MEDTRONIC EXH 1023
`MEDTRONIC V. BOSCH IPR2014-00488
`
`Table of Contents
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`FORM 10-K
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`xx
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`oo
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`Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934.
`For the fiscal year ended April 25, 2014.
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`Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
`For the transition period from __________ to __________
`
`Commission File No. 1-7707
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`Medtronic, Inc.
`(Exact name of registrant as specified in its charter)
`
`Minnesota
`(State of incorporation)
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`41-0793183
`(I.R.S. Employer Identification No.)
`
`710 Medtronic Parkway
`Minneapolis, Minnesota 55432
`(Address of principal executive offices) (Zip Code)
`Registrant’s telephone number, including area code: (763) 514-4000
`
`Securities registered pursuant to Section 12(b) of the Act:
`
`Title of each class
`Common stock, par value $0.10 per share
`
`Name of each exchange on which registered
`New York Stock Exchange, Inc.
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`Securities registered pursuant to section 12(g) of the Act:
`None
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes oo No x
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`Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes oo No x
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`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
`preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
`90 days. Yes x No oo
`
`Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be
`submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the
`registrant was required to submit and post such files). Yes x No oo
`
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the
`registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
`
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of
`“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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`Large accelerated filer x Accelerated filer oo Non-accelerated filer oo Smaller reporting company oo
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`Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes oo No x
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`Aggregate market value of voting and non-voting common stock of Medtronic, Inc. held by nonaffiliates of the registrant as of October 25, 2013, based on the closing
`price of $57.36, as reported on the New York Stock Exchange: approximately $57.2 billion. Shares of Common Stock outstanding on June 16, 2014: 995,764,180
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`Portions of Registrant’s Proxy Statement for its 2014 Annual Meeting are incorporated by reference into Part III hereto.
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`DOCUMENTS INCORPORATED BY REFERENCE
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`TABLE OF CONTENTS
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`Description
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`PART I
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`Business
`Risk Factors
`Unresolved Staff Comments
`Properties
`Legal Proceedings
`Mine Safety Disclosures
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`PART II
`Market for Medtronic’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
`Selected Financial Data
`Management’s Discussion and Analysis of Financial Condition and Results of Operations
`Quantitative and Qualitative Disclosures About Market Risk
`Financial Statements and Supplementary Data
`Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
`Controls and Procedures
`Other Information
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`PART III
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`Directors, Executive Officers, and Corporate Governance
`Executive Compensation
`Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
`Certain Relationships and Related Transactions, and Director Independence
`Principal Accounting Fees and Services
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`PART IV
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`Exhibits and Financial Statement Schedules
`Signatures
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`Table of Contents
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`Investor Information
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`Annual Meeting and Record Dates
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`Medtronic, Inc.’s (Medtronic or the Company, or we, us, or our) Annual Meeting of Shareholders will be held on Thursday, August 21, 2014 at 10:30 a.m.,
`Central Daylight Time at the Company’s Mounds View campus located at 8200 Coral Street N.E., Mounds View, MN 55112. The record date for the Annual
`Meeting is June 23, 2014 and all shareholders of record at the close of business on that day will be entitled to vote at the Annual Meeting.
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`Medtronic Website
`
`Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished
`pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act) are available through our website
`(www.medtronic.com under the “Investors” caption and “Financial Information - SEC Filings” subcaption) free of charge as soon as reasonably practicable
`after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC).
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`Information relating to corporate governance at Medtronic, including our Principles of Corporate Governance, Code of Conduct (including our Code of
`Ethics for Senior Financial Officers), Code of Business Conduct and Ethics for Members of the Board of Directors, and information concerning our executive
`officers, directors and Board committees (including committee charters) is available through our website at www.medtronic.com under the “Investors”
`caption and the “Corporate Governance” subcaption. Information relating to transactions in Medtronic securities by directors and officers is available
`through our website at www.medtronic.com under the "Investors" caption and the "Financial Information - SEC Filings" subcaption.
