Medtronic Annual Revenue Up 8 Percent to $14.6 Billion

Strong Performance Delivered Across Diverse Portfolio

• Press Release
• Source: Medtronic, Inc.
• On 7:15 am EDT, Tuesday May 19, 2009

MINNEAPOLIS--(BUSINESS WIRE)--Medtronic, Inc. (NYSE: MDT - News):

• Full Year Double Digit Constant Currency Revenue Growth in 5 out of 7 Businesses: CardioVascular, Spinal, Neuromodulation, Diabetes, Surgical Technologies
• Fourth Quarter GAAP Cash Flow from Operations of $1.123 Billion
• Fourth Quarter Constant Currency Revenue Growth of 5%; Fourth Quarter Revenue Decreased 1%

Medtronic, Inc. (NYSE: MDT - News) today announced financial results for its fiscal year and fourth quarter ended April 24, 2009.

Medtronic recorded fiscal year 2009 revenue of $14.599 billion, an 8 percent increase over the $13.515 billion in fiscal year 2008. Currency translation had a negative impact on revenue of $100 million for the fiscal year. As reported, fiscal year 2009 net earnings were $2.291 billion, or $2.04 per diluted share an increase of 3 percent and 5 percent respectively. The attached table details adjustments for restructuring, certain litigation, purchased in-process research and development (IPR&D) and special charges and discrete tax adjustments. After reconciling for these items in both periods, non-GAAP net earnings and diluted earnings per share for the fiscal year were $3.283 billion and $2.92, an increase of 10 percent and 12 percent respectively.

Fourth quarter revenue decreased approximately 1 percent to $3.829 billion from the $3.860 billion reported a year ago. Revenue growth on a constant currency basis was 5 percent after adjusting for the negative $211 million impact of currency translation in the fourth quarter. As reported, fourth quarter net earnings were $250 million, or $0.22 per diluted share. As detailed in the attached table, adjusting for restructuring, certain litigation, IPR&D and special charges and discrete tax adjustments, fourth quarter net earnings and diluted earnings per share on a non-GAAP basis were $916 million and $0.82, respectively.

“In 2009, we delivered on our financial commitments despite unforeseeable shifts in the economy. We strengthened our core businesses, made several strategic acquisitions in high potential markets, and made solid progress advancing our pipelines by increasing our focus and discipline on driving innovation across the company,” said Bill Hawkins, chairman and chief executive officer. “In addition, this was our second consecutive quarter of generating greater than $1 billion in free cash flow, which reflects our strong balance sheet management in addition to our focus on operational excellence.”

Cardiac Rhythm Disease Management

Cardiac Rhythm Disease Management annual revenue of $5.014 billion increased 1 percent; 2 percent on constant currency basis. Fourth quarter revenue of $1.300 billion decreased 5 percent, but grew 1 percent after adjusting for an unfavorable $83 million currency translation impact. Implantable cardioverter defibrillator (ICD) annual revenue of $2.962 billion increased 3 percent over fiscal year 2008 on a constant currency basis. Worldwide annual pacing revenue of $1.984 billion decreased 1 percent compared to last year. Fourth quarter revenues for ICDs and pacing were $780 million and $494 million, respectively. The acquisition of Ablation Frontiers was also completed in the quarter, which when combined with the recent CryoCath acquisition, gives Medtronic two of the leading technology platforms in the atrial fibrillation market.

Spinal and Biologics

Spinal and Biologics annual revenue of $3.400 billion increased 14 percent on both an actual and constant currency basis, driven by $609 million in Kyphon revenue. Fourth quarter Spinal and Biologics revenue of $881 million increased 1 percent, but grew 4 percent after adjusting for an unfavorable $20 million currency translation impact. Revenue growth was driven by core spinal products which increased 5 percent on a constant currency basis. Biologics revenue in the fourth quarter was $215 million.

CardioVascular

CardioVascular annual revenue of $2.437 billion increased 14 percent; 15 percent on a constant currency basis. Fourth quarter revenue of $644 million was flat compared to a year ago, but grew 8 percent after adjusting for an unfavorable $50 million currency translation impact. Coronary annual revenue of $1.292 billion increased 16 percent on a constant currency basis. Endovascular annual revenue of $398 million increased 42 percent on a constant currency basis. Fourth quarter Endovascular revenue of $117 million increased 67 percent on a constant currency basis, driven by the strong performance of both the Talent™ Abdominal Aortic Aneurysm (AAA) and Talent™ Thoracic aneurysm product lines. The acquisitions of CoreValve and Ventor were also completed in the quarter, positioning Medtronic in a leadership role in the transcatheter valve therapy marketplace.

Neuromodulation

Neuromodulation annual revenue of $1.434 billion increased 9 percent; 10 percent on a constant currency basis. Fourth quarter revenue of $389 million increased 2 percent, but grew 7 percent after adjusting for an unfavorable $18 million currency translation impact. The business unit’s key growth therapies in the fiscal year included InterStim® for the treatment of overactive bladder, and Activa® deep brain stimulation for the treatment of Parkinson’s disease.

Diabetes

Diabetes annual revenue of $1.114 billion increased 9 percent; 11 percent on a constant currency basis. Fourth quarter revenue of $296 million increased 8 percent, but grew 14 percent after adjusting for an unfavorable $18 million currency translation impact. Growth during the year and in the fourth quarter can be attributed to continued success of continuous glucose monitoring, which grew nearly 30 percent in the quarter.

