Attached files
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| 8-K - FORM 8-K - Medtronic plc | fy15q4earningsrelease.htm |
Exhibit 99.1
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NEWS RELEASE | ||
Contacts: | ||||
Cindy Resman | Jeff Warren | |||
Public Relations | Investor Relations | |||
+1-763-505-0291 | +1-763-505-2696 | |||
MEDTRONIC REPORTS FOURTH QUARTER AND
FISCAL YEAR 2015 FINANCIAL RESULTS
• | Q4 Worldwide Revenue of $7.3 Billion Grew 7% on a Comparable, Constant Currency Basis; 60% as Reported |
• | Q4 Non-GAAP Diluted EPS of $1.16; GAAP EPS were Break-even |
• | Q4 U.S. Revenue of $4.1 Billion Grew 8% on a Comparable Basis; 67% as Reported |
• | FY15 Revenue of $20.3 Billion Grew 19% as Reported, or 6% on a Comparable, Constant Currency Basis |
• | Q4 Free Cash Flow of $1.7 Billion; GAAP Cash Flow from Operations of $1.9 Billion |
• | Company Sets Initial FY16 Revenue Growth Outlook and EPS Guidance |
DUBLIN - June 2, 2015 - Medtronic plc (NYSE: MDT) today announced financial results for its fourth quarter and fiscal year 2015, which ended April 24, 2015, finalizing the preliminary revenue issued by the company on May 19, 2015.
Unless otherwise noted, all revenue growth rates in this press release are stated on a comparable, constant currency basis, which includes Covidien plc in the prior year comparison and aligns Covidien’s prior year monthly revenue to Medtronic’s fiscal quarters. Aligning historic Covidien revenue to Medtronic’s fiscal quarters is different than the pro forma revenue information previously included within certain SEC filings, which combined revenues from the closest historical reported quarters of both companies. Management believes that referring to comparable, constant currency revenue growth rates is a more useful way to evaluate the underlying performance of Medtronic’s revenue. For additional revenue detail and the reconciliation of these revenue amounts and growth rates to the most directly comparable GAAP financial measures, please refer to the link at the end of this release.
The company reported fourth quarter worldwide revenue of $7.304 billion, compared to $7.257 billion on a comparable basis in the fourth quarter of fiscal year 2014, an increase of 7 percent after adjusting for a $483 million negative foreign currency impact. As reported, revenue increased 60 percent when compared to the $4.566 billion reported by Medtronic, Inc. in the fourth quarter of fiscal year 2014. As detailed in the attached table, fourth quarter non-GAAP earnings and diluted earnings per share were $1.678 billion and $1.16, an increase of 41 percent and a decrease of 2 percent, respectively. As reported, the fourth quarter net loss was $1 million and $0.00 per diluted share, respectively.
Fourth quarter U.S. revenue of $4.057 billion increased 8 percent, or 67 percent as reported. Fourth quarter non-U.S. developed market revenue of $2.324 billion increased 5 percent, or 48 percent as reported. Fourth quarter emerging market revenue of $923 million increased 11 percent, or 62 percent as reported, and represented approximately 13 percent of company revenue.
As reported, Medtronic‘s fiscal year 2015 revenue of $20.261 billion, increased 19 percent, or 6 percent on a comparable, constant currency basis. As detailed in the attached table, fiscal year 2015 non-GAAP earnings and diluted earnings per share were $4.744 billion and $4.28, an increase of 16 percent and 6 percent, respectively. As reported, fiscal year 2015 net earnings were $2.675 billion or $2.41 per diluted share, a decrease of 13 percent and 20 percent, respectively.
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“I am encouraged by our strong fourth quarter performance, the first quarter that reflects the combined results of Medtronic and Covidien. In addition to making solid progress on our integration of Covidien, these results reflect disciplined execution across our three core strategies of therapy innovation, globalization, and economic value,” said Omar Ishrak, Medtronic chairman and chief executive officer. “Our results reflect the dedication and passion of over 85,000 employees collaborating with our partners in healthcare to deliver therapies and services to millions of patients around the globe, to fulfill our Mission of alleviating pain, restoring health, and extending life.”
Cardiac and Vascular Group
The Cardiac and Vascular Group (CVG) includes the Cardiac Rhythm & Heart Failure, Coronary & Structural Heart, and Aortic & Peripheral Vascular divisions. CVG had worldwide revenue in the quarter of $2.596 billion, representing an increase of 10 percent on both a comparable, constant currency basis and as reported. CVG revenue performance was driven by strong balanced growth across all three divisions.
Fourth quarter CVG U.S. revenue of $1.301 billion increased 15 percent, or 28 percent as reported. Fourth quarter CVG non-U.S. developed market revenue of $903 million increased 5 percent, or decreased 7 percent as reported. Fourth quarter CVG emerging market revenue of $392 million increased 11 percent, or 4 percent as reported.
Cardiac Rhythm & Heart Failure (CRHF) revenue of $1.398 billion grew 11 percent, or 4 percent as reported. CRHF performance this quarter was driven by low-teens growth in Low Power, mid-single digit growth in High Power, and strong growth of over 30 percent in AF Solutions. Geographically, the CRHF division benefitted from mid-teens growth in the U.S. and Japan. Low Power results were driven by the continued ongoing acceptance of the Reveal LINQTM insertable cardiac monitor and solid performance in the U.S. Pacing business, which grew in the upper-single digits. High Power results were driven by mid-single digit growth in the U.S. and double-digit growth in Japan. The VivaTM XT CRT-D with its AdaptivCRT® algorithm and Attain® PerformaTM Quadripolar Lead continue to show strong market acceptance. AF Solutions results were driven by continued robust growth of our Arctic Front Advance® CryoAblation System.
Coronary & Structural Heart (CSH) revenue of $792 million increased 9 percent, or 1 percent as reported. CSH performance was driven by upper-teens growth in Structural Heart and low-single digit growth in Coronary. Structural Heart growth was driven by Transcatheter Valves, which grew approximately 50 percent globally and approximately 30 percent in the U.S. based on the ongoing success of CoreValve® in the U.S. and the launch of the CoreValve® EvolutTM R recapturable system in CE Mark countries. Coronary benefitted from mid-single digit Drug Eluting Stent (DES) growth driven by the recent launch of Resolute OnyxTM in Europe and the continued acceptance of Resolute Integrity® DES in the U.S. The business also had low-double digit growth in balloons as a result of the recent launches of the company’s differentiated NC Euphora® and Euphora® SC balloon dilatation catheters.
Aortic & Peripheral Vascular (APV) revenue of $406 million increased 9 percent, or 69 percent as reported. APV performance was driven by very strong mid-teens growth in the Peripheral business, which is comprised of the legacy Medtronic peripheral business and a portion of the legacy Covidien Peripheral business, and low-single digit growth in Aortic. Growth in the Peripheral business was driven by the IN.PACT® Admiral® drug-coated balloon, which was launched at the beginning of the fiscal fourth quarter. The company estimates it now has the leading position in the U.S. Drug Coated Balloon market. This leadership position was attained without the benefit of having a full quarter of a combined Medtronic and legacy Covidien peripheral salesforce. Peripheral was also driven by strong double-digit growth in Chronic Venous Insufficiency (CVI) reflecting the continued acceptance of ClosureFastTM in Japan.
Minimally Invasive Therapies Group
The Minimally Invasive Therapies Group (MITG), formerly referred to as the Covidien Group following completion of the Covidien acquisition, includes both the Surgical Solutions division and the Patient Monitoring & Recovery division, formerly referred to as Medical Care Solutions by Covidien prior to the acquisition. The group had worldwide sales in the quarter of $2.387 billion, representing an increase of 6 percent. Incremental revenue from acquisitions contributed just over 1 percent to MITG growth. MITG revenue performance was driven by strong double-digit growth in Surgical Solutions and low-single digit growth in Patient Monitoring & Recovery.
Fourth quarter MITG revenue in the U.S. of $1.230 billion increased 6 percent. Fourth quarter MITG non-U.S. developed market revenue of $856 million increased 4 percent. Fourth quarter MITG emerging market revenue of $301 million increased 11 percent.
Surgical Solutions revenue of $1.293 billion increased 10 percent. Surgical Solutions performance this quarter was driven by high-single digit growth in Advanced Surgical, low-single digit growth in General Surgical, as well as growth of over 40 percent in Early Technologies, which benefitted significantly from acquisitions. Advanced Surgical results were driven by balanced low-
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double digit growth in both Stapling and Energy. Stapling growth reflected continued strong market adoption in the U.S. of new product introductions including the Endo GIATM Reinforced Reload. Energy results were driven by continued robust procedural growth in Vessel Sealing. Early Technologies results included strong growth across all three product lines: GI Solutions, Advanced Ablation, and Interventional Lung Solutions.
Patient Monitoring & Recovery (PMR) revenue of $1.094 billion increased 2 percent. Patient Monitoring grew in the mid-single digits, and both Airway & Ventilation and Nursing Care grew in the low-single digits, offsetting low-single digit declines in Patient Care. The strong U.S. flu season drove pulse oximetry sales.
Restorative Therapies Group
The Restorative Therapies Group (RTG) includes the Spine, Neuromodulation, Surgical Technologies, and Neurovascular divisions. The group had worldwide revenue in the quarter of $1.854 billion, representing an increase of 5 percent, or 7 percent as reported. Group revenue performance was driven by growth in Surgical Technologies, Neuromodulation, and Neurovascular, partially offset by modest declines in Spine.
Fourth quarter RTG U.S. revenue of $1.233 billion increased 4 percent, or 8 percent as reported. Fourth quarter RTG non-U.S. developed market revenue of $426 million increased 4 percent, or declined 4 percent as reported. Fourth quarter RTG emerging market revenue of $195 million increased 12 percent, or 25 percent as reported.
Spine revenue of $743 million declined 2 percent, or 5 percent as reported. Core Spine and Interventional revenue both declined in the low-single digits, offsetting low-single digit growth in Bone Morphogenetic Protein (BMP). The Core Spine business is focused on differentiating itself from the competition over the long-term through leading new technologies and minimally invasive procedure innovation, which are both enhanced by its Surgical Synergy™ program that integrates imaging, navigation, and powered surgical instruments.
Neuromodulation revenue of $518 million grew 6 percent, or 1 percent as reported. Neuromodulation performance was driven by mid-teens growth in Gastro/Uro and double-digit growth in Deep Brain Stimulation (DBS). Pain Stim was flat in the quarter, in-line with the market. Geographically, the Neuromodulation division benefitted from strong growth of over 30 percent in emerging markets, low-single digit growth in the U.S., and mid-single digit growth in Europe.
Surgical Technologies revenue of $461 million grew 9 percent, or 5 percent as reported. Surgical Technologies’ performance was driven by solid, balanced growth across all three businesses. Neurosurgery grew in the mid-single digits reflecting record worldwide O-arm® surgical imaging unit sales, continued strength in StealthStation® navigation service revenue, and the contribution of Visualase® MRI-guided laser ablation. ENT low-double digit growth reflected continued strong StraightShot® M5 Microdebrider and NuVent™ sinus balloon penetration offset partially by the MicroFrance divestiture, which occurred in the third quarter of fiscal year 2015. Advanced Energy grew in the upper-teens driven by the continued adoption of PEAK PlasmaBlade®. Geographically, the division had mid-teens growth in the U.S. on the strength of new products.
Neurovascular revenue of $132 million increased 23 percent. The division, formerly part of legacy Covidien, posted strong double-digit growth across coils, stents, flow diversion, and access product lines. Robust growth in neurovascular stents was driven by the SolitaireTM FR revascularization device following the publication of several positive clinical studies in the New England Journal of Medicine, including SWIFT PRIME. Flow diversion growth benefitted from the third quarter U.S. launch of the PipelineTM Flex embolization device.
