Medtronic 2016 Annual Report Download - page 40

Table of Contents
37
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Understanding Our Financial Information
The following discussion and analysis provides information management believes to be relevant to understanding the financial
condition and results of operations of the Company and its subsidiaries. You should read this discussion and analysis along with
our consolidated financial statements and related notes thereto as of April 29, 2016 and April 24, 2015 and for each of the three
fiscal years ended April 29, 2016, April 24, 2015, and April 25, 2014.
On January 26, 2015, pursuant to the Transaction Agreement, the Company acquired Covidien and Medtronic, Inc. (collectively,
the Transactions). Following the consummation of the Transactions, Medtronic, Inc. and Covidien became subsidiaries of the
Company. In connection with the Transactions, the Company became the successor registrant to Medtronic, Inc. and re-registered
as a public limited company organized under the laws of Ireland. For the fiscal year ended April 24, 2015, the results of operations
of Covidien are reflected in Medtronic’s results of operations for only the fourth quarter due to the timing of the Transactions,
which will affect comparability throughout this Annual Report on Form 10-K.
For further information regarding the Acquisition, see the section entitled "Acquisition and Investments - Acquisition of Covidien
plc in Fiscal Year 2015" contained in "Item 1. Business" and Note 2 to the consolidated financial statements in “Item 8. Financial
Statements and Supplementary Data” in this Annual Report on Form 10-K.
Organization of Financial Information
Management’s discussion and analysis provides material historical and prospective disclosures designed to enable investors and
other users to assess our financial condition and results of operations.
Statements that are forward-looking and not historical in nature are subject to risks and uncertainties. See "Item 1A. Risk Factors"
in this Annual Report on Form 10-K and "Cautionary Factors That May Affect Future Results" in this management's discussion
and analysis for more information.
The consolidated financial statements are presented within Item 8 of this Annual Report on Form 10-K and include the consolidated
statements of income, consolidated statements of comprehensive income, consolidated balance sheets, consolidated statements of
shareholders’ equity, consolidated statements of cash flows, and the related notes, which are an integral part of the consolidated
financial statements.
Financial Trends
Throughout this management’s discussion and analysis, we present certain financial measures that management uses to evaluate
the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not
presented in our financial statements prepared in accordance with generally accepted accounting principles in the United States
(U.S. GAAP). These financial measures are considered non-GAAP financial measures.
Management uses 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 non-GAAP financial measures provide useful information to
investors regarding the underlying business trends and performance of the Company’s ongoing operations and are useful for period
over period comparisons of such operations. The non-GAAP financial measures reflect an additional way of viewing aspects of
the Company’s operations. Investors should not consider results reflecting non-GAAP financial measures in isolation from, or as
a substitute for, financial information prepared in accordance with U.S. GAAP and are cautioned that Medtronic may calculate
results reflecting non-GAAP financial measures in a manner that is different from other companies.
The GAAP to Non-GAAP Reconciliation presents non-GAAP financial measures that exclude the impact of charges or gains that
contribute to or reduce earnings and may affect financial trends but which include charges or benefits that result from transactions
or events that management believes may or may not recur with similar materiality or impact to our operations in future periods
(Non-GAAP Adjustments).
In the event there is a Non-GAAP Adjustment recognized in our operating results, the tax cost or benefit attributable to that item
is separately calculated and recorded. Because the effective rate can be significantly impacted by these Non-GAAP Adjustments
that take place in the period, we often refer to our tax rate using both the effective rate and the non-GAAP nominal tax rate (Non-
GAAP Nominal Tax Rate). The Non-GAAP Nominal Tax Rate is calculated as the provision for income taxes, adjusted for the
impact of Non-GAAP Adjustments, as a percentage of income from operations before income taxes, excluding Non-GAAP
Adjustments.