Surgical Technologies

For the fiscal year, the Surgical Technologies business generated annual revenue of $857 million, an increase of 10 percent; 11 percent on a constant currency basis. Fourth quarter revenue of $235 million, increased 3 percent, but grew 8 percent after adjusting for an unfavorable $12 million currency translation impact. This growth was driven by sales of image guided surgery systems including the StealthStation S7 with Synergy Cranial and EM Fusion. Nerve monitoring equipment, monitoring disposables and revenue from service contracts also contributed to the business unit’s growth in the quarter.

Physio-Control

Physio-Control reported annual revenue of $343 million, an increase of 4 percent; 6 percent on a constant currency basis. Fourth quarter revenue of $84 million decreased 17 percent, but after adjusting for an unfavorable $10 million currency translation impact, revenue declined 7 percent.

In closing, Hawkins said, “We believe we have the most exciting portfolio of products and therapies in the industry. Our relentless focus on execution and innovation position us as an important part of the solution to address the burden of global chronic disease.”

Webcast Information

Medtronic will host a webcast today, May 19 at 8 a.m. EDT (7 a.m. CDT), to provide information about its businesses for the public, analysts and news media. This quarterly webcast can be accessed by clicking on the Investor Relations link on the Medtronic home page at www.medtronic.com. This earnings release will be archived at www.medtronic.com/newsroom. Within 24 hours, a replay of the webcast and a transcript of the company’s prepared remarks will be available in the “Presentations and Transcripts” section of the Investor Relations homepage.

About Medtronic

Medtronic, Inc., headquartered in Minneapolis, is the world’s leading medical technology company, alleviating pain, restoring health and extending life for people with chronic disease. Its Internet address is www.medtronic.com

This press release contains forward-looking statements regarding our operating momentum leverage, new acquisitions, continued product acceptance, non-domestic and domestic growth and general business conditions, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation and general economic conditions and other risk and uncertainties described in Medtronic’s Annual Report on Form 10-K for the year ended April 25, 2008. Actual results may differ materially from anticipated results. Medtronic does not undertake to update its forward-looking statements. Unless otherwise noted, all comparisons made in this press release are on an “as reported basis,” not on a constant currency basis, and references to quarterly figures increasing or decreasing are in comparison to the fourth quarter of fiscal year 2008.

MEDTRONIC, INC.
REVENUE BY OPERATING SEGMENT - WORLD WIDE
(Unaudited)
($ millions)
		FY 08			FY 08			FY 08			FY 08			FY 08			FY 09			FY 09			FY 09				FY 09				FY 09
		QTR 1			QTR 2			QTR 3			QTR 4			Total			QTR 1			QTR 2			QTR 3				QTR 4				Total
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT		$	1,235		$	1,148		$	1,218		$	1,363		$	4,963		$	1,303		$	1,242		$	1,169			$	1,300			$	5,014
Pacing Systems			494			495			478			540			2,008			526			506			457				494				1,984
Defibrillation Systems			726			639			726			806			2,897			764			724			694				780				2,962
Other			15			14			14			17			58			13			12			18				26				68
SPINAL		$	644		$	660		$	808		$	869		$	2,982		$	859		$	829		$	832			$	881			$	3,400
Core Spinal			454			462			455			498			1,869			477			485			479				512				1,951
Biologics			190			198			206			221			815			221			198			205				215				840
Kyphon Business			-			-			147			150			298			161			146			148				154				609
CARDIOVASCULAR		$	486		$	490		$	512		$	643		$	2,131		$	631		$	596		$	565			$	644			$	2,437
Coronary Stents			152			149			157			251			710			236			208			186				213				844
Other Coronary/Peripheral			95			96			103			116			408			113			107			110				119				448
Endovascular			69			70			70			76			285			87			95			99				117				398
Revasc & Surgical Therapies			102			105			109			115			431			117			112			103				114				447
Structural Heart Disease			68			70			73			85			297			78			74			67				81				300
NEUROMODULATION		$	289		$	321		$	320		$	381		$	1,311		$	348		$	343		$	354			$	389			$	1,434
Neuro Implantables			237			264			260			308			1,069			284			271			283				308				1,145
Gastroenterology & Urology			52			57			60			73			242			64			72			71				81				289
DIABETES		$	241		$	246		$	258		$	275		$	1,019		$	269		$	272		$	277			$	296			$	1,114
SURGICAL TECHNOLOGIES		$	172		$	185		$	195		$	228		$	780		$	202		$	213		$	207			$	235			$	857
Core Ear, Nose and Throat (ENT)			75			75			81			92			323			87			86			83				97				352
Neurologic Technologies			69			74			73			82			298			79			80			78				82				320
Navigation			28			36			41			54			159			36			47			46				56				185
PHYSIO-CONTROL		$	60		$	74		$	94		$	101		$	329		$	94		$	75		$	90			$	84			$	343
TOTAL		$	3,127		$	3,124		$	3,405		$	3,860		$	13,515		$	3,706		$	3,570		$	3,494			$	3,829			$	14,599
ADJUSTMENTS :
CURRENCY IMPACT (1)		$	-		$	-		$	-		$	-		$	-		$	157		$	65		$	(110	)		$	(211	)		$	(100	)
COMPARABLE OPERATIONS (1)		$	3,127		$	3,124		$	3,405		$	3,860		$	13,515		$	3,549		$	3,505		$	3,604			$	4,040			$	14,699

(1) Medtronic management believes that in order to properly understand Medtronic's short-term and long-term financial trends, investors may wish to consider the impact of foreign currency translation on revenue. In addition, Medtronic management uses results of operations before currency translation to evaluate the operational performance of the Company and as a basis for strategic planning. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP.

