Medtronic plc Revenue Reporting Changes and Combined Historical Revenue, Condensed Statement of Earnings, and Non-GAAP Reconciliations February 17, 2015 Updated to Include Combined Q3 FY15 Results 1
TABLE OF CONTENTS Slide(s) Disclaimers 3-4 Overview: Revenue Reporting Changes 5 Prior and New Views 6-15 Combined Historical Revenue Worldwide Combined Revenue Table 17 U.S. Combined Revenue Table 18 Geographic Combined Revenue Table 19 Combined Historical Condensed Statement of Earnings and Non-GAAP Reconciliations Overview 21 Q1 FY14 22-23 Q2 FY14 24-25 Q3 FY14 26-27 Q4 FY14 28-29 TOTAL FY14 30-31 Q1 FY15 32-33 Q2 FY15 34-35 Q3 FY15 36-37 Footnotes 38 Medtronic plc Group Product Line Mapping Cardiac & Vascular Group (CVG) 40 Covidien Group 41 Restorative Therapies Group (RTG) 42 Diabetes Group 43 2
DISCLAIMERS Forward Looking Statements Any statements in this presentation that are not historical or current facts are forward-looking statements. Any forward-looking statements contained in the presentation are based upon our historical performance and on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks, uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these statements. Accordingly, you should not place undue reliance on any forward-looking statements. More information about potential factors that could affect our business and financial results is included in filings with the SEC by Medtronic, Inc. ( Medtronic and such filings, the Medtronic Filings ) and Covidien plc ( Covidien and such filings, the Covidien Filings ), including each company s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and the Registration Statement on Form S-4 filed with the SEC by Medtronic Holdings Limited (now known as Medtronic plc) on November 20, 2014. No Reliance, No Update and Use Of Information The Company undertakes no obligation to update the forward-looking information or any of the information contained in this presentation, even in the event that the information becomes materially inaccurate. Certain information contained in this presentation 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, the sections entitled Combined Historical Revenue and Combined Historical Condensed Statements of Earnings and Non-GAAP Reconciliations (collectively, the Combined Financial Information ). Use of different methods for preparing, calculating or presenting information may lead to different results and such differences may be material. 3
DISCLAIMERS Basis of Preparation Certain amounts included in this presentation, including the Combined Financial Information, are presented strictly for illustrative purposes and were not prepared in compliance with Regulation S-X as promulgated by the SEC. In particular, the Combined Financial Information does not and is not intended to comply with Article 11 of Regulation S-X in respect of pro forma financial information, including in the following ways: the Combined Financial Information excludes the pro forma adjustment to record interest expense from debt financing obtained by Medtronic to fund the cash consideration to be transferred in the transaction and excludes the pro forma adjustment to record the estimated amortization expense on the definite-lived intangible assets; additionally, the periods presented within the Combined Financial Information included in this presentation differ from those required by Article 11 of Regulation S-X. The Combined Financial Information should not be viewed as a substitute for full financial statements prepared in accordance with GAAP and Regulation S-X, as it could differ, including materially, from pro forma financial statements presented in accordance therewith. The Combined Financial Information should be read in conjunction with the accompanying notes and assumptions as well as the historical consolidated financial statements of Medtronic and Covidien and related Medtronic Filings and Covidien Filings. The Combined Financial Information has been derived from the Medtronic Filings and the Covidien Filings, with the exception of certain reclassifications of Covidien s historical revenue to conform to Medtronic s segment and geographical reporting in the Combined Historical Revenue tables. The Combined Financial Information is preliminary and is based upon available information and certain assumptions which management believes are reasonable under the circumstances and which are described herein. Actual results may differ materially from the assumptions used to prepare the Combined Financial Information. The Combined Financial Information is not necessarily indicative of the combined financial position or results of operations that would have been realized had the Covidien acquisition occurred as of the dates or for the periods indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that Medtronic plc will experience after the Covidien acquisition. In addition, because we were not involved in the preparation of the Covidien Filings, we cannot assure you of the accuracy or completeness of the Covidien Filings. As a result, the Combined Financial Information is subject