Ladies and gentlemen, thank you for standing by. And welcome to Medtronic’s Fourth Quarter Earnings Call. At this time, all participant lines have been placed in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] It is now my pleasure to turn the call over to Jeff Warren, Vice President of Investor Relations. Sir?

Thank you, Maria. Good morning. And welcome to Medtronic's fourth quarter conference call and webcast. During the next hour, Omar Ishrak, Medtronic Chairman and Chief Executive Officer; and Gary Ellis, Medtronic's Chief Financial Officer, will provide comments on the results of our fourth quarter and fiscal year 2015, which ended April 24, 2015. 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 our revenue by business summary, which finalizes the preliminary revenue we issued on May 19, 2015. We also updated our combined historical Covidien-Medtronic financial statement presentation to include FY15 comparable revenue, as well as combined P&L for the past eight quarters. You should also note that some of the statements made during this call maybe considered forward-looking statements and 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 on the Investors portion of our website at medtronic.com. Finally, unless we say otherwise, references to quarterly or annual results increasing or decreasing are in comparison to the fourth quarter and full year 2014, respectively, and all year-over-year revenue growth rates are given on a comparable constant currency basis, which includes Covidien Plc and the prior year comparison and aligns Covidien’s prior year monthly revenue to Medtronic’s fiscal quarters. With that, I’m 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 fourth quarter revenue of $7.3 billion, which represents growth of 7% and Q4 non-GAAP diluted earnings per share of $1.16. Before providing more detail on our Q4 performance, I would like to recap the fiscal year. FY15 was a transformational year for our company, with the announcement of the Covidien acquisition in Q1 and the subsequent closing of this transaction in Q4. We believe the combination of our two companies meaning accelerates our strategies, diversifies our growth profile and increases our long-term financial flexibility. I will cover the Covidien integration in more detail in a moment. Our FY15 revenue grew 6%, which was at the upper end of our mid single-digit baseline goal and represented a 230 basis point improvement from FY14. FY15 was a strong year for therapy innovation at Medtronic, with our new therapies growth vector contributing 410 basis points for our full year growth, well above our stated goal of 150 to 350 basis points. All four of our groups launched meaningful innovations in FY15, including those that make advances into disease areas, innovate in our existing market-leading technologies or enhance our diagnostic, therapy and monitoring products with key wraparound programs. Gary will discuss the technologies that drove our results, as well as our future pipeline in more detail shortly when he recaps our business results. Revenue in emerging markets our second growth vector grew double digits again in FY15 and contributed 150 basis points to our full year growth. Our third growth vector, services and solutions nearly doubled in revenue in FY15 and 30 basis points to our full year growth. While legacy Covidien businesses were no doubt contribute to this vector in the future, we feel…

Thanks, Omar. Fourth quarter revenue of $7.34 billion increased 60%, as reported or 7% on a comparable, constant currency basis after adjusting for a $483 million unfavorable impact of foreign currency. Legacy acquisitions and divestitures from both Medtronic and Covidien contributed 80 basis points to growth. Q4 revenue results on a geographic basis were as follows. Growth in the U.S. was 8% and represented 55% of our overall sales. The non-U.S. developed markets grew 5% and represented 32% of our overall sales and growth in the emerging markets was 11% and represented 13% of our overall sales. Q4 diluted earnings per share on a non-GAAP basis were $1.16, a decrease of 2%. We will breakeven on a Q4 GAAP earnings basis after several significant charges primarily related to the Covidien acquisition. In addition to the $362 million adjustment for amortization expense, the Covidien related non-GAAP adjustments on an after-tax basis included a $455 million charge related to the inventory purchase price step-up, a $286 million charge for acquisition-related items and a $157 million net restructuring charge. We also had a $349 million charge related to certain tax adjustments, the majority of which related to the proposed agreement reached with the IRS, resolving all proposed adjustments associated with the Kyphon acquisition, a $61 million CVG product technology upgrade commitment charge and a $27 million net litigation charge, primarily related to provision for additional INFUSE clients. In our Cardiac and Vascular Group, revenue of $2,596 billion grew 10%. This was a result of strong performance in all three divisions -- Cardiac Rhythm & Heart Failure, Coronary & Structural Heart, and Aortic & Peripheral Vascular. In Cardiac Rhythm & Heart Failure or CRHF, revenue of $1,398 billion grew 11%. This performance was driven by low-teens growth in Low Power, mid-single digit growth in…