Note: The data in this schedule has been intentionally rounded to the nearest million and therefore the quarterly revenue may not sum to the fiscal year to date revenue.

MEDTRONIC, INC.
REVENUE BY OPERATING SEGMENT - US
(Unaudited)
($ millions)
		FY 08			FY 08			FY 08			FY 08			FY 08			FY 09			FY 09			FY 09			FY 09			FY 09
		QTR 1			QTR 2			QTR 3			QTR 4			Total			QTR 1			QTR 2			QTR 3			QTR 4			Total
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT		$	754		$	679		$	726		$	765		$	2,922		$	731		$	702		$	670		$	747		$	2,851
Pacing Systems			244			237			218			242			940			233			228			206			228			896
Defibrillation Systems			504			434			502			515			1,955			492			472			454			505			1,923
Other			6			8			6			8			27			6			2			10			14			32
SPINAL		$	530		$	540		$	642		$	683		$	2,395		$	682		$	647		$	658		$	691		$	2,678
Core Spinal			349			352			341			363			1,405			358			358			352			370			1,438
Biologics			181			188			195			208			772			208			184			194			203			789
Kyphon Business			-			-			106			112			218			116			105			112			118			451
CARDIOVASCULAR		$	167		$	173		$	165		$	256		$	761		$	253		$	235		$	224		$	265		$	976
Coronary Stents			20			21			20			98			158			92			68			59			77			296
Other Coronary/Peripheral			24			24			26			28			104			28			26			29			31			111
Endovascular			35			37			31			35			138			41			51			51			61			205
Revasc & Surgical Therapies			49			52			49			51			200			52			51			49			54			206
Structural Heart Disease			39			39			39			44			161			40			39			36			42			158
NEUROMODULATION		$	201		$	239		$	227		$	262		$	929		$	238		$	249		$	254		$	279		$	1,019
Neuro Implantables			160			192			180			207			738			189			192			199			215			794
Gastroenterology & Urology			41			47			47			55			191			49			57			55			64			225
DIABETES		$	163		$	170		$	170		$	176		$	681		$	167		$	180		$	188		$	200		$	736
SURGICAL TECHNOLOGIES		$	112		$	120		$	124		$	141		$	497		$	127		$	136		$	132		$	149		$	545
Core Ear, Nose and Throat (ENT)			48			47			51			56			201			53			54			54			61			221
Neurologic Technologies			45			50			48			52			195			51			53			51			53			209
Navigation			19			23			25			33			101			23			29			27			35			115
PHYSIO-CONTROL		$	21		$	37		$	44		$	49		$	151		$	51		$	47		$	50		$	45		$	192
TOTAL		$	1,948		$	1,958		$	2,098		$	2,332		$	8,336		$	2,249		$	2,196		$	2,176		$	2,376		$	8,997
ADJUSTMENTS :
CURRENCY IMPACT		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
COMPARABLE OPERATIONS		$	1,948		$	1,958		$	2,098		$	2,332		$	8,336		$	2,249		$	2,196		$	2,176		$	2,376		$	8,997

Note: The data in this schedule has been intentionally rounded to the nearest million and therefore the quarterly revenues may not sum to the fiscal year to date revenue.

MEDTRONIC, INC.
REVENUE BY OPERATING SEGMENT - INTERNATIONAL
(Unaudited)
($ millions)
		FY 08			FY 08			FY 08			FY 08			FY 08			FY 09			FY 09			FY 09				FY 09				FY 09
		QTR 1			QTR 2			QTR 3			QTR 4			Total			QTR 1			QTR 2			QTR 3				QTR 4				Total
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT		$	481		$	469		$	492		$	598		$	2,041		$	572		$	540		$	499			$	553			$	2,163
Pacing Systems			250			258			260			298			1,068			293			278			251				266				1,088
Defibrillation Systems			222			205			224			291			942			272			252			240				275				1,039
Other			9			6			8			9			31			7			10			8				12				36
SPINAL		$	114		$	120		$	166		$	186		$	587		$	177		$	182		$	174			$	190			$	722
Core Spinal			105			110			114			135			464			119			127			127				142				513
Biologics			9			10			11			13			43			13			14			11				12				51
Kyphon Business			-			-			41			38			80			45			41			36				36				158
CARDIOVASCULAR		$	319		$	317		$	347		$	387		$	1,370		$	378		$	361		$	341			$	379			$	1,461
Coronary Stents			132			128			137			153			552			144			140			127				136				548
Other Coronary/Peripheral			71			72			77			88			304			85			81			81				88				337
Endovascular			34			33			39			41			147			46			44			48				56				193
Revasc & Surgical Therapies			53			53			60			64			231			65			61			54				60				241
Structural Heart Disease			29			31			34			41			136			38			35			31				39				142
NEUROMODULATION		$	88		$	82		$	93		$	119		$	382		$	110		$	94		$	100			$	110			$	415
Neuro Implantables			77			72			80			101			331			95			79			84				93				351
Gastroenterology & Urology			11			10			13			18			51			15			15			16				17				64
DIABETES		$	78		$	76		$	88		$	99		$	338		$	102		$	92		$	89			$	96			$	378
SURGICAL TECHNOLOGIES		$	60		$	65		$	71		$	87		$	283		$	75		$	77		$	75			$	86			$	312
Core Ear, Nose and Throat (ENT)			27			28			30			36			122			34			32			29				36				131
Neurologic Technologies			24			24			25			30			103			28			27			27				29				111
Navigation			9			13			16			21			58			13			18			19				21				70
PHYSIO-CONTROL		$	39		$	37		$	50		$	52		$	178		$	43		$	28		$	40			$	39			$	151
TOTAL		$	1,179		$	1,166		$	1,307		$	1,528		$	5,179		$	1,457		$	1,374		$	1,318			$	1,453			$	5,602
ADJUSTMENTS :
CURRENCY IMPACT (1)		$	-		$	-		$	-		$	-		$	-		$	157		$	65		$	(110	)		$	(211	)		$	(100	)
COMPARABLE OPERATIONS (1)		$	1,179		$	1,166		$	1,307		$	1,528		$	5,179		$	1,300		$	1,309		$	1,428			$	1,664			$	5,702