Diabetes Group
The Diabetes Group includes the Intensive Insulin Management, Non-Intensive Diabetes Therapies, and Diabetes Services & Solutions divisions. The group had worldwide revenue in the quarter of $467 million, representing an increase of 8 percent, or 2 percent as reported.
Fourth quarter Diabetes U.S. revenue of $293 million increased 8 percent as reported. Fourth quarter Diabetes non-U.S. developed market revenue of $139 million increased 8 percent, or decreased 9 percent as reported. Fourth quarter Diabetes emerging market revenue of approximately $35 million increased 5 percent, or decreased 5 percent as reported.
Diabetes Group revenue in the quarter was driven by continued strong adoption in the U.S. of the MiniMed® 530G System with Enlite® CGM sensor and its proprietary Threshold Suspend technology. Growth was also driven by the continued international launch of the next-generation MiniMed® 640G System with a new insulin pump design, user interface, the Enhanced Enlite® CGM sensor and SmartGuardTM technology, a proprietary algorithm that can automatically suspend insulin delivery when sensor glucose levels are predicted to approach a low limit and resume insulin delivery once sensor glucose levels recover. The Intensive Insulin Management division continued to progress toward the development of an artificial pancreas system, with a
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minority investment in, and licensing of the DreaMed algorithm for a next generation closed loop system. The group continues to grow its Diabetes Services & Solutions division as evidenced by the recently announced partnership with IBM Watson Health and its minority investment in Glooko. The recent Diabeter acquisition also marks an important first move into the diabetes integrated care service space in the pediatric Type 1 population.
Revenue Outlook and Earnings per Share Guidance
The company today provided its fiscal year 2016 revenue outlook and diluted cash earnings per share (EPS) guidance. In fiscal year 2016, the company expects full-year underlying operational revenue growth in the range of 4 to 6 percent, and in addition, the company expects an incremental 1.0 to 1.5 percent of full-year revenue growth due to the extra selling week in the first quarter of fiscal year 2016. These revenue growth rates are on a comparable, constant currency basis, and exclude an estimated $1.3 to $1.5 billion negative foreign currency impact based on current exchange rates. The company also expects diluted cash EPS in the range of $4.30 to $4.40, which includes an expected $0.40 to $0.50 negative foreign currency impact based on current exchange rates. This foreign currency impact is $0.10 more negative than the amount previously estimated by the company in February.
“As we look ahead to fiscal year 2016, we remain focused on consistently delivering on our strategic and financial commitments,” said Ishrak. “We feel the company is well positioned to be a catalyst in transforming healthcare to a value-based model, using medical technology and services to deliver improved outcomes and efficiency, together with our provider partners around the world.”
Webcast Information
Medtronic will host a webcast today, June 2, at 8:00 a.m. EDT (7:00 a.m. CDT), to provide information about its businesses for the public, analysts, and news media. This quarterly webcast can be accessed by clicking on the Investors link on the Medtronic home page at www.medtronic.com and this earnings release will be archived at www.medtronic.com/newsroom. Within 24 hours of the webcast, a replay of the webcast and transcript of the company’s prepared remarks will be available by clicking on the Investor Events link through the Investors section of the Medtronic website.
Financial Schedules
To view the fourth quarter and fiscal year financial schedules, click here or visit www.medtronic.com/newsroom.
About Medtronic
Medtronic plc, headquartered in Dublin, Ireland, is the global leader in medical technology - alleviating pain, restoring health, and extending life for millions of people around the world.
This press release contains forward-looking statements related to product growth drivers, market position, strategies for growth, and Medtronic’s future results of operations, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation and general economic conditions and other risks and uncertainties described in Medtronic’s periodic reports on file with the U.S. Securities and Exchange Commission (the “SEC”). Actual results may differ materially from anticipated results. Medtronic does not undertake to update its forward-looking statements or any of the information contained in this press release. Certain information in this press release includes calculations or figures that have been prepared internally and have not been reviewed or audited by our independent registered public accounting firm, including but not limited to, certain information in the financial schedules accompanying this press release. Use of different methods for preparing, calculating or presenting information may lead to differences and such differences may be material.
Unless otherwise noted, all revenue amounts given in this news release are on a GAAP basis, and all comparisons and growth rates made in this news release are stated on a “comparable, constant currency basis” and not an as reported basis. References to quarterly figures increasing or decreasing are in comparison to the fourth quarter of fiscal year 2014. References to annual figures increasing or decreasing are in comparison to fiscal year 2014.
NON-GAAP FINANCIAL MEASURES
This press release contains financial measures, including revenue on a comparable, constant currency basis and comparable, constant currency growth rates, free cash flow, net earnings, and diluted EPS, which are considered “non-GAAP” financial measures under applicable SEC rules and regulations.
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These non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with generally accepted accounting principles (GAAP). The company’s definition of these non-GAAP measures may not be the same or similar to measures presented by other companies.
Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of aligning historical Covidien revenues to Medtronic’s fiscal calendar and excluding specified items that can be highly variable or difficult to predict. The company generally uses these 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 that the resulting non-GAAP financial measures provide useful information to investors regarding the underlying business trends and performance of the company’s ongoing operations and is useful for period over period comparisons of such operations. These non-GAAP financial measures reflect an additional way of viewing aspects of the company’s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting Medtronic’s business.
Because non-GAAP financial measures exclude the effect of items that will increase or decrease the company’s reported results of operations, management strongly encourages investors to review the company’s consolidated financial statements and publicly filed reports in their entirety. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial schedules accompanying this press release.
View FY15 Fourth Quarter Financial Schedules
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FINANCIAL SCHEDULES | Page |
REVENUE GAAP TO NON-GAAP RECONCILIATIONS | |
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MEDTRONIC PLC
WORLD WIDE REVENUE
(Unaudited)
MEDTRONIC FOURTH QUARTER AS REPORTED | FOURTH QUARTER COMPARABLE HISTORICAL REVENUE(6) | MEDTRONIC FISCAL YEAR AS REPORTED | FISCAL YEAR COMPARABLE HISTORICAL REVENUE(6) | |||||||||||||||||||||||||||||||||||||||||||||||||
($ millions) | FY15 Q4 | FY14 Q4 | Reported Growth | FY15 Q4(2) | FY14 Q4(3) | Currency Impact on Growth | Comparable Constant Currency Growth(1) | FY15 Total | FY14 Total | Reported Growth | FY15 Total(4) | FY14 Total(5) | Currency Impact on Growth | Comparable Constant Currency Growth(1) | ||||||||||||||||||||||||||||||||||||||
Cardiac & Vascular Group | $ | 2,596 | $ | 2,369 | 10 | % | $ | 2,596 | $ | 2,528 | $ | (194 | ) | 10 | % | $ | 9,361 | $ | 8,847 | 6 | % | $ | 9,854 | $ | 9,481 | $ | (299 | ) | 7 | % | ||||||||||||||||||||||
Cardiac Rhythm & Heart Failure | 1,398 | 1,346 | 4 | 1,398 | 1,346 | (100 | ) | 11 | 5,245 | 4,996 | 5 | 5,245 | 4,996 | (154 | ) | 8 | ||||||||||||||||||||||||||||||||||||
Coronary & Structural Heart | 792 | 783 | 1 | 792 | 783 | (65 | ) | 9 | 3,038 | 2,956 | 3 | 3,038 | 2,956 | (101 | ) | 6 | ||||||||||||||||||||||||||||||||||||
Aortic & Peripheral Vascular | 406 | 240 | 69 | 406 | 399 | (29 | ) | 9 | 1,078 | 895 | 20 | 1,571 | 1,529 | (44 | ) | 6 | ||||||||||||||||||||||||||||||||||||
Minimally Invasive Therapies Group | 2,387 | — | NC | 2,387 | 2,418 | (177 | ) | 6 | 2,387 | — | NC | 9,540 | 9,331 | (321 | ) | 6 | ||||||||||||||||||||||||||||||||||||
Surgical Solutions | 1,293 | — | NC | 1,293 | 1,282 | (115 | ) | 10 | 1,293 | — | NC | 5,188 | 4,915 | (204 | ) | 10 | ||||||||||||||||||||||||||||||||||||
Patient Monitoring & Recovery | 1,094 | — | NC | 1,094 | 1,136 | (62 | ) | 2 | 1,094 | — | NC | 4,352 | 4,416 | (117 | ) | 1 | ||||||||||||||||||||||||||||||||||||
Restorative Therapies Group | 1,854 | 1,737 | 7 | 1,854 | 1,851 | (83 | ) | 5 | 6,751 | 6,501 | 4 | 7,086 | 6,943 | (131 | ) | 4 | ||||||||||||||||||||||||||||||||||||
Spine | 743 | 786 | (5 | ) | 743 | 786 | (30 | ) | (2 | ) | 2,971 | 3,041 | (2 | ) | 2,971 | 3,041 | (52 | ) | (1 | ) | ||||||||||||||||||||||||||||||||
Neuromodulation | 518 | 513 | 1 | 518 | 513 | (27 | ) | 6 | 1,977 | 1,898 | 4 | 1,977 | 1,898 | (38 | ) | 6 | ||||||||||||||||||||||||||||||||||||
Surgical Technologies | 461 | 438 | 5 | 461 | 438 | (18 | ) | 9 | 1,671 | 1,562 | 7 | 1,671 | 1,562 | (29 | ) | 9 | ||||||||||||||||||||||||||||||||||||
Neurovascular | 132 | — | NC | 132 | 114 | (8 | ) | 23 | 132 | — | NC | 467 | 442 | (12 | ) | 8 | ||||||||||||||||||||||||||||||||||||
Diabetes Group | 467 | 460 | 2 | 467 | 460 | (29 | ) | 8 | 1,762 | 1,657 | 6 | 1,762 | 1,657 | (43 | ) | 9 | ||||||||||||||||||||||||||||||||||||
TOTAL | $ | 7,304 | $ | 4,566 | 60 | % | $ | 7,304 | $ | 7,257 | $ | (483 | ) | 7 | % | $ | 20,261 | $ | 17,005 | 19 | % | $ | 28,242 | $ | 27,412 | $ | (794 | ) | 6 | % | ||||||||||||||||||||||
NC - Not calculable
(1) Management believes that referring to comparable constant currency growth rates is a more useful way to evaluate the underlying performance of Medtronic’s sales. Constant currency growth, a non-GAAP financial measure, measures the change in revenue between current and prior year periods using average exchange rates in effect during the applicable prior year period. See description of non-GAAP financial measures on page 4 of this release.
(2) Medtronic plc revenue for the three months ended April 24, 2015.
(3) Includes Medtronic and Covidien revenue for the three months ended April 25, 2014.
(4) Includes Medtronic and Covidien revenue for the twelve months ended April 24, 2015.
(5) Includes Medtronic and Covidien revenue for the twelve months ended April 25, 2014.
(6) Prepared by aligning Covidien’s prior year monthly revenue to Medtronic’s fiscal quarters.