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`The information listed above may also be obtained upon request from the Medtronic Investor Relations Department, 710 Medtronic Parkway, Minneapolis
`(Fridley), MN 55432 USA.
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`We are not including the information on our website as a part of, or incorporating it by reference into, our Form 10-K.
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`Available Information
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`The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that
`file electronically with the SEC. The public can obtain any documents that the Company files with the SEC at http://www.sec.gov. The Company files annual
`reports, quarterly reports, proxy statements, and other documents with the SEC under the Exchange Act. The public may read and copy any materials that the
`Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain
`information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
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`Stock Transfer Agent and Registrar
`
`Wells Fargo Shareowner Services SM acts as transfer agent and registrar, dividend paying agent, and direct stock purchase plan agent for Medtronic and
`maintains all shareholder records for the Company. If you are a registered shareholder, you may access your account information online at
`www.shareowneronline.com. If you have questions regarding the Medtronic stock you own, stock transfers, address or name changes, direct deposit of
`dividends, lost dividend checks, lost stock certificates, or duplicate mailings, please contact Wells Fargo Shareowner Services SM by writing or calling: Wells
`Fargo Shareowner ServicesSM, 1110 Centre Pointe Curve, Suite 101, Mendota Heights, MN 55120 USA, Telephone: 888-648-8154 or 651-450-4064, Fax:
`651-450-4033, www.wellsfargo.com/shareownerservices.
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`Direct Stock Purchase Plan
`
`Medtronic’s transfer agent, Wells Fargo Shareowner Services SM, administers the direct stock purchase plan, which is called the Shareowner Service Plus
`PlanSM. Features of this plan include direct stock purchase and reinvestment of dividends to purchase whole or fractional shares of Medtronic stock. All
`registered shareholders and potential investors may participate.
`
`To request information on the Shareowner Service Plus Plan SM, or to enroll in the plan, contact Wells Fargo Shareowner Services SM at 888-648-8154 or 651-
`450-4064. You may also enroll via the Internet by visiting www.shareowneronline.com and selecting “Direct Purchase Plan.”
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`Table of Contents
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`Item 1. Business
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`Overview
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`PART I
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`Medtronic is the global leader in medical technology. Medtronic was founded in 1949, incorporated as a Minnesota corporation in 1957, and today serves
`hospitals, physicians, clinicians, and patients in more than 140 countries worldwide. We remain committed to a mission written by our founder more than 50
`years ago that directs us “to contribute to human welfare by the application of biomedical engineering in the research, design, manufacture, and sale of
`products to alleviate pain, restore health, and extend life.”
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`We currently function in three operating segments that manufacture and sell device-based medical therapies. Our operating segments are as follows:
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`Cardiac and Vascular Group
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`Cardiac Rhythm Disease Management (CRDM)
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`Coronary
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`Structural Heart
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`Endovascular
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`Restorative Therapies Group
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`Spine
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`Neuromodulation
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`Surgical Technologies
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`Diabetes Group
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`The chart above shows the net sales and percentage of total net sales contributed by each of our operating segments for the fiscal year ended April 25, 2014
`(fiscal year 2014). For more information please see Note 20 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary
`Data” in this Annual Report on Form 10-K.
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`The results of operations, assets, and liabilities of the Physio-Control business, which were previously presented as a component of the Cardiac and Vascular
`Group operating segment, are classified as discontinued operations. All information in this “Item 1. Business” includes only results from continuing
`operations (excluding Physio-Control) for all periods presented, unless otherwise noted. For further information regarding discontinued operations, see Note
`17 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
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`With innovation and market leadership, we have pioneered advances in medical technology in all of our businesses. Over the last five years, our net sales on
`a compounded annual growth basis have increased approximately 3 percent, from $15.392 billion in fiscal year 2010 to $17.005 billion in fiscal year 2014.