(1) Medtronic management believes that in order to properly understand Medtronic's short-term and long-term financial trends, investors may wish to consider the impact of foreign currency translation on revenue. In addition, Medtronic management uses results of operations before currency translation to evaluate the operational performance of the Company and as a basis for strategic planning. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP.

Note: The data in this schedule has been intentionally rounded to the nearest million and therefore the quarterly revenue may not sum to the fiscal year to date revenue.

MEDTRONIC, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
		Three months ended							Twelve months ended
		April 24,				April 25,			April 24,			April 25,
		2009				2008			2009			2008
		(in millions, except per share data)
Net sales		$	3,829			$	3,860		$	14,599		$	13,515
Costs and expenses:
Cost of products sold			932				945			3,518			3,446
Research and development expense			368				349			1,355			1,275
Selling, general and administrative expense			1,313				1,296			5,152			4,707
Special charges			100				-			100			78
Restructuring charges			24				27			120			41
Certain litigation charges			270				-			536			366
Purchased in-process research and development (IPR&D) charges			530				47			621			390
Other expense, net			53				188			396			436
Interest expense/(income), net			13				5			29			(109	)
Total costs and expenses			3,603				2,857			11,827			10,630
Earnings before income taxes			226				1,003			2,772			2,885
Provision for income taxes			(24	)			191			481			654
Net earnings		$	250			$	812		$	2,291		$	2,231
Earnings per share:
Basic		$	0.22			$	0.72		$	2.05		$	1.97
Diluted		$	0.22			$	0.72		$	2.04		$	1.95
Weighted average shares outstanding:
Basic			1,115.0				1,122.3			1,117.8			1,130.7
Diluted			1,119.0				1,130.4			1,124.0			1,142.1

MEDTRONIC, INC.
RECONCILIATION OF CONSOLIDATED GAAP NET EARNINGS
TO CONSOLIDATED NON-GAAP NET EARNINGS
(Unaudited)
(in millions, except per share data)
		Three months ended
		April 24,					April 25,				Percentage
		2009					2008				Change
Net earnings, as reported		$	250				$	812			-69	%
Special charges			64		(a)			-
Restructuring charges			16		(b)			22	(f)
Certain litigation charges			188		(c)			-
IPR&D charges			530		(d)			50	(g)
Discrete tax adjustments			(132	)	(e)			-
Non-GAAP net earnings		$	916				$	884			4	%
MEDTRONIC, INC.
RECONCILIATION OF CONSOLIDATED GAAP DILUTED EPS
TO CONSOLIDATED NON-GAAP DILUTED EPS
(Unaudited)
		Three months ended
		April 24,					April 25,				Percentage
		2009					2008				Change
Diluted EPS, as reported		$	0.22				$	0.72			-69	%
Special charges			0.06		(a)			-
Restructuring charges			0.02		(b)			0.02	(f)
Certain litigation charges			0.17		(c)			-
IPR&D charges			0.47		(d)			0.04	(g)
Discrete tax adjustments			(0.12	)	(e)			-
Non-GAAP diluted EPS		$	0.82				$	0.78			5	%

(a) The $64 million ($0.06 per share) special charge represents an after-tax charitable donation ($100 million pre-tax) made to The Medtronic Foundation. In addition to disclosing special charges that are determined in accordance with U.S. generally accepted accounting principles (GAAP), Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding this donation. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates this donation when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(b) The $16 million ($0.02 per share) after-tax ($27 million pre-tax) restructuring charge is the net impact of a $22 million after-tax charge for restructuring initiatives that the Company began in the fourth quarter of fiscal year 2009, offset by a $6 million after-tax reversal of excess reserves related to the global realignment initiative that began in the fourth quarter of fiscal year 2008. The fiscal year 2009 initiatives are designed to streamline operations and further align resources around the Company’s higher growth opportunities. This initiative will impact most businesses and certain corporate functions. The Company recorded $2 million of the after-tax expense within cost of products sold related to inventory write-offs and production-related asset impairments associated with these restructuring activities. The $6 million after-tax reversal is primarily a result of favorable severance negotiations with certain employee populations outside the U.S. as well as a higher than expected percentage of employees identified for elimination finding positions elsewhere within the Company. In addition to disclosing restructuring charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these restructuring charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these restructuring charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(c) The $188 million ($0.17 per share) after-tax ($270 million pre-tax) certain litigation charge relates to a settlement of all royalty disputes with Johnson & Johnson which concern Medtronic’s licensed use of certain patents. The agreement ended all current and potential disputes between the two parties under their 1997 settlement and license agreement relating to coronary angioplasty stent design and balloon material patents. In addition to disclosing certain litigation charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these certain litigation charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these certain litigation charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(d) The $530 million ($0.47 per share) after-tax IPR&D charge represents the cumulative impact of several transactions which took place during the fourth quarter of fiscal year 2009:

