October 27, 2023

(in millions) January 26, 2024

Due in one year or less $ 1,483

4 unchanged sentences

Interest income is recognized in other non-operating income, net , in the consolidated statements of income.

During the three and six months ended October 27, 2023, there was $ 148 million and $ 259 million of interest income, respectively.

During the three and six months ended October 28, 2022, there was $ 73 million and $ 128 million of interest income, respectively.

During the three and nine months ended January 26, 2024, there was $ 170 million and $ 429 million of interest income, respectively.

During the three and nine months ended January 27, 2023, there was $ 118 million and $ 246 million of interest income, respectively.

Medtronic plc

6 unchanged sentences

Equity investments that do not have readily determinable fair values, and that are not accounted for via the fair value option, are included within Level 3 of the fair value hierarchy, as they are measured using the measurement alternative at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

The following table summarizes the Company's equity and other investments at October 27, 2023 and April 28, 2023, which are classified as other assets in the consolidated balance sheets:

(in millions) October 27, 2023 April 28, 2023

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

(in millions) January 26, 2024 April 28, 2023

Investments with readily determinable fair value (marketable equity securities) $ 46 $ 115

4 unchanged sentences

Gains and losses on the Company's portfolio of equity and other investments are recognized in other non-operating income , net in the consolidated statements of income.

During the three and six months ended October 27, 2023, there were $ 7 million and $ 70 million of net unrealized losses, respectively, on equity securities and other investments still held at October 27, 2023.

During the three and six months ended October 28, 2022, there were $ 7 million of net unrealized losses and $ 1 million of net unrealized gains, respectively, on equity securities and other investments still held at October 28, 2022.

During the three and nine months ended January 26, 2024, there were $ 25 million and $ 95 million of net unrealized losses, respectively, on equity securities and other investments still held at January 26, 2024.

During the three and nine months ended January 27, 2023, there were $ 10 million and $ 15 million of net unrealized gains, respectively, on equity securities and other investments still held at January 27, 2023.

Mozarc Medical Investment

4 unchanged sentences

Under the fair value option, changes in the fair value of the investment are recognized through earnings each reporting period in other non-operating income, net in the consolidated statements of income.

During the three and six months ended October 27, 2023, the change in fair value was insignificant.

During the three and nine months ended January 26, 2024, the Company recognized a loss of $ 39 million.

Financing Arrangements

3 unchanged sentences

The aggregate amount outstanding at any time under the commercial paper programs may not exceed the equivalent of $ 3.5 billion.

Commercial paper outstanding at October 27, 2023 was $ 1.3 billion.

During the three months ended October 27, 2023, the commercial paper outstanding had a weighted average original maturity of 21 days and a weighted average interest rate of 5.476 percent.

During the six months ended October 27, 2023, the commercial paper outstanding had a weighted average original maturity of 18 days and a weighted average interest rate of 5.400 percent.

Commercial paper outstanding at January 26, 2024 was $ 1.0 billion.

During the three months ended January 26, 2024, the commercial paper outstanding had a weighted average original maturity of 23 days and a weighted average interest rate of 5.508 percent.

During the nine months ended January 26, 2024, the commercial paper outstanding had a weighted average original maturity of 20 days and a weighted average interest rate of 5.443 percent.

No commercial paper was outstanding at April 28, 2023.

3 unchanged sentences

The Credit Facility includes a multi-currency borrowing feature for certain specified foreign currencies.

At October 27, 2023 and April 28, 2023, no amounts were outstanding under the Credit Facility.

At January 26, 2024 and April 28, 2023, no amounts were outstanding under the Credit Facility.

Medtronic plc

6 unchanged sentences

(in millions) Maturity by

Fiscal Year October 27, 2023 April 28, 2023

Fiscal Year January 26, 2024 April 28, 2023

Current debt obligations 2024 - 2025 $ 1,029 $ 20

54 unchanged sentences

Notes to Consolidated Financial Statements

In September 2022, Medtronic Luxco issued four tranches of Euro-denominated Senior Notes with an aggregate principal of € 3.5 billion, with maturities ranging from fiscal year 2026 to 2035, resulting in cash proceeds of approximately $ 3.4 billion, net of discounts and issuance costs.

In September 2022, Medtronic Global Holdings S.C.A.

(Medtronic Luxco) issued four tranches of Euro-denominated Senior Notes with an aggregate principal of € 3.5 billion, with maturities ranging from fiscal year 2026 to 2035, resulting in cash proceeds of approximately $ 3.4 billion, net of discounts and issuance costs.

The Company used the net proceeds to repay at maturity € 750 million of Medtronic Luxco Senior Notes for $ 772 million of total consideration in December 2022 and € 2.8 billion of Medtronic Luxco Senior Notes for $ 2.9 billion of total consideration in March 2023.