Thanks, Gary. Before opening the lines for Q&A, let me briefly conclude by stating that Q4 was another strong quarter, a good finish to a successful and transformative year. As we look ahead, while we are facing increased headwinds from foreign exchange, we must remain focused in the operations of the company striving to reliably deliver on baseline financial model, mid-single digit constant currency revenue growth, EPS growth 200 to 400 basis points faster than revenue on an operational basis, and returning 50% of our free cash flow to shareholders. To achieve these goals we continue to execute in our three primary strategies, therapy innovation, globalization, and the economic value. We expect our efforts to deliver consistent and reliable performance, combined with the disciplined capital allocation, will enable us to create long-term, dependable value in healthcare. With that, we will now open the phone lines for Q&A. In addition to Gary, I've asked Mike Coyle, President of our Cardiac and Vascular Group; Bryan Hanson, President of our Minimally Invasive Therapies Group; Chris O'Connell, President of our Restorative Therapies Group; and Hooman Hakami, President of our Diabetes Group to join us. We are really able to get to everyone's questions so please limit yourself to only one question and only one follow-up. If you have 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.

Good morning. And thanks everybody for taking the question. So Omar as a starting point, if I look at your U.S. business, this is certainly one of your better quarters in quite sometime at the company. And I was hoping you could touch on your view of the health of U.S. med device end markets. You obviously have at Medtronic a number of products to drive in specific Medtronic growth and linked to CoreValve across the portfolio. How do you feel about the health of the overall U.S. med device market? Do you think that it’s picked up over the last few quarters?

Yes. Of course it has, because if you just look overall the number of procedures, look at what hospital systems are reporting in terms of their procedures and our own experience, certainly the market has picked up. But I would add, like three factors, some of which you mentioned already, which is some contributed to our performance. First is that there is an overall pick up and stabilization in fact of the market and now I think so correlating directly with the increased expectation from demographics. So that’s certainly there. I think in addition, like you pointed out a convergence for our new products coming altogether at roughly the same time has given us a boost and there is no question about it. And finally, we haven't fully quantified it yet, but there is a pull-through effect of some of our implantable devices from very strong diagnostic monitoring sales, our LINQ device sales. We don’t know how much that is, but I think the three of these put together, probably the main factors driving this increased growth in the U.S.

Gary, let me get to the FY16 guidance. So the incremental impact on EPS from FX, the $0.10, is that in part because you hedged into quarter the Covidien exposure, at some point were less favorable rates? And then I assume from your commentary just about the timing of the impact of FX, the timing of the benefit of synergies, as well as your tax rate still and one more item that as we think about the earnings cadence over the course of 2016 that we probably should expect it to be more back half loaded? Thanks.

Yes, Mike, back to the -- on the foreign exchange, yes the majority of the $0.10 change from what we have previously estimated on the FX is primarily related to the fact that as we hedged Covidien in the fourth quarter, the rates were even lower than where we provide guidance originally on the $0.30 to $0.40. So yes, I mean, the fact is we did -- as get hit Covidien with our hedging program, but unfortunately by the time we got them in our hedging program, we were at probably -- the rates were similar to where we are at currently and that generated an additional loss from the standpoint of foreign exchange overall. So that’s the majority of the $0.10. So the rest of it is, there is some slight impact just from the standpoint that we don't hedge up to 100% of our even the Medtronic earnings, it’s more like 80%. And so there were still some impact on the foreign exchange getting bit worse since their earnings call previously even on the Medtronic and their hedge component, but the majority of it was locking in Covidien under contracts that basically increased the potential negative hit going forward. Now the good news is they are locked in. So we need further change as we go forward obviously which should be minimized as a result of that. As you indicated, as we look forward I think right now from what I have seen out there for some of the models, I think people have it probably little bit too much front-end loaded. There is going to be more based on the results as we go forward here. Foreign exchange is pretty much heavier hit in the first half of the year and assuming the rates stay the same will be less in the back half year. As you said the tax rate, they will be a little higher in the first until we get the R&D credit approved. And the value capture is going to occur as we go through the year. So that’s clearly going to be escalating and we will have more benefit on value capture in the back half of the year. So I think some of the models are need to be shifting probably a little bit more from the first half to the second half on earnings per share guidance.