to inherent uncertainties and risks and may be based on underlying assumptions and estimates that may impact the performance of Covidien and that may not in all cases be identified in the Covidien Filings. Use of Non-GAAP Information There are non-gaap measures used in this presentation, including Combined Cash Earnings Per Share ( Combined Cash EPS ). Our management believes that the use of Combined Cash EPS provides key performance metrics useful for evaluating operating performance and assessing the profitability of our core business. Our management further believes that the use of pro forma Combined Cash EPS provides additional relevant information for comparison of current earnings per share to that of prior periods. Reconciliations of Combined Cash EPS to Combined Diluted Earnings Per Share ( Combined Diluted EPS ) are provided in the section entitled Combined Historical Condensed Statements of Earnings and Non- GAAP Reconciliations. 4
OVERVIEW OF WHAT IS CHANGING AND WHY REVENUE REPORTING CHANGES Reportable Segments: Legacy Medtronic, Inc. reportable segments remain: Cardiac & Vascular Group (CVG), Restorative Therapies Group (RTG) and Diabetes Group Addition of fourth group: Covidien Group Reported as two divisions: Surgical Solutions and Medical Care Solutions Covidien s legacy Vascular Therapies segment allocated to CVG, RTG and Covidien Group (as below) Product Level Changes: No product level changes to legacy Medtronic, Inc. Changes to legacy Covidien are as follows: Covidien s legacy Peripheral Stents, Directional Atherectomy and Chronic Venous Insufficiency product lines move from legacy Covidien Peripheral Vascular to CVG s Aortic & Peripheral Vascular business Covidien s legacy Compression, Dialysis and Other Peripheral product lines move from legacy Covidien Peripheral Vascular to Covidien Group s Medical Care Solutions business Covidien s legacy Neurovascular division moves from legacy Covidien Vascular Therapies to RTG Geographic Region Reporting: Intend to report 3 geographic regions going forward: US, Non-US Developed and Emerging Markets Medtronic plc includes Puerto Rico in the US line (consistent with legacy Medtronic, Inc.), whereas legacy Covidien plc included Puerto Rico in their Non-US Developed line Medtronic plc includes Israel, Greece and Korea in the Non-US Developed line (consistent with legacy Medtronic, Inc.), whereas legacy Covidien plc included them in their Emerging Markets line Medtronic plc s definition of Emerging Markets is consistent with how legacy Medtronic, Inc. defined Emerging Markets Rationale: Align revenue reporting with new, four group structure Provide appropriate level of detail to understand performance given size of Medtronic plc, including detailed look at growth in the U.S. and Emerging Markets 5
MEDTRONIC, INC. REPORTABLE SEGMENTS: PRIOR VIEW Medtronic, Inc. Cardiac & Vascular Group (52%) Restorative Therapies Group (38%) Diabetes Diabetes Group (10%) Cardiac Rhythm & Heart Failure (29%) Coronary & Structural Heart (18%) Aortic & Peripheral Vascular (5%) Spine (18%) Neuromodulation (11%) Surgical Technologies (9%) High Power (16%) Low Power (11%) AF & Other (2%) Coronary (11%) Structural Heart (7%) Core Spine (13%) Interventional Spine (2%) BMP (3%) Legacy Medtronic, Inc. reported revenue segments ranged from 2% to 29% of WW FY14 sales The average percentage of WW FY14 sales for these segments was 11% Note: Boxes represent revenue reporting lines. 6
COVIDIEN PLC REPORTABLE SEGMENTS: PRIOR VIEW Covidien plc Vascular Therapies Respiratory & Patient Care Surgical Solutions Peripheral Vascular Patient Monitoring Advanced Surgical Neurovascular Airway & Ventilation General Surgical Nursing Care Note: Boxes represent revenue reporting lines. Patient Care 7
MEDTRONIC PLC REPORTABLE SEGMENTS: NEW VIEW Medtronic plc Cardiac & Vascular Group (35%) Covidien Group (34%) Restorative Therapies Group (25%) Diabetes Group (6%) Cardiac Rhythm & Heart Failure (18%) Surgical Solutions (18%) Spine (11%) Each box represents revenue lines that Medtronic plc intends to report Coronary & Structural Heart (11%) Aortic & Peripheral Vascular (6%) Medical Care Solutions (16%) Neuromodulation (7%) Surgical Technologies (6%) Additional detail related to the composition of these reported lines is provided on subsequent slides Consistent with the level of reporting detail provided by legacy Medtronic, Inc.: Medtronic plc reported revenue segments range from 2% to 18% of WW FY14 combined sales Neurovascular (2%) The average percentage of WW FY14 combined sales for these segments was 11% 8
VASCULAR THERAPIES MAPPING: PRIOR VS NEW VIEW PRIOR VIEW NEW VIEW Peripheral Stents Vascular Therapies Directional Artherectomy Chronic Venous Insufficency Aortic & Peripheral Vascular (CVG) Also includes legacy Medtronic, Inc. Aortic & Peripheral businesses Peripheral Vascular Compression Dialysis Medical Care Solutions (Covidien Group) Other Peripheral Also includes legacy Covidien Respiratory & Patient Care businesses Neurovascular Neurovascular (RTG) 9