13 unchanged sentences

The Company recognized a total loss on debt extinguishment of $ 53 million in the three months ended July 29, 2022, which primarily includes cash premiums and accelerated amortization of deferred financing costs and debt discounts and premiums.

The loss was recognized in interest expense, net in the consolidated statements of income during the six months ended October 28, 2022.

The loss was recognized in interest expense, net in the consolidated statements of income during the nine months ended January 27, 2023.

During the fourth quarter of fiscal year 2023, the Company repaid the term loan in full, including interest.

Financial Instruments Not Measured at Fair Value

At October 27, 2023, the estimated fair value of the Company’s Senior Notes was $ 20.8 billion compared to a principal value of $ 23.9 billion.

At January 26, 2024, the estimated fair value of the Company’s Senior Notes was $ 21.8 billion compared to a principal value of $ 24.3 billion.

At April 28, 2023, the estimated fair value was $ 21.7 billion compared to a principal value of $ 24.5 billion.

12 unchanged sentences

The Company's cash flow hedges will mature within the subsequent three-year period.

At October 27, 2023 and April 28, 2023, the Company had $ 387 million and $ 93 million in after-tax unrealized gains, respectively, associated with cash flow hedging instruments recorded in accumulated other comprehensive loss.

The Company expects that $ 279 million of after-tax net unrealized gains at October 27, 2023 will be recognized in the consolidated statements of income over the next 12 months.

At January 26, 2024 and April 28, 2023, the Company had $ 167 million and $ 93 million in after-tax unrealized gains, respectively, associated with cash flow hedging instruments recorded in accumulated other comprehensive loss .

The Company expects that $ 140 million of after-tax net unrealized gains at January 26, 2024 will be recognized in the consolidated statements of income over the next 12 months.

Medtronic plc

6 unchanged sentences

Amounts excluded from the assessment of effectiveness are recognized in interest expense, net on a straight-line basis over the term of the hedge.

During the three and six months ended October 27, 2023, the Company recognized $ 50 million and $ 99 million, respectively, in after-tax gains representing excluded components in interest expense, net .

During the three and six months ended October 28, 2022, the Company recognized $ 27 million and $ 47 million in after-tax unrealized gains representing excluded components in interest expense, net .

During the three and nine months ended January 26, 2024, the Company recognized $ 49 million and $ 148 million, respectively, in gains representing excluded components in interest expense, net .

During the three and nine months ended January 27, 2023, the Company recognized $ 26 million and $ 74 million in unrealized gains representing excluded components in interest expense, net .

The cash flows related to the Company's derivative instruments designated as net investment hedges are reported as investing activities in the consolidated statements of cash flows.

6 unchanged sentences

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

(in billions) Designation October 27, 2023 April 28, 2023

(in billions) Designation January 26, 2024 April 28, 2023

Currency exchange rate contracts Cash flow hedge $ 10.1 $ 9.1

4 unchanged sentences

Currency exchange rate contracts Undesignated 5.2 5.8

(1) At October 27, 2023, includes derivative contracts with a notional value of € 4.5 billion, or $ 4.8 billion, designated as hedges of a portion of our net investment in certain European operations and derivative contracts with a notional value of ¥ 322.2 billion, or $ 2.1 billion, designated as hedges of a portion of our net investment in certain Japanese operations.

(1) At January 26, 2024, includes derivative contracts with a notional value of € 5.0 billion, or $ 5.4 billion, designated as hedges of a portion of our net investment in certain European operations and derivative contracts with a notional value of ¥ 322.2 billion, or $ 2.2 billion, designated as hedges of a portion of our net investment in certain Japanese operations.

These derivative contracts mature in fiscal years 2025 through 2033.

(2) At October 27, 2023, includes € 16.0 billion, or $ 16.9 billion, of outstanding Euro-denominated debt as hedges of a portion our net investment in foreign operations.

(2) At January 26, 2024, includes € 16.0 billion, or $ 17.4 billion, of outstanding Euro-denominated debt as hedges of a portion our net investment in foreign operations.

This debt matures in fiscal years 2026 through 2051.