Okay. Perfect. I will let some others jump in. Thanks, guys.

Thanks, Mike.

Thanks, Mike.

Our next question comes from the line of David Roman of Goldman Sachs.

Thank you. Good morning, everybody. I wanted to start with some of your comments that towards the end of the call regarding capital deployment. I know in the February call you had started to talk about a potential shift as it related to the mix of dividends and buybacks, the anticipation of the dividend update in June. I guess, A, is that so the case? And, B, any additional color you could provide around the major that shift at this point in time?

Well, first, yes, we clearly are more flexibility as we have talked about several times with the increased access to overseas cash. And I think also our increased operating productivity that we will get from synergies is the factor that we have to consider. And so based on that, we are examining our overall capital allocation strategy and we are going to update you shortly on this in a pretty short timeframe. That’s I think all I can share at this point.

Okay. And then maybe just a follow-up on spine. I mean, this is a business that has ebbed and flowed over the past several quarters, but it does look like the overall end market has shown some signs of improvement at least over the past call it 12 months, so that’s not something in which Medtronic has necessarily participated. Can you maybe go into a little bit more detail on exactly what the turnaround plan is for spine? And at what point you start to think about more significant changes in that business either the senior management or sales level?

Well, number of points, first of all, from an overall perspective you are right the business itself, spine taking in isolation, hasn’t quite kept up with the way the markets have trended at least in the last 12 months I would say. But there is a short-term strategy to this, which is probably related to the timing of some of the new products which we will see it play through in the coming quarters here in the short-term. Then the longer-term aspect of this and that we have always said that our strategy in that space is really an integrated strategy that uses our overall capabilities in capital equipment and in surgical tools together with spine to give us the competitive advantage. And to that effect, we’ve reorganized our commercial teams at the regional management level, that’s already in placed. We’ve done that both in the U.S. and in Europe, and we are going to -- we have to see how that plays out. I think that’s really our strategy and we’re going to monitor how we deliver on these two aspects in the coming quarters very closely.

Okay. Thank you, David.

Thanks.

Thanks. Thanks, David.

Our next question comes from the line of Kristen Stewart of Deutsche Bank.

Hi. Thanks for taking the question. Gary, as maybe if you could just go into a little bit more on the tax rate, you’d mentioned that during the quarter you had settled some related to Kyphon, I am not sure if that’s all of the IRS settlement that you were referring to at the Investor Day last year? And then also just on the guidance for the full year of 16% to 18%. Maybe just walk us through how you get there just given the fact that at least I was expecting the tax rate to be a little bit lower given some of the commentary that you had with Covidien post close with the rate dropping by about 200 basis points, not sure if it’s related to those settlement there with the IRS.

Yeah. Okay. With respect to, first of all, the Kyphon aspect and the charge we took in the quarter related to Kyphon. This relates to an issue we’ve had that was raised by the IRS related to our acquisition of Kyphon several years ago and which we used a combination of basically OUS cash and U.S. cash, the comparison there. There was a dispute on how much of that was taxable, et cetera. So as you recall, we used about $3.3 billion of OUS cash to do that transaction. What we’ve ended up agreeing with preliminary decision, the Board still has to approve this, but we agreed basically the settlement with the IRS where we ended up paying about $275 million to settle that and then interest on top of that gets you to the charge we took for the quarter overall. This is not the transfer pricing, put it for transfer pricing issue that we’ve talked about in some of the other previous meetings where which we’ll have a significant impact on the cash flow going forward, this is kind of more of a one-off item related to the acquisition. But it was a major outstanding issue we had with the IRS and we’re happy to get this when settled and move beyond it. As far as the tax rate going forward, 16% to 18%, that is basically in-line with what we’ve expected. If you went back and looked at Medtronic previously and remember this is all now on cash earning and so it’s actually a lower rate that you put in the amortization impact. So it -- you got to make sure you're looking at apples-to-apples when you look at this, Kristen. But, overall, I mean, Medtronic previously was kind of in -- we’ve been in that kind of 18% to 20% range, Covidien had been kind of in that 16% to 17% range. And then as we basically pull this all together, you leverage those and as we indicated is we’re going to get about 200 basis point drop as we come forward related to that. So as a result, we end up on that 16% to 18% range, I mean, is it 15.5% to 17.5%, I mean, that’s kind of how we get to the overall number. So it’s in line with what we've expected and been guiding towards overall. Obviously, there is still lot of moving parts with respect to the tax planning and strategies as we go forward, but we think that range is right in line with kind of what we saw here in Q4 as we went forward. It’s all depends on R&D tax credit, getting renewed, all those types of things. So as we go forward, we feel confident that that’s we are kind of in that range than we’ll have to see where that ultimately ends up, but that’s kind of our current expectation. It is in line with what we’ve been saying previously.