`Our commitment to enhance our offerings by developing and acquiring new products, wrap-around programs, and solutions to meet the needs of a broader set
`of stakeholders is driven by the following primary strategies:
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`Therapy Innovation: Delivering strong launch cadence of meaningful therapies and procedures.
`Globalization: Addressing the inequity in health care access globally, primarily in emerging markets.
`Economic Value: Becoming a leader in value-based health care by offering new services and solutions to improve outcomes, lower costs by
`reducing hospitalizations, improve remote clinical management, and increase patient engagement.
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`Our primary customers include hospitals, clinics, third-party health care providers, distributors, and other institutions, including governmental health care
`programs and group purchasing organizations.
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`Cardiac Rhythm Disease Management
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`CARDIAC AND VASCULAR GROUP
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`CRDM develops, manufactures, and markets products for the diagnosis, treatment, and management of heart rhythm disorders and heart failure, including
`implantable devices, leads and delivery systems, products for the treatment of atrial fibrillation (AF), products designed to reduce surgical site infections,
`information systems for the management of patients with CRDM devices, and an integrated health solutions business.
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`The following are the principal products offered by our CRDM business:
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`Implantable Cardiac Pacemakers (Pacemakers). A pacemaker is a battery-powered device implanted in the chest that delivers electrical impulses to treat
`bradycardia, a condition of abnormally slow heart rhythms, usually less than 60 beats per minute, or unsteady heart rhythms that cause symptoms such as
`dizziness, fainting, fatigue, and shortness of breath. Our latest generation of pacemaker systems is compatible with certain magnetic resonance imaging (MRI)
`machines. These include the Advisa and Revo MRI SureScan models, which have received United States (U.S.) Food and Drug Administration (U.S. FDA)
`approval, and the Advisa and Ensura MRI SureScan models which have received Conformité Européene (CE) Mark approval. We also continue to market the
`Adapta product family, which includes the Adapta, Versa, and Sensia models.
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`Implantable Cardioverter Defibrillators (ICDs). An ICD continually monitors the heart and delivers therapy when an abnormal heart rhythm, such as
`tachyarrhythmia, or rapid heart rhythm, occurs and leads to sudden cardiac arrest. Our latest generation ICD is the Evera MRI SureScan, the first and only ICD
`system with CE Mark approval for full-body MRI scans which has increased battery longevity, advanced shock reduction technology, and a contoured shape
`with thin, smooth, edges that better fits inside the body. The Evera system is paired with the reliable Sprint Quattro Secure lead, the only defibrillator lead
`with more than 10 years of proven performance with active monitoring. In addition to Evera, devices in the ICD family include the Protecta XT/Protecta with
`SmartShock technology, including the Lead Integrity Alert (LIA), an exclusive technology designed to improve the detection of lead fractures, and the
`Cardia and Egida models. We also continue to market the Secura, Virtuoso, and Maximo II devices.
`
`Implantable Cardiac Resynchronization Therapy Devices (CRT-Ds and CRT-Ps). Implantable cardiac resynchronization therapy (CRT) devices are
`combined with defibrillation (CRT-D) or are pacing-only (CRT-P). These devices treat heart failure patients by altering the abnormal electrical sequence of
`cardiac contractions by sending tiny electrical impulses to the lower chambers of the heart to help them beat in a more synchronized fashion. Our latest
`generation of CRT-Ds is the Viva/Brava family that features a new algorithm, called AdaptivCRT, which improves heart failure patients' response rate to
`CRT-D therapy, as compared to historical CRT trials, by preserving the patients' normal heart rhythms and continuously adapting to individual patient needs.