2 unchanged sentences

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

The amount of the gains and losses on hedging instruments and the classification of those gains and losses within our consolidated financial statements for the three and six months ended October 27, 2023 and October 28, 2022 were as follows:

The amount of the gains and losses on hedging instruments and the classification of those gains and losses within our consolidated financial statements for the three and nine months ended January 26, 2024 and January 27, 2023 were as follows:

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

Three months ended Six months ended Three months ended Six months ended Location of (Gain) Loss in Income Statement

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Three months ended Nine months ended Three months ended Nine months ended Location of (Gain) Loss in Income Statement

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Cash flow hedges

Currency exchange rate contracts $ ( 394 ) $ ( 266 ) $ ( 398 ) $ ( 608 ) $ ( 75 ) $ ( 205 ) $ ( 125 ) $ ( 343 ) Other operating income, net

Currency exchange rate contracts $ 136 $ 557 $ ( 263 ) $ ( 51 ) $ ( 83 ) $ ( 199 ) $ ( 209 ) $ ( 542 ) Other operating expense (income), net

Currency exchange rate contracts 23 155 ( 85 ) ( 12 ) ( 20 ) ( 8 ) ( 39 ) 12 Cost of products sold

3 unchanged sentences

Total $ 584 $ 2,570 $ ( 696 ) $ 386 $ ( 103 ) $ ( 208 ) $ ( 248 ) $ ( 530 )

The amount of the gains and losses on our derivative instruments not designated as hedging instruments and the classification of those gains and losses within our consolidated financial statements during the three and six months ended October 27, 2023 and October 28, 2022 were as follows:

The amount of the gains and losses on our derivative instruments not designated as hedging instruments and the classification of those gains and losses within our consolidated financial statements during the three and nine months ended January 26, 2024 and January 27, 2023 were as follows:

(Gain) Loss Recognized in Income

Three months ended Six months ended Location of (Gain) Loss in Income Statement

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Currency exchange rate contracts $ 94 $ 21 $ 92 $ 47 Other operating income, net

Medtronic plc

Notes to Consolidated Financial Statements

Three months ended Nine months ended Location of (Gain) Loss in Income Statement

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Currency exchange rate contracts $ ( 9 ) $ ( 1 ) $ 83 $ 46 Other operating expense (income), net

Balance Sheet Presentation

The following tables summarize the balance sheet classification and fair value of derivative instruments included in the consolidated balance sheets at October 27, 2023 and April 28, 2023.

The following tables summarize the balance sheet classification and fair value of derivative instruments included in the consolidated balance sheets at January 26, 2024 and April 28, 2023.

The fair value amounts are presented on a gross basis, and are segregated between derivatives that are designated and qualify as hedging instruments and those that are not designated and do not qualify as hedging instruments, and are further segregated by type of contract within those two categories.

Fair Value - Assets Fair Value - Liabilities

(in millions) October 27, 2023 April 28, 2023 Balance Sheet Classification October 27, 2023 April 28, 2023 Balance Sheet Classification

(in millions) January 26, 2024 April 28, 2023 Balance Sheet Classification January 26, 2024 April 28, 2023 Balance Sheet Classification

Derivatives designated as hedging instruments

7 unchanged sentences

Total derivatives $ 549 $ 368 $ 109 $ 236

Medtronic plc

Notes to Consolidated Financial Statements

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

October 27, 2023 April 28, 2023

January 26, 2024 April 28, 2023

(in millions) Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities

4 unchanged sentences

The cash flows related to collateral posted and received are reported gross as investing and financing activities, respectively, in the consolidated statements of cash flows.

Medtronic plc

Notes to Consolidated Financial Statements

The following tables provide information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria as stipulated by the terms of the master netting arrangements with each of the counterparties.

Derivatives not subject to master netting arrangements are not eligible for net presentation.

October 27, 2023

January 26, 2024

Gross Amount Not Offset on the Balance Sheet

2 unchanged sentences

Currency exchange rate contracts $ 523 $ ( 103 ) $ ( 29 ) $ 391

Derivative liabilities:

Currency exchange rate contracts ( 59 ) 58 — —

Total return swaps 26 — — 26

549 ( 103 ) ( 29 ) 417

Derivative liabilities:

Currency exchange rate contracts ( 109 ) 103 — ( 6 )

Total $ 439 $ — $ ( 29 ) $ 411

8 unchanged sentences

Inventory balances, net of reserves, were as follows:

(in millions) October 27, 2023 April 28, 2023

(in millions) January 26, 2024 April 28, 2023

Finished goods $ 3,799 $ 3,440

2 unchanged sentences

Total $ 5,726 $ 5,293

Medtronic plc

Notes to Consolidated Financial Statements

Goodwill and Other Intangible Assets

5 unchanged sentences

Currency translation and other ( 13 ) ( 44 ) ( 254 ) — ( 311 )

October 27, 2023 $ 7,849 $ 11,634 $ 19,084 $ 2,255 $ 40,821

Medtronic plc

Notes to Consolidated Financial Statements

January 26, 2024 $ 7,906 $ 11,674 $ 19,325 $ 2,255 $ 41,160

As further described in Note 17, the Company has certain new operating segments as of the beginning of fiscal year 2024.

Each new operating segment is considered a standalone reporting unit as of the beginning of fiscal year 2024.

