MINNEAPOLIS--(BUSINESS WIRE)--Aug. 22, 2006--Medtronic, Inc. (NYSE:MDT):

    --  Reported earnings of $599 million and diluted EPS of $0.51
        grew 87% and 96%, respectively over the prior year's quarter.

    --  Diluted EPS of $0.55 grew 15% after adjusting for certain
        charges and including stock option expense in both years.

    --  Revenue of $2.897 billion grew 8%.

    --  Double digit revenue growth in the Spinal, Vascular,
        Neurological and Diabetes businesses helped offset weakness in
        the U.S. implantable cardioverter defibrillator (ICD) market.

Medtronic, Inc. (NYSE:MDT) today announced financial results for its first quarter of fiscal year 2007 ended July 28, 2006.

Medtronic recorded first quarter fiscal year 2007 revenue of $2.897 billion, an 8 percent increase over the $2.690 billion in the first quarter of fiscal year 2006. Foreign currency translation had a positive impact of $6 million this quarter. As reported, first quarter fiscal year 2007 net earnings were $599 million, or $0.51 per diluted share, as compared to net earnings of $321 million, or $0.26 per diluted share for the same period last year, representing growth of 87 percent and 96 percent, respectively. Adjusted first quarter 2007 net earnings were $639 million, or $0.55 per diluted share, as compared to adjusted net earnings of $584 million, or $0.48 per diluted share for the same period last year, representing an increase of 9 percent and 15 percent, respectively. As detailed in the attached table, adjusted net earnings for these periods (1) excludes the impact of a certain litigation charge of $40 million in first quarter 2007, (2) excludes the impact of purchased in-process research and development (IPR&D) charges of $295 million in the first quarter 2006 and (3) includes incremental SFAS No. 123(R) stock-based compensation expense of $32 million in first quarter 2006.

"Strong performances in Medtronic's Spinal, Vascular, Neurological and Diabetes businesses helped offset weakness in the U.S. implantable defibrillator market during the quarter," said Art Collins, Medtronic chairman and chief executive officer. "We are encouraged by the strength of our new product pipeline, and we continue to make investments in R&D, market development and operating infrastructure to support future growth."

Cardiac Rhythm Disease Management Business

Cardiac Rhythm Disease Management (CRDM) reported first quarter revenue of $1.250 billion, representing a decrease of 1 percent over the same period last fiscal year.

ICD revenue of $673 million was down 6 percent, driven principally by a decline in the growth of the U.S. ICD market. The Company believes the ICD market remains significantly under penetrated and that several factors contributed to last quarter's unanticipated decline. Medtronic expects the ICD market to reaccelerate as a result of a number of initiatives it is undertaking to both increase market share and spur market growth in the U.S. ICD market.

ICD revenue outside the United States was strong, growing 21 percent over the prior year quarter and Medtronic's worldwide market share for ICDs was flat over the same period last fiscal year. Worldwide pacing revenue of $460 million grew 3 percent. Worldwide market share for pacemakers was up over 2 percentage points. Medtronic's Emergency Response Systems business reported revenue of $101 million, a 16 percent revenue increase over the same period last fiscal year.

    CRDM quarterly highlights include:

    --  The Concerto(TM) and Virtuoso(TM) line of ICDs were
        commercially launched in Europe and in the U.S. These are
        Medtronic's first devices with wireless telemetry, enabling
        remote communication between the implanted device and
        programmers in a clinician's office and at implant, or between
        the device and a patient home monitor.

    --  The company launched a multi-center clinical trial to
        determine the safety, efficacy and functionality of the
        Chronicle(R) ICD when used in heart failure patients indicated
        for ICD therapy. The trial involves approximately 850 patients
        with mild-to-moderate heart failure at up to 75 sites in the
        U.S.

    --  The Medtronic Carelink(R) Network, available on both pacing
        and ICD platforms, continued to expand to nearly 1,000 clinics
        monitoring over 80,000 patients in the U.S.

    --  Adapta(TM), Versa(TM) and Sensia(TM) pacemakers all received
        FDA approval this fiscal quarter and were launched in August.
        These pacemakers provide physiologic pacing adapted to the
        needs of individual patients and include an exclusive Managed
        Ventricular Pacing (MVP) mode. MVP enables the device to be
        programmed to deliver pacing pulses to the heart's lower right
        chamber only when necessary, which recent studies indicate may
        reduce a patient's risk of developing heart failure and atrial
        fibrillation.