`Other features of the Viva/Brava portfolio include Ensure CRT, which works to maximize CRT treatment, even during atrial fibrillation, SmartShock
`technology, increased battery longevity, and OptiVol 2.0 fluid status monitoring. In Europe, we also have CE Mark approval for our Attain Performa
`quadripolar leads. Paired with our Viva/Brava Quad CRT-Ds, Attain Performa left-heart leads provide additional options for physicians as they navigate
`different patient anatomies, optimizing therapy based on the individual needs of heart failure patients. Our quadripolar technology is in the clinical
`evaluation process for U.S. FDA approval. Our CRT-D devices also include the Protecta XT/Protecta with SmartShock technology. With respect to CRT-P, we
`recently received CE Mark approval for our Viva CRT-P, which includes the AdaptivCRT software. In the U.S., our latest CRT-P devices are Consulta and
`Syncra.
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`AF Products. AF is a condition in which the atrium quivers instead of pumping blood effectively. Our portfolio of AF products includes the Arctic Front
`Advance Cardiac Cryoballoon System designed for pulmonary vein isolation in the treatment of patients with drug refractory paroxysmal AF. Additionally,
`we have a second-generation CE Mark approved Phased RF System, PVAC Gold, which uses duty cycled, phased radio frequency energy for the treatment of
`symptomatic paroxysmal persistent and long-standing persistent AF. Our Phased RF portfolio, including PVAC Gold, is currently being clinically evaluated
`by the U.S. FDA.
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`Diagnostics and Monitoring Devices. The Reveal LINQ is our newest Insertable Cardiac Monitor (ICM) System, having recently received U.S. FDA and CE
`Mark approval. The system is used to record the heart’s electrical activity before, during, and after transient symptoms such as syncope (i.e., fainting) and
`palpitations to help provide a diagnosis and is the smallest ICM device available for patients. LINQ is 80% smaller than other ICMs. In addition, it has 20%
`more data memory than its larger predecessor, Reveal XT.
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`Services and Solutions. Given the market’s shift to value-based health care, we are expanding our medical device product offerings to include broader health
`care services and solutions that provide meaningful clinical outcomes and economic value for hospitals, physicians, patients, and payers. Such services and
`solutions include several different platforms. Our Cardiocom products and services include remote monitoring and patient-centered software to enable
`efficient care coordination and specialized telehealth nurse support. Our TYRX products include the recently U.S. FDA cleared AIGISRx R fully resorbable
`antibacterial envelope and AIGISRx N antibacterial envelope, which are designed to reduce surgical site infections associated with implantable pacemakers,
`defibrillators, and spinal cord neurostimulators. Our Cath Lab Managed Services business is focused on developing
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`novel partnerships with hospitals to provide services directly related to hospital operational efficiency. The business is initially focused on offering services
`in Europe to manage and modernize catheterization lab (cath lab) facilities, bringing sustainable efficiencies and programs to this critical area of hospital
`cardiology departments.
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`Patient Management Tools. We have a number of patient management tools, such as Patient Home Monitors, CareLink Express, Paceart, and CardioSight
`Service. CareLink Express is the latest advancement in the care of Medtronic cardiac device patients, enabling transmission of data from their pacemaker,
`ICD, CRT-D, or Insertable Cardiac Monitor using a portable monitor that is connected to a standard telephone line. Paceart organizes and archives data for
`cardiac devices from major device manufacturers, serving as the central hub for patients’ device data. CardioSight Service is an in-clinic data access tool
`available to physicians treating heart failure patients who have one of several types of Medtronic CRT-Ds or ICDs. Patient Home Monitors transfer data from
`pacemakers, ICDs, and CRT-Ds from patients' homes to a web-based system that their health care provider can view.
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`The charts below set forth net sales of our CRDM products as a percentage of our total net sales for each of the last three fiscal years:
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`Customers and Competitors
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`The primary medical specialists who use our CRDM products include electrophysiologists, implanting cardiologists, heart failure specialists, and
`cardiovascular surgeons. Our primary competitors in the CRDM business are St. Jude Medical, Inc. (St. Jude), Boston Scientific Corporation (Boston
`Scientific), Biotronik, Inc., and Sorin Group (Sorin).
