Good morning. My name is Brandy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Medtronic’s Q3 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. I would now like to turn the call over to Jeff Warren, Vice President of Investor Relations. Please go ahead sir.

Thank you, Brandy. Good morning, and welcome to Medtronic’s third quarter conference call and webcast. During the next hour, Omar Ishrak, Medtronic’s Chairman and Chief Executive Officer; and Gary Ellis, Medtronic’s Chief Financial Officer will provide comments on the results of our fiscal year 2013 third quarter which ended January 25, 2013. After our prepared remarks, we’ll be happy to take your questions. First, a few logistical comments. Earlier this morning, we issued a press release containing our financial statements and a revenue by business summary. You should also note that some of the statements made during this call maybe considered forward-looking statements that actual results might differ materially from those projected in any forward-looking statement. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports filed with the SEC. Therefore, we do not undertake to update any forward-looking statement. In addition, the reconciliations of any non-GAAP financial measures are available in the Investors portion of our website at medtronic.com. Finally, unless we say otherwise, references to quarterly results, increasing or decreasing, are in comparison to the third quarter of fiscal year 2012 and all year-over-year revenue growth rates are given on a constant currency basis. With that, I am now pleased to turn the call over to Medtronic Chairman and Chief Executive Officer, Omar Ishrak.

Good morning, and thank you, Jeff and thank you to everyone for joining us today. This morning we reported third quarter revenue of $4.27 billion, which represented growth of 4%. Q3 non-GAAP earnings of $946 million and diluted earnings per share of $0.93 increased 7% and 11% respectively. Despite facing many challenges, Q3 represented another step in building toward our goal of delivering consistent growth on both revenue and earnings per share in line with our baseline expectations. With the number of businesses and geographies that delivered strong performances, but at the same time, we faced some unexpected pressures in certain areas. We are still in the process of strengthening and geographically diversifying our business, so that we can continue to deliver a balanced and consistent performance reliably. In the quarter, we continued to see sequential stabilization in two of our key markets U.S. ICD and U.S. Core Spine. When these businesses decline the combined 2% versus the prior year average daily sales grew 4% sequentially as we have fewer selling days in Q3. In addition our daily revenue share increased sequentially in both of these markets despite facing competitive year ends. Gary will walk you through the details later but the trends confirm that these markets are indeed stabilizing. At the same time we continue to manage challenges in other businesses. First U.S. pacing declined 8% versus the prior year and daily sales declined 2% sequentially. Our procedural volumes were ultimately stable through December but decelerated in January. However, our Q3 performance was in line with the market and we do expect further improvements with the launch of advisor MRI which recently received FDA approval. Also our international pacing business covered for the weakness in the U.S. growing 5% in taking over 300 basis points of share year-over-year. Next…

Thanks Omar. Third quarter revenue of $4.27 billion increased 3% as recorded and 4% no a constant currency basis after adjusting for a $41 million unfavorable impact of foreign currency. Q3 revenue results by region were as follows, relative Central and Eastern Europe was 24%, the Middle Eastern Africa grew 23%, growth in Greater China was 22%, South Asia 20%, growth in Asia Pacific was 15% including 18% growth in Japan, Latin America grew 14%. Growth in the U.S. was 1% while Western Europe and Canada declined 1%. Emerging markets grew a combined 21% in Q3 and represented 12% of our total sales mix, while this is an improvement it was aided by easier comparison through the timing of the Chinese New Year which conversely will turn into a difficult comparison in Q4. Accordingly we would expect emerging market growth to be in the mid-teens. Q3 earnings and diluted earnings per share on a non-GAAP basis were $946.93 million and an increase of 7% and 11% respectively. Q3 GAAP earnings and diluted earnings per share were 988.97 million an increase of 6% and 10% respectively. Included in our Q3 GAAP earnings was a $70 million gain primarily related to the change in fair value of our RDM contingent commercial milestone payments which are based on annual revenue growth through FY ’15. Given the current slower commercial ramp in Europe and contracted U.S. regulatory process we now expect our milestone payments to be reduced that some of our value our RDM business has now shifted beyond the final milestone date. In our cardiac and vascular group revenue of 2.100 billion grew 5%. Results were driven by solid growth in the coronary, endovascular, structural heart and AF Solutions, partially offset by declines in ICDs. CRDM revenue of 1.171 billion declined to 1%,…