SURGICAL SOLUTIONS MAPPING: PRIOR VS NEW VIEW PRIOR VIEW Surgical Solutions Advanced Surgical General Surgical NEW VIEW Note: Boxes represent revenue reporting lines. Surgical Solutions (Covidien Group) Advanced Surgical and General Surgical collapsed into one reporting line No change to the underlying components of legacy Surgical Solutions vs new Surgical Solutions 10
MEDICAL CARE SOLUTIONS MAPPING: PRIOR VS NEW VIEW PRIOR VIEW NEW VIEW Peripheral Vascular Peripheral Stents Directional Artherectomy Chronic Venous Insufficency Aortic & Peripheral Vascular (CVG) Also includes legacy Medtronic, Inc. Aortic & Peripheral businesses Respiratory & Patient Care Patient Monitoring Airway & Ventilation Compression Dialysis Other Peripheral Medical Care Solutions (Covidien Group) Nursing Care Patient Care 11
CARDIAC RHYTHM & HEART FAILURE MAPPING: PRIOR VS NEW VIEW PRIOR VIEW Cardiac Rhythm & Heart Failure High Power Low Power AF & Other NEW VIEW Note: Boxes represent revenue reporting lines. Cardiac Rhythm & Heart Failure (CVG) High Power, Low Power and AF & Other collapsed into one reporting line No change to the underlying components of legacy CRHF vs new CRHF 12
CORONARY & STRUCTURAL HEART MAPPING: PRIOR VS NEW VIEW PRIOR VIEW Coronary & Structural Heart Coronary Structural Heart NEW VIEW Note: Boxes represent revenue reporting lines. Coronary & Structural Heart (CVG) Coronary and Structural Heart collapsed into one reporting line No change to the underlying components of legacy Coronary & Structural Heart vs new Coronary & Structural Heart 13
CORONARY & STRUCTURAL HEART MAPPING: PRIOR VS NEW VIEW PRIOR VIEW Spine Core Spine Interventional Spine BMP NEW VIEW Note: Boxes represent revenue reporting lines. Spine (RTG) Core Spine, Interventional Spine and BMP collapsed into one reporting line No change to the underlying components of legacy Spine vs new Spine 14
GEOGRAPHIC REGION REPORTING: PRIOR VS NEW VIEW PRIOR VIEW Medtronic, Inc. Covidien plc United States International United States Non-U.S. Developed Markets* Emerging Markets** NEW VIEW Medtronic plc United States* Non-U.S. Developed Markets** Emerging Markets * Medtronic plc includes Puerto Rico in the US line (consistent with legacy Medtronic, Inc.), whereas legacy Covidien plc included Puerto Rico in its Non-US Developed line ** Medtronic plc includes Israel, Greece and Korea in the Non-US Developed line (consistent with legacy Medtronic, Inc.), whereas legacy Covidien plc included them in its Emerging Markets line 15
Combined Historical Revenue Unaudited 16
WORLDWIDE COMBINED REVENUE (UNAUDITED) MEDTRONIC PLC COMBINED HISTORICAL REVENUE: WORLDWIDE The data in this table has been intentionally rounded to the nearest million and, therefore, the quarterly revenue may not sum to the year to date revenue. (1) Includes Medtronic Services and Solutions (2) Includes portion of legacy Covidien Peripheral Vascular (3) Legacy Covidien Neurovascular moved to Restorative Therapies Group (a) Includes Medtronic's revenue for the three months ended July 26, 2013 and Covidien's revenue for the three months ended June 28, 2013. (b) Includes Medtronic's revenue for the three months ended October 25, 2013 and Covidien's revenue for the three months ended September 27, 2013. (c) Includes Medtronic's revenue for the three months ended January 24, 2014 and Covidien's revenue for the three months ended December 27, 2013. (d) Includes Medtronic's revenue for the three months ended April 25, 2014 and Covidien's revenue for the three months ended March 28, 2014. (e) Includes Medtronic's revenue for the fiscal year ended April 25, 2014 and Covidien's revenue for the twelve months ended March 28, 2014. (f) Includes Medtronic's revenue for the three months ended July 25, 2014 and Covidien's revenue for the three months ended June 27, 2014. (g) Includes Medtronic's revenue for the three months ended October 24, 2014 and Covidien's revenue for the three months ended September 26, 2014. (h) Includes Medtronic's revenue for the three months ended January 23, 2015 and Covidien's revenue for the three months ended December 26, 2014. 17
UNITED STATES COMBINED REVENUE (UNAUDITED) MEDTRONIC PLC COMBINED HISTORICAL REVENUE: UNITED STATES The data in this table has been intentionally rounded to the nearest million and, therefore, the quarterly revenue may not sum to the year to date revenue. (1) Includes Medtronic Services and Solutions (2) Includes portion of legacy Covidien Peripheral Vascular (3) Legacy Covidien Neurovascular moved to Restorative Therapies Group (a) Includes Medtronic's revenue for the three months ended July 26, 2013 and Covidien's revenue for the three months ended June 28, 2013. (b) Includes Medtronic's revenue for the three months ended October 25, 2013 and Covidien's revenue for the three months ended September 27, 2013. (c) Includes Medtronic's revenue for the three months ended January 24, 2014 and Covidien's revenue for the three months ended December 27, 2013. (d) Includes Medtronic's revenue for the three months ended April 25, 2014 and Covidien's revenue for the three months ended March 28, 2014. (e) Includes Medtronic's revenue for the fiscal year ended April 25, 2014 and Covidien's revenue for the twelve months ended March 28, 2014. (f) Includes Medtronic's revenue for the three months ended July 25, 2014 and Covidien's revenue for the three months ended June 27, 2014. (g) Includes Medtronic's revenue for the three months ended October 24, 2014 and Covidien's revenue for the three months ended September 26, 2014. (h) Includes Medtronic's revenue for the three months ended January 23, 2015 and Covidien's revenue for the three months ended December 26, 2014. 18