    --  The LIFEPAK(R) 1000 external defibrillator launched last
        quarter, received strong market acceptance this quarter as it
        was introduced into accounts in the U.S. The LIFEPAK 1000 is
        designed for professional emergency responders and includes
        novel technology to improve response times in treating Sudden
        Cardiac Arrest.

    Spinal and Navigation Business

Spinal and Navigation reported first quarter revenue of $599 million, representing 14 percent growth over the same period last fiscal year.

    Spinal and Navigation quarterly highlights include:

    --  The launch of the CD HORIZON(R) SEXTANT(R) II system has been
        a major factor as more surgeons adopt this revolutionary
        method of minimally invasive pedicle screw implantation.

    --  INFUSE(R) Bone Graft, a recombinant version of a naturally
        occurring protein capable of stimulating bone growth for both
        spinal and acute tibial fracture indications, had revenue
        growth of more than 25 percent over the same period last year.

    --  The DIAM(TM) Spinal Stabilization System received FDA approval
        for an investigational device exemption for use in a clinical
        study, allowing the first of three planned clinical trials in
        the U.S. to begin. The study will compare the DIAM implant to
        a traditional posterior fusion system and approach. The DIAM
        System is designed to alleviate pain in degenerative stenosis
        patients who suffer predominantly from radiating leg
        discomfort and moderate low back pain.

    --  Medtronic artificial discs continue to gain momentum outside
        the U.S., led by particularly strong performance of the
        MAVERICK(TM) Artificial Lumbar Disc family and the PRESTIGE(R)
        LP Cervical Disc.

    Vascular Business

Vascular reported first quarter revenue of $280 million, representing 37 percent growth over the same period of the last fiscal year. Vascular experienced solid growth across all of its major businesses and geographies.

    Vascular quarterly highlights include:

    --  The Endeavor(R) drug-eluting coronary stent is now
        commercially available in over 100 countries outside the U.S.
        Medtronic received Endeavor regulatory approval in China and
        reimbursement approval in France. Endeavor drug-eluting stent
        market share exceeds 20 percent in markets with full
        commercial release.

    --  Long-term clinical results from ENDEAVOR I and ENDEAVOR II
        trials were presented at the Paris Course on Revascularization
        meeting in May. This data demonstrated Endeavor's significant
        and sustained efficacy and safety performance over time, with
        low rates of repeat procedures and no observations of late
        stent thrombosis. Enrollment was completed in the ENDEAVOR IV
        Clinical Trial in the U.S., and the launch of Endeavor in the
        U.S. is still anticipated in calendar year 2007.

    --  The Micro-Driver coronary stent, a bare metal system designed
        specifically to perform in small vessels, received FDA
        approval and has been positively accepted in the U.S. market.

    Neurological Business

Neurological reported first quarter revenue of $276 million, representing 17 percent growth over the same quarter one year ago. Growth was driven by new products and strong performance across all therapies, in particular, neurostimulation for chronic pain, movement disorders and overactive bladder.

    Neurological quarterly highlights include:

    --  RestorePRIME(TM), a non-rechargeable neurostimulator for the
        treatment of chronic pain which affects an estimated 75
        million people in the U.S., was launched in several countries,
        including the U.S. RestorePRIME offers the broadest number of
        programming options and the largest stimulation coverage area
        of any non-rechargeable neurostimulator.

    --  InterStim(R) II neurostimulation system for the treatment of
        overactive bladder and urinary retention was launched
        worldwide. The InterStim therapy uses sacral nerve stimulation
        to improve bladder function. InterStim II's enhancements
        include greater flexibility to accommodate more patients, a
        streamlined implant procedure and simplified programming. The
        improved patient programmer also provides patients more
        control of their therapy.

    --  Prostiva(TM) RF (radio-frequency) therapy for the treatment of
        symptomatic benign prostatic hyperplasia (BPH), or enlarged
        prostate, was launched in the U.S. Prostiva RF therapy
        delivers low-level radio frequency energy to a precisely
        targeted area of an enlarged prostate.

    Diabetes Business

Diabetes reported first quarter revenue of $196 million, representing 13 percent growth over the same period last fiscal year, supported by worldwide insulin pump growth of more than 20 percent.

    Diabetes quarterly highlights include:

    --  The Guardian(R) Real-Time Continuous Glucose Monitoring System
        received FDA approval and is expected to be available
        nationwide by the end of the calendar year. This stand-alone
        glucose monitoring system provides patients with real-time
        glucose trend graphs and predictive alarms informing them when
        their glucose levels become too high or too low, enabling
        better management of diabetes.