Thanks Gary. Before opening the lines for Q&A let me conclude by reiterating the Q3 represented another quarter in building towards our goal of delivering consistent and dependable growth. While we continue to execute in areas we can control, including growing our markets, we have seen early in the process of building a business that is strong enough to offset the variables that are beyond our control so that we can reliably deliver our client expectations which are consistent mid-single digit revenue growth, consistent EPS growth 200 to 400 basis points faster than revenue and returning 50% of free cash flow through shareholders. At the same time we’re also playing a leading role in transforming global healthcare by implementing our long term strategies of economic value and globalization. We’re only at the beginning of establishing our track record but we believe that crisp execution on both our baseline and long term growth strategies combined with strong and disciplined capital allocation will enable us to create long term dependable value in health care. With that we would now like to open the phone lines for Q&A, in addition to Gary I have asked Mike Coyle, President of our Cardiac Investor Group and Chris O'Connell, President of our Restorative Therapies Group to join us again for the Q&A session. We’re rarely able to get to everyone’s questions so we respectfully request to limit yourself to only one question and if necessary one follow-up so that we can get to as many people as possible. If you have any additional questions please contact our Investor Relations team after the call. Operator first question please.

Our first question comes from the line of Mike Weinstein of JPMorgan.

January was a little bit soft and just curious how the January performance impacts you’re thinking relative to the goal of getting back to mid-single digit revenue growth in the near term and I know it's premature to think about FY ’14 but if you have to think about it today how that would influence that goal of getting back to mid-single digits for FY ’14?

The goal is still there, obviously the slowdown in January especially in Europe put some challenges in our way but we feel that they are streaming our businesses enough is to get there. YOU know like we mentioned at JPMorgan there are basically a roadmap included you know strengthening of the U.S. ICD and its spine markets kind of offsetting the year-over-year sort of bad comparison if you like with resolute integrity. However on top of that rest of the businesses were supposed to grow, you can call it about 4.5% or 5% and that’s we were sort of road mapping our mid-single digit. Now Europe’s got pressure but it's 10 times Japan has got some upside and we’re like pushing emerging markets quite hard and you know that’s basically the influx to offset these different variables and address the challenges and then reach our goals. We think is fairly achievable.

I will add to what Omar said I mean overall we obviously January especially and Europe was softer than we expected and as we look into our comments that gives us a little bit of pause but as Omar said there is a lot of parts of Medtronic and we’re going to have to push harder in some other areas and we don’t know what the impact of Europe is long term either we have to make sure see how that plays out but as Omar said Japan is continue to be very, very strong, the U.S. was trying to see some growth back in some of our core businesses, spine and CRDM. So in that we’re still, our goal is to put the other plants that can deliver on that mid-single digit growth. Now, as you indicated, we are not giving FY ‘14 guidance yet, but that is still our plan to deliver on the mid-single digit revenue growth.

Thanks. And then just one quick follow-up on the diabetes business, it sounded like you got a round of questions on the 530G approval, any sense of the likelihood of that pushes out beyond just a three-month turnaround?

Well, I can’t really say. I mean we are working with the FDA closely and we are pretty optimistic that we will get it in the next few months, but our regulatory process has norms, which we cannot control, but at this stage, we are working closely with them and you achieve and expect to achieve a positive outcome.

Thank you, Omar.

Thanks Mike.

Your next question comes from the line of Matthew Dodds with Citigroup.