U.S., NON-U.S. DEVELOPED & EMERGING MARKETS COMBINED REVENUE (UNAUDITED) MEDTRONIC PLC COMBINED HISTORICAL REVENUE: GEOGRAPHIC The data in this table has been intentionally rounded to the nearest million and, therefore, the quarterly revenue may not sum to the year to date revenue. (1) Includes Medtronic Services and Solutions (2) Includes portion of legacy Covidien Peripheral Vascular (3) Legacy Covidien Neurovascular moved to Restorative Therapies Group (a) Includes Medtronic's revenue for the three months ended July 26, 2013 and Covidien's revenue for the three months ended June 28, 2013. (b) Includes Medtronic's revenue for the three months ended October 25, 2013 and Covidien's revenue for the three months ended September 27, 2013. (c) Includes Medtronic's revenue for the three months ended January 24, 2014 and Covidien's revenue for the three months ended December 27, 2013. (d) Includes Medtronic's revenue for the three months ended April 25, 2014 and Covidien's revenue for the three months ended March 28, 2014. (e) Includes Medtronic's revenue for the fiscal year ended April 25, 2014 and Covidien's revenue for the twelve months ended March 28, 2014. (f) Includes Medtronic's revenue for the three months ended July 25, 2014 and Covidien's revenue for the three months ended June 27, 2014. (g) Includes Medtronic's revenue for the three months ended October 24, 2014 and Covidien's revenue for the three months ended September 26, 2014. (h) Includes Medtronic's revenue for the three months ended January 23, 2015 and Covidien's revenue for the three months ended December 26, 2014. 19
Combined Historical Condensed Statements of Earnings and Non-GAAP Reconciliations Unaudited 20
OVERVIEW AND IMPORTANT DETAIL P&L Overview: For the purposes of simplifying the combined P&Ls in these statements, we ve condensed some line items as detailed below None of these simplifications affected the final non-gaap P&L numbers, in this presentation Legacy Medtronic, Inc. line items condensed into SG&A: SG &A Special Charges Acquisition-related items Legacy Covidien plc line items condensed into SG&A: SG & A Impairment of in-process research and development Other legacy Covidien condensed items: Other (expense) income, net and Loss (gain) on divestiture, net condensed into Other Income/Expense Interest Expense and Interest Income condensed into Interest expense, net Going forward, these line items will be broken out on Medtronic plc s P&L, consistent with legacy Medtronic, Inc. s presentation Going forward, these line items will be broken out on Medtronic plc s GAAP P&L, consistent with legacy Medtronic, Inc. s presentation, including IP R&D, which would be located in Acquisition-related items Going forward, these line items will be presented consistent with legacy Medtronic, Inc. s presentation 21
UNAUDITED CONDENSED COMBINED STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED JULY 26, 2013 Q1 FY14: MEDTRONIC PLC COMBINED HISTORICAL STATEMENT OF EARNINGS (1) For the three months ended July 26, 2013 (2) For the three months ended June 28, 2013 (3) Combined weighted average shares outstanding have been calculated as if the shares to be issued in the transaction had been issued and outstanding as of April 27, 2013, the beginning of fiscal year 2014. (4) See accompanying footnotes (Slide 35 of this deck) for additional information on reclassification adjustments. 22
FOR THE THREE MONTHS ENDED JULY 26, 2013 (IN MILLIONS, EXCEPT PER SHARE DATA) Q1 FY14: MEDTRONIC PLC NON-GAAP RECONCILIATION (UNAUDITED) (1) For the three months ended July 26, 2013 (2) For the three months ended June 28, 2013 (3) Combined Cash EPS is calculated as diluted EPS excluding Medtronic and Covidien reported non-gaap adjustments and combined amortization of intangible assets. (a) To exclude the impact of a charitable cash donation made to the Medtronic Foundation. (b) To exclude the impact of Medtronic's restructuring charges, net. (c) To exclude impact of Medtronic's acquisition-related items, primarily related to adjustments in Ardian, Inc. (Ardian) contingent consideration. (d) To exclude the impact of Covidien's restructuring charges, net, including $1 million of restructuring-related accelerated depreciation included in cost of products sold. (e) To exclude Covidien acquisition-related costs, primarily the gain associated with Covidien's acquisition of CV Ingenuity. (f) To exclude the non-interest portion of the impact of Covidien's tax sharing agreement with Tyco International plc and TE Connectivity Ltd. (g) To exclude adjustments to income tax liabilities subject to Covidien's tax sharing agreement with Tyco International plc and TE Connectivity Ltd. (h) To exclude combined amortization of intangible assets. Investors should consider these non-gaap measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. 23