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MEDTRONIC PLC
U.S. REVENUE
(Unaudited)
MEDTRONIC FOURTH QUARTER AS REPORTED | FOURTH QUARTER COMPARABLE HISTORICAL REVENUE(6) | MEDTRONIC FISCAL YEAR AS REPORTED | FISCAL YEAR COMPARABLE HISTORICAL REVENUE(6) | |||||||||||||||||||||||||||||||||||||||||
($ millions) | FY15 Q4 | FY14 Q4 | Reported Growth | FY15 Q4(2) | FY14 Q4(3) | Comparable Growth(1) | FY15 Total | FY14 Total | Reported Growth | FY15 Total(4) | FY14 Total(5) | Comparable Growth(1) | ||||||||||||||||||||||||||||||||
Cardiac & Vascular Group | $ | 1,301 | $ | 1,020 | 28 | % | $ | 1,301 | $ | 1,136 | 15 | % | $ | 4,435 | $ | 3,877 | 14 | % | $ | 4,803 | $ | 4,356 | 10 | % | ||||||||||||||||||||
Cardiac Rhythm & Heart Failure | 761 | 666 | 14 | 761 | 666 | 14 | 2,799 | 2,552 | 10 | 2,799 | 2,552 | 10 | ||||||||||||||||||||||||||||||||
Coronary & Structural Heart | 314 | 267 | 18 | 314 | 267 | 18 | 1,160 | 993 | 17 | 1,160 | 993 | 17 | ||||||||||||||||||||||||||||||||
Aortic & Peripheral Vascular | 226 | 87 | 160 | 226 | 203 | 11 | 476 | 332 | 43 | 844 | 811 | 4 | ||||||||||||||||||||||||||||||||
Minimally Invasive Therapies Group | 1,230 | — | NC | 1,230 | 1,157 | 6 | 1,230 | — | NC | 4,804 | 4,566 | 5 | ||||||||||||||||||||||||||||||||
Surgical Solutions | 540 | — | NC | 540 | 481 | 12 | 540 | — | NC | 2,112 | 1,902 | 11 | ||||||||||||||||||||||||||||||||
Patient Monitoring & Recovery | 690 | — | NC | 690 | 676 | 2 | 690 | — | NC | 2,692 | 2,664 | 1 | ||||||||||||||||||||||||||||||||
Restorative Therapies Group | 1,233 | 1,139 | 8 | 1,233 | 1,188 | 4 | 4,569 | 4,389 | 4 | 4,715 | 4,578 | 3 | ||||||||||||||||||||||||||||||||
Spine | 516 | 535 | (4 | ) | 516 | 535 | (4 | ) | 2,061 | 2,106 | (2 | ) | 2,061 | 2,106 | (2 | ) | ||||||||||||||||||||||||||||
Neuromodulation | 354 | 343 | 3 | 354 | 343 | 3 | 1,365 | 1,304 | 5 | 1,365 | 1,304 | 5 | ||||||||||||||||||||||||||||||||
Surgical Technologies | 297 | 261 | 14 | 297 | 261 | 14 | 1,077 | 979 | 10 | 1,077 | 979 | 10 | ||||||||||||||||||||||||||||||||
Neurovascular | 66 | — | NC | 66 | 49 | 35 | 66 | — | NC | 212 | 189 | 12 | ||||||||||||||||||||||||||||||||
Diabetes Group | 293 | 271 | 8 | 293 | 271 | 8 | 1,071 | 981 | 9 | 1,071 | 981 | 9 | ||||||||||||||||||||||||||||||||
TOTAL | $ | 4,057 | $ | 2,430 | 67 | % | $ | 4,057 | $ | 3,752 | 8 | % | $ | 11,305 | $ | 9,247 | 22 | % | $ | 15,393 | $ | 14,481 | 6 | % | ||||||||||||||||||||
NC - Not calculable
(1) Management believes that referring to comparable growth rates is a more useful way to evaluate the underlying performance of Medtronic’s sales. See description of non-GAAP financial measures on page 4 of this release.
(2) Medtronic plc revenue for the three months ended April 24, 2015.
(3) Includes Medtronic and Covidien revenue for the three months ended April 25, 2014.
(4) Includes Medtronic and Covidien revenue for the twelve months ended April 24, 2015.
(5) Includes Medtronic and Covidien revenue for the twelve months ended April 25, 2014.
(6) Prepared by aligning Covidien’s prior year monthly revenue to Medtronic’s fiscal quarters.
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MEDTRONIC PLC
WORLD WIDE REVENUE: GEOGRAPHIC
(Unaudited)
MEDTRONIC FOURTH QUARTER AS REPORTED | FOURTH QUARTER COMPARABLE HISTORICAL REVENUE(6) | MEDTRONIC FISCAL YEAR AS REPORTED | FISCAL YEAR COMPARABLE HISTORICAL REVENUE(6) | |||||||||||||||||||||||||||||||||||||||||||||||||
($ millions) | FY15 Q4 | FY14 Q4 | Reported Growth | FY15 Q4(2) | FY14 Q4(3) | Currency Impact on Growth | Comparable Constant Currency Growth(1) | FY15 Total | FY14 Total | Reported Growth | FY15 Total(4) | FY14 Total(5) | Currency Impact on Growth | Comparable Constant Currency Growth(1) | ||||||||||||||||||||||||||||||||||||||
U.S. | $ | 1,301 | $ | 1,020 | 28 | % | $ | 1,301 | $ | 1,136 | $ | — | 15 | % | $ | 4,435 | $ | 3,877 | 14 | % | $ | 4,803 | $ | 4,356 | $ | — | 10 | % | ||||||||||||||||||||||||
Non-U.S. Developed | 903 | 971 | (7 | ) | 903 | 1,005 | (156 | ) | 5 | 3,412 | 3,540 | (4 | ) | 3,506 | 3,658 | (221 | ) | 2 | ||||||||||||||||||||||||||||||||||
Emerging Markets | 392 | 378 | 4 | 392 | 387 | (38 | ) | 11 | 1,514 | 1,430 | 6 | 1,545 | 1,467 | (78 | ) | 11 | ||||||||||||||||||||||||||||||||||||
Cardiac & Vascular Group | 2,596 | 2,369 | 10 | 2,596 | 2,528 | (194 | ) | 10 | 9,361 | 8,847 | 6 | 9,854 | 9,481 | (299 | ) | 7 | ||||||||||||||||||||||||||||||||||||
U.S. | 1,230 | — | NC | 1,230 | 1,157 | — | 6 | 1,230 | — | NC | 4,804 | 4,566 | — | 5 | ||||||||||||||||||||||||||||||||||||||
Non-U.S. Developed | 856 | — | NC | 856 | 956 | (139 | ) | 4 | 856 | — | NC | 3,488 | 3,579 | (234 | ) | 4 | ||||||||||||||||||||||||||||||||||||
Emerging Markets | 301 | — | NC | 301 | 305 | (38 | ) | 11 | 301 | — | NC | 1,248 | 1,186 | (87 | ) | 13 | ||||||||||||||||||||||||||||||||||||
Minimally Invasive Therapies Group | 2,387 | — | NC | 2,387 | 2,418 | (177 | ) | 6 | 2,387 | — | NC | 9,540 | 9,331 | (321 | ) | 6 | ||||||||||||||||||||||||||||||||||||
U.S. | 1,233 | 1,139 | 8 | % | 1,233 | 1,188 | — | 4 | 4,569 | 4,389 | 4 | 4,715 | 4,578 | — | 3 | |||||||||||||||||||||||||||||||||||||
Non-U.S. Developed | 426 | 442 | (4 | )% | 426 | 479 | (72 | ) | 4 | 1,556 | 1,564 | (1 | ) | 1,660 | 1,705 | (109 | ) | 4 | ||||||||||||||||||||||||||||||||||
Emerging Markets | 195 | 156 | 25 | % | 195 | 184 | (11 | ) | 12 | 626 | 548 | 14 | 711 | 660 | (22 | ) | 11 | |||||||||||||||||||||||||||||||||||
Restorative Therapies Group | 1,854 | 1,737 | 7 | % | 1,854 | 1,851 | (83 | ) | 5 | 6,751 | 6,501 | 4 | 7,086 | 6,943 | (131 | ) | 4 | |||||||||||||||||||||||||||||||||||
U.S. | 293 | 271 | 8 | 293 | 271 | — | 8 | 1,071 | 981 | 9 | 1,071 | 981 | — | 9 | ||||||||||||||||||||||||||||||||||||||
Non-U.S. Developed | 139 | 152 | (9 | ) | 139 | 152 | (25 | ) | 8 | 548 | 548 | — | 548 | 548 | (34 | ) | 6 | |||||||||||||||||||||||||||||||||||
Emerging Markets | 35 | 37 | (5 | ) | 35 | 37 | (4 | ) | 5 | 143 | 128 | 12 | 143 | 128 | (9 | ) | 19 | |||||||||||||||||||||||||||||||||||
Diabetes Group | 467 | 460 | 2 | 467 | 460 | (29 | ) | 8 | 1,762 | 1,657 | 6 | 1,762 | 1,657 | (43 | ) | 9 | ||||||||||||||||||||||||||||||||||||
U.S. | 4,057 | 2,430 | 67 | % | 4,057 | 3,752 | — | 8 | 11,305 | 9,247 | 22 | 15,393 | 14,481 | — | 6 | |||||||||||||||||||||||||||||||||||||
Non-U.S. Developed | 2,324 | 1,565 | 48 | 2,324 | 2,592 | (392 | ) | 5 | 6,372 | 5,652 | 13 | 9,202 | 9,490 | (598 | ) | 3 | ||||||||||||||||||||||||||||||||||||
Emerging Markets | 923 | 571 | 62 | 923 | 913 | (91 | ) | 11 | 2,584 | 2,106 | 23 | 3,647 | 3,441 | (196 | ) | 12 | ||||||||||||||||||||||||||||||||||||
TOTAL | $ | 7,304 | $ | 4,566 | 60 | % | $ | 7,304 | $ | 7,257 | $ | (483 | ) | 7 | % | $ | 20,261 | $ | 17,005 | 19 | % | $ | 28,242 | $ | 27,412 | $ | (794 | ) | 6 | % | ||||||||||||||||||||||
NC - Not calculable
(1) Management believes that referring to comparable constant currency growth rates is a more useful way to evaluate the underlying performance of Medtronic’s sales. Constant currency growth, a non-GAAP financial measure, measures the change in revenue between current and prior year periods using average exchange rates in effect during the applicable prior year period. See description of non-GAAP financial measures on page 4 of this release.
(2) Medtronic plc revenue for the three months ended April 24, 2015.
(3) Includes Medtronic and Covidien revenue for the three months ended April 25, 2014.
(4) Includes Medtronic and Covidien revenue for the twelve months ended April 24, 2015.
(5) Includes Medtronic and Covidien revenue for the twelve months ended April 25, 2014.
(6) Prepared by aligning Covidien’s prior year monthly revenue to Medtronic’s fiscal quarters.