    --  The three-phase STAR clinical trial program comparing outcomes
        on continuous glucose monitoring and insulin pump therapy to
        multiple daily injections continues. The STAR I trial
        enrollment is complete and results are expected in the fall.
        Focus groups with STAR II participants are underway and STAR
        III is scheduled to begin enrollment in the fall.

    --  The results of a series of clinical trials demonstrating the
        benefit of Guardian Real-Time Continuous Glucose Monitoring
        System compared to traditional blood glucose meters will be
        published later this year, and are expected to provide further
        clinical support for reimbursement of continuous glucose
        monitoring products.

    Cardiac Surgery Business

Cardiac Surgery reported first quarter revenue of $168 million, representing 2 percent growth over the same period last year.

    Cardiac Surgery quarterly highlights include:

    --  The Octopus(R) Evolution Tissue Stabilizer was launched in the
        U.S. Used in beating heart surgery to hold cardiac tissue in
        place while the surgeon repairs the heart, the Octopus helps
        speed procedure times and provides improved stability and
        targeting for the surgeon.

    --  The EDGE Physician Training Program continues to be expanded
        to cardiac surgeons in an effort to provide leading-edge
        training on new vascular and cardiac-related techniques and
        therapies.

    Ear Nose and Throat Business

Ear, Nose and Throat (ENT), which also includes neurologic technology products, reported first quarter revenue of $128 million, representing 7 percent growth over the same period last year.

    ENT quarterly highlights include:

    --  Powered drills and endoscopic shavers revenue grew 15 percent
        with sinus and otologic systems growing at twice the estimated
        market growth rate. Nerve integrity monitors grew over 20
        percent in the quarter.

    --  Revenue for the Strata(TM) valve, a programmable device for
        the treatment of hydrocephalus, grew over 50 percent over the
        same period last year.

In reviewing the quarter, Collins concluded, "While this past quarter presented some challenging market dynamics, we remain optimistic about the underlying strength of our diversified business base and our future growth prospects."

Webcast Information

Medtronic will host a webcast today, Aug. 22 at 4:30 pm EDT (3:30 CDT), to provide information about its businesses for the public, analyst 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., and 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 & Transcripts" section of the Investor Relations homepage.

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, including statements regarding clinical trials, new products, market growth and market acceptance and other developments, 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, general economic conditions and other risk and uncertainties described in Medtronic's Annual Report on Form 10-K for the year ended April 28, 2006. Actual results may differ materially from anticipated results. Medtronic does not undertake to update its forward-looking statements.

                           MEDTRONIC, INC.
                     REVENUE BY OPERATING SEGMENT
                             (Unaudited)



($ millions)

----------------------------------------------------------------------
                               FY 06   FY 06   FY 06   FY 06   FY 06
                               QTR 1   QTR 2   QTR 3   QTR 4   TOTAL
----------------------------------------------------------------------
REPORTED REVENUE :
  CARDIAC RHYTHM DISEASE
   MANAGEMENT                 $1,268  $1,289  $1,263  $1,385   $5,206
    Low Power Pacing             446     459     426     464    1,795
    High Power Defibrillation    718     733     723     758    2,932
    Emergency Response
     Systems                      87      81      99     144      412
    Other                         17      16      15      19       67

  SPINAL & NAVIGATION           $524    $539    $563    $619   $2,244
    Spinal Instrumentation       376     382     387     420    1,566
    Spinal Biologics             128     134     147     163      570
    Navigation                    20      23      29      36      108

  NEUROLOGICAL                  $235    $252    $247    $283   $1,016
    Neuro Implantables           186     204     202     241      833
    Gastroenterology &
     Urology                      49      48      45      42      183

  VASCULAR                      $205    $225    $236    $274     $940
    Stents                        65      90      96     114      366
    Other Coronary                81      78      83      92      334
    Endovascular/Peripheral       59      57      57      68      240

  DIABETES                      $173    $178    $182    $188     $722

  CARDIAC SURGERY               $165    $161    $154    $183     $663
    Valves                        58      56      52      63      229
    Perfusion                     79      78      75      89      321
    Cardiac Surgery
     Technologies                 28      27      27      31      113

  Ear, Nose & Throat (ENT)      $120    $121    $125    $135     $501
    ENT                           65      64      65      72      266
    Neurologic Technologies       55      57      60      63      235