UNAUDITED CONDENSED COMBINED STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED OCTOBER 25, 2013 Q2 FY14: MEDTRONIC PLC COMBINED HISTORICAL STATEMENT OF EARNINGS (1) For the three months ended October 25, 2013 (2) For the three months ended September 27, 2013 (3) Combined weighted average shares outstanding have been calculated as if the shares to be issued in the transaction had been issued and outstanding as of April 27, 2013, the beginning of fiscal year 2014. (4) See accompanying footnotes (Slide 35 of this deck) for additional information on reclassification adjustments. 24
FOR THE THREE MONTHS ENDED OCTOBER 25, 2013 (IN MILLIONS, EXCEPT PER SHARE DATA) Q2 FY14: MEDTRONIC PLC NON-GAAP RECONCILIATION (UNAUDITED) (1) For the three months ended October 25, 2013 (2) For the three months ended September 27, 2013 (3) Combined Cash EPS is calculated as diluted EPS excluding Medtronic and Covidien reported non-gaap adjustments and combined amortization of intangible assets. (a) To exclude the impact of Medtronic's certain litigation charges, net. (b) To exclude the impact of Covidien's restructuring charges, net, including $2 million of restructuring-related accelerated depreciation included in cost of products sold. (c) To exclude Covidien transaction costs, primarily resulting from charges associated with entering into license and distribution agreements. (d) To exclude Covidien's loss on the retirement of debt incurred in connection with the early termination of a capital lease. (e) To exclude the impact of Covidien's net gain on investments. (f) To exclude the non-interest portion of the impact of Covidien's tax sharing agreement with Tyco International plc and TE Connectivity Ltd. (g) To exclude adjustments to income tax liabilities subject to Covidien's tax sharing agreement with Tyco International plc and TE Connectivity Ltd. (h) To exclude combined amortization of intangible assets. Investors should consider these non-gaap measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. 25
UNAUDITED CONDENSED COMBINED STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED JANUARY 24, 2014 Q3 FY14: MEDTRONIC PLC COMBINED HISTORICAL STATEMENT OF EARNINGS (1) For the three months ended January 24, 2014 (2) For the three months ended December 27, 2013 (3) Combined weighted average shares outstanding have been calculated as if the shares to be issued in the transaction had been issued and outstanding as of April 27, 2013, the beginning of fiscal year 2014. (4) See accompanying footnotes (Slide 35 of this deck) for additional information on reclassification adjustments. 26
FOR THE THREE MONTHS ENDED JANUARY 24, 2014 (IN MILLIONS, EXCEPT PER SHARE DATA) Q3 FY14: MEDTRONIC PLC NON-GAAP RECONCILIATION (UNAUDITED) (1) For the three months ended January 24, 2014 (2) For the three months ended December 27, 2013 (3) Combined Cash EPS is calculated as diluted EPS excluding Medtronic and Covidien reported non-gaap adjustments and combined amortization of intangible assets. (a) To exclude the impact of Medtronic's reversal of excess restructuring reserves. (b) To exclude the impact of Medtronic's acquisition-related items, primarily including impairment of long-lived assets related to the Ardian acquisition and adjustments in Ardian contingent consideration. (c) To exclude the impact of Covidien's restructuring charges, net, including $2 million of restructuring-related accelerated depreciation included in cost of products sold. (d) To exclude the impact of charges associated with Covidien's exit of OneShot renal denervation program and the reversal of contingent consideration associated with the fiscal 2012 acquisition of Maya Medical. Also excludes the write-off of a prepaid tax asset that had been established in connection with the acquisition of Maya Medical. (e) Primarily to exclude Covidien's portion of Tyco International plc s settlement of contract claims under a 2002 tax agreement with CIT Group Inc., a former subsidiary of Tyco International. (f) To exclude Covidien's anticipated settlements of certain tax matters. (g) To exclude combined amortization of intangible assets. Investors should consider these non-gaap measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. 27
UNAUDITED CONDENSED COMBINED STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED APRIL 25, 2014 Q4 FY14: MEDTRONIC PLC COMBINED HISTORICAL STATEMENT OF EARNINGS (1) For the three months ended April 25, 2014 (2) For the three months ended March 28, 2014 (3) Combined weighted average shares outstanding have been calculated as if the shares to be issued in the transaction had been issued and outstanding as of April 27, 2013, the beginning of fiscal year 2014. (4) See accompanying footnotes (Slide 35 of this deck) for additional information on reclassification adjustments. 28
