Prior to beginning work in this discussion thread, read pages 51 through 80 of Understanding Corporate Annual Reports, Voluntary disclosures in corporate annual reports – More than meets the eye, and Integrated Performance Report. This is the time to share in discussion format your critical learnings and any details from your AOR. These thoughts should be qualitative, quantitative, generic, and specific. The learnings should be related to your AOR and what you can put to work in the short- and long-term in the real world. Please use 150 words or more.
MEDTRONIC 2016 INTEGRATED PERFORMANCE REPORT 7th CONSECUTIVE YEAR receiving a perfect score on the Human Rights Campaign Corporate Equality Index 7.7% OF TOTAL SALES invested in research and development 60,000 MEDICAL PROFESSIONALS received training on the newest technologies and treatments $114.6 MILLION in philanthropic giving NON-REGULATED WASTE DOWN per unit of revenue from 2013 GHG EMISSIONS DOWN per unit of revenue from 2013 64,800 EMPLOYEE HOURS volunteered through Project 6 BUSINESS GROWTH WORKING RESPONSIBLY VALUE TO SOCIETY $3.5 BILLION in net earnings $28.8 BILLION in revenue FY2016 HIGHLIGHTS 16% 20% CEO Letter 4 Leadership in the New Healthcare Era 4 Company Overview 5 About Our Company 5 Organizational Profile 5 Scope of Report 6 Sustainability Risks and Opportunities 7 Our Material Issues 7 Sustainability Management 7 Reducing Sustainability Risk 8 Creating Opportunities 9 Economic Contributions to Society 10 Financial Performance 10 Operating Costs 12 Acquisitions and Investments 13 Divestitures 14 Taxes 14 Financial Assistance 14 Return to Shareholders 14 Philanthropy 14 Non-GAAP Financial Measures 16 VALUE TO SOCIETY: OUR PRIORITIES 19 Access 20 Therapy Innovation 20 Economic Value 21 Globalization 22 Product Quality 25 Responsibility and Quality 25 Maintaining Quality Facilities 26 Product Use and Performance 26 Customer Feedback 28 Clinical Trials 28 Animal Research 29 Product Stewardship 30 Our Approach 30 Responsible Sourcing 32 Supplier Quality Management 32 Responsible Supply Management 33 Supplier Diversity 33 Ethics in Sales and Marketing 35 Ethical Business Conduct 35 Customer and Product Security 37 WORKING RESPONSIBLY: OUR COMPANY 38 Governance and Engagement 39 Corporate Governance 39 Ethical Workplace 39 Public Policy 41 Stakeholder Engagement 41 Operations 42 Our Environmental, Health, Safety, and Sustainability Approach 42 Operational Footprint 43 Energy Use and GHG Emissions 43 Managing Waste 44 Water 45 Employees 46 Global Workforce 46 Investing in Our Workforce 46 Employee Engagement 47 Inclusion and Diversity 47 Employee Compensation 48 Safety and Wellness 48 Data Summary 49 About this Report 52 Medtronic 2016 Integration Index 53 CEO Letter | 4 LEADERSHIP IN THE NEW HEALTHCARE ERA Healthcare is at a crossroads. Our industry faces intense clinical and economic challenges that include an aging global population, rising incidence of chronic disease, inefficient healthcare delivery, complex regulatory systems, and fragmented fee-for-service payment models. These challenges require new approaches and creative collaboration as we pursue better healthcare delivery and improved patient outcomes for more people. Medtronic is leading this evolution with a transformative business strategy to advance global healthcare. Our approach combines meaningful innovation in therapies, products, and systems; with value-based, cost- efficient healthcare models; and technologies and partnerships that open the door to quality care for more people around the world. I am excited to report that in FY2016 this strategy has produced significant results. More than 65 million people benefited from Medtronic technologies — two every second — as we helped our customers deliver more seamless, integrated care for patients across the healthcare continuum. In particular, the full integration of Covidien — acquired in late FY2015 — has greatly expanded our global reach and impact. Further, we expanded our leadership in Value-based Healthcare, with a goal of sharing accountability for costs and improved patient outcomes. Additionally, in FY2016 Medtronic: § Delivered strong financial results, with $28.8 billion in revenue and $3.5 billion in net earnings. § Invested $2.2 billion in research and development (R&D), representing 7.7 percent of net sales. § Donated more than 2 percent of pre-tax profits — $114.6 million — to charitable causes. § Supported Hub & Spoke healthcare delivery models with an investment in Abraaj Group’s Growth Markets Health Fund (GMHF). GMHF will purchase and build hub hospitals in several emerging markets, including Bangladesh, Ethiopia, Ghana, India, Kenya, Nigeria, and Pakistan, expanding access to specialists for millions of patients. CEO LETTER § Extended our lifesaving HeartRescue Project into China and India, and expanded the U.S. program nationally as the HeartRescue Consortium. § Increased healthcare capacity and access by investing more than $152 million in training for approximately 60,000 medical professionals. § Progressed to meet our goal to reduce operational energy use and greenhouse gas emissions by 15 percent by 2020 from a FY2013 baseline. § Launched a Responsible Supply Management function to support socially and environmentally responsible business practices from our suppliers. Reflecting our focus on reshaping Medtronic for a new healthcare era, this annual integrated report is organized primarily around our most material sustainability issues. These are global access to healthcare, product quality, product stewardship, responsible sourcing, and ethics in sales and marketing. For more than half a century, Medtronic has