-$97 million ($97 million pre-tax) related to the acquisition of Ablation Frontiers, Inc.;

-$307 million ($307 million pre-tax) related to the acquisition of Ventor Technologies, Ltd.;

-$123 million ($123 million pre-tax) related to the acquisition of CoreValve, Inc.; and

-$3 million ($3 million pre-tax) related to the purchase of certain intellectual property for use in the Spinal and Diabetes businesses.

In each of the above transactions, technological feasibility of the underlying products had not yet been reached and such technology had no future alternative use. In addition to disclosing IPR&D charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these IPR&D charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these IPR&D charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(e) The $132 million ($0.12 per share) discrete tax adjustment represents a tax benefit associated with settlements reached in the fourth quarter of fiscal year 2009 with the U.S. Internal Revenue Service, numerous state taxing authorities, and assessments received from various foreign tax authorities. The years under review by the U.S. Internal Revenue Service were with respect to fiscal years 2005 and 2006, while the numerous state and foreign audits covered fiscal years ranging from 1998 through 2008. In addition to disclosing the provision for income taxes that is determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding this discrete tax adjustment. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations, specifically the effective tax rate. Medtronic management eliminates this discrete tax adjustment when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(f) The $22 million ($0.02 per share) after-tax ($31 million pre-tax) restructuring charge is related to a global realignment initiative that the Company began in the fourth quarter of fiscal year 2008. This initiative focuses on shifting resources to those areas where the Company has the greatest opportunities for growth and streamlining operations to drive operating leverage. The global realignment initiative impacts most businesses and certain corporate functions. The Company recorded $3 million of the $22 million after-tax expense within cost of products sold related to inventory write-offs and production-related asset impairments associated with these restructuring activities. In addition to disclosing restructuring charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these restructuring charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these restructuring charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(g) The $50 million ($0.04 per share) after-tax IPR&D charge represents the cumulative impact of after-tax charges of $47 million ($42 million pre-tax) related to the acquisition of NDI Medical, Inc., a development stage company, and $3 million ($5 million pre-tax) related to the purchase of certain intellectual property. In each of the above transactions, technological feasibility of the underlying products had not yet been reached and such technology had no future alternative use. In addition to disclosing IPR&D charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these IPR&D charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these IPR&D charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

MEDTRONIC, INC.
RECONCILIATION OF CONSOLIDATED GAAP NET EARNINGS
TO CONSOLIDATED NON-GAAP NET EARNINGS
(Unaudited)
(in millions, except per share data)
		Twelve months ended
		April 24,					April 25,				Percentage
		2009					2008				Change
Net earnings, as reported		$	2,291				$	2,231			3	%
Special charges			64		(a)			47	(f)
Restructuring charges			82		(b)			33	(g)
Certain litigation charges			364		(c)			274	(h)
IPR&D charges			614		(d)			388	(i)
Discrete tax adjustments			(132	)	(e)			-
Non-GAAP net earnings		$	3,283				$	2,973			10	%
MEDTRONIC, INC.
RECONCILIATION OF CONSOLIDATED GAAP DILUTED EPS
TO CONSOLIDATED NON-GAAP DILUTED EPS
(Unaudited)
		Twelve months ended
		April 24,					April 25,				Percentage
		2009					2008				Change
Diluted EPS, as reported		$	2.04				$	1.95			5	%
Special charges			0.06		(a)			0.04	(f)
Restructuring charges			0.07		(b)			0.03	(g)
Certain litigation charges			0.32		(c)			0.24	(h)
IPR&D charges			0.55		(d)			0.34	(i)
Discrete tax adjustments			(0.12	)	(e)			-
Non-GAAP diluted EPS		$	2.92				$	2.60			12	%

(a) The $64 million ($0.06 per share) special charge represents an after-tax charitable donation ($100 million pre-tax) made to The Medtronic Foundation. In addition to disclosing special charges that are determined in accordance with U.S. generally accepted accounting principles (GAAP), Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding this donation. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates this donation when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(b) The $82 million ($0.07 per share) after-tax ($123 million pre-tax) restructuring charge is an accumulation of charges recorded in the first and fourth quarters of fiscal year 2009. As outlined in footnote (b) for the three months ended April 24, 2009, the Company recorded net after-tax charges of $16 million in the fourth quarter of fiscal year 2009 related to initiatives begun in that quarter. In addition, the Company recorded after-tax charges of $66 million in the first quarter of fiscal year 2009 that related to a global realignment initiative that the Company began in the fourth quarter of fiscal year 2008. The 2008/2009 initiatives focus on shifting resources to those areas where the Company has the greatest opportunities for growth and streamlining operations to drive operating leverage. The global realignment initiative impacts most businesses and certain corporate functions. In addition to disclosing restructuring charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these restructuring charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these restructuring charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(c) The $364 million ($0.32 per share) after-tax ($536 million pre-tax) certain litigation charge is an accumulation of three separate charges recorded throughout fiscal year 2009. As outlined in footnote (c) for the three months ended April 24, 2009, the Company recorded a $188 million after-tax ($270 million pre-tax) charge related to a settlement of all royalty disputes with Johnson & Johnson (J&J) which concern Medtronic’s licensed use of certain patents. In addition, in the three months ended October 24, 2008, the Company recorded a $152 million after-tax ($229 million pre-tax) charge related to the final judgment in separate litigation with Cordis Corporation (Cordis), a subsidiary of J&J, that originated in October 1997, and $24 million after-tax ($37 million pre-tax) related to the settlement of litigation with Fastenetix LLC that originated in May 2006. The second quarter 2009 charge related to litigation with Cordis was in addition to a $243 million pre-tax reserve recorded in the third quarter of fiscal year 2008. In addition to disclosing certain litigation charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these certain litigation charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these certain litigation charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(d) The $614 million ($0.55 per share) after-tax IPR&D charge represents the cumulative impact of several transactions which took place throughout the fiscal year including:

