SEC Filings

10-Q
MEDTRONIC PLC filed this Form 10-Q on 09/01/2017
Entire Document
 


INCOME TAXES
 
Three months ended
(in millions)
July 28, 2017
 
July 29, 2016
Provision for income taxes
$
186

 
$
59

Income from operations before taxes
1,195

 
988

Effective tax rate
15.6
 %
 
6.0
%
 
 
 
 
Non-GAAP provision for income taxes
$
230

 
$
269

Non-GAAP income from operations before taxes
1,764

 
1,713

Non-GAAP Nominal Tax Rate
13.0
 %
 
15.7
%
 
 
 
 
Difference between the effective tax rate and Non-GAAP Nominal Tax Rate
(2.6
)%
 
9.7
%
Our effective tax rate for the three months ended July 28, 2017 was 15.6 percent, as compared to 6.0 percent for the first quarter in the prior fiscal year. The increase in our effective tax rate for the three months ended July 28, 2017 was primarily due to certain tax adjustments, changes in the amount and jurisdiction of restructuring charges, net and certain litigation charges, operational tax adjustments described below, and year over year changes in operational results by jurisdiction.
Our Non-GAAP Nominal Tax Rate for the three months ended July 28, 2017 was 13.0 percent, as compared to 15.7 percent for the three months ended July 29, 2016. The decrease in our Non-GAAP Nominal Tax Rate for the three months ended July 28, 2017 was primarily due to the finalization of certain tax audits, the lapse of a statute of limitations for federal purposes, and excess tax benefits related to stock-based compensation due to the adoption of revised guidance. An increase in our Non-GAAP Nominal Tax Rate of 1 percent would result in an additional income tax provision for the three months ended July 28, 2017 of approximately $18 million.
Certain Tax Adjustments During the three months ended July 28, 2017, we recognized charges of $60 million primarily related to the tax effect from certain restructuring steps taken during the quarter in anticipation of the divestiture of a portion of our Patient Monitoring & Recovery division to Cardinal Health.
During the three months ended July 29, 2016, we recognized a $31 million net benefit from certain tax adjustments. A $431 million tax benefit was recognized as the result of the resolution of Covidien's previously disclosed Tyco International plc intercompany debt issues with the U.S. Tax Court and the Appeals Division of the U.S. Internal Revenue Service (IRS). This benefit was partially offset by a $371 million charge associated with the expected resolution with the IRS for the for the Ardian, CoreValve, Inc. and Ablation Frontiers, Inc. acquisition-related issues and the allocation of income between Medtronic, Inc. and its wholly owned subsidiary operating in Puerto Rico for certain businesses. This resolution does not include the businesses that are the subject of the Medtronic, Inc. U.S. Tax Court case for fiscal years 2005 and 2006. In addition, we recognized a $29 million charge in connection with the redemption of an intercompany minority interest.
For additional information about certain tax adjustments, see Notes 11 and 16 to the current period's consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
(in millions)
July 28, 2017
 
April 28, 2017
Working capital
$
9,321

 
$
10,316

Current ratio(1)
          1.6:1.0

 
1.7:1.0

Cash, cash equivalents, and current investments
$
13,088

 
$
13,708

Current debt obligations and long-term debt
$
34,011

 
$
33,441

(1)
The ratio of current assets to current liabilities, excluding current assets and current liabilities held for sale, at July 28, 2017 and April 28, 2017.
We believe our balance sheet and liquidity provide us with flexibility in the future. Approximately $6 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 ($1.5 billion of commercial paper outstanding at July 28, 2017),

59

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