9
MEDTRONIC PLC
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three months ended | Fiscal year ended | |||||||||||||||
April 24, 2015 | April 25, 2014 | April 24, 2015 | April 25, 2014 | |||||||||||||
(in millions, except per share data) | ||||||||||||||||
Net sales | $ | 7,304 | $ | 4,566 | $ | 20,261 | $ | 17,005 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of products sold | 2,934 | 1,171 | 6,309 | 4,333 | ||||||||||||
Research and development expense | 528 | 385 | 1,640 | 1,477 | ||||||||||||
Selling, general, and administrative expense | 2,404 | 1,539 | 6,904 | 5,847 | ||||||||||||
Special (gains) charges, net | — | — | (38 | ) | 40 | |||||||||||
Restructuring charges, net | 207 | 75 | 237 | 78 | ||||||||||||
Certain litigation charges, net | 42 | 746 | 42 | 770 | ||||||||||||
Acquisition-related items | 368 | 13 | 550 | 117 | ||||||||||||
Amortization of intangible assets | 468 | 87 | 733 | 349 | ||||||||||||
Other (income) expense, net | (20 | ) | 59 | 118 | 181 | |||||||||||
Operating profit | 373 | 491 | 3,766 | 3,813 | ||||||||||||
Interest income | (113 | ) | (93 | ) | (386 | ) | (271 | ) | ||||||||
Interest expense | 299 | 103 | 666 | 379 | ||||||||||||
Interest expense, net | 186 | 10 | 280 | 108 | ||||||||||||
Income from operations before income taxes | 187 | 481 | 3,486 | 3,705 | ||||||||||||
Provision for income taxes | 188 | 33 | 811 | 640 | ||||||||||||
Net (loss) income | $ | (1 | ) | $ | 448 | $ | 2,675 | $ | 3,065 | |||||||
Basic earnings per share | $ | — | $ | 0.45 | $ | 2.44 | $ | 3.06 | ||||||||
Diluted earnings per share | $ | — | $ | 0.44 | $ | 2.41 | $ | 3.02 | ||||||||
Basic weighted average shares outstanding | 1,422.3 | 1,000.0 | 1,095.5 | 1,002.1 | ||||||||||||
Diluted weighted average shares outstanding | 1,440.6 | 1,012.2 | 1,109.0 | 1,013.6 | ||||||||||||
Cash dividends declared per common share | $ | 0.305 | $ | 0.280 | $ | 1.220 | $ | 1.120 | ||||||||
10
MEDTRONIC PLC
NET (LOSS) INCOME AND DILUTED EPS GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
(in millions, except per share data)
Three months ended April 24, 2015 | ||||||||||||||||||||||||||||||
Net Sales | Cost of Products Sold | Gross Margin Percent | Operating Profit | Operating Profit Percent | Income from Operations Before Taxes | Net (Loss) Income | Diluted EPS | |||||||||||||||||||||||
GAAP | $ | 7,304 | $ | 2,934 | 59.8 | % | $ | 373 | 5.1 | % | $ | 187 | $ | (1 | ) | $ | — | |||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||
Impact of inventory step-up (a) | — | (623 | ) | 623 | 623 | 455 | 0.32 | |||||||||||||||||||||||
Impact of product technology upgrade commitment (b) | — | (74 | ) | 74 | 74 | 61 | 0.04 | |||||||||||||||||||||||
Restructuring charges, net (c) | — | (15 | ) | 222 | 222 | 157 | 0.11 | |||||||||||||||||||||||
Certain litigation charges, net (d) | — | — | 42 | 42 | 27 | 0.02 | ||||||||||||||||||||||||
Acquisition-related items (e) | — | — | 368 | 368 | 268 | 0.19 | ||||||||||||||||||||||||
Amortization of intangible assets (f) | — | — | 468 | 468 | 362 | 0.25 | ||||||||||||||||||||||||
Certain tax adjustments (g) | — | — | — | — | 349 | 0.24 | ||||||||||||||||||||||||
Non-GAAP | $ | 7,304 | $ | 2,222 | 69.6 | % | $ | 2,170 | 29.7 | % | $ | 1,984 | $ | 1,678 | $ | 1.16 | (1) | |||||||||||||
Three months ended April 25, 2014 | ||||||||||||||||||||||||||||||
Net Sales | Cost of Products Sold | Gross Margin Percent | Operating Profit | Operating Profit Percent | Income from Operations Before Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||
GAAP | $ | 4,566 | $ | 1,171 | 74.4 | % | $ | 491 | 10.8 | % | $ | 481 | $ | 448 | $ | 0.44 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||
Restructuring charges, net (h) | — | (10 | ) | 85 | 85 | 58 | 0.06 | |||||||||||||||||||||||
Certain litigation charges, net (i) | — | — | 746 | 746 | 684 | 0.68 | ||||||||||||||||||||||||
Acquisition-related items (j) | — | — | 13 | 13 | 8 | 0.01 | ||||||||||||||||||||||||
Amortization of intangible assets (f) | 87 | 87 | 57 | 0.06 | ||||||||||||||||||||||||||
Certain tax adjustments (k) | — | — | — | — | (63 | ) | (0.06 | ) | ||||||||||||||||||||||
Non-GAAP | $ | 4,566 | $ | 1,161 | 74.6 | % | $ | 1,422 | 31.1 | % | $ | 1,412 | $ | 1,192 | $ | 1.18 | (1) | |||||||||||||
Net (Loss) Income | Diluted EPS | |||||||||||||||||||||||||||||
Year over year percent change: | ||||||||||||||||||||||||||||||
GAAP | (100)% | (100)% | ||||||||||||||||||||||||||||
Non-GAAP | 41% | (2)% | ||||||||||||||||||||||||||||
See description of non-GAAP financial measures contained in this release.
(1) The data in this schedule has been intentionally rounded to the nearest $0.01 and, therefore, may not sum.
(a) | Represents amortization of step-up in preliminary fair value of inventory acquired in connection with the Covidien acquisition. |
(b) | Represents the probable and reasonably estimable commitment related to a CRHF global comprehensive program for home based monitors due to industry conversion from analog to digital technology. |
(c) | Includes a $176 million after-tax ($248 million pre-tax) charge related to the fiscal year 2015 restructuring initiative, partially offset by a $19 million after-tax ($26 million pre-tax) reversal of excess restructuring reserves related to certain legacy Medtronic and certain legacy Covidien restructuring initiatives. The restructuring charge for the fiscal year 2015 |
11
initiative consisted of employee termination costs (including accelerated stock compensation due to terminations resulting from the Covidien acquisition), asset write-downs, contract termination fees, and other related costs. The restructuring charge includes expense within cost of products sold related to inventory write-offs of discontinued product lines. The fiscal year 2015 initiative primarily relates to the Covidien acquisition, strategic alignment of certain manufacturing processes, certain inventory rationalizations, and certain program cancellations. The reversal was primarily a result of revisions to particular strategies and employees identified for elimination finding other positions within the Company.
(d) | Relates to accounting charges for probable and reasonably estimable INFUSE product liability litigation of $24 million after-tax ($37 million pre-tax) and other matters litigation. |
(e) | Primarily includes transaction and integration-related costs incurred in connection with the Covidien acquisition, of which $127 million after-tax ($189 million pre-tax) primarily relates to accelerated stock compensation expense incurred in the acquisition. |
(f) | To exclude amortization of intangible assets. |
(g) | Primarily relates to a $329 million tax expense for anticipated resolution of the Kyphon acquisition-related issues with the IRS. |
(h) | Includes a $85 million after-tax ($116 million pre-tax) charge related to the fiscal year 2014 restructuring initiative, partially offset by a $27 million after-tax ($31 million pre-tax) reversal of excess restructuring reserves related to certain Medtronic restructuring initiatives. The restructuring charge for the fiscal year 2014 initiative consisted of employee termination costs, asset write-downs, contract termination fees, and other related costs. The restructuring charge includes expense within cost of products sold related to inventory write-offs of discontinued product lines.The fiscal year 2014 initiative primarily relates to our renal denervation business, certain manufacturing shut-downs, and reduction of back-office support functions in Europe. The reversal was primarily a result of revisions to particular strategies and employees identified for elimination finding other positions within the Company. |
(i) | Primarily relates to the global patent settlement agreement with Edwards Lifesciences Corporation (Edwards), accounting charges for probable and reasonably estimable INFUSE product liability litigation of $89 million after-tax ($140 million pre-tax) and other litigation. The Edwards settlement represents the resolution of all pending litigation matters and patent office actions between the Company and Edwards, and Medtronic made a payment of $750 million. As a result, Medtronic recognized a $580 million after-tax ($589 million pre-tax) certain litigation charge (net of existing accrual). |
(j) | Primarily includes an IPR&D impairment charge related to a recent acquisition in the Endovascular business. |
(k) | Represent a tax benefit associated with the resolution of certain issues in the fourth quarter of fiscal year 2014 with the U.S. Internal Revenue Service (IRS). The years under review by the IRS were with respect to fiscal years 2009 through 2011. |
12
MEDTRONIC PLC
NET INCOME AND DILUTED EPS GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
(in millions, except per share data)
Fiscal year ended April 24, 2015 | ||||||||||||||||||||||||||||||
Net Sales | Cost of Products Sold | Gross Margin Percent | Operating Profit | Operating Profit Percent | Income from Operations Before Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||
GAAP | $ | 20,261 | $ | 6,309 | 68.9 | % | $ | 3,766 | 18.6 | % | $ | 3,486 | $ | 2,675 | $ | 2.41 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||
Impact of inventory step-up (a) | — | (623 | ) | 623 | 623 | 455 | 0.41 | |||||||||||||||||||||||
Impact of product technology upgrade commitment (b) | — | (74 | ) | 74 | 74 | 61 | 0.06 | |||||||||||||||||||||||
Special (gains) charges, net (c) | — | — | (38 | ) | (38 | ) | (23 | ) | (0.02 | ) | ||||||||||||||||||||
Restructuring charges, net (d) | — | (15 | ) | 252 | 252 | 180 | 0.16 | |||||||||||||||||||||||
Certain litigation charges, net (e) | — | — | 42 | 42 | 27 | 0.02 | ||||||||||||||||||||||||
Acquisition-related items (f) | — | — | 550 | 550 | 433 | 0.39 | ||||||||||||||||||||||||
Amortization of intangible assets (g) | — | — | 733 | 733 | 538 | 0.49 | ||||||||||||||||||||||||
Impact of acquisition on interest expense (h) | — | — | — | 77 | 49 | 0.04 | ||||||||||||||||||||||||
Certain tax adjustments (i) | — | — | — | — | 349 | 0.31 | ||||||||||||||||||||||||
Non-GAAP | $ | 20,261 | $ | 5,597 | 72.4 | % | $ | 6,002 | 29.6 | % | $ | 5,799 | $ | 4,744 | $ | 4.28 | (1) | |||||||||||||
Fiscal year ended April 25, 2014 | ||||||||||||||||||||||||||||||
Net Sales | Cost of Products Sold | Gross Margin Percent | Operating Profit | Operating Profit Percent | Income from Operations Before Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||
GAAP | $ | 17,005 | $ | 4,333 | 74.5 | % | $ | 3,813 | 22.4 | % | $ | 3,705 | $ | 3,065 | $ | 3.02 | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||
Special charges (j) | — | — | 40 | 40 | 26 | 0.03 | ||||||||||||||||||||||||
Restructuring charges, net (k) | — | (10 | ) | 88 | 88 | 60 | 0.06 | |||||||||||||||||||||||
Certain litigation charges, net (l) | — | — | 770 | 770 | 701 | 0.69 | ||||||||||||||||||||||||
Acquisition-related items (m) | — | — | 117 | 117 | 79 | 0.08 | ||||||||||||||||||||||||
Amortization of intangible assets (g) | — | — | 349 | 349 | 230 | 0.23 | ||||||||||||||||||||||||
Certain tax adjustments (n) | — | — | — | — | (63 | ) | (0.06 | ) | ||||||||||||||||||||||
Non-GAAP | $ | 17,005 | $ | 4,323 | 74.6 | % | $ | 5,177 | 30.4 | % | $ | 5,069 | $ | 4,098 | $ | 4.04 | ||||||||||||||
Net Income | Diluted EPS | |||||||||||||||||||||||||||||
Year over year percent change: | ||||||||||||||||||||||||||||||
GAAP | (13)% | (20)% | ||||||||||||||||||||||||||||
Non-GAAP | 16% | 6% | ||||||||||||||||||||||||||||
See description of non-GAAP financial measures contained in this release.
(1) The data in this schedule has been intentionally rounded to the nearest $0.01 and, therefore, may not sum.