As a result of the change, the Company allocated all goodwill that was previously assigned to the Medical Surgical reporting unit to the new reporting units using a relative fair value allocation approach.

As a result of the realignment of the operating segment structure, the Company allocated all goodwill that was previously assigned to the Medical Surgical reporting unit to the new reporting units using a relative fair value allocation approach.

Reporting units were tested for impairment before and after the alignment.

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however, the Patient Monitoring & Respiratory Interventions reporting unit had an estimated fair value that exceeded its carrying value by less than 10 percent.

As of October 27, 2023, no events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value, including the Patient Monitoring & Respiratory Interventions reporting unit.

The Patient Monitoring & Respiratory Interventions reporting unit had $ 3.0 billion of goodwill as of October 27, 2023.

The goodwill allocation and the tests for impairment of goodwill require the Company to make several estimates related to projected future cash flows to determine the fair value of the goodwill reporting units.

The Company calculates the excess of each reporting unit's fair value over its carrying amount, including goodwill, utilizing a discounted cash flow analysis.

The test for goodwill is based on future cash flows that require significant judgment with respect to future revenue and expense growth rates and discount rates.

The discount rate applied to the cash flow analysis is based on the weighted average cost of capital (“WACC”) for each reporting unit.

As of July 28, 2023, $ 3.0 billion of goodwill was allocated to the Patient Monitoring & Respiratory Interventions reporting unit.

The Company assesses goodwill for impairment annually as of the first day of the third quarter of the fiscal year and whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired.

Impairment testing for goodwill is performed at the reporting unit level.

The Company calculates the excess of each reporting unit's fair value over its carrying amount, including goodwill, utilizing a discounted cash flow analysis and revenue and earnings multiples using comparable public company information.

Significant assumptions used in reporting unit fair value measurements include forecasted cash flows, including revenue and expense growth rates, discount rates, and revenue and earnings multiples.

An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit.

A change in any of these estimates and assumptions could produce a different fair value, which could have a material impact on the Company's results of operations.

No goodwill impairment was recognized during the three and nine months ended January 26, 2024 and the three months ended January 27, 2023.

As of January 26, 2024, the Patient Monitoring & Respiratory Interventions reporting unit had an estimated fair value that exceeded its carrying value by greater than 10 percent.

As a result of the agreement with DaVita, as disclosed in Note 4 to the consolidated financial statements, the Company allocated $ 208 million of goodwill to the RCS business that met the criteria to be classified as held for sale during the first quarter of fiscal year 2023 and was subsequently sold on April 1, 2023.

Upon allocation, a goodwill impairment test was performed for the RCS business, and the Company recognized $ 61 million of goodwill impairment during the six months ended October 28, 2022.

The goodwill impairment charges were recognized in other operating income, net in the consolidated statements of income.

The Company did not recognize any goodwill impairment during the three and six months ended October 27, 2023 and the three months ended October 28, 2022.

Intangible Assets

Upon allocation, a goodwill impairment test was performed for the RCS business, and the Company recognized $ 61 million of goodwill impairment during the nine months ended January 27, 2023.

The goodwill impairment charges were recognized in other operating expense (income), net in the consolidated statements of income.

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

October 27, 2023 April 28, 2023

January 26, 2024 April 28, 2023

(in millions) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

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IPR&D $ 234 $ — $ 232 $ —

The Company did not recognize any definite-lived intangible asset impairment charges during the three and six months ended October 27, 2023 and October 28, 2022.

Indefinite-lived intangible asset impairments were not significant for the three and six months ended October 27, 2023.

The Company did not recognize any indefinite-lived intangible asset impairment charges during the three and six months ended October 28, 2022.

Due to the nature of IPR&D projects, the Company may experience future delays or failures to obtain regulatory approvals to conduct clinical trials, failures of clinical trials, delays or failures to obtain required market clearances, other failures to achieve a commercially viable product, or the discontinuation of certain projects, and as a result, may recognize impairment losses in the future.

The Company did not recognize any definite-lived intangible asset impairment charges during the three and nine months ended January 26, 2024 and January 27, 2023.

Medtronic plc

Notes to Consolidated Financial Statements

The Company did not recognize any indefinite-lived intangible asset impairments during the three months ended January 26, 2024.

Indefinite-lived intangible asset impairments were not significant for the nine months ended January 26, 2024 and the three and nine months ended January 27, 2023.

Amortization Expense

Intangible asset amortization expense for the three months ended October 27, 2023 and October 28, 2022 was $ 425 million and $ 421 million, respectively.

Intangible asset amortization expense for the six months ended October 27, 2023 and October 28, 2022 was $ 855 million and $ 844 million, respectively.