  TOTAL                       $2,690  $2,765  $2,770  $3,067  $11,292
                              ========================================

ADJUSTMENTS :

  CURRENCY (1)                   $26     $(3)   $(72)   $(69)   $(118)

COMPARABLE OPERATIONS (1)     $2,664  $2,768  $2,842  $3,136  $11,410
                              ========================================

----------------------------------------------------------------------

($ millions)

----------------------------------------------------------------------
                               FY 07   FY 07   FY 07   FY 07   FY 07
                               QTR 1   QTR 2   QTR 3   QTR 4   TOTAL
----------------------------------------------------------------------
REPORTED REVENUE :
  CARDIAC RHYTHM DISEASE
   MANAGEMENT                 $1,250      $-      $-      $-   $1,250
    Low Power Pacing             460       -       -       -      460
    High Power Defibrillation    673       -       -       -      673
    Emergency Response
     Systems                     101       -       -       -      101
    Other                         16       -       -       -       16

  SPINAL & NAVIGATION           $599      $-      $-      $-     $599
    Spinal Instrumentation       412       -       -       -      412
    Spinal Biologics             163       -       -       -      163
    Navigation                    24       -       -       -       24

  NEUROLOGICAL                  $276      $-      $-      $-     $276
    Neuro Implantables           226       -       -       -      226
    Gastroenterology &
     Urology                      50       -       -       -       50

  VASCULAR                      $280      $-      $-      $-     $280
    Stents                       120       -       -       -      120
    Other Coronary                92       -       -       -       92
    Endovascular/Peripheral       68       -       -       -       68

  DIABETES                      $196      $-      $-      $-     $196

  CARDIAC SURGERY               $168      $-      $-      $-     $168
    Valves                        59       -       -       -       59
    Perfusion                     80       -       -       -       80
    Cardiac Surgery
     Technologies                 29       -       -       -       29

  Ear, Nose & Throat (ENT)      $128      $-      $-      $-     $128
    ENT                           65       -       -       -       65
    Neurologic Technologies       63       -       -       -       63

  TOTAL                       $2,897      $-      $-      $-   $2,897
                              ========================================

ADJUSTMENTS :

  CURRENCY (1)                    $6                               $6

COMPARABLE OPERATIONS (1)     $2,891     $(0)     $-      $-   $2,891
                              ========================================

----------------------------------------------------------------------


(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 revenues may not sum to
the fiscal year to date revenues.


                           MEDTRONIC, INC.
                 CONSOLIDATED STATEMENTS OF EARNINGS
                             (Unaudited)
                 (in millions, except per share data)


                                               Three months ended
                                           ---------------------------
                                           July 28, 2006 July 29, 2005
                                           ------------- -------------


Net sales                                        $2,897        $2,690

Costs and expenses:
  Cost of products sold                             732           654
  Research and development expense                  299           263
  Selling, general, and administrative
   expense                                          984           882
  Certain litigation charges                         40             -
  Purchased in-process research and
   development (IPR&D)                                -           364
  Other expense, net                                 66            51
  Interest income                                   (39)          (16)
                                           ------------- -------------
    Total costs and expenses                      2,082         2,198
                                           ------------- -------------

Earnings before income taxes                        815           492

Provision for income taxes                          216           171
                                           ------------- -------------

Net earnings                                       $599          $321
                                           ============= =============


Earnings per share:
         Basic                                    $0.52         $0.26
                                           ============= =============
         Diluted                                  $0.51         $0.26
                                           ============= =============


Weighted average shares outstanding:
         Basic                                  1,153.8       1,210.5
         Diluted                                1,164.8       1,222.6



                           MEDTRONIC, INC.
           RECONCILIATION OF CONSOLIDATED GAAP NET EARNINGS
                TO CONSOLIDATED ADJUSTED NET EARNINGS
                             (Unaudited)
                 (in millions, except per share data)



                           Three months ended    Three months ended
                             July 28, 2006         July 29, 2005
                           ------------------    ------------------

Net earnings, as reported               $599                  $321
Certain litigation charges                40 (a)                 -
IPR&D charges                              -                   295 (b)
Pro forma stock-based
 compensation                              -                   (32)(c)
                           ------------------    ------------------
Adjusted net earnings                   $639                  $584
                           ==================    ==================


                           MEDTRONIC, INC.
           RECONCILIATION OF CONSOLIDATED GAAP DILUTED EPS
                 TO CONSOLIDATED ADJUSTED DILUTED EPS
                             (Unaudited)