(a) | Represents amortization of step-up in preliminary fair value of inventory acquired in connection with the Covidien acquisition. |
(b) | Represents the probable and reasonably estimable commitment related to a CRHF global comprehensive program for home based monitors due to industry conversion from analog to digital technology. |
13
(c) | Includes $64 million after-tax ($100 million pre-tax) charitable contribution made to the Medtronic Foundation, $25 million after-tax ($41 million pre-tax) gain on divestiture recognized in connection with the sale of a product line in the Surgical Technologies division and $62 million after-tax ($97 million pre-tax) net gain recognized in connection with the sale of a certain equity method investment. |
(d) | Includes a $176 million after-tax ($248 million pre-tax) charge related to the fiscal year 2015 restructuring initiative and a $28 million after-tax ($38 million pre-tax) charge related to a continuation of our fourth quarter fiscal year 2014 restructuring initiative, partially offset by a $25 million after-tax ($34 million pre-tax) reversal of excess restructuring reserves related to certain legacy Medtronic and certain legacy Covidien restructuring initiatives. The restructuring charge for the fiscal year 2015 initiative consisted of employee termination costs (including accelerated stock compensation due to terminations resulting from the Covidien acquisition), asset write-downs, contract termination fees, and other related costs. This restructuring charge includes expense within cost of products sold related to inventory write-offs of discontinued product lines. The fiscal year 2015 initiative primarily relates to the Covidien acquisition, strategic alignment of certain manufacturing processes, certain inventory rationalizations, and certain program cancellations. The reversal was primarily a result of revisions to particular strategies and employees identified for elimination finding other positions within the Company. |
(e) | Relates to accounting charges for probable and reasonably estimable INFUSE product liability litigation of $24 million after-tax ($37 million pre-tax) and other matters litigation. |
(f) | Primarily includes transaction and integration-related costs incurred in connection with the Covidien acquisition (bridge financing fees, legal fees, and other transaction- related costs), of which $127 million after-tax ($189 million pre-tax)primarily relates to accelerated or incremental stock compensation expense incurred in the acquisition. |
(g) | To exclude amortization of intangible assets. |
(h) | Represents the incremental interest expense incurred to hold $17 billion of debt from December 10, 2014 through the end of the third quarter of fiscal year 2015. On December 10, 2014, Medtronic issued $17 billion of debt to finance, in part, the cash component of the Covidien acquisition consideration including the payment of certain transaction and financing expenses and for working capital and general corporate purposes, which may include repayment of indebtedness. The Covidien acquisition closed on January 26, 2015. |
(i) | Primarily relates to a $329 million tax expense for anticipated resolution of the Kyphon acquisition-related issues with the IRS. |
(j) | Represents a charitable cash donation made to the Medtronic Foundation. |
(k) | Includes an $85 million after-tax ($116 million pre-tax) charge related to the fiscal year 2014 restructuring initiative and a $15 million after-tax ($18 million pre-tax) charge related to a continuation of our fourth quarter fiscal year 2013 restructuring initiative, partially offset by a $40 million after-tax ($46 million pre-tax) reversal of excess restructuring reserves related to certain Medtronic restructuring initiatives. The restructuring charge for the fiscal year 2014 initiative consisted of employee termination costs, asset write-downs, contract termination fees, and other related costs. This restructuring charge includes expense within cost of products sold related to inventory write-offs of discontinued product lines. The fiscal year 2014 initiative primarily relates to our renal denervation business, certain manufacturing shut-downs, and reduction of back-office support functions in Europe. The reversal was primarily a result of revisions to particular strategies and employees identified for elimination finding other positions within the Company. |
(l) | Primarily relates to the global patent settlement agreement with Edwards Lifesciences Corporation (Edwards), accounting charges for probable and reasonably estimable INFUSE product liability litigation of $89 million after-tax ($140 million pre-tax), patent and other matters litigation, and other litigation. The Edwards settlement represents the resolution of all pending litigation matters and patent office actions between the Company and Edwards, and Medtronic made a payment of $750 million. As a result, Medtronic recognized a $580 million after-tax ($589 million pre-tax) certain litigation charge (net of existing accrual). |
(m) | Primarily includes a $204 million after-tax ($236 million pre-tax) impairment of long-lived assets related to the Ardian acquisition, $138 million after-tax ($138 million pre-tax) net income related to the change in fair value of contingent consideration payments associated with acquisitions subsequent to April 29, 2009, and a $9 million after-tax ($14 million pre-tax) IPR&D impairment related to a recent acquisition in the Endovascular business. In the third quarter of |
14
fiscal year 2014, the U.S. pivotal trial in renal denervation for treatment-resistant hypertension, Symplicity HTN-3, failed to meet its primary efficacy endpoint. Therefore, the Company assessed the Ardian IPR&D and long-lived asset group for impairment. As a result, in the third quarter of fiscal year 2014, the Company recorded impairment charges of $166 million after-tax ($192 million pre-tax) related to IPR&D and $38 million after-tax ($44 million pre-tax) related to other long-lived assets. The change in fair value of contingent consideration payments primarily related to adjustments in Ardian contingent consideration. In the first quarter of fiscal year 2014, the Company recorded after-tax net income of $96 million ($96 million pre-tax) related to the change in fair value of contingent consideration payments. In the third quarter of fiscal year 2014, the Company recorded after-tax net income of $39 million ($39 million pre-tax) related to the change in fair value of contingent consideration payments.
(n) | Represents a tax benefit associated with the resolution of certain issues in the fourth quarter of fiscal year 2014 with the U.S. Internal Revenue Service (IRS). The years under review by the IRS were with respect to fiscal years 2009 through 2011. |
15
MEDTRONIC PLC
RECONCILIATION OF OPERATING CASH FLOW TO FREE CASH FLOW
(Unaudited)
(in millions)
Fiscal year ended | Nine months ended | Three months ended | |||||||||
April 24, | January 23, | April 24, | |||||||||
2015 | 2015 | 2015 | |||||||||
Net cash provided by operating activities | $ | 4,902 | $ | 2,990 | $ | 1,912 | |||||
Additions to property, plant, and equipment | (571 | ) | (316 | ) | (255 | ) | |||||
Free cash flow (a) | $ | 4,331 | $ | 2,674 | $ | 1,657 | |||||
(a) | Free cash flow, a non-GAAP financial measure, is calculated by subtracting property, plant, and equipment additions from operating cash flows. See description of non-GAAP financial measures contained in this release. |
16
MEDTRONIC, PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
April 24, 2015 | April 25, 2014 | |||||||
(in millions, except per share data) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,843 | $ | 1,403 | ||||
Investments | 14,637 | 12,838 | ||||||
Accounts receivable, less allowances of $144 and $115, respectively | 5,112 | 3,811 | ||||||
Inventories | 3,463 | 1,725 | ||||||
Tax assets | 1,335 | 736 | ||||||
Prepaid expenses and other current assets | 1,454 | 697 | ||||||
Total current assets | 30,844 | 21,210 | ||||||
Property, plant, and equipment, net | 4,699 | 2,392 | ||||||
Goodwill | 40,530 | 10,593 | ||||||
Other intangible assets, net | 28,101 | 2,286 | ||||||
Long-term tax assets | 774 | 300 | ||||||
Other assets | 1,737 | 1,162 | ||||||
Total assets | $ | 106,685 | $ | 37,943 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term borrowings | $ | 2,434 | $ | 1,613 | ||||
Accounts payable | 1,610 | 742 | ||||||
Accrued compensation | 1,611 | 1,015 | ||||||
Accrued income taxes | 935 | 164 | ||||||
Deferred tax liabilities | 119 | 19 | ||||||
Other accrued expenses | 2,464 | 2,006 | ||||||
Total current liabilities | 9,173 | 5,559 | ||||||
Long-term debt | 33,752 | 10,315 | ||||||
Long-term accrued compensation and retirement benefits | 1,535 | 662 | ||||||
Long-term accrued income taxes | 2,476 | 1,343 | ||||||
Long-term deferred tax liabilities | 4,700 | 386 | ||||||
Other long-term liabilities | 1,819 | 235 | ||||||
Total liabilities | 53,455 | 18,500 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Ordinary shares — par value $0.0001, $0.10; 2.6 billion and1.6 billion shares authorized; 1,421,648,005 and 998,999,125 issued and outstanding, respectively | — | 100 | ||||||
Retained earnings | 54,414 | 19,940 | ||||||
Accumulated other comprehensive loss | (1,184 | ) | (597 | ) | ||||
Total shareholders’ equity | 53,230 | 19,443 | ||||||
Total liabilities and shareholders’ equity | $ | 106,685 | $ | 37,943 | ||||
17
MEDTRONIC, PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Fiscal Year | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
(in millions) | ||||||||||||
Operating Activities: | ||||||||||||
Net income | $ | 2,675 | $ | 3,065 | $ | 3,467 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 1,306 | 850 | 819 | |||||||||
Amortization of debt discount and issuance costs | 76 | 8 | 104 | |||||||||
Acquisition-related items | 634 | 110 | (74 | ) | ||||||||
Provision for doubtful accounts | 35 | 43 | 51 | |||||||||
Deferred income taxes | (926 | ) | (207 | ) | (7 | ) | ||||||
Stock-based compensation | 439 | 145 | 152 | |||||||||
Other, net | (134 | ) | (28 | ) | — | |||||||
Change in operating assets and liabilities, net of acquisitions: | ||||||||||||
Accounts receivable, net | (413 | ) | (70 | ) | 1 | |||||||
Inventories | (282 | ) | (39 | ) | 93 | |||||||
Accounts payable and accrued liabilities | 1,616 | (117 | ) | 481 | ||||||||
Other operating assets and liabilities | 643 | 444 | (215 | ) | ||||||||
Certain litigation charges, net | 42 | 770 | 245 | |||||||||
Certain litigation payments | (809 | ) | (15 | ) | (175 | ) | ||||||
Net cash provided by operating activities | 4,902 | 4,959 | 4,942 | |||||||||
Investing Activities: | ||||||||||||
Acquisitions, net of cash acquired | (14,884 | ) | (385 | ) | (820 | ) | ||||||
Additions to property, plant, and equipment | (571 | ) | (396 | ) | (457 | ) | ||||||
Purchases of investments | (7,582 | ) | (10,895 | ) | (12,321 | ) | ||||||
Sales and maturities of investments | 5,890 | 8,111 | 10,511 | |||||||||
Other investing activities, net | 89 | (29 | ) | (14 | ) | |||||||
Net cash used in investing activities | (17,058 | ) | (3,594 | ) | (3,101 | ) | ||||||
Financing Activities: | ||||||||||||
Acquisition-related contingent consideration | (85 | ) | (1 | ) | (18 | ) | ||||||
Change in short-term borrowings, net | (1 | ) | 127 | (720 | ) | |||||||
Repayment of short-term borrowings (maturities greater than 90 days) | (150 | ) | (1,301 | ) | (2,700 | ) | ||||||
Proceeds from short-term borrowings (maturities greater than 90 days) | 150 | 1,176 | 2,628 | |||||||||
Issuance of long-term debt | 19,942 | 1,994 | 2,980 | |||||||||
Payments on long-term debt | (1,268 | ) | (565 | ) | (2,214 | ) | ||||||
Dividends to shareholders | (1,337 | ) | (1,116 | ) | (1,055 | ) | ||||||
Issuance of ordinary shares | 649 | 1,307 | 267 | |||||||||
Repurchase of ordinary shares | (1,920 | ) | (2,553 | ) | (1,247 | ) | ||||||
Other financing activities | (31 | ) | 14 | (22 | ) | |||||||
Net cash provided by (used in) financing activities | 15,949 | (918 | ) | (2,101 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (353 | ) | 37 | 7 | ||||||||
Net change in cash and cash equivalents | 3,440 | 484 | (253 | ) | ||||||||
Cash and cash equivalents at beginning of period | 1,403 | 919 | 1,172 | |||||||||
Cash and cash equivalents at end of period | $ | 4,843 | $ | 1,403 | $ | 919 | ||||||
Supplemental Cash Flow Information | ||||||||||||
Cash paid for: | ||||||||||||
Income taxes | $ | 632 | $ | 521 | $ | 537 | ||||||
Interest | 578 | 394 | 333 | |||||||||
18
MEDTRONIC PLC
FOURTH QUARTER RECONCILIATION OF WORLD WIDE REPORTED GROWTH TO
WORLD WIDE COMPARABLE CONSTANT CURRENCY GROWTH (1)
(Unaudited)
(in millions)
A | B | C | D=B+C | E | F=D+E | G = (A-B)/B | H | I=(A-F-H)/F | |||||||||||||||||||||||||||
Medtronic As Reported Three Months Ended April 24, 2015 | Medtronic As Reported Three Months Ended April 25, 2014 | Covidien As Reported Three Months Ended March 28, 2014 | Q4 FY14 Pro Forma Historical Revenue | Non-GAAP Adjustment(2) | Q4 FY14 Comparable Historical Revenue | Q4 FY15 Reported Growth | Currency Impact on Growth | Comparable Constant Currency Growth(1) | |||||||||||||||||||||||||||
Cardiac & Vascular Group | $ | 2,596 | $ | 2,369 | $ | 151 | $ | 2,520 | $ | 8 | $ | 2,528 | 10 | % | $ | (194 | ) | 10 | % | ||||||||||||||||
Cardiac Rhythm & Heart Failure | 1,398 | 1,346 | — | 1,346 | — | 1,346 | 4 | (100 | ) | 11 | |||||||||||||||||||||||||
Coronary & Structural Heart | 792 | 783 | — | 783 | — | 783 | 1 | (65 | ) | 9 | |||||||||||||||||||||||||
Aortic & Peripheral Vascular | 406 | 240 | 151 | 391 | 8 | 399 | 69 | (29 | ) | 9 | |||||||||||||||||||||||||
Minimally Invasive Therapies Group | 2,387 | — | 2,336 | 2,336 | 82 | 2,418 | NC | (177 | ) | 6 | |||||||||||||||||||||||||
Surgical Solutions | 1,293 | — | 1,213 | 1,213 | 69 | 1,282 | NC | (115 | ) | 10 | |||||||||||||||||||||||||
Patient Monitoring & Recovery | 1,094 | — | 1,123 | 1,123 | 13 | 1,136 | NC | (62 | ) | 2 | |||||||||||||||||||||||||
Restorative Therapies Group | 1,854 | 1,737 | 111 | 1,848 | 3 | 1,851 | 7 | (83 | ) | 5 | |||||||||||||||||||||||||
Spine | 743 | 786 | — | 786 | — | 786 | (5 | ) | (30 | ) | (2 | ) | |||||||||||||||||||||||
Neuromodulation | 518 | 513 | — | 513 | — | 513 | 1 | (27 | ) | 6 | |||||||||||||||||||||||||
Surgical Technologies | 461 | 438 | — | 438 | — | 438 | 5 | (18 | ) | 9 | |||||||||||||||||||||||||
Neurovascular | 132 | — | 111 | 111 | 3 | 114 | NC | (8 | ) | 23 | |||||||||||||||||||||||||
Diabetes Group | 467 | 460 | — | 460 | — | 460 | 2 | (29 | ) | 8 | |||||||||||||||||||||||||
TOTAL | $ | 7,304 | $ | 4,566 | $ | 2,598 | $ | 7,164 | $ | 93 | $ | 7,257 | 60 | % | $ | (483 | ) | 7 | % | ||||||||||||||||
(1) Management believes that referring to comparable constant currency growth rates is a more useful way to evaluate the underlying performance of Medtronic’s sales. Constant currency growth, a non-GAAP financial measure, measures the change in revenue between current and prior year periods using average exchange rates in effect during the applicable prior year period. See description of non-GAAP financial measures on page 4 of this release.