Estimated aggregate amortization expense by fiscal year based on the carrying value of definite-lived intangible assets at October 27, 2023, excluding any possible future amortization associated with acquired IPR&D which has not yet met technological feasibility, is as follows:

Intangible asset amortization expense for the three months ended January 26, 2024 and January 27, 2023 was $ 419 million and $ 431 million, respectively.

Intangible asset amortization expense for the nine months ended January 26, 2024 and January 27, 2023 was $ 1.3 billion.

Estimated aggregate amortization expense by fiscal year based on the carrying value of definite-lived intangible assets at January 26, 2024, excluding any possible future amortization associated with acquired IPR&D which has not yet met technological feasibility, is as follows:

(in millions) Amortization Expense

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The court determined that there was a deemed taxable transfer of intellectual property.

As a result, the Company recorded a $ 187 million income tax charge during the six months ended October 27, 2023.

Subsequent to October 27, 2023, the Company filed an appeal with the Supreme Court of Israel.

Our effective tax rate for the three and six months ended October 27, 2023 was 30.6 % and 32.0 %, respectively, as compared to 68.7 % and 44.0 % for the three and six months ended October 28, 2022, respectively.

The decrease in our effective tax rate for the three months ended October 27, 2023 primarily relates to the $ 764 million income tax charge recorded during the three months ended October 28, 2022 related to the U.S.

Tax Court decision, which was partially offset by an increase in Puerto Rico withholding tax rates and the establishment of a valuation allowance on certain net operating losses recorded during the three months ended October 27, 2023.

In addition to the items discussed in the current quarter, the decrease in the effective tax rate for the six months ended October 27, 2023 was also attributable to the Ventor court decision noted above.

At October 27, 2023 and April 28, 2023, the Company's gross unrecognized tax benefits were $ 2.8 billion and $ 2.7 billion, respectively.

During the three months ended October 27, 2023, the Company made a $ 193 million payment to the Internal Revenue Service.

After considering advance payments and deposits, the Company had no accrued gross interest and penalties at October 27, 2023.

As a result, the Company recorded a $ 187 million income tax charge during the nine months ended January 26, 2024.

During the three months ended January 26, 2024, the Company filed an appeal with the Supreme Court of Israel.

The Company's effective tax rate for the three and nine months ended January 26, 2024 was 9.2 % and 23.5 %, respectively, as compared to 10.6 % and 31.9 % for the three and nine months ended January 27, 2023, respectively.

The decrease in the effective tax rate for the three months ended January 26, 2024 primarily relates to a Swiss Cantonal tax rate change on previously recorded deferred tax assets, which was partially offset by an increase in Puerto Rico withholding tax rates and finalization of certain tax returns and statute of limitation lapses for the quarter ended January 27, 2023.

The decrease in the effective tax rate for the nine months ended January 26, 2024 was attributable to the previously highlighted items and the $ 764 million income tax charge recorded during the nine months ended January 27, 2023 related to the U.S.

Tax Court decision partially offset by the Ventor court decision noted above and the establishment of a valuation allowance against certain net operating losses.

At January 26, 2024 and April 28, 2023, the Company's gross unrecognized tax benefits were $ 2.8 billion and $ 2.7 billion, respectively.

In addition, the Company had accrued gross interest and penalties that were not significant at January 26, 2024.

If all of the Company’s unrecognized tax benefits were recognized, approximately $ 2.6 billion would impact the Company’s effective tax rate.

At both October 27, 2023 and April 28, 2023, the amount of the Company's gross unrecognized tax benefits, net of cash advance, recorded as a noncurrent liability within accrued income taxes on the consolidated balance sheets was $ 1.8 billion.

At both January 26, 2024 and April 28, 2023, the amount of the Company's gross unrecognized tax benefits, net of cash advance, recorded as a noncurrent liability within accrued income taxes on the consolidated balance sheets was $ 1.8 billion.

The Company recognizes interest and penalties related to income tax matters within income tax provision in the consolidated statements of income and records the liability within either current or noncurrent accrued income taxes on the consolidated balance sheets.

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

Three months ended Six months ended

(in millions, except per share data) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Three months ended Nine months ended

(in millions, except per share data) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Net income attributable to ordinary shareholders $ 1,322 $ 1,222 $ 3,022 $ 2,579

7 unchanged sentences

Diluted earnings per share $ 0.99 $ 0.92 $ 2.27 $ 1.94

The calculation of weighted average diluted shares outstanding excludes options to purchase approximately 31 million and 27 million ordinary shares for the three and six months ended October 27, 2023, respectively, and 25 million and 20 million ordinary shares for the three and six months ended October 28, 2022, respectively, because their effect would have been anti-dilutive on the Company’s earnings per share.