                           Three months ended    Three months ended
                             July 28, 2006         July 29, 2005
                           ------------------    ------------------

Diluted EPS, as reported               $0.51                 $0.26
Certain litigation charges              0.04 (a)                 -
IPR&D charges                              -                  0.24 (b)
Stock-Based awards                         -                 (0.02)(c)
                           ------------------    ------------------
Adjusted diluted EPS                   $0.55                 $0.48
                           ==================    ==================


(a) The $40 million ($0.04 per share) after-tax certain litigation
charge is related to the settlement agreement reached with the United
States (U.S.) Department of Justice which requires the government to
seek dismissal of two qui tam civil suits pending against Medtronic.
In addition to disclosing certain litigation 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 these
litigation charges. Management believes that this 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 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 GAAP. In addition, this non-GAAP financial measure may not be the
same as similar measures presented by other companies.

(b) The $295 million ($0.24 per share) after-tax IPR&D charges ($364
million pre-tax) represents the cumulative impact of pre-tax charges
of $169 million related to a technology acquired through the purchase
of Transneuronix, Inc. that had not yet reached technological
feasibility and had no future alternative use, $175 million related to
the purchase of spinal technology based devices owned by Gary
Michelson and Karlin Technology, Inc. that had not yet reached
technological feasability and had no future alternative use, and $20
million related to a cross-licensing agreement with NeuroPace, Inc.
for patent and patent applications on products that had not yet
reached technological feasability and had no future alternative use,
collectively the IPR&D charges. In addition to disclosing IPR&D
charges that are determined in accordance with 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. These
IPR&D charges resulted from facts and circumstances that vary in
frequency and/or impact on continuing operations. Management believes
that this 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 GAAP. In addition, this non-GAAP financial
measure may not be the same as similar measures presented by other
companies.

(c) The Company adopted SFAS No. 123(R) effective April 29, 2006 and
began to recognize compensation expense associated with all
stock-based awards. Prior to fiscal year 2007, the Company accounted
for stock-based awards under APB No. 25, and thus the Company only
recognized compensation expense related to restricted stock awards and
restricted stock units. Under SFAS No. 123(R) compensation expense is
recognized on all stock-based awards including stock options, employee
stock purchase plans and restricted stock awards/units. The $32
million ($0.02 per share), net of statutory tax, ($44 million
pre-statutory tax) represents the incremental expense that would have
been recorded had the Company accounted for stock-based awards in
accordance with SFAS 123(R) in fiscal year 2006. Total stock-based
compensation including stock options, restricted stock awards/units
and employee stock purchase plans was $49 million (pre-tax) in the
first quarter of fiscal year 2007 and pro-forma total stock-based
compensation including stock options, restricted stock awards/units
and employee stock purchase plans was $49 million in the first quarter
of fiscal year 2006. Below is a listing, by income statement line
item, of the pre-tax total stock-based compensation expense recognized
in first quarter fiscal 2007 and the pro forma stock-based
compensation for first quarter fiscal 2006.



                           Three months ended    Three months ended
                             July 28, 2006         July 29, 2005
                           ------------------    ------------------

  Cost of products sold                   $6                    $5
  Research and development
   expense                                11                    12
  Selling, general, and
   administrative expense                 32                    32
                           ------------------    ------------------
                                         $49                   $49
                           ==================    ==================


Management believes that this 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 applies the provisions of SFAS 123(R) to fiscal
years 2006 and prior 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 GAAP. In addition, this non-GAAP financial
measure may not be the same as similar measures presented by other
companies.


                            MEDTRONIC, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                              (Unaudited)


                                  July 28,              April 28,
                                    2006                  2006
                          ------------------------ -------------------
                          (dollars in millions, except per share data)
ASSETS
------

Current assets:
   Cash and cash
    equivalents           $                 1,396  $            2,994
   Short-term investments                   4,549               3,107
   Accounts receivable,
    less allowances of
    $193 and $184,
    respectively                            2,444               2,429
   Inventories                              1,280               1,177
   Deferred tax assets,
    net                                       226                 197
   Prepaid expenses and
    other current assets                      536                 473
                          ------------------------ -------------------

     Total current assets                  10,431              10,377

Property, plant and
 equipment                                  3,921               3,794
Accumulated depreciation                   (2,017)             (1,913)
                          ------------------------ -------------------

     Net property, plant
      and equipment                         1,904               1,881