Hi, good morning. Just a quick follow-up on Mike’s question on diabetes, at the U.S. it was down 1%, I know the pump business are being held up by the new approval, but how is the disposable business tracking and is the diabetes market year-over-year for pumps slowing overall?

We are such a big piece of the market. I think we obviously have an impact on that. There are some pressures that the other competitors have also faced, but I think the new pump is a strong enough catalyst that it will have further growth in the market and we are big enough there in that space. And as far as the disposable market is concerned, I think that’s fine.

Yeah, Matt, the disposables overall are growing fine, we are not seeing any CGMR disposables. We are not seeing growth slowdown there as primarily in the pump side of the equation, and we do believe it’s related to the fact that people are waiting for the new pump voice approval. And so that’s clearly having impact. I mean, I think the overall pump market in the U.S., it had been somewhat slower even if you went back over the last year, it had been somewhat slower, but what you have seen outside the United States when you get this new pump approved the 530G with its global (indiscernible) system feature, we have seen that we actually we accelerated the markets and we saw that outside the United States and Europe, where we saw double-digit growth really two years since the pump has been launched. And so we are expecting that, that will accelerate pump growth in the U.S. And as Omar has said, we are such a large part of the market that, that clearly will drive market growth.

Okay. And a quick one for Mike Coyle, we see Advisa now out can you compare and contrast how much more of the market, what’s the potential share benefit is of Advisa versus Revo?

So, obviously you have seen Advisa has had a real impact on our growth in Japan, but it is also the first MRI product to be approved in Japan since Revo has been in the marketplace here for a year in the U.S. We don’t expect quite as much benefit as we are seeing in Japan, but on the other hand, adding all of the top end feature sets of our Advisa Pacemaker II and now an MRI capable product gives us an opportunity we think both on price as well as on the market share. And importantly, it also gives us now a Revo as a product tier to deal with some of the pricing pressures we have seen at the mid-tiers. So, we think it’s going to be an important addition to our product line. And now we think it will continue the momentum that we are seeing in pacing. We are up as we pointed out on a global basis two market share points year-over-year and obviously having this to reload our U.S. offering is very encouraging.

Thanks Mike. Thanks Omar. Thanks Gary.

Your next question comes from the line of Bob Hopkins with Bank of America.

Good morning. Can you hear me okay?

Yes, okay Bob.

Great, good morning. So, I was just wondering if you could provide some more details on two things which you mentioned on the call. First, you talked about selling day comparisons and I was wondering if you could just be more specific about exactly where the mismatch is, where this particular quarter? And then secondly on Western Europe, I was wondering if you could just talk a little bit more detail about specifically which areas of the business are seeing the greatest weakness, is it cardiovascular, is it spine, is it pricing, is it even, just a little bit more detail on Western Europe and on the selling day mismatches that you mentioned?

Yeah, let me cover Western Europe and I will let Gary cover the selling day thing, and Gary could answer Western Europe. Western Europe, I would answer by saying all of the above, because in general we have had general softness like everywhere it’s I think more in the cardiovascular area, because the products, there is more competition in there, more in the radar screen if you like of the regular, of the policy makers, but you know every business face certain degree of pressure and you know it's both pricing and volume and varies by country, you know Italy for example if it's grow both of them. In Germany it was more pricing. So it varied according to the different countries, but we see this quarter which was different from previous quarters was that in previous quarter’s the softness you like was limited to Southern Europe. This quarter we saw more generalized softening and to some degree you know the general economy (inaudible) is going to consistent with that but again we don’t know all the answer yet, we’re watching this thing very carefully. On this we were doing everything we can to our specialist to make it clear because the market valued our product spring and the value to the healthcare system will in terms of cost and clinical efficacy there are product spring and through that approach we hope to at least stabilize the markets.