FOR THE THREE MONTHS ENDED APRIL 25, 2014 (IN MILLIONS, EXCEPT PER SHARE DATA) Q4 FY14: MEDTRONIC PLC NON-GAAP RECONCILIATION (UNAUDITED) (1) For the three months ended April 25, 2014 (2) For the three months ended March 28, 2014 (3) Combined Cash EPS is calculated as diluted EPS excluding Medtronic and Covidien reported non-gaap adjustments and combined amortization of intangible assets. (a) To exclude the impact of Medtronic's restructuring charges, net, including $10 million of charges recorded in cost of products sold related to inventory write-offs of discontinued product lines and production-related asset impairments. (b) To exclude the impact of Medtronic's certain litigation charges, net, primarily related to the global patent settlement agreement with Edwards Lifesciences Corporation and accounting charges for probable and reasonably estimable INFUSE product liability litigation. (c) To exclude impact of Medtronic's acquisition-related items. (d) To exclude Medtronic's tax benefit associated with resolution of certain issues in fiscal year 2014 with the U.S. Internal Revenue Service, with respect to fiscal year 2009 through 2011. (e) To exclude the impact of Covidien's restructuring charges, net, including $1 million of restructuring-related accelerated depreciation included in cost of products sold. (f) To exclude Covidien acquisition-related costs, including $4 million of charges recorded in cost of products sold related to the sale of acquired inventory that had been written up to fair value upon acquisition. (g) To exclude Covidien's estimated incremental cost to remediate environmental matters at a site located in Orrington, Maine. (h) To exclude the net gain recognized upon the sale of Covidien's Confluent biosurgery product line. (i) To exclude the non-interest portion of the impact of Covidien's tax sharing agreement with Tyco International plc and TE Connectivity Ltd. (j) To exclude Covidien's potential settlement of certain pre-2007 Tyco separation tax matters subject to Covidien's tax sharing agreement with Tyco International plc and TE Connectivity Ltd. (k) To exclude combined amortization of intangible assets. Investors should consider these non-gaap measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. 29
UNAUDITED CONDENSED COMBINED STATEMENT OF EARNINGS FOR THE FISCAL YEAR ENDED APRIL 25, 2014 FY14: MEDTRONIC PLC COMBINED HISTORICAL STATEMENT OF EARNINGS (1) For the fiscal year ended April 25, 2014 (2) For the twelve months ended March 28, 2014 (3) Combined weighted average shares outstanding have been calculated as if the shares to be issued in the transaction had been issued and outstanding as of April 27, 2013, the beginning of fiscal year 2014. (4) See accompanying footnotes (Slide 35 of this deck) for additional information on reclassification adjustments. 30
FOR THE FISCAL YEAR ENDED APRIL 25, 2014 (IN MILLIONS, EXCEPT PER SHARE DATA) FY14: MEDTRONIC PLC NON-GAAP RECONCILIATION (UNAUDITED) (1) For the fiscal year ended April 25, 2014 (2) For the twelve months ended March 28, 2014 (3) Combined Cash EPS is calculated as diluted EPS excluding Medtronic and Covidien reported non-gaap adjustments and combined amortization of intangible assets. (4) The data in this table has been intentionally rounded to the nearest $0.01 and, therefore, may not sum. (a) To exclude combined amortization of intangible assets. For details on Medtronic and Covidien reported non-gaap adjustments for the fiscal year ended April 25, 2014, see Non-GAAP Reconciliations for the three months ended April 25, 2014, January 24, 2014, October 25, 2013, and July 26, 2013. Investors should consider these non-gaap measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. 31
UNAUDITED CONDENSED COMBINED STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED JULY 25, 2014 Q1 FY15: MEDTRONIC PLC COMBINED HISTORICAL STATEMENT OF EARNINGS (1) For the three months ended July 25, 2014 (2) For the three months ended June 27, 2014 (3) Combined weighted average shares outstanding have been calculated as if the shares to be issued in the transaction had been issued and outstanding as of April 26, 2014, the beginning of fiscal year 2015. (4) See accompanying footnotes (Slide 35 of this deck) for additional information on reclassification adjustments. 32
FOR THE THREE MONTHS ENDED JULY 25, 2014 (IN MILLIONS, EXCEPT PER SHARE DATA) Q1 FY15: MEDTRONIC PLC NON-GAAP RECONCILIATION (UNAUDITED) (1) For the three months ended July 25, 2014 (2) For the three months ended June 27, 2014 (3) Combined Cash EPS is calculated as diluted EPS excluding Medtronic and Covidien reported non-gaap adjustments and combined amortization of intangible assets. (a) To exclude the impact of Medtronic's restructuring charges, net. (b) To exclude the impact of Medtronic's acquisition-related items, primarily costs incurred in connection with the Covidien acquisition. (c) To exclude the impact of Covidien's restructuring charges, net, including $2 million of restructuring-related accelerated depreciation included in cost of products sold. (d) To exclude Covidien acquisition-related costs, primarily $12 million of charges recorded in cost of products sold related to the sale of acquired inventory that had been written up to fair value upon acquisition and an adjustment to contingent consideration. (e) To exclude a legal charge resulting from an increase to Covidien's estimated indemnification obligation for certain pelvic mesh products liability cases. (f) To exclude transaction costs incurred by Covidien resulting from Medtronic's acquisition of Covidien. (g) To exclude an adjustment to the gain on the sale of Covidien's Confluent biosurgery product line. (h) To exclude the non-interest portion of the impact of Covidien's tax sharing agreement with Tyco International plc and TE Connectivity Ltd. (i) Primarily to exclude Covidien's favorable audit settlement reached with certain non-u.s. taxing authorities. (j) To exclude combined amortization of intangible assets. Investors should consider these non-gaap measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. 33
UNAUDITED CONDENSED COMBINED STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED OCTOBER 24, 2014 Q2 FY15: MEDTRONIC PLC COMBINED HISTORICAL STATEMENT OF EARNINGS (1) For the three months ended October 24, 2014 (2) For the three months ended September 26, 2014 (3) Combined weighted average shares outstanding have been calculated as if the shares to be issued in the transaction had been issued and outstanding as of April 26, 2014, the beginning of fiscal year 2015. (4) See accompanying footnotes (Slide 35 of this deck) for additional information on reclassification adjustments. 34
FOR THE THREE MONTHS ENDED OCTOBER 24, 2014 (IN MILLIONS, EXCEPT PER SHARE DATA) Q2 FY15: MEDTRONIC PLC NON-GAAP RECONCILIATION (UNAUDITED) (1) For the three months ended October 24, 2014 (2) For the three months ended September 26, 2014 (3) Combined Cash EPS is calculated as diluted EPS excluding Medtronic and Covidien reported non-gaap adjustments and combined amortization of intangible assets. (4) The data in this table has been intentionally rounded to the nearest $0.01 and, therefore, may not sum. (a) To exclude the impact of a charitable cash donation made to the Medtronic Foundation. (b) To exclude the impact of Medtronic's acquisition-related items, primarily costs incurred in connection with the Covidien acquisition. (c) To exclude the impact of Covidien's restructuring charges, net. (d) To exclude Covidien acquisition-related costs, primarily adjustments to contingent consideration. (e) To exclude the impairment of in-process research and development related to Covidien's drug coated balloon platform, which was sold in connection with Medtronic's acquisition of Covidien. (f) To exclude transaction costs incurred by Covidien resulting from Medtronic's acquisition of Covidien. (g) To exclude the non-interest portion of the impact of Covidien's tax sharing agreement with Tyco International plc and TE Connectivity Ltd. (h) Primarily to exclude the effective settlement of all Covidien tax matters relating to the 2005 through 2007 U.S. audit cycle. (i) To exclude combined amortization of intangible assets. Investors should consider these non-gaap measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. 35
UNAUDITED CONDENSED COMBINED STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED JANUARY 23, 2015 Q3 FY15: MEDTRONIC PLC COMBINED HISTORICAL STATEMENT OF EARNINGS (1) For the three months ended January 23, 2015 (2) For the three months ended December 26, 2014 (3) Combined weighted average shares outstanding have been calculated as if the shares issued in the transaction had been issued and outstanding as of April 26, 2014, the beginning of fiscal year 2015. (4) See accompanying footnotes for additional information on reclassification adjustments. 36
FOR THE THREE MONTHS ENDED JANUARY 23, 2015 (IN MILLIONS, EXCEPT PER SHARE DATA) Q3 FY15: MEDTRONIC PLC NON-GAAP RECONCILIATION (UNAUDITED) (1) For the three months ended January 23, 2015 (2) For the three months ended December 26, 2014 (3) Combined Cash EPS is calculated as diluted EPS excluding Medtronic and Covidien reported non-gaap adjustments and combined amortization of intangible assets. (a) To exclude the impact of a charitable cash donation made to the Medtronic Foundation, a gain on divestiture recognized in connection with the sale of a product line in the Surgical Technologies division and a net gain recognized in connection with the sale of a certain equity method investment. (b) To exclude the impact of Medtronic's acquisition-related items, primarily costs incurred in connection with the Covidien acquisition. (c) To exclude 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. (d) To exclude the impact of Covidien's restructuring credits, net. (e) To exclude transaction costs incurred by Covidien resulting from Medtronic's acquisition of Covidien. (f) To exclude the non-interest portion of the impact of Covidien's tax sharing agreement with Tyco International plc and TE Connectivity Ltd. (g) To exclude $20 million from the effective settlement of all Covidien tax matters related to a 2004 U.S. audit and $8 million from the retroactive re-enactment of the U.S. research and development tax credit. (h) To exclude combined amortization of intangible assets. Investors should consider these non-gaap measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. 37