(2) Represents the increase in Covidien revenue for the three months ended April 25, 2014 as compared to Covidien revenue for the three months ended March 28, 2014.
19
MEDTRONIC PLC
FISCAL YEAR RECONCILIATION OF WORLD WIDE REPORTED GROWTH TO
WORLD WIDE COMPARABLE CONSTANT CURRENCY GROWTH (1)
(Unaudited)
(in millions)
A | B | C=A+B | D | E=C+D | F | G | H=F+G | I | J=H+I | K=(A-F)/F | L | M=(E-J-L)/J | |||||||||||||||||||||||||||||||||||||||
Medtronic As Reported Twelve Months Ended April 24, 2015 | Covidien As Reported Nine Months Ended December 26, 2014 | FY15 Pro Forma Historical Revenue | Non-GAAP Adjustment(2) | FY15 Comparable Historical Revenue | Medtronic As Reported Twelve Months Ended April 25, 2014 | Covidien As Reported Twelve Months Ended March 28, 2014 | FY14 Pro Forma Historical Revenue | Non-GAAP Adjustment(3) | FY14 Comparable Historical Revenue | FY15 Reported Growth | Currency Impact on Growth | Comparable Constant Currency Growth(1) | |||||||||||||||||||||||||||||||||||||||
Cardiac & Vascular Group | $ | 9,361 | $ | 497 | $ | 9,858 | $ | (4 | ) | $ | 9,854 | $ | 8,847 | $ | 633 | $ | 9,480 | $ | 1 | $ | 9,481 | 6 | % | $ | (299 | ) | 7 | % | |||||||||||||||||||||||
Cardiac Rhythm & Heart Failure | 5,245 | — | 5,245 | — | 5,245 | 4,996 | — | 4,996 | — | 4,996 | 5 | (154 | ) | 8 | |||||||||||||||||||||||||||||||||||||
Coronary & Structural Heart | 3,038 | — | 3,038 | — | 3,038 | 2,956 | — | 2,956 | — | 2,956 | 3 | (101 | ) | 6 | |||||||||||||||||||||||||||||||||||||
Aortic & Peripheral Vascular | 1,078 | 497 | 1,575 | (4 | ) | 1,571 | 895 | 633 | 1,528 | 1 | 1,529 | 20 | (44 | ) | 6 | ||||||||||||||||||||||||||||||||||||
Minimally Invasive Therapies Group | 2,387 | 7,261 | 9,648 | (108 | ) | 9,540 | — | 9,301 | 9,301 | 30 | 9,331 | NC | (321 | ) | 6 | ||||||||||||||||||||||||||||||||||||
Surgical Solutions | 1,293 | 3,952 | 5,245 | (57 | ) | 5,188 | — | 4,889 | 4,889 | 26 | 4,915 | NC | (204 | ) | 10 | ||||||||||||||||||||||||||||||||||||
Patient Monitoring & Recovery | 1,094 | 3,309 | 4,403 | (51 | ) | 4,352 | — | 4,412 | 4,412 | 4 | 4,416 | NC | (117 | ) | 1 | ||||||||||||||||||||||||||||||||||||
Restorative Therapies Group | 6,751 | 350 | 7,101 | (15 | ) | 7,086 | 6,501 | 441 | 6,942 | 1 | 6,943 | 4 | (131 | ) | 4 | ||||||||||||||||||||||||||||||||||||
Spine | 2,971 | — | 2,971 | — | 2,971 | 3,041 | — | 3,041 | — | 3,041 | (2 | ) | (52 | ) | (1 | ) | |||||||||||||||||||||||||||||||||||
Neuromodulation | 1,977 | — | 1,977 | — | 1,977 | 1,898 | — | 1,898 | — | 1,898 | 4 | (38 | ) | 6 | |||||||||||||||||||||||||||||||||||||
Surgical Technologies | 1,671 | — | 1,671 | — | 1,671 | 1,562 | — | 1,562 | — | 1,562 | 7 | (29 | ) | 9 | |||||||||||||||||||||||||||||||||||||
Neurovascular | 132 | 350 | 482 | (15 | ) | 467 | — | 441 | 441 | 1 | 442 | NC | (12 | ) | 8 | ||||||||||||||||||||||||||||||||||||
Diabetes Group | 1,762 | — | 1,762 | — | 1,762 | 1,657 | — | 1,657 | — | 1,657 | 6 | (43 | ) | 9 | |||||||||||||||||||||||||||||||||||||
TOTAL | $ | 20,261 | $ | 8,108 | $ | 28,369 | $ | (127 | ) | $ | 28,242 | $ | 17,005 | $ | 10,375 | $ | 27,380 | $ | 32 | $ | 27,412 | 19 | % | $ | (794 | ) | 6 | % | |||||||||||||||||||||||
(1) Management believes that referring to comparable constant currency growth rates is a more useful way to evaluate the underlying performance of Medtronic’s sales. Constant currency growth, a non-GAAP financial measure, measures the change in revenue between current and prior year periods using average exchange rates in effect during the applicable prior year period. See description of non-GAAP financial measures on page 4 of this release.
(2) Represents the decrease in Covidien revenue for the nine months ended January 23, 2015 as compared to Covidien revenue for the nine months ended December 26, 2014.
(3) Represents the increase in Covidien revenue for the twelve months ended April 25, 2014 as compared to Covidien revenue for the twelve months ended March 28, 2014.
20
MEDTRONIC PLC
FOURTH QUARTER RECONCILIATION OF U.S. REPORTED GROWTH TO U.S. COMPARABLE GROWTH (1)
(Unaudited)
(in millions)
A | B | C | D=B+C | E | F=D+E | G = (A-B)/B | H=(A-F)/F | ||||||||||||||||||||||||
Medtronic As Reported Three Months Ended April 24, 2015 | Medtronic As Reported Three Months Ended April 25, 2014 | Covidien As Reported Three Months Ended March 28, 2014 | Q4 FY14 Pro Forma Historical Revenue | Non-GAAP Adjustment(2) | Q4 FY14 Comparable Historical Revenue | Q4 FY15 Reported Growth | Comparable Growth(1) | ||||||||||||||||||||||||
Cardiac & Vascular Group | $ | 1,301 | $ | 1,020 | $ | 110 | $ | 1,130 | $ | 6 | $ | 1,136 | 28 | % | 15 | % | |||||||||||||||
Cardiac Rhythm & Heart Failure | 761 | 666 | — | 666 | — | 666 | 14 | 14 | |||||||||||||||||||||||
Coronary & Structural Heart | 314 | 267 | — | 267 | — | 267 | 18 | 18 | |||||||||||||||||||||||
Aortic & Peripheral Vascular | 226 | 87 | 110 | 197 | 6 | 203 | 160 | 11 | |||||||||||||||||||||||
Minimally Invasive Therapies Group | 1,230 | — | 1,129 | 1,129 | 28 | 1,157 | NC | 6 | |||||||||||||||||||||||
Surgical Solutions | 540 | — | 453 | 453 | 28 | 481 | NC | 12 | |||||||||||||||||||||||
Patient Monitoring & Recovery | 690 | — | 676 | 676 | — | 676 | NC | 2 | |||||||||||||||||||||||
Restorative Therapies Group | 1,233 | 1,139 | 48 | 1,187 | 1 | 1,188 | 8 | 4 | |||||||||||||||||||||||
Spine | 516 | 535 | — | 535 | — | 535 | (4 | ) | (4 | ) | |||||||||||||||||||||
Neuromodulation | 354 | 343 | — | 343 | — | 343 | 3 | 3 | |||||||||||||||||||||||
Surgical Technologies | 297 | 261 | — | 261 | — | 261 | 14 | 14 | |||||||||||||||||||||||
Neurovascular | 66 | — | 48 | 48 | 1 | 49 | NC | 35 | |||||||||||||||||||||||
Diabetes Group | 293 | 271 | — | 271 | — | 271 | 8 | 8 | |||||||||||||||||||||||
TOTAL | $ | 4,057 | $ | 2,430 | $ | 1,287 | $ | 3,717 | $ | 35 | $ | 3,752 | 67 | % | 8 | % | |||||||||||||||
(1) Management believes that referring to comparable growth rates is a more useful way to evaluate the underlying performance of Medtronic’s sales. See description of non-GAAP financial measures on page 4 of this release.
(2) Represents the increase in Covidien revenue for the three months ended April 25, 2014 as compared to Covidien revenue for the three months ended March 28, 2014.