What’s the impact on the R&D tax renewal for that number and what is the updated timeline or resolution on the transfer pricing issue?

Well, the R&D tax credit, probably, has an impact of 50 basis points or so to the overall rate as far as where that is. So it’s not huge but it does have an impact on it. And it all depends obviously when they comes in and how much -- how it plays out as far as how much catch up you have when it occurs. On the transfer pricing issue at Puerto Rico, the cohort is the case. We’re waiting for the judge’s decision on that and that will be whenever the judge decides. I mean, it’s probably going to be towards -- closer towards end of FY or a fiscal year before we hear anything on that, but it’s all based on their timing.

As the judges said they want at least the year to review it.

So it’s all based on the timing.

Okay. Thanks very much.

Thanks, Kristen.

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

Good morning. Just two quick questions. First for Bryan, surgical solutions business continues to remain above market growth, even though you’re getting a much more concerted effort from your chief competitor? So you keep might getting these questions of sustainability in that business despite in a very consistent performance. So, I guess, you could focus on what's driving that success and what gives you the confidence and above market growth going forward and then I have a quick follow-up.

Yeah. I appreciate the question. Yeah. I feel pretty confident, you have got a first kind of reconcile though the fourth quarter, it was very strong for surgical solutions, but we did have some portfolio moves in that. If you pull that out, we’re more in the 7% growth range organically, which is still very strong versus market? And we have noticed a little extra effort by our chief competitor, but we have a lot of confidence in our plan as well. So I feel that we can continue with that above market growth. We’ve got strong momentum as you’ve already referenced. We have what I believe to be very differentiated technologies both in advance stapling, as well as advanced energy and we continue to launch products in both of those areas. Matter of fact if I look across the surgical business, somewhere in the neighborhood of 30 products that we’re going to launch in FY16 and that will drive somewhere in the neighborhood of $60 million to $70 million of revenue, just in those products launched in FY16. So the momentum is there. We’re not getting extra days on our approach there, just because we've been winning we’re very intense in launching products that matter and executing policy when we do.

Okay. And then, Omar, I guess, for you. You’ve been very focused on in this three-prong strategy. And I guess, as I think about certain business lines within patient monitoring and recovery, they seem little less strategic or perhaps not fitting with every piece of your strategy? Do you see these businesses as it kind of important to Medtronic strategy and can you comment on sort of the likelihood of targeted divestitures now that you’ve got the deal at least to close?

Look, the way we look at these businesses is, first, are they in line with our mission or not. And second, if they are and in this situation the way we define that is that these businesses collectively impact patient outcomes through elevating pain restoring health to extending life. Second thing we look at is there room to improve that further, is there technology capability there that can help us drive the outcomes and better outcomes in a more meaningful way, then we look at, is the market space is attractive, can we grow it and is our key capable of delivering. And then finally, we look at that in combination with everything else that we have from a broad value-based healthcare perspective. So within that we led this thing play out, I mean, this is we just beginning to put this new structure together with that kind of thinking in the business groups and then overtime we’ll evaluate what fits and we are constantly looking at our overall portfolio and we do divestitures of certain items that we feel does not fit into that overall strategy. So we’ll look at these businesses just like any other business in that context. But certainly, the main question are they in line with our mission or not, can they make a difference for technology, we think, yes.

Thanks, David.

Thank you very much.

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

Thanks. Can you hear me, okay? Good morning.

Good morning, Bob.

Good morning.

So, first question for, Gary, just on 2016 guidance as it relates to free cash flow? Can you give us a sense as to what you expect for 2016 global free cash flow? And then maybe also an update on the percentage of that free cash flow that you think you’ll have access to? I think from some of your slides recently suggested between $7 billion and $7.5 billion of free cash flow in ’16, but just wanted to confirm that?