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`Coronary
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`Coronary includes therapies to treat coronary artery disease (CAD) and hypertension. The products contained within this business include coronary stents
`and related delivery systems, including a broad line of balloon angioplasty catheters, guide catheters, guidewires, diagnostic catheters, and accessories.
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`The following are the principal products offered by our Coronary business:
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`Percutaneous Coronary Intervention (PCI). PCI encompasses a variety of procedures used to treat patients with CAD. CAD is commonly treated with balloon
`angioplasty, which is performed to open narrowed heart vessels by inserting a balloon catheter into the vessel and advancing it to the site of the blockage
`where it is inflated to widen the obstructed vessel. Balloon angioplasty can be followed up with a coronary stent, a support device which works as scaffolding
`to keep the vessel open following the intervention. Our PCI stent products include our Resolute Integrity, Resolute, and Endeavor drug-eluting stent systems
`as well as our Integrity, Driver, and Micro-Driver bare metal stent systems.
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`The charts below set forth net sales of our Coronary products as a percentage of our total net sales for each of the last three fiscal years:
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`Customers and Competitors
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`The primary medical specialists who use our Coronary products are interventional cardiologists. Our primary competitors in the Coronary business are Abbott
`Laboratories (Abbott) and Boston Scientific.
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`Structural Heart
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`The Structural Heart business offers a comprehensive line of products and therapies to treat a variety of heart valve disorders. Our products include products
`for the repair and replacement of heart valves, perfusion systems, positioning and stabilization systems for beating heart revascularization surgery, and
`surgical ablation products.
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`The following are the principal products offered by our Structural Heart business:
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`Transcatheter Heart Valves (TCVs). TCV technology represents a less invasive means to treat heart valve disease and is designed to allow physicians to
`deliver replacement valves via a catheter through the body’s cardiovascular system, eliminating the need to open the chest. Our TCVs include the CoreValve
`transfemoral aortic valve and Engager transapical aortic valves as well as the Melody pulmonary valve. CoreValve, which is the only TCV system shown to
`be superior to open-heart surgery, has received U.S. FDA approval for extreme risk patients and CE Mark approval. We received U.S. FDA approval for
`CoreValve in high risk patients in June 2014. Our next-generation recapturable TCV system, CoreValve Evolut R, is currently being clinically evaluated for
`CE Mark approval and is expected to begin enrolling in its U.S. IDE in the first half of fiscal year 2015. Engager has received CE Mark approval while
`Melody has received CE Mark approval and U.S. FDA approval under a Humanitarian Device Exemption (HDE).
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`Heart Valves. We offer a complete line of surgical valve replacement and repair products for damaged or diseased heart valves. Our replacement products
`include both tissue and mechanical valves. Our replacement tissue valve product offerings include the Mosaic bioprosthetic stented, Freestyle stentless,
`Hancock II stented, Enable sutureless tissue (CE Mark countries), and 3f Biological tissue valves. Our mechanical valves include the Open Pivot valve. Our
`valve repair products include the Duran Flexible and CG Future Band, CG Composite Annuloplasty Systems, Profile 3D Annuloplasty Ring, Simulus Ring
`portfolio, and Tri-Ad Annuloplasty Ring.
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`Arrested Heart Surgery. In conventional coronary artery bypass graft procedures and heart valve surgery, the patient’s heart is temporarily stopped, or
`arrested. The patient is placed on a circulatory support system that temporarily functions as the patient’s heart and lungs and provides blood flow to the body.
`We offer a complete line of blood-handling products that form this circulatory support system and maintain and monitor blood circulation and coagulation
`status, oxygen supply, and body temperature during arrested heart surgery. Our Affinity Fusion oxygenation system received both CE Mark and U.S. FDA
`approval and is being launched globally. Affinity Fusion incorporates numerous innovations for patient safety and ease of use.