21
MEDTRONIC PLC
FISCAL YEAR RECONCILIATION OF U.S. REPORTED GROWTH TO U.S. COMPARABLE GROWTH (1)
(Unaudited)
(in millions)
A | B | C=A+B | D | E=C+D | F | G | H=F+G | I | J=H+I | K=(A-F)/F | L=(E-J)/J | ||||||||||||||||||||||||||||||||||||
Medtronic As Reported Twelve Months Ended April 24, 2015 | Covidien As Reported Nine Months Ended December 26, 2014 | FY15 Pro Forma Historical Revenue | Non-GAAP Adjustment(2) | FY15 Comparable Historical Revenue | Medtronic As Reported Twelve Months Ended April 25, 2014 | Covidien As Reported Twelve Months Ended March 28, 2014 | FY14 Pro Forma Historical Revenue | Non-GAAP Adjustment(3) | FY14 Comparable Historical Revenue | FY15 Reported Growth | Comparable Growth(1) | ||||||||||||||||||||||||||||||||||||
Cardiac & Vascular Group | $ | 4,435 | $ | 372 | $ | 4,807 | $ | (4 | ) | $ | 4,803 | $ | 3,877 | $ | 477 | $ | 4,354 | $ | 2 | $ | 4,356 | 14 | % | 10 | % | ||||||||||||||||||||||
Cardiac Rhythm & Heart Failure | 2,799 | — | 2,799 | — | 2,799 | 2,552 | — | 2,552 | — | 2,552 | 10 | 10 | |||||||||||||||||||||||||||||||||||
Coronary & Structural Heart | 1,160 | — | 1,160 | — | 1,160 | 993 | — | 993 | — | 993 | 17 | 17 | |||||||||||||||||||||||||||||||||||
Aortic & Peripheral Vascular | 476 | 372 | 848 | (4 | ) | 844 | 332 | 477 | 809 | 2 | 811 | 43 | 4 | ||||||||||||||||||||||||||||||||||
Minimally Invasive Therapies Group | 1,230 | 3,593 | 4,823 | (19 | ) | 4,804 | — | 4,537 | 4,537 | 29 | 4,566 | NC | 5 | ||||||||||||||||||||||||||||||||||
Surgical Solutions | 540 | 1,574 | 2,114 | (2 | ) | 2,112 | — | 1,884 | 1,884 | 18 | 1,902 | NC | 11 | ||||||||||||||||||||||||||||||||||
Patient Monitoring & Recovery | 690 | 2,019 | 2,709 | (17 | ) | 2,692 | — | 2,653 | 2,653 | 11 | 2,664 | NC | 1 | ||||||||||||||||||||||||||||||||||
Restorative Therapies Group | 4,569 | 158 | 4,727 | (12 | ) | 4,715 | 4,389 | 187 | 4,576 | 2 | 4,578 | 4 | 3 | ||||||||||||||||||||||||||||||||||
Spine | 2,061 | — | 2,061 | — | 2,061 | 2,106 | — | 2,106 | — | 2,106 | (2 | ) | (2 | ) | |||||||||||||||||||||||||||||||||
Neuromodulation | 1,365 | — | 1,365 | — | 1,365 | 1,304 | — | 1,304 | — | 1,304 | 5 | 5 | |||||||||||||||||||||||||||||||||||
Surgical Technologies | 1,077 | — | 1,077 | — | 1,077 | 979 | — | 979 | — | 979 | 10 | 10 | |||||||||||||||||||||||||||||||||||
Neurovascular | 66 | 158 | 224 | (12 | ) | 212 | — | 187 | 187 | 2 | 189 | NC | 12 | ||||||||||||||||||||||||||||||||||
Diabetes Group | 1,071 | — | 1,071 | — | 1,071 | 981 | — | 981 | — | 981 | 9 | 9 | |||||||||||||||||||||||||||||||||||
TOTAL | $ | 11,305 | $ | 4,123 | $ | 15,428 | $ | (35 | ) | $ | 15,393 | $ | 9,247 | $ | 5,201 | $ | 14,448 | $ | 33 | $ | 14,481 | 22 | % | 6 | % | ||||||||||||||||||||||
(1) Management believes that referring to comparable growth rates is a more useful way to evaluate the underlying performance of Medtronic’s sales. See description of non-GAAP financial measures on page 4 of this release.
(2) Represents the decrease in Covidien revenue for the nine months ended January 23, 2015 as compared to Covidien revenue for the nine months ended December 26, 2014.
(3) Represents the increase in Covidien revenue for the twelve months ended April 25, 2014 as compared to Covidien revenue for the twelve months ended March 28, 2014.
22
MEDTRONIC PLC
FOURTH QUARTER RECONCILIATION OF WORLD WIDE GEOGRAPHIC REPORTED GROWTH TO
WORLD WIDE GEOGRAPHIC COMPARABLE CONSTANT CURRENCY GROWTH (1)
(Unaudited)
(in millions)
A | B | C | D=B+C | E | F=D+E | G = (A-B)/B | H | I=(A-F-H)/F | |||||||||||||||||||||||||||
Medtronic As Reported Three Months Ended April 24, 2015 | Medtronic As Reported Three Months Ended April 25, 2014 | Covidien As Reported Three Months Ended March 28, 2014 | Q4 FY14 Pro Forma Historical Revenue | Non-GAAP Adjustment(2) | Q4 FY14 Comparable Historical Revenue | Q4 FY15 Reported Growth | Currency Impact on Growth | Comparable Constant Currency Growth(1) | |||||||||||||||||||||||||||
U.S. | $ | 1,301 | $ | 1,020 | $ | 110 | $ | 1,130 | $ | 6 | $ | 1,136 | 28 | % | $ | — | 15 | % | |||||||||||||||||
Non-U.S. Developed | 903 | 971 | 32 | 1,003 | 2 | 1,005 | (7 | ) | (156 | ) | 5 | ||||||||||||||||||||||||
Emerging Markets | 392 | 378 | 9 | 387 | — | 387 | 4 | (38 | ) | 11 | |||||||||||||||||||||||||
Cardiac & Vascular Group | 2,596 | 2,369 | 151 | 2,520 | 8 | 2,528 | 10 | (194 | ) | 10 | |||||||||||||||||||||||||
U.S. | 1,230 | — | 1,129 | 1,129 | 28 | 1,157 | NC | — | 6 | ||||||||||||||||||||||||||
Non-U.S. Developed | 856 | — | 917 | 917 | 39 | 956 | NC | (139 | ) | 4 | |||||||||||||||||||||||||
Emerging Markets | 301 | — | 290 | 290 | 15 | 305 | NC | (38 | ) | 11 | |||||||||||||||||||||||||
Minimally Invasive Therapies Group | 2,387 | — | 2,336 | 2,336 | 82 | 2,418 | NC | (177 | ) | 6 | |||||||||||||||||||||||||
U.S. | 1,233 | 1,139 | 48 | 1,187 | 1 | 1,188 | 8 | — | 4 | ||||||||||||||||||||||||||
Non-U.S. Developed | 426 | 442 | 36 | 478 | 1 | 479 | (4 | ) | (72 | ) | 4 | ||||||||||||||||||||||||
Emerging Markets | 195 | 156 | 27 | 183 | 1 | 184 | 25 | (11 | ) | 12 | |||||||||||||||||||||||||
Restorative Therapies Group | 1,854 | 1,737 | 111 | 1,848 | 3 | 1,851 | 7 | (83 | ) | 5 | |||||||||||||||||||||||||
U.S. | 293 | 271 | — | 271 | — | 271 | 8 | — | 8 | ||||||||||||||||||||||||||
Non-U.S. Developed | 139 | 152 | — | 152 | — | 152 | (9 | ) | (25 | ) | 8 | ||||||||||||||||||||||||
Emerging Markets | 35 | 37 | — | 37 | — | 37 | (5 | ) | (4 | ) | 5 | ||||||||||||||||||||||||
Diabetes Group | 467 | 460 | — | 460 | — | 460 | 2 | (29 | ) | 8 | |||||||||||||||||||||||||
U.S. | 4,057 | 2,430 | 1,287 | 3,717 | 35 | 3,752 | 67 | % | — | 8 | |||||||||||||||||||||||||
Non-U.S. Developed | 2,324 | 1,565 | 985 | 2,550 | 42 | 2,592 | 48 | (392 | ) | 5 | |||||||||||||||||||||||||
Emerging Markets | 923 | 571 | 326 | 897 | 16 | 913 | 62 | (91 | ) | 11 | |||||||||||||||||||||||||
TOTAL | $ | 7,304 | $ | 4,566 | $ | 2,598 | $ | 7,164 | $ | 93 | $ | 7,257 | 60 | % | $ | (483 | ) | 7 | % | ||||||||||||||||
(1) Management believes that referring to comparable constant currency growth rates is a more useful way to evaluate the underlying performance of Medtronic’s sales. Constant currency growth, a non-GAAP financial measure, measures the change in revenue between current and prior year periods using average exchange rates in effect during the applicable prior year period. See description of non-GAAP financial measures on page 4 of this release.
(2) Represents the increase in Covidien revenue for the three months ended April 25, 2014 as compared to Covidien revenue for the three months ended March 28, 2014.