No, I mean, I think the free cash flow, if you just take and even use our fourth quarter free cash flow here of a $1.7 billion and kind of talk, is that is going to annualize that. Your time more in that $6.8 billion to $7 billion range is kind of what we’ve been talking about overall. Now the reality is however foreign exchange has a big impact in that free cash flow also. And so just like the kind of our annual rate overall that’s kind of where we’d be at and you’d have as back to Omar’s point earlier, you have some synergies coming into play, the cost of value capture synergies are benefited. But FX is going to be a headwind on cash flow also. So my guess is right now our numbers are probably clearly was based on FX rates, are clearly below $7 billion, probably closer to between $6.5 billion and $7 billion with all the moving parts are going on just because the foreign exchange. And as we indicated, we do think right now that based on those rates, we’re probably going to be closer to somewhere around 60% of that cash is accessible in the FY16 timeframe would be our current assumption based on the numbers that we see rolling in. And that’s why our 50% commitment to return cash to shareholders, obviously we have much more flexibility around that with that 60% kind of mix that we’re expecting at this point. The other thing that’s one on Bob, that’s all based in kind of what I’d call on operating basis, including the FX piece. There obviously are still some one-time items that do affect cash flow and that free cash flow I just talked about is really coming from our operating results and that’s where we based all of our assumptions on. But I do have to think about the fact that there are going to be -- so there will be some additional restructuring and things like that and capital investments we’re going to have to make as we go forward with Covidien acquisition. So that’s all taken into account as we kind of think through our overall free cash flow here for the current year. But in general, I would use right now -- I think it’s less than $7 billion that we’ve previously kind of been talking about. You’re probably down more in the $6.5 billion to $7 billion just based on what’s going on with foreign exchange.

Great. That's very helpful. Thank you. And then one also for Omar, now that you’ve had Covidien for obviously just a few months, but we’d love to hear your updated thoughts on where that you think you can leverage that acquisition beyond just the cost synergies. And I'm thinking specifically about M&A and leveraging your access to your global cash flow and leveraging your low tax rate. And so just wanted to kind of get an update on where that you think you can really leverages as Covidien transaction and the degree to which that helps you with an M&A strategy going forward?

Well, the first thing is that beyond the cost synergies, I just want to remind you that there are two very specific areas that we’ve called out, in drug coated balloon and in neurovascular where we’re getting immediate benefit and we expect some growth acceleration as a result of that. Beyond that, we've begun to explore at a pretty much grassroots levels of engineers, sort of other opportunities where we can leverage each other's technologies. Now from an M&A perspective, which is using that access to that extra -- using extra access we have to that cash, we stated that we’re going to look at early technologies in the U.S. primarily where there maybe opportunities which we haven't been able to participate into the degree that we’d like to, to create a long-term technology pipeline of early stage technologies that we think can make a difference. We’ve begun to look at it. We’ve actually already -- in the interior for example, we’re already kind of executed on some of these and we’ve got a good pipeline of other activities that we’re looking at closely. But beyond that, the Covidien or the MITG business has had a history of doing acquisitions to supplement their business with regularity and we’ll certainly continue to encourage that process and in fact focus it even more according to the way in which we’ve organized overall business. So the M&A activity from us, certainly from a technology perspective is very sort of close to what we’re focusing on. Bigger deals, obviously opportunistically, we’ll look at it, but that’s a matter of our overall financial bandwidth and our management bandwidth. So that’s the way in which we’re approaching this.

Great. Thank you.

Thanks.

Our next question comes from the line of Matt Taylor of Barclays.

Hi. Thanks for taking the question. I just wanted to ask one about your emerging markets strategy. You talked a little bit about some partnerships there that you’re pursuing and some things you’re doing to try to get the current rate higher. I guess so I was just curious to see whether you changed your views on what that growth could be sustainably and whether or not Covidien integrated into Medtronic structure could help you to grow faster in EM?