FOOTNOTES Footnotes to the Unaudited Condensed Combined Statements of Earnings Certain reclassifications have been made to Covidien s historical financial statements to conform to Medtronic s presentation, as follows: A. To reclassify Covidien s medical device excise tax from selling, general, and administrative expense to other expense (income), net. B. To reclassify Covidien s amortization of definite-lived intangible assets from cost of products sold and selling, general, and administrative expense to amortization of intangible assets. C. To reclassify Covidien s net gains and losses on foreign exchange transactions and related gains and losses on associated hedge transactions from cost of products sold and selling, general, and administrative expense to other expense (income), net. D. To reclassify certain of Covidien s stock-based compensation expense from selling, general, and administrative expense to cost of products sold and research and development expense. E. To reclassify certain of Covidien s shipping and handling costs from cost of products sold to selling, general, and administrative expense. F. To reclassify Covidien s royalty expense from cost of products sold to other expense (income), net. G. To reclassify Covidien s litigation and environmental charges from selling, general, and administrative expense to certain litigation charges, net. The litigation charge resulted from an increase to Covidien's estimated indemnification obligation for certain pelvic mesh product liability cases. The environmental charge related to probable and reasonably estimated incremental costs to remediate a site in Orrington, Maine following a court decision affirming a compliance order issued by the Maine Board of Environmental Protection. H. To reclassify Covidien's gain on a previously-held investment associated with Covidien's acquisition of CV Ingenuity from other expense (income), net to acquisition-related items, which is included in selling, general, and administrative expense in these Condensed Combined Statements of Earnings. 38
Medtronic plc Group Product Line Mapping 39
CARDIAC AND VASCULAR GROUP: PRODUCT LINE MAPPING* Cardiac & Vascular Group Divisions Business Units Product Lines Cardiac Rhythm & Heart Failure Coronary & Structural Heart Tachy Brady Heart Failure AF Solutions Diagnostics Services & Solutions Coronary & Renal Denervation Heart Valve Therapies Extracorporeal Therapies Aortic ICDs Pacemakers CRT-Ds CRT-Ps Cryoablation Phased RF Ablation Catheters Cardiac Monitors Cath Lab Managed Services Cardiocom Coronary Stents Renal Denervation Surgical Valves Transcatheter Valves Perfusion Surgical AF AAA & TAA Drug Coated Balloons Aortic & Peripheral Peripheral Peripheral Stents Directional Atherectomy Chronic Venous Insufficiency 40 *This product line mapping references selective product lines to provide an appreciation for the products in each business unit and are not intended to be comprehensive.
COVIDIEN GROUP: PRODUCT LINE MAPPING* Covidien Group Divisions Business Units Product Lines Stapling Vessel Sealing Fixation Mesh Surgical Solutions Medical Care Solutions Advanced Surgical General Surgical Patient Monitoring Airway & Ventilation Nursing Care Patient Care Peripheral Vascular Hardware Interventional Lung Gastrointestinal Solutions Ablation Surgical Instrumentation Sutures Electrosurgery Sensors Monitors Airway Ventilation Woundcare Enteral Feeding Medical Surgical Sharp Safety OEM Compression Dialysis Other Peripheral 41 *This product line mapping references selective product lines to provide an appreciation for the products in each business unit and are not intended to be comprehensive.
RESTORATIVE THERAPIES GROUP: PRODUCT LINE MAPPING* Restorative Therapies Group Divisions Business Units Product Lines Spine Neuromodulation Surgical Technologies Neurovascular Core Spine Interventional Spine BMP Pain & Intrathecal Baclofen (ITB) Deep Brain Stimulation (DBS) Gastro/Uro Neurosurgery ENT Advanced Energy Neurovascular Constructs Other Biologics Kanghui Balloon Kyphoplasty BMP Spinal Cord Stimulation Pain Pumps DBS Therapy Bladder & Bowel Control Imaging & Navigation Cranial Surgical Drills ENT Power Monitoring RF & Transcollation Access Coils & Stents 42 *This product line mapping references selective product lines to provide an appreciation for the products in each business unit and are not intended to be comprehensive.
DIABETES GROUP: PRODUCT LINE MAPPING* Diabetes Group Divisions Business Units Product Lines Intensive Insulin Management Non-intensive Therapies Service & Solutions Insulin Pumps & CGM for Type I & Intensive Type 2 Type 2 Solutions Consumables, supplies & financial services 43 *This product line mapping references selective product lines to provide an appreciation for the products in each business unit and are not intended to be comprehensive.