23
MEDTRONIC PLC
FISCAL YEAR RECONCILIATION OF WORLD WIDE GEOGRAPHIC REPORTED GROWTH TO
WORLD WIDE GEOGRAPHIC COMPARABLE CONSTANT CURRENCY GROWTH (1)
(Unaudited)
(in millions)
A | B | C=A+B | D | E=C+D | F | G | H=F+G | I | J=H+I | K=(A-F)/F | L | M=(E-J-L)/J | |||||||||||||||||||||||||||||||||||||||
Medtronic As Reported Twelve Months Ended April 24, 2015 | Covidien As Reported Nine Months Ended December 26, 2014 | FY15 Pro Forma Historical Revenue | Non-GAAP Adjustment(2) | FY15 Comparable Historical Revenue | Medtronic As Reported Twelve Months Ended April 25, 2014 | Covidien As Reported Twelve Months Ended March 28, 2014 | FY14 Pro Forma Historical Revenue | Non-GAAP Adjustment(3) | FY14 Comparable Historical Revenue | FY15 Reported Growth | Currency Impact on Growth | Comparable Constant Currency Growth(1) | |||||||||||||||||||||||||||||||||||||||
U.S. | $ | 4,435 | $ | 372 | $ | 4,807 | $ | (4 | ) | $ | 4,803 | $ | 3,877 | $ | 477 | $ | 4,354 | $ | 2 | $ | 4,356 | 14 | % | $ | — | 10 | % | ||||||||||||||||||||||||
Non-U.S. Developed | 3,412 | 94 | 3,506 | — | 3,506 | 3,540 | 117 | 3,657 | 1 | 3,658 | (4 | ) | (221 | ) | 2 | ||||||||||||||||||||||||||||||||||||
Emerging Markets | 1,514 | 31 | 1,545 | — | 1,545 | 1,430 | 39 | 1,469 | (2 | ) | 1,467 | 6 | (78 | ) | 11 | ||||||||||||||||||||||||||||||||||||
Cardiac & Vascular Group | 9,361 | 497 | 9,858 | (4 | ) | 9,854 | 8,847 | 633 | 9,480 | 1 | 9,481 | 6 | (299 | ) | 7 | ||||||||||||||||||||||||||||||||||||
U.S. | 1,230 | 3,593 | 4,823 | (19 | ) | 4,804 | — | 4,537 | 4,537 | 29 | 4,566 | NC | — | 5 | |||||||||||||||||||||||||||||||||||||
Non-U.S. Developed | 856 | 2,696 | 3,552 | (64 | ) | 3,488 | — | 3,583 | 3,583 | (4 | ) | 3,579 | NC | (234 | ) | 4 | |||||||||||||||||||||||||||||||||||
Emerging Markets | 301 | 972 | 1,273 | (25 | ) | 1,248 | — | 1,181 | 1,181 | 5 | 1,186 | NC | (87 | ) | 13 | ||||||||||||||||||||||||||||||||||||
Minimally Invasive Therapies Group | 2,387 | 7,261 | 9,648 | (108 | ) | 9,540 | — | 9,301 | 9,301 | 30 | 9,331 | NC | (321 | ) | 6 | ||||||||||||||||||||||||||||||||||||
U.S. | 4,569 | 158 | 4,727 | (12 | ) | 4,715 | 4,389 | 187 | 4,576 | 2 | 4,578 | 4 | — | 3 | |||||||||||||||||||||||||||||||||||||
Non-U.S. Developed | 1,556 | 106 | 1,662 | (2 | ) | 1,660 | 1,564 | 142 | 1,706 | (1 | ) | 1,705 | (1 | ) | (109 | ) | 4 | ||||||||||||||||||||||||||||||||||
Emerging Markets | 626 | 86 | 712 | (1 | ) | 711 | 548 | 112 | 660 | — | 660 | 14 | (22 | ) | 11 | ||||||||||||||||||||||||||||||||||||
Restorative Therapies Group | 6,751 | 350 | 7,101 | (15 | ) | 7,086 | 6,501 | 441 | 6,942 | 1 | 6,943 | 4 | (131 | ) | 4 | ||||||||||||||||||||||||||||||||||||
U.S. | 1,071 | — | 1,071 | — | 1,071 | 981 | — | 981 | — | 981 | 9 | — | 9 | ||||||||||||||||||||||||||||||||||||||
Non-U.S. Developed | 548 | — | 548 | — | 548 | 548 | — | 548 | — | 548 | — | (34 | ) | 6 | |||||||||||||||||||||||||||||||||||||
Emerging Markets | 143 | — | 143 | — | 143 | 128 | — | 128 | — | 128 | 12 | (9 | ) | 19 | |||||||||||||||||||||||||||||||||||||
Diabetes Group | 1,762 | — | 1,762 | — | 1,762 | 1,657 | — | 1,657 | — | 1,657 | 6 | (43 | ) | 9 | |||||||||||||||||||||||||||||||||||||
U.S. | 11,305 | 4,123 | 15,428 | (35 | ) | 15,393 | 9,247 | 5,201 | 14,448 | 33 | 14,481 | 22 | % | — | 6 | ||||||||||||||||||||||||||||||||||||
Non-U.S. Developed | 6,372 | 2,896 | 9,268 | (66 | ) | 9,202 | 5,652 | 3,842 | 9,494 | (4 | ) | 9,490 | 13 | (598 | ) | 3 | |||||||||||||||||||||||||||||||||||
Emerging Markets | 2,584 | 1,089 | 3,673 | (26 | ) | 3,647 | 2,106 | 1,332 | 3,438 | 3 | 3,441 | 23 | % | (196 | ) | 12 | |||||||||||||||||||||||||||||||||||
TOTAL | $ | 20,261 | $ | 8,108 | $ | 28,369 | $ | (127 | ) | $ | 28,242 | $ | 17,005 | $ | 10,375 | $ | 27,380 | $ | 32 | $ | 27,412 | 19 | % | $ | (794 | ) | 6 | % | |||||||||||||||||||||||
(1) Management believes that referring to comparable constant currency growth rates is a more useful way to evaluate the underlying performance of Medtronic’s sales. Constant currency growth, a non-GAAP financial measure, measures the change in revenue between current and prior year periods using average exchange rates in effect during the applicable prior year period. See description of non-GAAP financial measures on page 4 of this release.
(2) Represents the decrease in Covidien revenue for the nine months ended January 23, 2015 as compared to Covidien revenue for the nine months ended December 26, 2014.
(3) Represents the increase (decrease) in Covidien revenue for the twelve months ended April 25, 2014 as compared to Covidien revenue for the twelve months ended March 28, 2014.
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MEDTRONIC PLC
FIRST QUARTER FISCAL YEAR 2015 RECONCILIATION OF WORLD WIDE REPORTED REVENUE TO
WORLD WIDE COMPARABLE HISTORICAL REVENUE (1)
(Unaudited)
(in millions)
A | B | C=A+B | D | E=C+D | |||||||||||||||
Medtronic As Reported Three Months Ended July 25, 2014 | Covidien As Reported Three Months Ended June 27, 2014 | Q1 FY15 Pro Forma Historical Revenue | Non-GAAP Adjustment(2) | Q1 FY15 Comparable Historical Revenue | |||||||||||||||
Cardiac & Vascular Group | $ | 2,254 | $ | 166 | $ | 2,420 | $ | (2 | ) | $ | 2,418 | ||||||||
Cardiac Rhythm & Heart Failure | 1,256 | — | 1,256 | — | 1,256 | ||||||||||||||
Coronary & Structural Heart | 766 | — | 766 | — | 766 | ||||||||||||||
Aortic & Peripheral Vascular | 232 | 166 | 398 | (2 | ) | 396 | |||||||||||||
Minimally Invasive Therapies Group | — | 2,409 | 2,409 | (15 | ) | 2,394 | |||||||||||||
Surgical Solutions | — | 1,305 | 1,305 | (3 | ) | 1,302 | |||||||||||||
Patient Monitoring & Recovery | — | 1,104 | 1,104 | (12 | ) | 1,092 | |||||||||||||
Restorative Therapies Group | 1,603 | 113 | 1,716 | — | 1,716 | ||||||||||||||
Spine | 743 | — | 743 | — | 743 | ||||||||||||||
Neuromodulation | 479 | — | 479 | — | 479 | ||||||||||||||
Surgical Technologies | 381 | — | 381 | — | 381 | ||||||||||||||
Neurovascular | — | 113 | 113 | — | 113 | ||||||||||||||
Diabetes Group | 416 | — | 416 | — | 416 | ||||||||||||||
TOTAL | $ | 4,273 | $ | 2,688 | $ | 6,961 | $ | (17 | ) | $ | 6,944 | ||||||||
(1) Management believes that referring to comparable historical revenue is a more useful way to evaluate the underlying performance of Medtronic’s sales. See description of non-GAAP financial measures on page 4 of this release.
(2) Represents the decrease in Covidien revenue for the three months ended July 25, 2014 as compared to Covidien revenue for the three months ended June 27, 2014.
25
MEDTRONIC PLC
FIRST QUARTER FISCAL YEAR 2015 RECONCILIATION OF U.S. REPORTED REVENUE TO
U.S. COMPARABLE HISTORICAL REVENUE (1)
(Unaudited)
(in millions)
A | B | C=A+B | D | E=C+D | |||||||||||||||
Medtronic As Reported Three Months Ended July 25, 2014 | Covidien As Reported Three Months Ended June 27, 2014 | Q1 FY15 Pro Forma Historical Revenue | Non-GAAP Adjustment(2) | Q1 FY15 Comparable Historical Revenue | |||||||||||||||
Cardiac & Vascular Group | $ | 1,019 | $ | 124 | $ | 1,143 | $ | (3 | ) | $ | 1,140 | ||||||||
Cardiac Rhythm & Heart Failure | 654 | — | 654 | — | 654 | ||||||||||||||
Coronary & Structural Heart | 281 | — | 281 | — | 281 | ||||||||||||||
Aortic & Peripheral Vascular | 84 | 124 | 208 | (3 | ) | 205 | |||||||||||||
Minimally Invasive Therapies Group | — | 1,159 | 1,159 | (22 | ) | 1,137 | |||||||||||||
Surgical Solutions | — | 498 | 498 | (7 | ) | 491 | |||||||||||||
Patient Monitoring & Recovery | — | 661 | 661 | (15 | ) | 646 | |||||||||||||
Restorative Therapies Group | 1,072 | 52 | 1,124 | — | 1,124 | ||||||||||||||
Spine | 506 | — | 506 | — | 506 | ||||||||||||||
Neuromodulation | 322 | — | 322 | — | 322 | ||||||||||||||
Surgical Technologies | 244 | — | 244 | — | 244 | ||||||||||||||
Neurovascular | — | 52 | 52 | — | 52 | ||||||||||||||
Diabetes Group | 242 | — | 242 | — | 242 | ||||||||||||||
TOTAL | $ | 2,333 | $ | 1,335 | $ | 3,668 | $ | (25 | ) | $ | 3,643 | ||||||||
(1) Management believes that referring to comparable historical revenue is a more useful way to evaluate the underlying performance of Medtronic’s sales. See description of non-GAAP financial measures on page 4 of this release.
(2) Represents the decrease in Covidien revenue for the three months ended July 25, 2014 as compared to Covidien revenue for the three months ended June 27, 2014.
26
MEDTRONIC PLC
FIRST QUARTER FISCAL YEAR 2015 RECONCILIATION OF WORLD WIDE GEOGRAPHIC REVENUE TO
WORLD WIDE GEOGRAPHIC COMPARABLE HISTORICAL REVENUE (1)
(Unaudited)
(in millions)
A | B | C=A+B | D | E=C+D | |||||||||||||||
Medtronic As Reported Three Months Ended July 25, 2014 | Covidien As Reported Three Months Ended June 27, 2014 | Q1 FY15 Pro Forma Historical Revenue | Non-GAAP Adjustment(2) | Q1 FY15 Comparable Historical Revenue | |||||||||||||||
U.S. | $ | 1,019 | $ | 124 | $ | 1,143 | $ | (3 | ) | $ | 1,140 | ||||||||
Non-U.S. Developed | 860 | 32 | 892 | — | 892 | ||||||||||||||
Emerging Markets | 375 | 10 | 385 | 1 | 386 | ||||||||||||||
Cardiac & Vascular Group | 2,254 | 166 | 2,420 | (2 | ) | 2,418 | |||||||||||||
U.S. | — | 1,159 | 1,159 | (22 | ) | 1,137 | |||||||||||||
Non-U.S. Developed | — | 930 | 930 | 10 | 940 | ||||||||||||||
Emerging Markets | — | 320 | 320 | (3 | ) | 317 | |||||||||||||
Minimally Invasive Therapies Group | — | 2,409 | 2,409 | (15 | ) | 2,394 | |||||||||||||
U.S. | 1,072 | 52 | 1,124 | — | 1,124 | ||||||||||||||
Non-U.S. Developed | 390 | 35 | 425 | 1 | 426 | ||||||||||||||
Emerging Markets | 141 | 26 | 167 | (1 | ) | 166 | |||||||||||||
Restorative Therapies Group | 1,603 | 113 | 1,716 | — | 1,716 | ||||||||||||||
U.S. | 242 | — | 242 | — | 242 | ||||||||||||||
Non-U.S. Developed | 143 | — | 143 | — | 143 | ||||||||||||||
Emerging Markets | 31 | — | 31 | — | 31 | ||||||||||||||
Diabetes Group | 416 | — | 416 | — | 416 | ||||||||||||||
U.S. | 2,333 | 1,335 | 3,668 | (25 | ) | 3,643 | |||||||||||||
Non-U.S. Developed | 1,393 | 997 | 2,390 | 11 | 2,401 | ||||||||||||||
Emerging Markets | 547 | 356 | 903 | (3 | ) | 900 | |||||||||||||
TOTAL | $ | 4,273 | $ | 2,688 | $ | 6,961 | $ | (17 | ) | $ | 6,944 | ||||||||
(1) Management believes that referring to comparable historical revenue is a more useful way to evaluate the underlying performance of Medtronic’s sales. See description of non-GAAP financial measures on page 4 of this release.
(2) Represents the (decrease) increase in Covidien revenue for the three months ended July 25, 2014 as compared to Covidien revenue for the three months ended June 27, 2014.
27