-$97 million ($97 million pre-tax) related to the acquisition of Ablation Frontiers, Inc., which was recorded in the fourth quarter of fiscal year 2009;

-$307 million ($307 million pre-tax) related to the acquisition of Ventor Technologies, Ltd., which was recorded in the fourth quarter of fiscal year 2009;

-$123 million ($123 million pre-tax) related to the acquisition of CoreValve, Inc., which was recorded in the fourth quarter of fiscal year 2009;

-$72 million ($72 million after-tax) related to the acquisition of CryoCath Technologies, Inc. which was recorded in the third quarter of fiscal year 2009; and

-$15 million ($22 million pre-tax) related to the purchase of certain intellectual property for use in the Spinal and Diabetes businesses which took place in the second and fourth quarters of fiscal year 2009.

In each of the above transactions, technological feasibility of the underlying products had not yet been reached and such technology had no future alternative use. In addition to disclosing IPR&D charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these IPR&D charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these IPR&D charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(e) The $132 million ($0.12 per share) discrete tax adjustment represents a tax benefit associated with settlements reached in the fourth quarter of fiscal year 2009 with the U.S. Internal Revenue Service, numerous state taxing authorities, and assessments received from various foreign tax authorities. The years under review by the U.S. Internal Revenue Service were with respect to fiscal years 2005 and 2006, while the numerous state and foreign audits covered fiscal years ranging from 1998 through 2008. In addition to disclosing the provision for income taxes that is determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding this discrete tax adjustment. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations, specifically the effective tax rate. Medtronic management eliminates this discrete tax adjustment when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(f) The $47 million ($0.04 per share) after-tax ($78 million pre-tax) special charge is related to impairment charges recognized on intangible assets associated with our benign prostatic hyperplasia product line acquired in fiscal year 2002. In the third quarter of fiscal year 2008, after carefully evaluating the development of the market relative to our original assumptions and analyzing our estimated future cash flows utilizing this technology, we determined that the carrying value of these intangible assets was impaired and a write-down was necessary. In addition to disclosing special charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these special charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these special charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(g) The $33 million ($0.03 per share) after-tax ($45 million pre-tax) restructuring charge is related to restructuring initiatives that the Company began in the fourth quarter of fiscal year 2007 and the fourth quarter of fiscal year 2008. The fourth quarter fiscal year 2007 initiatives were designed to drive manufacturing efficiencies in our CardioVascular business, downsize our Physio-Control business due to our voluntary suspension of U.S. shipments, and rebalance resources within our Cardiac Rhythm Disease Management (CRDM) business to reflect the market dynamics. As a continuation of our fiscal year 2007 initiatives, in the first quarter of fiscal year 2008 the Company recognized $11 million after-tax expense associated with compensation and early retirement benefits provided to employees whose employment terminated with the Company in the first quarter of fiscal year 2008 which could not be accrued in the fourth quarter of fiscal year 2007. The fourth quarter fiscal year 2008 restructuring charge of $22 million after-tax is related to a global realignment initiative. This initiative focuses on shifting resources to those areas where the Company has the greatest opportunities for growth and streamlining operations to drive operating leverage. The global realignment initiative impacts most businesses and certain corporate functions. The Company recorded $3 million of the $22 million after-tax expense within cost of products sold related to inventory write-offs and production-related asset impairments associated with the global realignment initiative. In addition to disclosing restructuring charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these restructuring charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these restructuring charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(h) The $274 million ($0.24 per share) after-tax certain litigation charges are related to a $121 million after-tax ($123 million pre-tax) settlement of certain lawsuits relating to the Marquis line of implantable cardioverter defibrillators that were subject to a field action announced on February 11, 2005 and a $153 million after-tax ($243 million pre-tax) reserve associated with litigation with Cordis that originated in October 1997. In addition to disclosing certain litigation charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these certain litigation charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these certain litigation charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(i) The $388 million ($0.34 per share) after-tax IPR&D charges represent the cumulative impact of several transactions which took place throughout the fiscal year including:

-$290 million ($290 million pre-tax) allocated to in-process technology acquired in the acquisition of Kyphon Inc. which was recorded in the third quarter of fiscal year 2008;

-$47 million ($42 million pre-tax) related to the acquisition of NDI Medical, Inc., a development stage company, which was recorded in the fourth quarter of fiscal year 2008;

-$24 million ($20 million pre-tax) related to the acquisition of Setagon, Inc., a development stage company, which was recorded in the third quarter of fiscal year 2008;

-$18 million ($25 million pre-tax) related to a milestone payment associated with a royalty bearing, non-exclusive patent cross-licensing agreement with NeuroPace, Inc. that the Company entered into in the first quarter of fiscal year 2006 which was recorded in the first quarter of fiscal year 2008; and

-$9 million ($13 million pre-tax) related to the purchase of certain intellectual property which took place in the first and fourth quarter of fiscal year 2008.