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`Beating Heart Surgery. To assist physicians performing beating heart surgery, we offer positioning and stabilization technologies. These technologies
`include our Starfish 2 and Urchin heart positioners, which are designed to work in concert with our family of Octopus tissue stabilizers.
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`Surgical Ablation. Our Cardioblate surgical ablation system, which includes the Cardioblate LP surgical ablation system, Cardioblate navigator tissue
`dissector, and Cardioblate Cryoflex system, allows cardiac surgeons to create ablation lines during cardiac surgery.
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`The charts below set forth net sales of our Structural Heart products as a percentage of our total net sales for each of the last three fiscal years:
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`Customers and Competitors
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`The primary medical specialists who use our Structural Heart products are cardiac surgeons and interventional cardiologists. Our primary competitors in the
`Structural Heart business are Edwards Lifesciences Corporation (Edwards), St. Jude, Sorin, Maquet Medical Systems, which is part of the publicly-listed
`Swedish group of companies GETINGE AB, and Terumo Medical Corporation.
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`Endovascular
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`The Endovascular business is comprised of a comprehensive line of products and therapies to treat aortic disease (such as aneurysms, dissections, and
`transections) as well as peripheral vascular disease (PVD). Our products include endovascular stent graft systems, peripheral stent and angioplasty systems,
`and carotid embolic protection systems for the treatment of vascular disease outside the heart.
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`The following are the principal products offered by our Endovascular business:
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`Endovascular Stent Grafts. An endovascular stent graft is a minimally invasive device to treat aortic disease such as an aortic aneurysm, which is a weakened
`and bulging area in the aorta, the major blood vessel that feeds blood to the body. Our products are designed to treat aortic aneurysms in either the abdomen
`(AAA) or thoracic (TAA) regions of the aorta. Our product line includes a range of endovascular stent grafts and accessories including the market-leading
`Endurant II abdominal stent graft system and the Valiant Captivia thoracic stent graft system.
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`Peripheral Vascular Intervention (PVI). PVI encompasses a variety of procedures to treat patients with PVD, a narrowing or blockage of vessels outside the
`heart which impedes blood supply to the brain, kidneys, legs, and other vital organs. Similar to CAD, PVD is commonly treated with balloon angioplasty
`which can be followed up with a peripheral stent. Our primary PVI products include percutaneous angioplasty balloons including the IN.PACT family of
`drug-coated balloons, as well as stents such as the Complete SE Vascular Stent and the Assurant Cobalt Iliac Stent.
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`The charts below set forth net sales of our Endovascular products as a percentage of our total net sales for each of the last three fiscal years:
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`Customers and Competitors
`The primary medical specialists who use our Endovascular products include interventional radiologists, vascular surgeons, cardiac surgeons, and
`interventional cardiologists. Our primary competitors in the Endovascular business are Cook, Inc., W. L. Gore & Associates, Inc., Endologix, Inc., TriVascular
`Technologies, Inc., Lombard Medical, Inc., Abbott, Boston Scientific, C.R. Bard, Inc., and Johnson & Johnson, Inc. (Johnson & Johnson).
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`RESTORATIVE THERAPIES GROUP
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`Spine
`Our Spine business develops, manufactures, and markets a comprehensive line of medical devices and implants used in the treatment of the spine and
`musculoskeletal system. Our products and therapies treat a variety of conditions affecting the spine, including degenerative disc disease, spinal deformity,
`spinal tumors, fractures of the spine, and stenosis. Our Spine business also provides biologic solutions for the orthopedic and dental markets.
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`We offer some of the industry’s broadest lines of devices, including a wide range of sophisticated internal spinal stabilization devices, instruments, and
`biomaterials used in the treatment of spinal conditions. Our Spine products are used in spinal fusion of both the thoracolumbar region, referring to the mid to
`lower vertebrae, and cervical region, or upper spine and neck vertebrae. Products used to treat spinal conditions include rods, pedicle screws, hooks, plates,
`balloons, cement and interbody devices, as well as biologics products, primarily bone growth substitutes including bone graft extenders and structural
`allografts such as dowels and wedges. In concert with our Surgical Technologies business, we offer unique and highly differentiated navigation,
`neuromonitoring, and power technologies designed for spine procedures.
