Medtronic 2016 Annual Report Download - page 58

Table of Contents
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During fiscal year 2015, we recorded $33 million in operational tax benefits. The retroactive renewal and extension of the U.S.
federal research and development tax credit resulted in a $12 million operational tax benefit for fiscal year 2015. In addition, we
recorded a $9 million benefit associated with foreign dividend distributions, and a $12 million net benefit associated with the
resolution of certain income tax audits, finalization of certain tax returns, and changes to uncertain tax position reserves.
An increase in our Non-GAAP Nominal Tax Rate of 1 percent would result in an additional income tax provision for the fiscal
years ended April 29, 2016 and April 24, 2015 of approximately $74 million and $58 million, respectively.
Certain Tax Adjustments
During fiscal year 2016 we recorded certain tax adjustments of $417 million. A $442 million certain tax adjustment charge was
recorded, which primarily related to the U.S. income tax expense resulting from our completion of an internal reorganization of
the ownership of certain legacy Covidien businesses that reduced the cash and investments held by our U.S.-controlled non-U.S.
subsidiaries (the Internal Reorganization). As a result of the Internal Reorganization, approximately $9.7 billion of cash, cash
equivalents and investments in marketable debt and equity securities previously held by U.S.-controlled non-U.S. subsidiaries
became available for general corporate purposes. This charge was partially offset by a $25 million tax benefit associated with the
disposition of a wholly owned U.S. subsidiary. The $417 million net certain tax adjustment was recorded in the provision for
income taxes in the consolidated statement of income for fiscal year 2016.
In fiscal year 2015, we recorded certain tax adjustments of $349 million, of which $329 million related to the resolution of the
Kyphon Inc. (Kyphon) acquisition-related issues with the U.S. Internal Revenue Service (IRS). In addition, the certain tax
adjustments include $20 million related to a taxable gain associated with the Covidien acquisition. The $349 million certain tax
adjustment was recorded in the provision for income taxes in the consolidated statement of income for fiscal year 2015.
In fiscal year 2014, we recorded a $63 million certain tax benefit associated with the resolution of certain issues in the fourth
quarter of fiscal year 2014 with the IRS relating to their review of our fiscal year 2009 through 2011 domestic income tax returns.
The $63 million certain tax benefit was recorded in the provision for income taxes in the consolidated statement of income for
fiscal year 2014.
Certain tax adjustments will affect the comparability of our operating results between periods, therefore, we consider these Non-
GAAP Adjustments. Refer to the "Executive Level Overview" section of this Management's Discussion and Analysis for further
analysis related to these adjustments.
Liquidity and Capital Resources
Fiscal Year
(in millions) 2016 2015
Working capital $ 16,435 $ 21,671
Current ratio(1) 3.3:1.0 3.4:1.0
Cash, cash equivalents, and current investments $ 12,634 $ 19,480
Short-term borrowings and long-term debt 31,240 36,186
Net cash position(2) $(18,606) $ (16,706)
Total shareholder's equity $ 52,063 $ 53,230
Debt-to-total capital ratio(3) 38% 40%
(1) The ratio of current assets to current liabilities.
(2) The sum of cash, cash equivalents, and current investments less short-term borrowings and long-term debt and excludes non-current
investments that are not considered readily available to fund current operations.
(3) The ratio of total debt (short-term borrowings and long-term debt) to total capitalization (total debt and total shareholder's equity).
As of April 29, 2016, we believe our balance sheet and liquidity provide us with flexibility in the future. Approximately $5 billion
of our cash, cash equivalents, and investments held by certain U.S.-controlled non-U.S. subsidiaries may not represent available
liquidity for general corporate purposes. However, we believe our other existing cash, cash equivalents and investments, as well
as our $3.5 billion revolving credit facility and related commercial paper program (no commercial paper outstanding as of April 29,
2016), will satisfy our foreseeable working capital requirements for at least the next 12 months. We regularly review our capital
needs and consider various investing and financing alternatives to support our requirements.
Our net cash position in fiscal year 2016 decreased by $1.9 billion as compared to fiscal year 2015. See the “Summary of Cash
Flows” section of this management’s discussion and analysis for further information.