In each of the above transactions, technological feasibility of the underlying products had not yet been reached and such technology had no future alternative use. In addition to disclosing IPR&D charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these IPR&D charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these IPR&D charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

MEDTRONIC, INC.
RECONCILIATION OF OUS REVENUE GROWTH AT CONSTANT CURRENCY
(Unaudited)
(in millions)
		Three months ended					Three months ended						Percentage
		April 24, 2009					April 25, 2008						Change
OUS Revenue, as reported		$	1,453				$	1,528					-5	%
Currency Impact			(211	)	(a)			-
OUS Revenue, comparable currency rates		$	1,664				$	1,528					9	%
MEDTRONIC, INC.
RECONCILIATION OF OUS REVENUE GROWTH AT CONSTANT CURRENCY
(Unaudited)
(in millions)
		Twelve months ended					Twelve months ended						Percentage
		April 24, 2009					April 25, 2008						Change
OUS Revenue, as reported		$	5,602				$	5,179					8	%
Currency Impact			(100	)	(a)			-
OUS Revenue, comparable currency rates		$	5,702				$	5,179					10	%
MEDTRONIC, INC.
RECONCILIATION OF OPERATING CASH FLOW TO FREE CASH FLOW
(Unaudited)
(in millions)
		Twelve months ended					Nine months ended					Three months ended
		April 24, 2009					January 23, 2009					April 24, 2009
Net cash provided by operating activities		$	3,878				$	2,755				$	1,123
Additions to property, plant, and equipment			(498	)				(378	)				(120	)
Free cash flow		$	3,380		(b)		$	2,377		(b)		$	1,003		(b)

(a) Medtronic management believes that in order to properly understand Medtronic’s short-term and long-term financial trends, investors may wish to consider the impact of foreign currency translation on revenue. In addition, Medtronic management uses results of operations before currency translation to evaluate the operational performance of the Company and as a basis for strategic planning. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP.

(b) Medtronic calculates free cash flow by subtracting additions to property, plant and equipment from operating cash flows.

MEDTRONIC, INC.
CONSTANT CURRENCY GROWTH BY OPERATING SEGMENT - WORLD WIDE
(Unaudited)
($ millions)
											Currency			Constant
		FY 09			FY 08						Impact			Currency
		QTR 4			QTR 4			Growth			On Growth (a)			Growth (a)
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT		$	1,300		$	1,363		-5	%		-6	%		1	%
Pacing Systems			494			540		-9	%		-7	%		-2	%
Defibrillation Systems			780			806		-3	%		-5	%		2	%
Other			26			17		53	%		-29	%		82	%
SPINAL		$	881		$	869		1	%		-3	%		4	%
Core Spinal			512			498		3	%		-2	%		5	%
Biologics			215			221		-3	%		-2	%		-1	%
Kyphon Business			154			150		3	%		-3	%		6	%
CARDIOVASCULAR		$	644		$	643		-	%		-8	%		8	%
Coronary Stents			213			251		-15	%		-7	%		-8	%
Other Coronary/Peripheral			119			116		3	%		-8	%		11	%
Endovascular			117			76		54	%		-13	%		67	%
Revasc & Surgical Therapies			114			115		-1	%		-6	%		5	%
Structural Heart Disease			81			85		-5	%		-6	%		1	%
NEUROMODULATION		$	389		$	381		2	%		-5	%		7	%
Neuro Implantables			308			308		-	%		-5	%		5	%
Gastroenterology & Urology			81			73		11	%		-5	%		16	%
DIABETES		$	296		$	275		8	%		-6	%		14	%
SURGICAL TECHNOLOGIES		$	235		$	228		3	%		-5	%		8	%
Core Ear, Nose and Throat (ENT)			97			92		5	%		-4	%		9	%
Neurologic Technologies			82			82		-	%		-6	%		6	%
Navigation			56			54		4	%		-7	%		11	%
PHYSIO-CONTROL		$	84		$	101		-17	%		-10	%		-7	%
TOTAL		$	3,829		$	3,860		-1	%		-6	%		5	%

(a) Medtronic believes that in order to properly understand Medtronic's short-term and long-term financial trends, investors may wish to consider the impact of foreign currency translation on revenue. In addition, Medtronic management uses results of operations before currency translation to evaluate the operational performance of the Company and as a basis for strategic planning. Investors should consider these non-GAAP measures in addition to, an not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP.