Just quickly on the selling base, Bob what we’re trying to highlight is really wasn’t a significant difference in selling days this year versus last year there is a difference, our Q3 versus Q2 which we have always have. Q3 is the lowest selling days for us in either quarters just to from a standpoint of obviously the holiday seasons that are in there and so as a result of that Q4 versus Q3 there is five, six extra selling days in our Q4 and with the same thing versus Q2. So last time we were trying to highlight in the comments when we are comparing against that sequential our Q2 results that there was fewer selling days this quarter versus the prior quarter versus the prior year it's basically comparable. It does have some impact you know we probably saw a little bit more impact we believe this year than last you tend to obviously where the holidays fall in the week and what’s that kind of an impact, so there was some of that softness, in fact that was in some way’s what we thought might have been some of the issue even in Europe though that the first two weeks of January clearly were much, much softer than we have historical seen. So we couldn’t tell whether that was really a holiday effect or not so we’re watching it closely but clearly that’s what we’re trying to get in the selling days comment. There is no difference really on year-over-year.

Thanks and just one quick follow-up on the BMP, supply constraint, how much did that impact the revenues in the quarter and when do you expect that to be resolved?

Well right now it is resolved, so we’re shipping with the supply constraint, we got approval on the sterile water supply right from the FDA. So that thing is resolved, how much of an impact there it had, it had some impact I mean Chris you want to make a comment on that if you want?

Sure yeah Bob, it wasn’t major impact, we were on allocation on certain tip sizes because of the sterile water supply issue and we didn’t take typical end of the quarter orders and so now that we have FDA approval on our new supplier for sterile water we’re in the process of releasing inventory and getting back into, getting off an allocation basis on that product and so I would characterize it as a minor.

Your next question comes from the line of David Lewis with Morgan Stanley.

You gave us a more detail on acquisition strategy that they have end in entire quarter, so I’m going to start there and maybe one follow-up, if you give us some more color in terms of how you’re thinking about the size of transaction sort of become comfortable with Medtronic as several years doing deals that were less than a $1 billion, maybe you can talk us how the size of transaction maybe the stage development. It sounds like your preference is still emerging market or developed markets but then emerging markets you did talk about the nice return goals, help us understand sort of how you think about this return goals as it relates to transactions like (inaudible) which are very much infrastructure type of deals but any additional color you can give us on some of those components it will be very helpful.

I think David the goals and the hurdles is going to change, you know based on whether it's geographic broadening acquisition or new technology acquisition I mean those goals are going to change. You know we really look at two things or three things if you like, we look for a strategic fit, strategic fit you know we have already described our businesses in three groups, the cardiovascular group, the vascular group which essentially includes Ortho and Spine in a broad sense and URO for that matter Ortho Spine and URO and diabetes and we’re aiming to fill gaps within these groups that’s one area of strategic focus and the other is as we fill those jobs, you are also looking at acquisitions that can help us deliver economic value and that could mean broadening our focus in the continuum of care, but always related to our therapy and by that I mean looking at businesses which help us identify patients better or more efficiently as well as patient management offerings. And the other area is globalization, and in globalization, it’s primarily at this stage anyway is approaching the value segments although we are quite interested in sort of market growth as well if we see fit in distribution companies who got high share, who got credibility in certain marketplaces are also areas that we look at. So, those are the areas that we look at. That’s the first thing of strategic focus. The second is it’s going to have certain hurdle rates in the mid-teens and that surprised everyone, no matter who we buy. And the third is that we have got to cover dilution within the company and by covering dilution what I mean is that our goal of delivering this mid single-digit growth with 200 to 400 basis points of leverage and EPS is something we want to protect despite an acquisition. Your acquisition should help us get there rather than get in the way of achieving that. So, these are the things that we try to look at for the acquisition. The size it’s new to all this criteria is a secondary factor.

Okay, very helpful. And then Gary just a quick follow-up here, if we think about margins and progression throughout the year specifically gross margins, it come down maybe 50, 60 basis points across the quarters, if you sort of – if we get to the fourth quarter number that you provided is obviously where it comes in at, can you see what the sense of the factors across the quarters whether it’s FX some of the pricing pressure you talked about or geographic mix? So, what’s been sort of the incremental downward pressure on GEMs across the quarters?