Well, number of points. First of all, our confidence and our belief and really share it if you like, in the long-term opportunity in emerging markets is completely unchanged and we’re not tolerating on that. That’s just matter of fact. The way in which we approach that market to tap into that opportunity, particularly in the short-term, actually it’s been more complex and more difficult than we first envisaged. And so the growth rate has been slower than what certainly we had originally thought. I think having said that there is certainly, fairly respectable double-digit growth that we can expect reliably, but we want that to be higher. And we’re looking at methods which we continually actually looking at methods which we can do that sooner rather than later. And as we’re learning, channel optimization is a key factor, partnerships with government is a key factor. And finally, referral chain development is something that we need to approach with far greater scale than we’re had before. These are all important factors. As far as Covidien goes, there are number of things that make us optimistic that this combination will help us. One, there is a complementary strength in certain markets. In the Middle East and Latin America, where between Covidien and Medtronic, we were complementary strength. As a result, we now have our emerging market profile diversify between China, Middle East, and Africa, and Latin America as a big three kind of centers within the emerging markets while previously on a standalone Medtronic basis it was dramatic China. So that gives us a little bit diversity in this markets that we didn’t have. And finally as we’ve talked about before, simply the scale that we now will allow us to penetrate more geographies much more efficiently than we could before and just adding more sales team around the world either in underpenetrated regions within countries or in brand new countries will have to contribute. So we haven’t pieced all of that stuff together yet, then we are in the process of prioritizing some of those investments. And again, we are trying to accelerate the growth profile in emerging markets with actually pretty great sense of urgency.

Thanks for that. And I guess on your synergies you talked about at least 850 million, again in the past you referenced some opportunities to further that number through some network consolidation in your plans. When you think you will be in a position to give us quantifiable update on what you think the synergies could be between the two companies in combination?

I think number of things. First of all, as we go forward, this is going to reflect in our overall productivity. I think that’s the best way to do it, although we will keep track of our value capture efforts with very detailed and granular programs. I think at some point new efforts that are results of the combination versus efforts that were already in place that get accelerated gets very kind of mixed up. And since we’re trying to divide those things up, we’re going to sort of commit to certain levels of productivity that we get out of different line items in our P&L. And that’s the way to do it. We feel good about a long-term productivity that we can get out of this that the value capture, the synergy sort of effort is going to eventually morph into a long-term productivity benefit, extending way beyond the three years that we projected. I think that’s the correct way to look at it, that this becomes a productivity engine of significant magnitude that we didn’t have before and to some extent, we are pretty excited about.

Thanks. We’ve got past the top of hour but we will take two last questions.

Our next question comes from the line of Larry Biegelsen of Wells Fargo.

Good morning. Thanks for taking the question and congrats on the strong quarter. Hey Gary, one clarification. It’s still not clear to me, is the R&D tax credit assumed in the guidance or not assumed?

On the tax rate, it’s assumed in the guidance, Larry. But what we are saying is that it’s probably towards the higher end of the range until the credit has approved but assuming it gets approved and that we could be in that range.

Okay. That’s helpful.

It’s basically assumed in there, yes.

All right. And then for my real questions. First to Gary, the guidance, just bear with me on some numbers here. The guidance implies constant currency EPS growth of about 5.6% to 10% and your sales guidance is about 5% to 7.5%, if you include the extra week. So therefore, the EPS guidance at the low end of the range doesn’t imply any leverage. Another way of looking at is the EPS guidance is implying the 4% to 6% underlying sales growth, adding the benefit of the extra week and then adding the 200 to 400 basis points of EPS leverage, that gets you to 7% and 11.5% constant currency EPS growth. And as I said you are guiding constant currency EPS growth of 5.6% to 10%. So, sorry for the long-winded questions, but just curious to know why the EPS guidance appears conservative and I just have one product question? Thanks.

Well. I can’t go through all the number you just laid out, Larry, because I don’t have those in my mind. Let me look at it from the way. You are right. Our revenue growth overall as we indicated is expected to grow, plus the 1% to 1.5% related to the extra week. So just taking the midpoint of the range of 5%, you are seeing somewhere around 6%, 6.5% revenue growth. What do we indicated on the comments overall? From the operating margin perspective as we looked at it, we know from the standpoint of what we are driving there as far as the 100 basis point of improvement on the operating margin as we go forward, we are driving about 400 basis points of leverage and the operating income line on a operational basis before foreign exchange. And so the point is yes. We are getting that 400 basis points of leverage that we talked about in the calculation. That’s offset, that’s measurably impacted by foreign exchange and so it’s all going to get back. The foreign exchange is offsetting the majority of the overall operating leverage that we’ve talked about and that we are trying to drive towards. So the rest of numbers get a little bit more difficult as we think about the number of shares that had been issued and in the various tax rates are going on between various years as we go forward. But the guidance is kind of in line with what we were expecting from the overall standpoint of earnings per share growing. Again, as we talked about that 200 to 400 basis points faster than the revenue but unfortunately with $0.40 to $0.50 of FX hit, you take the 430 to 440 and add $0.40 to $0.50 to that, I think you are going to get to the point that it is on a constant currency basis is significant leverage over and above the revenue growth.