Goodwill                                    4,361               4,346
Other intangible assets,
 net                                        1,559               1,592
Long-term investments                       1,394                 957
Non-current deferred tax
 assets, net                                   25                   -
Other assets                                  507                 512
                          ------------------------ -------------------


     Total assets         $                20,181  $           19,665
                          ======================== ===================


LIABILITIES AND
 SHAREHOLDERS' EQUITY
---------------------

Current liabilities:
   Short-term borrowings  $                 2,427  $            2,437
   Accounts payable                           341                 319
   Accrued compensation                       513                 723
   Accrued income taxes                       590                 461
   Other accrued expenses                     568                 466
                          ------------------------ -------------------

     Total current
      liabilities                           4,439               4,406

Long-term debt                              5,485               5,486
Deferred tax liabilities,
 net                                            -                  22
Long-term accrued
 compensation                                 199                 189
Other long-term
 liabilities                                  162                 179
                          ------------------------ -------------------

     Total liabilities                     10,285              10,282

Commitments and
 contingencies                                 --                  --

Shareholders' equity:
   Preferred stock -- par
    value $1.00                                --                  --
   Common stock -- par
    value $0.10                               115                 116
   Retained earnings                        9,600               9,112
   Accumulated other non-
    owner changes in
    equity                                    181                 155
                          ------------------------ -------------------

     Total shareholders'
      equity                                9,896               9,383
                          ------------------------ -------------------


     Total liabilities
      and shareholders'
      equity              $                20,181  $           19,665
                          ======================== ===================



                            MEDTRONIC, INC.
            CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                              (Unaudited)


                                                  Three months ended
                                                 ---------------------
                                                  July 28,   July 29,
                                                    2006       2005
                                                 ---------- ----------
                                                 (dollars in millions)
OPERATING ACTIVITIES:
   Net earnings                                  $     599  $     321
   Adjustments to reconcile net earnings to net
    cash (used in) provided by operating
    activities:
      Depreciation and amortization                    140        128
      Purchased in-process research and
       development                                      --        364
      Provision for doubtful accounts                   10          6
      Deferred income taxes                            (50)       167
      Stock-based compensation                          49          5
      Excess tax benefit from exercise of stock-
       based awards                                     (7)        --
      Change in operating assets and
       liabilities:
         Accounts receivable                           (25)       (28)
         Inventories                                  (103)      (115)
         Accounts payable and accrued
          liabilities                                   25       (722)
         Changes in other operating assets and
          liabilities                                  (58)      (138)
                                                 ---------- ----------

      Net cash provided by (used in) operating
       activities                                      580        (12)

INVESTING ACTIVITIES:
   Acquisition, net of cash acquired                    (6)      (227)
   Purchases of intellectual property                   (8)      (793)
   Additions to property, plant and equipment         (117)      (103)
   Purchases of marketable securities               (4,197)      (601)
   Sales and maturities of marketable securities     2,315        237
   Other investing activities, net                      (7)         9
                                                 ---------- ----------

      Net cash (used in) investing activities       (2,020)    (1,478)

FINANCING ACTIVITIES:
   Increase (decrease) in short-term borrowings,
    net                                                (10)       982
   Increase (decrease) in long-term debt, net           (2)        --
   Dividends to shareholders                          (127)      (117)
   Issuance of common stock                             58        123
   Excess tax benefit from exercise of stock-
    based awards                                         7         --
   Repurchase of common stock                          (99)      (229)
                                                 ---------- ----------

      Net cash (used in) provided by financing
       activities                                     (173)       759

Effect of exchange rate changes on cash and cash
 equivalents                                            15         89
                                                 ---------- ----------

Net change in cash and cash equivalents             (1,598)      (642)

Cash and cash equivalents at beginning of period     2,994      2,232
                                                 ---------- ----------


Cash and cash equivalents at end of period       $   1,396  $   1,590
                                                 ========== ==========

Supplemental Cash Flow Information
   Cash paid for:
              Income taxes                       $     162  $      59
              Interest                                  22         15
   Supplemental Noncash Investing Activities
              Deferred payments for purchases of
               intellectual property             $      --  $      30

CONTACT: Medtronic, Inc., Minneapolis
Investor Relations:
Jeff Warren, 763-505-2696
or
Public Relations:
Marybeth Thorsgaard, 763-505-2644
or
International Public Relations:
Yvan Deurbroeck, +41 21 802-7574

SOURCE: Medtronic, Inc.