Yeah. Well, as we indicated obviously FX was a big impact, especially over the last couple of quarters. And the good news is as we go into fourth quarter here we are starting to anniversary, especially versus the euro some significant changes on the FX. And so the FX impact started in Q4 is less than the gross margin line and so we do expect that we are not going to quite have quite a negative impact that we have had over the last two or three quarters from that factor. As you indicated, I mean obviously we continued to see pricing pressures across the organization we talked about that. The mix, revenue mix, we got positives and negatives Japan obviously being the big growth, and then right now it has higher margins and that’s positive. Having what’s actually coming back the CRDM business and even spine in the U.S. which are higher margin businesses improving is good, but we saw pricing pressure that we are offsetting and then we are having product cost reductions obviously as we continue to take the $1.2 billion of product cost out. So, we are seeing a benefit on that side of equation. So, there is a lot of factors that are driving it. Overall, we feel still very confident that we are kind of been – we have been able to maintain that 75% to 76% range. It’s been varied by 30, 40 basis points in kind of given quarters, but in general, as we indicated for the fourth quarter 75.5% is kind of what we are looking at, and that’s assuming that the FX basically stay to our setup, and we don’t have a significant negative impact from FX, which is what we have been finding in the last two or three quarters.

Thank you very much.

Your next question comes from the line of Bruce Nudell with Credit Suisse.

Good morning. Thanks for taking my question. I have one for Omar and then a follow-up for Mike. Oman, at (NYSEARCA:GEM) you were sounding recently optimistic that mid-single digits was feasible with kind of reasonable in short assumptions. Clearly, January in Europe seemed to be a surprise to the company. Now, the question is do you guys have intelligences to whether or not January was just a bad month or there were specific identifiable policy changes that really impacted the quarter?

I don’t think we have really hard evidence, but our – obviously we have looked into these very closely and are watching the trends very carefully as well. The policy changes there aren’t any dramatics across the board policy changes in Europe that we can point to. However, in Italy, for example, some of the policy changes are people are driving more strongly and is having an impact. I think there is a general concern and this is a little qualitative but there is a general concern over the overall economy and Europe like you have heard recently in the three has been a concern about growth in Germany and I think that to some degree is probably driving some of this caution in the marketplace both from policy makers as well as patients to certainly a degree that they participate in paying for their own healthcare. So that’s the best that I can do about it, I will be welcomed to…

I don’t know if I can add much more to what Omar said, obviously we were surprised by January. We have since seen through December we were feeling pretty good and then January 30 was softer, as we indicated through the first couple of weeks we could maybe point to the holidays and say that was maybe just an usual impact and that was both power exploiting it and we thought we could see a recovery a little bit in the back half of January but we’re still cautious because it's not like it's bounced back you know to where we’re previously as far as growth rate and so we’re watching that carefully but we don’t have any, as Omar said there is nothing from a policy or direction that changed in January. There wasn’t anything that you know came up in the government or anything else that would have changed how why January ended up being the way it was and it just seems as the overall, as Omar said the overall economy and concern and focus on healthcare is what’s going to focus on and we will have to wait and see how long this plays out.

Okay and for on TAVI, you know Western Europe is have’s and have’s not and I was wondering if you guys could comment on the just general trajectory of volume and price and what’s it going to take you know to get the rest of Western Europe to look more like Germany where they are moving past partner one through into partner two type patients and then finally like when is the extreme rest data from your trial in the U.S. likely to be made available.

On the question of Europe in general you know we believe the availability of data into the moderate risk patient population is going to be the key item to expanding the usage of the technology more broadly outside of Germany and obviously we’re very aggressively pursuing enrollment in our TAVI program to provide those data. In addition for us obviously the availability for us to penetrate the transthecal segment is going to be important and then we expect engage or CE Mark here in the spring and going forward that gives us an opportunity to penetrate what’s roughly 20% of the overall market. So those would be the primary drivers, I would point to for what will keep the growth going in the upper single digit kind of range for Europe. In terms of availability for our data, we are in the U.S. trial we would expect that to become available in the fall time frame for sharing more generally and that’s what I would set as an expectation.

