| Item 7.01 | Regulation FD Disclosure |
On July 10, 2019, Medtronic plc (the “Company”) announced that it would purchase a total of $5.171 billion in aggregate principal amount of various series of senior notes issued by its subsidiaries (includes $4.638 billion pursuant to the Tender Offers and $533 million of the Redemption Notes, both as defined in Item 8.01 below). This follows the July 2, 2019 announcement of the closing of its registered public offering of €5.0 billion of senior notes, the proceeds of which will be used to purchase notes in the Tender Offers. The Company expects these transactions will effectively be leverage neutral.
Given the Company’s first fiscal quarter ends on July 26, 2019, the Company does not expect a material change to its previously disclosednon-GAAP interest expense expectation of $200 to $210 million for the first quarter. However, as a result of these transactions, the Company now expects itsnon-GAAP interest expense to be in the range of $170 to $180 million per quarter in the Company’s second, third, and fourth quarters of fiscal year 2020(“Q2-Q4 FY20”). This anticipated benefit is on apre-tax basis, as the reducednon-GAAP interest expense is expected to be partially offset by a slight increase in U.S. tax expense inQ2-Q4 FY20.
The expected financial benefits of the Company’s refinancing give management comfort in the upper end of its current fiscal year 2020 earnings per share guidance range of $5.44 to $5.50. The Company expects to update its earnings per share guidance when the Company releases its first quarter earnings results, which is currently expected to occur on August 20, 2019.
This report discussesnon-GAAP interest expense, which is considered a“non-GAAP” financial measure under applicable SEC rules and regulations. The Company’s management believes thatnon-GAAP financial measures provide information useful to investors in understanding the Company’s underlying operational performance and trends and to facilitate comparisons with the performance of other companies in the med tech industry. Medtronic generally usesnon-GAAP financial measures to facilitate management’s review of the operational performance of the company and as a basis for strategic planning.Non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with U.S. generally accepted accounting principles (GAAP), and investors are cautioned that the Company may calculatenon-GAAP financial measures in a way that is different from other companies.
The Company calculates forward-lookingnon-GAAP financial measures based on internal forecasts that omit certain charges or gains that would be included in GAAP financial measures. For instance,non-GAAP interest expense excludes the impact of certain fees, costs and premiums to be paid in connection with the Tender Offers. The Company does not attempt to provide a reconciliation of forward-lookingnon-GAAP interest expense because the combined impact and timing of recognition of these potential charges or gains is inherently uncertain and difficult to predict and is unavailable without unreasonable efforts. In addition, the Company believes such a reconciliation would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP interest expense.
This Current Report on Form8-K contains forward-looking statements that are not historical in nature. Such forward-looking statements are subject to risks and uncertainties, including the risks related to the acceptance of any tendered notes, the expiration and settlement of the Tender Offers, the satisfaction of conditions to the Tender Offers, whether the Tender Offers will be consummated in accordance with terms set forth in the Offer to Purchase, dated June 24, 2019, or at all and the timing of any of the foregoing, competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation and general economic conditions and other risks and uncertainties described in the Company’s periodic reports on file with the U.S. Securities and Exchange Commission including the most recent Annual Report on Form10-K of the Company, as filed with the U.S. Securities and Exchange Commission.