The calculation of weighted average diluted shares outstanding excludes options to purchase approximately 29 million and 28 million ordinary shares for the three and nine months ended January 26, 2024, respectively, and 28 million and 23 million ordinary shares for the three and nine months ended January 27, 2023, respectively, because their effect would have been anti-dilutive on the Company’s earnings per share.

Stock-Based Compensation

The following table presents the components and classification of stock-based compensation expense for stock options, restricted stock, performance share units, and employee stock purchase plan shares recognized for the three and six months ended October 27, 2023 and October 28, 2022:

Three months ended Six months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

The following table presents the components and classification of stock-based compensation expense for stock options, restricted stock, performance share units, and employee stock purchase plan shares recognized for the three and nine months ended January 26, 2024 and January 27, 2023:

Three months ended Nine months ended

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Stock options $ 15 $ 15 $ 61 $ 64

14 unchanged sentences

employees and many employees outside the U.S.

The net periodic benefit cost of the defined benefit pension plans included the following components for the three and six months ended October 27, 2023 and October 28, 2022:

The net periodic benefit cost of the defined benefit pension plans included the following components for the three and nine months ended January 26, 2024 and January 27, 2023:

Three months ended Three months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Service cost $ 15 $ 19 $ 10 $ 12

4 unchanged sentences

Net periodic benefit (credit) cost $ ( 6 ) $ 4 $ 5 $ 7

Six months ended Six months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Nine months ended Nine months ended

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Service cost $ 45 $ 57 $ 30 $ 36

14 unchanged sentences

Other comprehensive income (loss) 73 ( 461 ) 348 6 74 39

October 27, 2023 $ ( 296 ) $ ( 3,748 ) $ 1,016 $ ( 737 ) $ 387 $ ( 3,377 )

(in millions) Unrealized (Loss) Gain on Investment Securities Cumulative Translation Adjustment Net Investment Hedges Net Change in Retirement Obligations Unrealized Gain (Loss) on Cash Flow Hedges Total Accumulated Other Comprehensive (Loss) Income

January 26, 2024 $ ( 185 ) $ ( 3,300 ) $ 593 $ ( 735 ) $ 167 $ ( 3,459 )

(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 29, 2022 $ ( 209 ) $ ( 2,599 ) $ 841 $ ( 773 ) $ 474 $ ( 2,265 )

Other comprehensive income (loss) before reclassifications ( 195 ) ( 1,705 ) 1,409 3 634 146

Other comprehensive (loss) income before reclassifications ( 94 ) ( 20 ) ( 449 ) — 43 ( 520 )

Reclassifications 18 — — 2 ( 424 ) ( 404 )

Other comprehensive (loss) income ( 76 ) ( 20 ) ( 449 ) 2 ( 382 ) ( 924 )

October 28, 2022 $ ( 392 ) $ ( 4,304 ) $ 2,250 $ ( 769 ) $ 852 $ ( 2,361 )

The income tax on gains and losses on investment securities in other comprehensive income before reclassifications during the six months ended October 27, 2023 and October 28, 2022, was a benefit of $ 8 million and $ 41 million, respectively.

During the six months ended October 27, 2023 and October 28, 2022, realized gains and losses on investment securities reclassified from AOCI were reduced by income taxes of $ 3 million and $ 4 million, respectively.

January 27, 2023 $ ( 285 ) $ ( 2,619 ) $ 392 $ ( 771 ) $ 92 $ ( 3,189 )

The income tax on gains and losses on investment securities in other comprehensive income before reclassifications during the nine months ended January 26, 2024 and January 27, 2023, was an expense of $ 9 million and a benefit of $ 22 million, respectively.

During the nine months ended January 26, 2024 and January 27, 2023, realized gains and losses on investment securities reclassified from AOCI were reduced by income taxes of $ 4 million and $ 6 million, respectively.

When realized, gains and losses on investment securities reclassified from AOCI are recognized within other non-operating income, net .

Refer to Note 6 to the consolidated financial statements for additional information.

For the six months ended October 27, 2023, there was no income tax on cumulative translation adjustment.

For the six months ended October 28, 2022, the income tax on cumulative translation adjustment was a benefit of $ 3 million.

During the six months ended October 27, 2023 and October 28, 2022, there were no tax impacts on net investment hedges.

For the nine months ended January 26, 2024, there was no income tax on cumulative translation adjustment.

For the nine months ended January 27, 2023, the income tax on cumulative translation adjustment was a benefit of $ 4 million.

During the nine months ended January 26, 2024 and January 27, 2023, there were no tax impacts on net investment hedges.

Refer to Note 8 to the consolidated financial statements for additional information.

The net change in retirement obligations in other comprehensive income includes amortization of net actuarial losses included in net periodic benefit cost.