I guess just a follow-up on you know like you look at the U.K I mean you know in Belgium I mean they are not through partner one yet, I mean so what’s it going to take to open up markets like that?

I mean again I think there has to be compelling data to show the use of this technology in lower risk patients to really get at the larger patient population and I think that you know we are very aggressively pursuing the generation of those data.

Your next question comes from the line of Raj Denhoy with Jefferies.

I wonder if I could ask a bit about the U.S. ICD market, you know I think for a couple of quarters now you commented about the lead to port ration continuing to increase for you but you haven’t yet seen any full through on the CAN side, I’m curious whether you expect to do that or really what’s behind that sort of lack of pull through.

As you point out I mean we have seen it consistency have seen an increase in the lead to port ratios and that is very encouraging for us, I think the opportunity that we see going forward is to use some of the unique technologies that we have within our cans to differentiate our product line and for example we have submitted data for the use of our lead integrity alert with competitive leads which we believe would be an important catalyst for us to be able to convert replacement shares on competitive lead products. So that’s an example of where I think, we have some opportunity to expand CAN penetration but the other piece is we just have the very robust pipeline going forward, I mean as you look at that now the revised MRI program on the pacing side, but also the Evera product line is going to be coming into the U.S. in the first quarter of next year which offers a significant size/shape productions and longevity enhancements to the overall product line, which we think will help us with the CAN penetration. And then the availability of the Viva/Brava product which offers some unique algorithms for enhancing CRT effectiveness in that segment of the population, that too will be coming to the U.S. in the first quarter. And obviously, those products, Evera and the Viva/Brava are also going to help us in Europe, where we now have the Viva/Brava approved and are getting very nice uptake on that technology in Europe, and that we’ll have Evera here in the fourth quarter. So, we think these are going to give us good opportunities to continue to share or capture momentum. And it was encouraging to us that we are up almost growing a point of share year-over-year on the ICD side even though our competitors have been in new product introduction modes and we are just entering ours. So, we think the share momentum will continue in these segments.

Okay. Just two quick follow-ups, so in times past, you have also talked about the replacement market improving for you, how much of that share increase you are seeing is on the replacement side and are you actually starting to see now acceleration in that side of your business?

Most of the share capture has been on the replacement side, but we expect that to now shift to the initial implant side as we bring in our new products.

Okay. And then just lastly pricing again U.S. sizing is I think you noted was down 5% in the U.S., how has that been changing, have you seen that stabilized as pricing getting worse, and also in the context of not bulking to see negative 5% is kind of a big number?

Well, the negative 5% is slightly well worse than what we had been seeing. Typically, we have been seeing about 3% declines in the prior quarters, but obviously we think the new products are going to give us an opportunity to play in multiple tiers with better pricing which is going to be helpful to us. But frankly, we have also seen more competitive pressure on pricing. And so we are going to continue to shift our discussions with customers to the breadth of our CVG product offering from the standpoint that we have multiple programs for economic value creation and meeting out their patient clinic, meeting outpatient closer there at CAT labs, the blood conservation programs, the use of the connectivity technologies that we have like they are going to express for being able to do more efficient device checks in the emergency rooms. These were all programs that we are working with accounts on multi-product line offerings to basically address their core economic needs beyond simply the price reductions that we are seeing. And that’s something that’s getting a lot more attraction we think will help us with mitigating some of these pricing issues going forward.

It’s helpful. Thank you.

Next question?

Your next question comes from the line of Dave Roman with Goldman Sachs.

