Medtronic 2014 Annual Report Download - page 37

General of HHS. These investigations have related primarily to financial arrangements with health care providers, regulatory
compliance, and product promotional practices. Similar requests were made of our major competitors.
We are fully cooperating with these investigations and are responding to these requests. However, we cannot predict when these
investigations will be resolved, the outcome of these investigations, or their impact on us. An adverse outcome in one or more of
these investigations could include the commencement of civil and/or criminal proceedings, substantial fines, penalties, and/or
administrative remedies, including exclusion from government reimbursement programs, entry into Corporate Integrity
Agreements (CIAs) with governmental agencies and amendments to existing CIAs. In addition, resolution of any of these
matters could involve the imposition of additional and costly compliance obligations. Finally, if these investigations continue
over a long period of time, they could divert the attention of management from the day-to-day operations of our business and
impose significant administrative burdens, including cost, on us. These potential consequences, as well as any adverse outcome
from these investigations or other investigations initiated by the government at any time, could have a material adverse effect on
our financial condition and results of operations.
Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition
and results of operations.
We are subject to income taxes as well as non-income based taxes, in both the U.S. and various jurisdictions outside the U.S.
We are subject to ongoing tax audits in various jurisdictions. Tax authorities may disagree with certain positions we have taken
and assess additional taxes. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of
our tax provision. However, there can be no assurance that we will accurately predict the outcomes of these audits, and the
actual outcomes of these audits could have a material impact on our consolidated earnings and financial condition. Additionally,
changes in tax laws or tax rulings could materially impact our effective tax rate. For example, recent legislation imposed on
medical device manufacturers a 2.3 percent excise tax on U.S. sales of medical devices beginning in January 2013. Proposals
for fundamental U.S. corporate tax reform, if enacted, could have a material impact on our future results of operations.
We are increasingly dependent on sophisticated information technology and if we fail to properly maintain the integrity of
our data or if our products do not operate as intended, our business could be materially affected.
We are increasingly dependent on sophisticated information technology for its products and infrastructure. As a result of
technology initiatives, recently enacted regulations, changes in our system platforms and integration of new business
acquisitions, we have been consolidating and integrating the number of systems we operate and have upgraded and expanded
our information systems capabilities. Our information systems require an ongoing commitment of significant resources to
maintain, protect, and enhance existing systems and develop new systems to keep pace with continuing changes in information
processing technology, evolving systems and regulatory standards, the increasing need to protect patient and customer
information, and changing customer patterns. In addition, third parties may attempt to hack into our products or systems and
may obtain data relating to patients with our products or the Company’s proprietary information. If we fail to maintain or
protect our information systems and data integrity effectively, we could lose existing customers, have difficulty attracting new
customers, have problems in determining product cost estimates and establishing appropriate pricing, have difficulty preventing,
detecting, and controlling fraud, have disputes with customers, physicians, and other health care professionals, have regulatory
sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data
privacy breach, or suffer other adverse consequences. There can be no assurance that our process of consolidating the number of
systems we operate, upgrading and expanding our information systems capabilities, protecting and enhancing our systems and
developing new systems to keep pace with continuing changes in information processing technology will be successful or that
additional systems issues will not arise in the future. Any significant breakdown, intrusion, interruption, corruption, or
destruction of these systems, as well as any data breaches, could have a material adverse effect on our business.
Risks relating to our pending acquisition of Covidien plc
Medtronic and Covidien must obtain required approvals and governmental and regulatory consents to consummate the
Pending Acquisition, which, if delayed, not granted or granted with unacceptable conditions, may jeopardize or delay the
consummation of the Pending Acquisition, result in additional expenditures of money and resources and/or reduce the
anticipated benefits of the transaction.
The Pending Acquisition is subject to customary closing conditions. These closing conditions include, among others, the receipt
of required approvals of Medtronic and Covidien shareholders, the effectiveness of the registration statement, the approval of
the Arrangement by the Irish High Court and the expiration or termination of the waiting period under the HSR Act, and the
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