MEDTRONIC, INC.
CONSTANT CURRENCY GROWTH BY OPERATING SEGMENT - WORLD WIDE
(Unaudited)
($ millions)
											Currency			Constant
											Impact			Currency
		FY 09			FY 08			Growth			On Growth (a)			Growth (a)
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT		$	5,014		$	4,963		1	%		-1	%		2	%
Pacing Systems			1,984			2,008		-1	%		-	%		-1	%
Defibrillation Systems			2,962			2,897		2	%		-1	%		3	%
Other			68			58		17	%		-14	%		31	%
SPINAL		$	3,400		$	2,982		14	%		-	%		14	%
Core Spinal			1,951			1,869		4	%		-	%		4	%
Biologics			840			815		3	%		-1	%		4	%
Kyphon Business			609			298		104	%		-3	%		107	%
CARDIOVASCULAR		$	2,437		$	2,131		14	%		-1	%		15	%
Coronary Stents			844			710		19	%		-1	%		20	%
Other Coronary/Peripheral			448			408		10	%		-	%		10	%
Endovascular			398			285		40	%		-2	%		42	%
Revasc & Surgical Therapies			447			431		4	%		-	%		4	%
Structural Heart Disease			300			297		1	%		-1	%		2	%
NEUROMODULATION		$	1,434		$	1,311		9	%		-1	%		10	%
Neuro Implantables			1,145			1,069		7	%		-1	%		8	%
Gastroenterology & Urology			289			242		19	%		-2	%		21	%
DIABETES		$	1,114		$	1,019		9	%		-2	%		11	%
SURGICAL TECHNOLOGIES		$	857		$	780		10	%		-1	%		11	%
Core Ear, Nose and Throat (ENT)			352			323		9	%		-2	%		11	%
Neurologic Technologies			320			298		7	%		-1	%		8	%
Navigation			185			159		16	%		-2	%		18	%
PHYSIO-CONTROL		$	343		$	329		4	%		-2	%		6	%
TOTAL		$	14,599		$	13,515		8	%		-1	%		9	%

(a) Medtronic believes that in order to properly understand Medtronic's short-term and long-term financial trends, investors may wish to consider the impact of foreign currency translation on revenue. In addition, Medtronic management uses results of operations before currency translation to evaluate the operational performance of the Company and as a basis for strategic planning. Investors should consider these non-GAAP measures in addition to, an not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP.

MEDTRONIC, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
		April 24,				April 25,
		2009				2008
		(in millions)
ASSETS
Current assets:
Cash and cash equivalents		$	1,271			$	1,060
Short-term investments			405				553
Accounts receivable, less allowances of $61 and $99, respectively			3,123				3,287
Income tax receivable			-				73
Inventories			1,426				1,280
Deferred tax assets, net			549				600
Prepaid expenses and other current assets			630				469
Total current assets			7,404				7,322
Property, plant and equipment, net			2,279				2,221
Goodwill			8,195				7,519
Other intangible assets, net			2,477				2,193
Long-term investments			2,769				2,322
Long-term deferred tax assets, net			65				103
Other assets			416				518
Total assets		$	23,605			$	22,198
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings		$	522			$	1,154
Accounts payable			382				383
Accrued compensation			901				789
Accrued income taxes			130				-
Other accrued expenses			1,034				1,209
Total current liabilities			2,969				3,535
Long-term debt			6,772				5,802
Long-term accrued compensation and retirement benefits			329				304
Long-term accrued income taxes			475				519
Other long-term liabilities			87				502
Total liabilities			10,632				10,662
Commitments and contingencies			-				-
Shareholders’ equity:
Preferred stock— par value $1.00			-				-
Common stock— par value $0.10			112				112
Retained earnings			13,063				11,710
Accumulated other comprehensive loss			(202	)			(286	)
Total shareholders’ equity			12,973				11,536
Total liabilities and shareholders’ equity		$	23,605			$	22,198

MEDTRONIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
		Fiscal Year
		2009				2008				2007
		(in millions)
Operating Activities:
Net earnings		$	2,291			$	2,231			$	2,802
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			699				637				583
Special charges			-				78				98
IPR&D charges			621				390				-
Provision for doubtful accounts			23				31				31
Deferred income taxes			(60	)			(49	)			(236	)
Stock-based compensation			237				217				185
Excess tax benefit from exercise of stock-based awards			(24	)			(40	)			(36	)
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable			108				(461	)			(326	)
Inventories			(212	)			30				(24	)
Prepaid expenses and other assets			(121	)			92				(45	)
Accounts payable and accrued liabilities			342				61				17
Other operating assets and liabilities			(26	)			272				(70	)
Net cash provided by operating activities			3,878				3,489				2,979
Investing Activities:
Acquisitions, net of cash acquired			(1,624	)			(4,221	)			(8	)
Purchase of intellectual property			(165	)			(93	)			(121	)
Additions to property, plant and equipment			(498	)			(513	)			(573	)
Purchases of marketable securities			(2,960	)			(6,433	)			(11,837	)
Sales and maturities of marketable securities			2,845				8,557				10,894
Other investing activities, net			(338	)			(87	)			(56	)
Net cash used in investing activities			(2,740	)			(2,790	)			(1,701	)
Financing Activities:
Change in short-term borrowings, net			(633	)			543				45
Payments on long-term debt			(300	)			(12	)			(1,880	)
Issuance of long-term debt			1,250				300				-
Dividends to shareholders			(843	)			(565	)			(504	)
Issuance of common stock			416				403				331
Excess tax benefit from exercise of stock-based awards			24				40				36
Repurchase of common stock			(759	)			(1,544	)			(1,039	)
Net cash used in financing activities			(845	)			(835	)			(3,011	)
Effect of exchange rate changes on cash and cash equivalents			(82	)			(60	)			(5	)
Net change in cash and cash equivalents			211				(196	)			(1,738	)
Cash and cash equivalents at beginning of period			1,060				1,256				2,994
Cash and cash equivalents at end of period		$	1,271			$	1,060			$	1,256

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