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`The following are the principal products offered by our Spine business:
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`Thoracolumbar Products. Products used to treat conditions in this region of the spine include the CD HORIZON SOLERA and LEGACY Systems, the TSRH
`3Dx System, and the T2 Altitude System. In addition, Medtronic offers a number of products that facilitate less invasive thoracolumbar surgeries, including
`the CD HORIZON SOLERA SEXTANT and LONGITUDE Percutaneous Fixation Systems, the Direct Lateral Access System and corresponding
`CLYDESDALE Interbody Implant, Xpander II Balloon Kyphoplasty product for vertebral compression fractures, and the METRx System. Other products
`include AMT interbody implants, Powerease powered surgical instruments, and the NIM-ECLIPSE Spinal System.
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`Cervical Products. Products used to treat conditions in this region of the spine include the ATLANTIS VISION ELITE Anterior Cervical Plate System, the
`VERTEX SELECT Reconstruction System, and the PRESTIGE and BRYAN Cervical Artificial Discs.
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`Kanghui. China Kanghui Holdings (Kanghui), which was acquired on November 1, 2012, has a broad portfolio of trauma and spine products focused on the
`growing value segment in China and other emerging markets, and is beginning to expand into large-joint reconstruction.
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`Biologics Products. Products in our Biologics platform include INFUSE Bone Graft (InductOs in the European Union (EU)), which contains a recombinant
`human bone morphogenetic protein, rhBMP-2, for certain spinal, trauma, and oral maxillofacial applications, Demineralized Bone Matrix (DBM) products,
`including MagniFuse, Grafton/Grafton Plus, and PROGENIX, and the MASTERGRAFT family of synthetic bone graft products – Matrix, Putty, and Granules.
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`The charts below set forth net sales of our Spine products as a percentage of our total net sales for each of the last three fiscal years:
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`Table of Contents
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`Customers and Competitors
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`The primary medical specialists who use our Spine products are spinal surgeons, neurosurgeons, orthopedic surgeons, and interventional radiologists.
`Competitors in this business include DePuySynthes, a Johnson & Johnson Company, Stryker Corporation (Stryker), NuVasive, Inc., Globus Medical, Inc.,
`Zimmer Holdings, Inc. (Zimmer), Alphatec Holdings, Inc., K2M Group Holdings, Inc., LDR Holding Corporation, Orthofix International N.V., Biomet, Inc.,
`and over 200 smaller competitors and physician-owned distributorships.
`
`Neuromodulation
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`Our Neuromodulation business includes implantable neurostimulation and targeted drug delivery systems for the management of chronic pain, common
`movement disorders, spasticity, and urologic and gastrointestinal disorders. Neurostimulation uses an implantable medical device, similar to a pacemaker,
`called a neurostimulator.
`
`The following are the principal products offered by our Neuromodulation business:
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`Neurostimulation Systems for Chronic Pain. Neurostimulation therapy for chronic pain uses a neurostimulator to deliver mild electrical impulses to the
`spinal cord, which act to block pain signals from the brain. We have the largest portfolio of neurostimulation systems in the industry, including rechargeable
`and non-rechargeable devices and a large selection of leads used to treat chronic back and/or limb pain. Our portfolio of products includes pain
`neurostimulation systems with SureScan MRI Technology, including the RestoreSensor (rechargeable) SureScan MRI, with its proprietary AdaptiveStim
`technology. Other products include the RestoreULTRA (rechargeable), RestoreADVANCED (rechargeable), and PrimeADVANCED (non-rechargeable)
`neurostimulation systems.
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`Implantable Drug Infusion Systems. The SynchroMed II Implantable Infusion System delivers small quantities of d