Okay. That’s helpful. And then on the Reveal LINQ for Mike, it’s annualizing now at about $500 million. It seems like Q4 was very strong with over 20% sequential growth on. So where are you in the adoption of that product and how should we think about the growth maybe in the near-term and perhaps the next three to five years? And do you see any headwinds from either new competition or reimbursement pressure? Thanks for taking the questions.

So on LINQ overall, you have to think about it in terms of its three indications for use of syncope, cryptogenic stroke and atrial fibrillation. On the syncope side, we are probably in the low to mid 20s, penetrated 0.22%. Again, I’m just talking about the U.S. and Europe because that really is the place, currently where it is generating the very significant revenues and we’re still building up reimbursement in other places around the world. In cryptogenic stroke, it's more like 5% penetrated. And then when you look at atrial fibrillation, it’s more like 1% to 2% penetrated. So there's still plenty of growth opportunity left obviously in the product. Now, we don’t expect competitors who are looking, who have basic capabilities in electronics, are going to looking at this and ignore it. So, we expect that at some point, we are going to see competitors but frankly, we haven't seen anything yet. I think we're now at a point, as we look at our five-year plans where we think this will be a billion dollar contributor to the overall product company in terms of just its diagnostic sales. And as Omar pointed out, when you look at the syncope patients, you put one of these devices and roughly 8% to 9% of those patients will end up with the pacemaker within a year and by the time you get out to year three, it's more like 20%. So it is really the source of the Low Power growth that we have seen in the United States in terms of growth in units. So, we think it is an important product line in terms of what it does for us on product sales but it also provide us now with service revenue opportunity longer term to monitor patients. And so we will be updating that as our plans develop.

Thank you.

Thanks, Larry. And now time for one last question.

Our final question will comes from the line of Bruce Nudell of Credit Suisse.

Hey, guys. This is Matt in for Bruce. Thanks for taking the questions. First for Mike, just in your press release you highlighted to have a growth of 50% worldwide, 30% in the U.S., which implies pretty significant growth, ex-U.S. 60% year-over-year, I think a $30 million step-up according to our math. So are numbers reasonably correct and can you give us any color, kind of on what drove the gains there. Was there any stock, destocking ahead of, or with the launch of the new sizes or anything else there?

Just to be clear, the 30% number is the heart valve therapies numbers. So it’s a combination of our transcatheter valves and surgical valves. So actually the TAVI growth in the United States is faster than the international growth.

Okay. That makes sense. Can you give us any color on kind of how those split out?

So, our growth in overall was about 50% in the U.S. We almost doubled our revenues in TAVI during the quarter on a year-over-year basis. So, U.S. is considerably faster in terms of its overall growth.

Okay. That’s helpful. And then just one follow-up on the [indiscernible] spacer launch you talked about this summer. Can you talk about when you will have reimbursement in place? It’s sort of when you expect that product to be fully launched and do you see that more of a source of unit share gains, or is the opportunity therefore a more premium pricing?

So, I just didn’t want to finish up with the -- we don't do any meaningful stocking of transcatheter out in the U.S. just to finish your first question. On the trans continuous pacing product line, obviously, we are talking about O-U.S. now and Europe with the CE Mark that we now have. And there is no separate reimbursement in the sense of this product line obtaining different reimbursement in Europe. So it basically is being targeted at a specific set of patients who might be at risk for infection and single chamber of patient population. Although, you do see opportunities this year, a makeshift towards more single chamber pacing because of the benefit this product line offers in terms of a lower expected complication rates. So, we think it’s an important breakthrough but you will see us to be deliberate in the rollout of this product. It requires very different implant technique than what the standard pacemaker has and so you will see us doing very significant training and education as we roll this out and that will gage some of the speed with which its grows.

Okay. Thank you.

Okay. Thanks everyone and thanks to all of you for those great questions. And with that on behalf of our entire management team, thank you again for your continued support and interest in Medtronic. We look forward to updating you on our progress in our Q1 call, which we anticipate, holding on September 3rd. Thank you and have a great day.

Thank you. Ladies and gentlemen, this does conclude today’s conference call. You may now disconnect.