Good morning everyone and thank you for taking the question. I was hoping I know there is a lot of focus on this call on trends in January in Europe, but if I look across your U.S. businesses, there is actually it seems to be pretty healthy, can you just talk about the trajectory in some of the core U.S. markets and maybe you could help us frame it into two categories? One will be sort of looking at those businesses that have faced sort of reassessment on prescribing patterns whether that’s spine or ICDs, whether we are in fact you think reaching a bottom there, employees for reacceleration, and then maybe some of the categories that are more elective in nature, where you might have seen some seasonal impact in the fourth calendar quarter and how those have trended?

No, I think you are right. I think there is room for reason for some level of optimism regarding the U.S. market, because in general that’s at least being stable over the past few quarters. I think a number of things. First of all, I do think in January and in early part of the year in the U.S., there is some pressure in the market based on people’s insurance plans, deductibles start coming up early in the year, so any out-of-pocket expense, be even more careful weapon, that has a tendency to shift procedures to the back half of the year when they want to use up whatever health benefits they had. So, there is that kind of factoring in the U.S. market, which we think we do see in the early part of the year as insurance schemes become more and more patient pay dependent. That’s one factor, but on the other hand, we do think that both in spine and in ICDs there is a general stabilization of volume and implants and then spine for example has reached a level of stability that we haven’t seen for years I think with the practitioners getting comfortable with qualities in place. Now we expect to continue to work with them to drive further growth in that market but they seem to be somewhat of stabilization. I think there is going to be issues of pricing, I think there is going to be issues in the U.S. healthcare reform in the Affordable Care Act distant and there is a certain level of uncertainty there. I think there is factors around the accountable care organizations that we have to watch but in all of these areas we think that if we can demonstrate value financially of the products that we that is essential to our success and the success of the whole healthcare system. So we do think that the U.S. in some ways will be a little more stable than Europe for example but again I mean it's uncertainty there as well.

Yes just to add to Omar’s comment David is you know what I would also say is I think you’re right, I think U.S. is looking better because of the stabilization in ICDs and spine as Omar said I think that we need to know people and need to focus on is as you heard from Mike and even as going through our discussion. We have a lot of new products or just in the U.S. market at this point in time and I mean spine have seen some uplift because they have added new products here recently that are certainly impacted. CRDM is getting ready to launch several new products in the U.S. market, diabetes as we talked about you know is clearly getting ready to launch in the U.S. market and the fact is some of the things that have been driving some of the emerging international markets some of those products are finally just hitting the U.S. market and I think that will even have well especially on top of the fact that we stabilized the ICD and spine business we will help to start accelerating some of the growth in the U.S.

As that I have a follow-up just on that last point Gary were you talked about new product launches. If we look at RDN outside of the United States I think your comments have gone a little bit more slowly than you had expected maybe you can provide a little bit more detail there but maybe more broadly speaking as new products get phased in and launched how should we be thinking about ramp curves and timing of adoption. I mean if you look across the entire sector it seems you know we’re all used to you launch a new product that automatically gets adopted those ramp curves are all looking more slowly than the uses, maybe how should we think about your new product flow and then the corresponding impact on revenue and then earnings.

Maybe I will just add a few comments, you know first of all the ramp increasingly people will demand economic data because you know every government everybody in the world is concerned about healthcare cost, even when they are spending as a percent of GDP low they all watch what’s going around the world and are very careful well that’s creating healthcare cost. So the new for economic value of these therapies is going to be and is becoming as important as clinical value so that’s an essential ingredient to accelerating the commercial adoption of some of these products. The other factor which you have to be careful with is that you know in these parts are different, when RDN for example has a referral chain that is to be educated which is not the same as some of the other products that we might launch and so depending on the details of and the nature of the technology and who is adopting it or what are the barriers in changing the physician or the hospital or healthcare system workflow that’s also will affect the speed of ramp. So those are two things that I would look at as we look at new products.

Your final question comes from the line of Kristen Stewart with Deutsche Bank.