During the six months ended October 27, 2023, there were no tax impacts on retirement obligations.

During the six months ended October 28, 2022, the net change in retirement obligations in other comprehensive income before reclassifications resulted in income tax expense of $ 1 million.

During the six months ended October 27, 2023 and October 28, 2022, the gains and losses on defined benefit and pension items reclassified from AOCI were reduced by income taxes of $ 2 million and $ 7 million, respectively.

During the nine months ended January 26, 2024, there were no tax impacts on retirement obligations.

During the nine months ended January 27, 2023, the net change in retirement obligations in other comprehensive income before reclassifications resulted in income tax benefit of $ 1 million.

During the nine months ended January 26, 2024 and January 27, 2023, the gains and losses on defined benefit and pension items reclassified from AOCI were reduced by income taxes of $ 2 million and $ 8 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 14 to the consolidated financial statements for additional information.

The income tax on unrealized gains and losses on cash flow hedges in other comprehensive income before reclassifications during the six months ended October 27, 2023 and October 28, 2022, was an expense of $ 103 million and $ 141 million, respectively.

During the six months ended October 27, 2023 and October 28, 2022, gains and losses on cash flow hedges reclassified from AOCI were reduced by income taxes of $ 34 million and $ 59 million, respectively.

When realized, gains and losses on currency exchange rate contracts reclassified from AOCI are recognized within other operating income, net or cost of products sold.

The income tax on unrealized gains and losses on cash flow hedges in other comprehensive income before reclassifications during the nine months ended January 26, 2024 and January 27, 2023, was an expense of $ 75 million and $ 20 million, respectively.

During the nine months ended January 26, 2024 and January 27, 2023, gains and losses on cash flow hedges reclassified from AOCI were reduced by income taxes of $ 48 million and $ 98 million, respectively.

When realized, gains and losses on currency exchange rate contracts reclassified from AOCI are recognized within other operating expense (income), net or cost of products sold.

Refer to Note 8 to the consolidated financial statements for additional information.

1 unchanged sentence

Legal Matters

The Company and its affiliates are involved in a number of legal actions from time to time involving product liability, employment, intellectual property and commercial disputes, shareholder related matters, environmental proceedings, tax disputes, and governmental proceedings and investigations, including those described below.

With respect to governmental proceedings and investigations, like other

Medtronic plc

Notes to Consolidated Financial Statements

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.

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.

8 unchanged sentences

The Company classifies certain specified litigation charges and gains related to significant legal matters as certain litigation charges in the consolidated statements of income.

The Company recognized $ 65 million and $ 105 million of certain litigation charges during the three and six months ended October 27, 2023, respectively, whereas the Company recognized no certain litigation charges during the three and six months ended October 28, 2022.

At October 27, 2023 and April 28, 2023, accrued litigation was approximately $ 0.3 billion.

The Company recognized no certain litigation charges during the three months ended January 26, 2024 and the three and nine months ended January 27, 2023.

The Company recognized $ 105 million of certain litigation charges during the nine months ended January 26, 2024.

At January 26, 2024 and April 28, 2023, accrued litigation was approximately $ 0.2 billion and $ 0.3 billion, respectively.

The ultimate cost to the Company with respect to accrued litigation could be materially different than the amount of the current estimates and accruals and could have a material adverse impact on the Company’s consolidated earnings, financial position, and/or cash flows.

14 unchanged sentences

Product Liability Matters

Pelvic Mesh Litigation

The Company 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 subsidiaries of Covidien supplied pelvic mesh products to one of the manufacturers, C.R.

Bard (Bard), named in the litigation.

The litigation included a federal multi-district litigation in the U.S.

District Court for the Northern District of West Virginia (now closed) 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 16,200 claimants have asserted or may assert claims involving

Medtronic plc

Notes to Consolidated Financial Statements

products manufactured by Covidien’s subsidiaries.

As of November 1, 2023, the Company had reached agreements to settle nearly all of these claims.

The Company's accrued expenses for this matter are included within accrued litigation as discussed above.

Hernia Mesh Litigation

1 unchanged sentence

state and federal courts that allege personal injury from hernia mesh products sold by those subsidiaries.

As of November 1, 2023, the Company and certain of its subsidiaries have been named as defendants in lawsuits filed on behalf of approximately 7,600 individual plaintiffs, and certain plaintiffs’ law firms have advised the Company that they may file additional cases in the future.

As of January 31, 2024, the Company and certain of its subsidiaries have been named as defendants in lawsuits filed on behalf of approximately 7,950 individual plaintiffs, and certain plaintiffs’ law firms have advised the Company that they may file additional cases in the future.

Approximately 6,500 plaintiffs have pending lawsuits in a coordinated proceeding in Massachusetts state court, where they have been consolidated before a single judge.

