Medtronic 2016 Annual Report Download - page 130

Table of Contents
Medtronic plc
Notes to Consolidated Financial Statements (Continued)
127
On June 9, 2016, the U.S. Tax court issued its opinion with respect to the allocation of income between Medtronic, Inc. and its
wholly-owned subsidiary operating in Puerto Rico for fiscal years 2005 and 2006. The U.S. Tax Court generally rejected the IRS’s
position, but also made certain modifications to the Medtronic, Inc. tax returns as filed. We do not expect the results of the opinion
to have a material impact on the financial statements. An Appeal of the U.S. Tax Court Opinion must be filed within 90 days of
the final decision by the Tax Court. The final decision will not occur until all issues related to the fiscal years are resolved. As
one item remains open, the calculation of amounts eligible for the one-time repatriation holiday, a final decision is not expected
until later this fiscal year, and, therefore, an estimate of the financial statement impact cannot yet be made.
On June 27, 2016, the Company announced entry into a definitive agreement to acquire HeartWare International, Inc. for
approximately $1.1 billion. The addition of HeartWare International, Inc.'s portfolio of heart failure products will expand and
strengthen Medtronic's heart failure product offerings and will further complement its existing global cardiac rhythm and heart
failure business. The acquisition is expected to close in fiscal year 2017.
19. Guarantor Financial Information
On January 26, 2015, Medtronic plc ("Parent Company Guarantor") and Medtronic Luxco, a subsidiary guarantor, each provided
a full and unconditional guarantee of the obligations of Medtronic, Inc. under the Medtronic 2015 Senior Notes. In addition,
Medtronic plc and Medtronic Luxco each provided a full and unconditional guarantee of the obligations of CIFSA, assumed as
part of the Covidien acquisition, under the CIFSA Senior Notes. These guarantees of the CIFSA Senior Notes were in addition to
the guarantees of the CIFSA Senior Notes by acquired Covidien holding companies Covidien Ltd. (f/k/a Covidien plc) and Covidien
Group Holdings Ltd. (f/k/a Covidien Ltd.), both of which remain guarantors of the CIFSA Senior Notes. A summary of the
guarantees is as follows:
Guarantees of Medtronic Senior Notes
• Parent Company Guarantor - Medtronic plc
• Subsidiary Issuer - Medtronic, Inc.
• Subsidiary Guarantor - Medtronic Luxco
Since Medtronic plc and Medtronic Luxco did not exist in prior years, the Parent Company Guarantor column and Subsidiary
Guarantor Column in the consolidating financial information for the guarantees of the Medtronic 2015 Senior Notes appear as
zeros for fiscal year 2014. Accordingly, the fiscal year 2014 consolidating financial information is of the predecessor registrant,
Medtronic, Inc.
Guarantees of CIFSA Senior Notes
• Parent Company Guarantor - Medtronic plc
• Subsidiary Issuer - CIFSA
• Subsidiary Guarantors - Medtronic Luxco, Covidien Ltd., and Covidien Group Holdings Ltd.
The following presents the Company’s Consolidating Statements of Comprehensive Income and Condensed Consolidating
Statements of Cash Flows as of and for the fiscal years ended April 29, 2016, April 24, 2015, and April 25, 2014, and Condensed
Consolidating Balance Sheets as of April 29, 2016 and April 24, 2015. The guarantees provided by the Parent Company Guarantor
and Subsidiary Guarantors are joint and several. Condensed consolidating financial information for Medtronic plc, Medtronic
Luxco, Medtronic, Inc. and CIFSA, on a stand-alone basis, is presented using the equity method of accounting for subsidiaries.
There were no Medtronic plc or Medtronic Luxco guarantees in effect in periods prior to fiscal year 2015, and the CIFSA Senior
Notes were assumed as part of the Covidien acquisition. Therefore, no consolidating financial information for the fiscal year ended
April 25, 2014 is presented related to the guarantees of the CIFSA Senior Notes.
During fiscal year 2016, the Company undertook certain steps to reorganize ownership of various subsidiaries. The transactions
were entirely among subsidiaries under the common control of Medtronic. This reorganization has been reflected as of the
beginning of the earliest period presented.
The Company made revisions to its Condensed Consolidating Balance Sheet of the guarantees of the CIFSA Senior Notes as
previously presented in Note 19 in the Company’s Annual Report on Form 10-K for the year ended April 24, 2015. A $14.7 billion
revision increased investment in subsidiaries and shareholders' equity in the Subsidiary Issuer (CIFSA) column of the Condensed
Consolidating Balance Sheet due to an incorrect presentation primarily related to the investment balance upon acquisition and an