Just wanted to go back over Gary I know you mentioned over expense came in a little bit lower I think you decide the device tax and then also I think a gain on the sale of investment, can you maybe just talk about the drivers that between where it came at 17 relative to your expectations again and whether the device tax is something that we should expect should remain lower whether it's a timing issue.

Yeah there was a few items that affected the interim company extended the line item, it's a little bit favorable than we had expected. One is something we have should, we didn’t know the timing on it with the solution of the Weigao joint venture, one thing is obvious as a joint venture we consolidated the entire sales and expenses really the joint venture, but the profits related that basically Weigao took the offsetting profits, half the profits in effect were down as an expense in other income and expense line item, with it does revolving the joint venture that went away. So, that expense that we have had down in net other income expense was be eliminations, because of the accounting on how we handle Weigao now joint venture. So, that was a benefit that we didn’t anticipate at the beginning of the quarter. It obviously is also by the fact you don’t have the revenues and everything else that we would have we also lost from the resolution of the joint venture. And Kanghui, obviously, then the revenues and expenses are up all of above the line not in the other kind of interest income and expense line even though those two basically offset. That was one item. The medical device tax was also a little lower than we expected. Now, we only have the one month device tax, but as the final rules and regulations came out, basically what we saw is on – the basically the existing inventory that’s in the field already you don’t pay the device tax on that piece of it. And so as a result of that only thing we pay is what’s coming for the manufacturer that actually goes through to the spinal sales. So, there is – there will be a little bit of a slower ramp up on the device tax itself just based on what the existing inventory levels that are out there for the various businesses. And so it was relatively small. Our previous estimate I think even for the fiscal year we have just to be up to $50 million kind of on a pre-tax basis. Now, our current estimate based on new regulations would say that probably for the fiscal year, this may be up to $20 million, $25 million, so just about half of what we expected, say prior to the final regulations. And so that was a slight benefit also.

Okay. And did you have any gains on the sales, any investments I know that you guys were selling Weigao?

No, I mean nothing that’s unusual I mean we have some periodically where we do some, I mean we – and then but we also had some impairments on some investments also from net-net, there was no real change.

Okay. And then can you provide anymore color just around the, I guess, it sounded like it was a gain related to Ardian and the contingent to our future milestones just what the expectation…

Right. What we did on the non-GAAP, excuse me, on the GAAP financials reflects the $70 million gain, which is a reduction in the contingent consideration. So, this is as we made the acquisition of Ardian we had to record the accounting rules required you to record, what do you think your milestone payments are going to be and you have to book that as a continued consideration of liability as you go forward. Because of the obviously the regulatory process in the U.S. here and the enrollment I should say, the enrollment process has been longer than we expected and because of the slower commercialization uplift in Europe because of some of the getting reimbursement and some of these things, the whole things we have been talking about that Ardian, we are still excited about the opportunity, but the reality is it’s coming a little slower than we expected. That means that the milestone payments that we would have to payout based on our current estimates and forecasts of how this will ramp up is left that you are kind of shifting things out a little bit and we are shifting things out past, some of it out past obviously the final milestone payment, which is in FY ‘15. And that gain because the liability has now been reduced, that liability is being reduced, it goes through the P&L as a gain. We recorded it’s obviously in the GAAP financials, but we did not reflect it in our non-GAAP numbers, but it is a gain that company recognizes by reducing that liability.

Will that also have any implications on the amortization and ultimately flows through once you get U.S. commercialization?

No, because again the intangible assets and all the assets are related. The value of the Ardian itself we still feel very, very strongly about, in fact, if anything we probably feel that there is more value there long-term. It’s just that if you think about the value has shifted out past the milestone payment.

Okay, perfect. Thank you.

Thanks. Okay thanks very much for your questions. On behalf of the entire management team, I would like to thank you again for your continued support and interest in Medtronic. And we look forward to updating you again on our progress on our Q4 call in May. Thanks everyone.

This concludes Medtronic’s Q3 earnings release conference call. You may now disconnect.