operated with a clear, compelling Mission: to alleviate pain, restore health, and extend life. We believe that access to quality healthcare is a fundamental right of all people around the world. We believe that continuously improving clinical outcomes through innovation will present virtually limitless opportunities to extend our Mission. Each day we challenge ourselves to make this a reality for more people. I’m incredibly proud of our performance in FY2016 and even more excited about our future as we continue to challenge the status quo. In my five years with Medtronic, I see our value as a company, and our business performance, tied more closely than ever to our citizenship impact. Omar Ishrak Chairman and Chief Executive Officer Company Overview | 5 ABOUT OUR COMPANY Medtronic is among the world’s largest medical technology, services, and solutions companies — alleviating pain, restoring health, and extending life for millions of people around the world. Founded more than 60 years ago, today we serve hospitals, physicians, clinicians, and patients in approximately 160 countries. Our therapies improve the lives of two people every second. Our purpose is to transform healthcare by creating meaningful innovation, expanding global access to therapies, aligning value, and being a trusted partner. Our three strategic priorities are: § Therapy innovation (see Access for more information) § Globalization § Economic value (see Economic Contributions to Society for more information) MEDTRONIC, FY2016 SNAPSHOT Number of Employees 88,000+ Number of Countries in Which We Operate Approximately 160 Number of Locations 480 Research and Development Spend $2.2 billion Number of Patents 45,000+ Patients Served 65 million+ ORGANIZATIONAL PROFILE Medtronic is a global healthcare player with four operating segments — the Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group, and Diabetes Group. Each segment is divided into business divisions that deliver a wide range of medical technologies, therapies, services, and solutions. COMPANY OVERVIEW MEDTRONIC OPERATING SEGMENTS: FY2016 TOTAL SALES AND BUSINESS DIVISIONS Total net sales $28.8 billion CARDIAC AND VASCULAR GROUP FY2016 net sales of $10.2 billion § Cardiac Rhythm and Heart Failure § Coronary and Structural Heart § Aortic and Peripheral Vascular MINIMALLY INVASIVE THERAPIES GROUP FY2016 net sales of $9.6 billion § Surgical Solutions § Patient Monitoring and Recovery RESTORATIVE THERAPIES GROUP FY2016 net sales of $7.2 billion § Spine § Neuromodulation § Surgical Technologies § Neurovascular DIABETES GROUP FY2016 net sales of $1.8 billion § Intensive Insulin Management § Non-Intensive Diabetes Therapies § Diabetes Service and Solutions SCOPE OF REPORT This is our third annual integrated report. It covers our global operations for the fiscal year ended Apr. 29, 2016 (FY2016), and, for the first time, incorporates annual data from Covidien, acquired in FY2015. The FY2016 report is organized around our most material issues, summarized in Sustainability Risks and Opportunities and covered extensively throughout the report, GRI Supplement, and website. FY2016 NET PROPERTY, PLANT, AND EQUIPMENT (PPE) BY REGION ($ MILLIONS) Total net PPE: $4,841 Americas $17,578 (61%) Europe, Middle East, and Africa $6,700 (23%) Greater China $1,495 (5%) Company Overview | 6 Americas $17,578 (61%) Europe, Middle East, and Africa $6,700 (23%) Asia Pacific $3,060 (11%) Greater China $1,495 (5%) Americas $3,728 (77%) Europe, Middle East, and Africa $708 (14%) Asia Pacific $220 (5%) Greater China $185 (4%) Americas $17,578 (61%) Europe, Middle East, and Africa $6,700 (23%) Asia Pacific $3,060 (11%) Greater China $1,495 (5%) Americas $3,728 (77%) Europe, Middle East, and Africa $708 (14%) Asia Pacific $220 (5%) Greater China $185 (4%) FY2016 NET SALES TO EXTERNAL CUSTOMERS BY REGION ($ MILLIONS) Total net sales: $28,833 http://www.medtronic.com Sustainability Risks and Opportunities | 7 SUSTAINABILITY RISKS AND OPPORTUNITIES As a global leader in medical technology, our business generates significant benefits for society. In addition to pursuing our Mission to alleviate pain, restore health, and extend life, we embrace and act on our social and environmental responsibilities. We proactively manage risks to our operations and reputation, and capitalize on opportunities through the integration of sustainability into our business strategy. OUR MATERIAL ISSUES We aim to understand, and act on, the issues most important to our stakeholders and our business. In FY2014, we consulted internal and external stakeholders including healthcare providers, policy makers, and investors to identify our material issues. In May 2016, our Sustainability Steering Committee reviewed the proposed strategy for continuous improvement of our five priority sustainability issues. Our most material sustainability issues are: § Access to Care: working with health systems around the world, sharing technologies, services, resources, and expertise to help remove barriers to affordable treatment of chronic diseases. § Product Quality: ensuring that our products and services clearly comply with the highest standards of safety and reliability. § Product Stewardship: minimizing the lifecycle footprint of our products and packaging through design innovation. § Responsible Sourcing: collaborating with our supply chain to develop long-term relationships that enhance product quality, worker rights, and environmental protection. § Ethics in Sales and Marketing: leading our industry as a trusted partner with a commitment to ensure responsible business practices in relation to the marketing, communication, and promotion of our products and