Approximately 500 plaintiffs have pending lawsuits in a coordinated action in Minnesota state court, and there are approximately 900 actions coordinated in a federal Multidistrict Litigation in the U.S.

District Court for the District of Massachusetts.

District Court for the District of Massachusetts plus seven one-off cases filed in other courts.

The pending lawsuits relate almost entirely to hernia mesh products that have not been subject to recalls, withdrawals, or other adverse regulatory action.

The Company has not recorded an expense related to damages in connection with these matters because any potential loss is not currently probable and reasonably estimable.

The Company has not recorded an expense related to damages in connection with these matters because any potential loss

Medtronic plc

Notes to Consolidated Financial Statements

is not currently probable and reasonably estimable.

A dditionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.

2 unchanged sentences

state and federal courts alleging personal injury from Series 600 insulin pumps with allegedly defective clear retainer rings that were subject to field corrective actions in 2019 and 2021.

As of November 1, 2023, 63 individual plaintiffs have filed lawsuits, and certain plaintiffs’ law firms have notified the Company that they may file additional lawsuits in the future on behalf of thousands of additional claimants.

As of February 5, 2024, 23 lawsuits have been filed on behalf of a total of 86 individual plaintiffs, and certain plaintiffs’ law firms have notified the Company that they may file additional lawsuits in the future on behalf of thousands of additional claimants.

Most of the filed suits are coordinated in California state court.

11 unchanged sentences

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

Anti-Corruption Matters

The Company has regular and ongoing interactions with governmental agencies, and its practice is to cooperate with such inquiries.

In addition, from time to time, the Company self-discloses potential concerns to governmental regulators.

Like many in the medical device industry or with international operations, the Company engages in periodic discussions with the U.S.

Securities and Exchange Commission, U.S.

Department of Justice, and various authorities in China regarding certain activities, largely involving historical conduct of third-party distributors, primarily in China.

The Company is committed to regularly evaluating and, as appropriate, strengthening its anti-corruption compliance programs and practices.

Any possible future determination that certain of our operations and activities, and/or those of our third-party distributors, are not in compliance with existing laws could result in the imposition of fines, penalties, and equitable remedies in the United States or in other jurisdictions.

The Company has not recorded an expense in connection with these matters because any potential loss is not currently probable and reasonably estimable.

Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.

In March 2009, the IRS issued its audit report on Medtronic, Inc.

10 unchanged sentences

The Tax Court issued its second opinion in August 2022, the IRS filed a Notice of Appeal to the U.S.

Court of Appeals for the Eights Circuit in September 2023, and Medtronic subsequently filed a cross-appeal in October 2023.

A hearing date for the Appeal has not been set.

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

The IRS has issued its audit reports on Medtronic, Inc.

35 unchanged sentences

Segment Operating Profit

Three months ended Six months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

Three months ended Nine months ended

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Cardiovascular $ 1,090 $ 1,055 $ 3,298 $ 3,104

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(1) Includes the operations from the Renal Care Solutions business contributed to Mozarc Medical on April 1, 2023 and Transition Manufacturing and Service Agreements for previously divested businesses.

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

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

Geographic Information

Net sales are attributed to the country based on the location of the customer taking possession of the products or in which the services are rendered.

The following table presents net sales for the three and six months ended October 27, 2023 and October 28, 2022 for the Company's country of domicile, countries with significant concentrations, and all other countries:

Three months ended Six months ended

(in millions) October 27, 2023 October 28, 2022 October 27, 2023 October 28, 2022

The following table presents net sales for the three and nine months ended January 26, 2024 and January 27, 2023 for the Company's country of domicile, countries with significant concentrations, and all other countries:

Three months ended Nine months ended

(in millions) January 26, 2024 January 27, 2023 January 26, 2024 January 27, 2023

Ireland $ 27 $ 23 $ 86 $ 70

3 unchanged sentences

Total $ 8,089 $ 7,727 $ 23,775 $ 22,682

Medtronic plc

Notes to Consolidated Financial Statements

Subsequent Events

On February 20, 2024, the Company announced the decision to exit its ventilator product line and retain and combine the remaining Patient Monitoring and Respiratory Interventions (PMRI) businesses into one business unit called Acute Care and Monitoring (ACM).

For the nine months ended January 26, 2024, ventilator product line revenue was $ 111 million and is included in our Medical Surgical reportable segment.

The Company expects to record an estimated pre-tax charge of $ 350 million to $ 425 million, the majority of which is expected to be recorded in the quarter ending April 26, 2024, primarily related to non-cash impairment of long-lived intangible assets.

The Company will continue to honor existing ventilator contracts to serve the needs of its customers and their patients.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements