MINNEAPOLIS, Nov 23, 2010 (BUSINESS WIRE) --

Medtronic, Inc. (NYSE:MDT) today announced financial results for its second quarter of fiscal year 2011, which ended October 29, 2010.

The company reported worldwide second quarter revenue of $3.903 billion, compared to the $3.838 billion reported in the second quarter of fiscal year 2010, an increase of 2 percent as reported and on a constant currency basis.

As detailed in the attached table, second quarter net earnings and diluted earnings per share on a non-GAAP basis were $887 million and $0.82, an increase of 4 percent and 6 percent, respectively, over the same period in the prior year. As reported, second quarter net earnings were $566 million, or $0.52 per diluted share, a decrease of 35 percent and 33 percent, respectively, over the same period in the prior year.

International revenue of $1.608 billion increased 4 percent compared to the same period last year, or an increase of 6 percent after adjusting for a $29 million negative foreign currency impact. International sales accounted for 41 percent of Medtronic's worldwide revenue.

"Overall, we saw relative market stability from July through October in a challenging market environment with more consistent performance in our businesses, resulting in sequential share gains in ICDs, pacemakers, spine, and drug-eluting stents," said Bill Hawkins, Medtronic chairman and chief executive officer. "While macroeconomic challenges remain, we continue to advance our pipeline, drive growth in emerging markets and with our emerging therapies, and remain focused on leveraging our size and scale to reduce our cost structure. This positions us well for solid, market-leading performance in the long run."

Cardiac and Vascular Group

The Cardiac and Vascular Group at Medtronic is comprised of Cardiac Rhythm Disease Management (CRDM), CardioVascular, and Physio-Control. The group reported worldwide sales in the quarter of $2.095 billion, which represents an increase of 1 percent as reported or 2 percent after adjusting for foreign currency. Cardiac & Vascular Group International sales of $1.084 billion were up 4 percent as reported or 5 percent after adjusting for foreign currency. Group performance was driven by strong CardioVascular and Physio-Control sales offset by slower sales in CRDM.

CRDM revenue of $1.248 billion declined 2 percent as reported or 1 percent after adjusting for foreign currency. Revenue from implantable cardioverter defibrillators (ICDs) of $745 million was down 1 percent compared to the same period in the prior year, but up 3 percent sequentially compared to the first quarter of fiscal year 2011. Pacing revenue was $472 million in the quarter, a decline of 5 percent. CRDM sales were negatively affected by slower market growth, but partially offset by continued growth of the AF Solutions business and the continued adoption of the Protecta(TM) ICD in Europe.

CardioVascular revenue of $738 million grew 6 percent as reported, or 7 percent after adjusting for foreign currency. Revenue growth was driven by strong international performance, particularly in Latin America, Greater China and Other Asia, leading to an increase in international sales of 10 percent as reported, or 12 percent after adjusting for foreign currency. The Coronary & Peripheral, Structural Heart, and Endovascular businesses grew worldwide revenue 3 percent, 17 percent, and 3 percent, respectively, after adjusting for foreign currency. Structural Heart revenue was driven by continued solid growth in transcatheter valves as well as revenue from the recent acquisition of ATS Medical, which closed in August.

Physio-Control revenue of $109 million increased 16 percent as reported, or 18 percent after adjusting for foreign currency. Solid U.S. growth of 31 percent was due in part to strong sales of the LIFEPAK(TM) 15 monitor/defibrillator and the resolution of a supplier constraint at the beginning of the quarter.

Restorative Therapies Group

The Restorative Therapies Group at Medtronic is comprised of Spinal, Neuromodulation, Diabetes, and Surgical Technologies. The group had worldwide sales in the quarter of $1.808 billion, which represents an increase of 2 percent as reported or 3 percent after adjusting for foreign currency. Restorative Therapies Group International sales of $524 million increased 6 percent as reported, or 8 percent after adjusting for foreign currency. Group revenue performance was led by strong growth in Diabetes and Surgical Technologies, offset by weaker sales in Spinal and Neuromodulation.

Spinal revenue of $850 million declined 1 percent both as reported and after adjusting for foreign currency, but was up 3 percent sequentially compared to the first quarter of fiscal year 2011. Sales in Core Spinal declined 1 percent. Biologics revenue decreased 2 percent. Slow but stable market growth, affected by continued utilization and pricing pressures, contributed to Spinal results.

Neuromodulation revenue of $388 million increased 1 percent as reported or 2 percent after adjusting for foreign currency. After adjusting for the fiscal year 2010 divestiture of the Bravo pH monitoring business, sales growth was 3 percent on a constant currency basis. Results were driven by new implant growth in pain stimulation therapies, Deep Brain Stimulation systems for movement disorders, and InterStim(R) Therapy for overactive bladder and urinary retention, and bowel control outside the United States.

Diabetes revenue of $326 million grew 9 percent as reported or 11 percent after adjusting for foreign currency. Growth in the quarter was driven by strong sales of continuous glucose monitoring products as well as solid performance in international markets, particularly in sales of insulin pumps.

Surgical Technologies revenue of $244 million grew 9 percent both as reported and on a constant currency basis. After adjusting for the fiscal year 2010 divestiture of the Ophthalmic business, sales growth was 11 percent on a constant currency basis. Sales performance in the U.S. was solid as capital spending in hospitals continued to improve, providing opportunities for technology upgrades driven by new product launches. International performance was strong in Japan, China and Latin America.

Revenue Outlook and Earnings per Share Guidance

The company today updated its revenue outlook and adjusted its diluted earnings per share guidance for fiscal year 2011.

For the second half of fiscal year 2011, based on estimated market growth of 2 to 3 percent, the company expects revenue growth in the range of 2 to 4 percent on a constant currency basis.

For fiscal year 2011, the company expects diluted earnings per share in the range of $3.38 to $3.44, which includes approximately $0.05 of dilution from the acquisition of Invatec and ATS Medical but does not take into account any impact from the pending acquisition of Ardian. Excluding the approximate $0.05 impact of acquisition dilution and the approximate $0.05 benefit of the extra week in fiscal year 2010, fiscal year 2011 diluted earnings per share growth is expected to be in the range of 8 percent to 10 percent.

Earnings per share guidance excludes any unusual charges or gains that might occur during the fiscal year and the impact of the non-cash charge to interest expense due to the accounting rules governing convertible debt. The guidance provided only reflects information available to the company at this time.

"With the overwhelming financial and societal impact of chronic disease, it is a critical time for Medtronic's leadership in the management of major health problems like diabetes, heart disease, neurological disorders and musculoskeletal disorders," said Hawkins. "We have the size, scale and financial strength to significantly and fundamentally change the future direction of chronic disease globally."

Webcast Information

Medtronic will host a webcast today, November 23, at 8 a.m. EST (7 a.m. CST), to provide information about its businesses for the public, analysts and news media. This quarterly webcast can be accessed by clicking on the Investors 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 "Events & Presentations" section of the Investors portion of the Medtronic website.

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 related to expected product introductions and results of Medtronic's future operations, 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 risks and uncertainties described in Medtronic's periodic reports on file with the Securities and Exchange Commission.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 news release are on an "as reported basis," and not on a constant currency basis; references to quarterly figures increasing or decreasing are in comparison to the second quarter of fiscal year 2010.

MEDTRONIC, INC.
WORLD WIDE REVENUE
(Unaudited)
($ millions)
		FY10 QTR 1			FY10 QTR 2			FY10 QTR 3			FY10 QTR 4			FY10 Total			FY11 QTR 1				FY11 QTR 2				FY11 QTR 3			FY11 QTR 4			FY11 Total
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT		$	1,337		$	1,278		$	1,243		$	1,409		$	5,268		$	1,226			$	1,248			$	-		$	-		$	2,474
Pacing Systems			536			498			459			495			1,987			473				472				-			-			945
Defibrillation Systems			775			754			756			881			3,167			722				745				-			-			1,467
Other			26			26			28			33			114			31				31				-			-			62
CARDIOVASCULAR		$	689		$	696		$	722		$	757		$	2,864		$	717			$	738			$	-		$	-		$	1,455
Coronary & Peripheral			353			369			386			382			1,489			372				379				-			-			751
Structural Heart			218			206			216			239			880			224				237				-			-			461
Endovascular			118			121			120			136			495			121				122				-			-			243
PHYSIO-CONTROL		$	97		$	94		$	100		$	134		$	425		$	84			$	109			$	-		$	-		$	193
CARDIAC & VASCULAR GROUP		$	2,123		$	2,068		$	2,065		$	2,300		$	8,557		$	2,027			$	2,095			$	-		$	-		$	4,122
SPINAL		$	915		$	862		$	842		$	880		$	3,500		$	829			$	850			$	-		$	-		$	1,680
Core Spinal			696			642			630			664			2,632			622				634				-			-			1,257
Biologics			219			220			212			216			868			207				216				-			-			423
NEUROMODULATION		$	373		$	384		$	394		$	411		$	1,560		$	370			$	388			$	-		$	-		$	758
DIABETES		$	295		$	300		$	311		$	332		$	1,237		$	312			$	326			$	-		$	-		$	638
SURGICAL TECHNOLOGIES		$	227		$	224		$	239		$	273		$	963		$	235			$	244			$	-		$	-		$	479
RESTORATIVE THERAPIES GROUP		$	1,810		$	1,770		$	1,786		$	1,896		$	7,260		$	1,746			$	1,808			$	-		$	-		$	3,555
TOTAL		$	3,933		$	3,838		$	3,851		$	4,196		$	15,817		$	3,773			$	3,903			$	-		$	-		$	7,677
ADJUSTMENTS :
CURRENCY IMPACT (1)		$	-		$	-		$	-		$	-		$	-		$	(21	)		$	(29	)		$	-		$	-		$	(49	)
COMPARABLE OPERATIONS (1)		$	3,933		$	3,838		$	3,851		$	4,196		$	15,817		$	3,794			$	3,932			$	-		$	-		$	7,726

(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.
U.S. REVENUE
(Unaudited)
($ millions)
		FY10 QTR 1			FY10 QTR 2			FY10 QTR 3			FY10 QTR 4			FY10 Total			FY11 QTR 1			FY11 QTR 2			FY11 QTR 3			FY11 QTR 4			FY11 Total
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT		$	762		$	721		$	675		$	787		$	2,944		$	691		$	699		$	-		$	-		$	1,390
Pacing Systems			247			221			193			212			872			214			210			-			-			424
Defibrillation Systems			508			492			475			567			2,043			467			481			-			-			948
Other			7			8			7			8			29			10			8			-			-			18
CARDIOVASCULAR		$	260		$	252		$	239		$	264		$	1,015		$	241		$	248		$	-		$	-		$	489
Coronary & Peripheral			103			106			100			111			419			98			103			-			-			201
Structural Heart			98			87			86			92			363			89			91			-			-			180
Endovascular			59			59			53			61			233			54			54			-			-			108
PHYSIO-CONTROL		$	57		$	49		$	53		$	71		$	230		$	53		$	64		$	-		$	-		$	117
CARDIAC & VASCULAR GROUP		$	1,079		$	1,022		$	967		$	1,122		$	4,189		$	985		$	1,011		$	-		$	-		$	1,996
SPINAL		$	712		$	662		$	644		$	662		$	2,680		$	631		$	645		$	-		$	-		$	1,275
Core Spinal			507			457			446			462			1,871			439			445			-			-			884
Biologics			205			205			198			200			809			192			200			-			-			391
NEUROMODULATION		$	265		$	272		$	272		$	276		$	1,086		$	261		$	278		$	-		$	-		$	538
DIABETES		$	193		$	201		$	203		$	213		$	810		$	203		$	213		$	-		$	-		$	417
SURGICAL TECHNOLOGIES		$	142		$	140		$	150		$	169		$	601		$	149		$	148		$	-		$	-		$	298
RESTORATIVE THERAPIES GROUP		$	1,312		$	1,275		$	1,269		$	1,320		$	5,177		$	1,244		$	1,284		$	-		$	-		$	2,528
TOTAL		$	2,391		$	2,297		$	2,236		$	2,442		$	9,366		$	2,229		$	2,295		$	-		$	-		$	4,524
ADJUSTMENTS :
CURRENCY IMPACT		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
COMPARABLE OPERATIONS		$	2,391		$	2,297		$	2,236		$	2,442		$	9,366		$	2,229		$	2,295		$	-		$	-		$	4,524

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.
INTERNATIONAL REVENUE
(Unaudited)
($ millions)
		FY10 QTR 1			FY10 QTR 2			FY10 QTR 3			FY10 QTR 4			FY10 Total			FY11 QTR 1				FY11 QTR 2				FY11 QTR 3			FY11 QTR 4			FY11 Total
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT		$	575		$	557		$	568		$	622		$	2,324		$	535			$	549			$	-		$	-		$	1,084
Pacing Systems			289			277			266			283			1,115			259				262				-			-			521
Defibrillation Systems			267			262			281			314			1,124			255				264				-			-			519
Other			19			18			21			25			85			21				23				-			-			44
CARDIOVASCULAR		$	429		$	444		$	483		$	493		$	1,849		$	476			$	490			$	-		$	-		$	966
Coronary & Peripheral			250			263			286			271			1,070			274				276				-			-			550
Structural Heart			120			119			130			147			517			135				146				-			-			281
Endovascular			59			62			67			75			262			67				68				-			-			135
PHYSIO-CONTROL		$	40		$	45		$	47		$	63		$	195		$	31			$	45			$	-		$	-		$	76
CARDIAC & VASCULAR GROUP		$	1,044		$	1,046		$	1,098		$	1,178		$	4,368		$	1,042			$	1,084			$	-		$	-		$	2,126
SPINAL		$	203		$	200		$	198		$	218		$	820		$	198			$	205			$	-		$	-		$	405
Core Spinal			189			185			184			202			761			183				189				-			-			373
Biologics			14			15			14			16			59			15				16				-			-			32
NEUROMODULATION		$	108		$	112		$	122		$	135		$	474		$	109			$	110			$	-		$	-		$	220
DIABETES		$	102		$	99		$	108		$	119		$	427		$	109			$	113			$	-		$	-		$	221
SURGICAL TECHNOLOGIES		$	85		$	84		$	89		$	104		$	362		$	86			$	96			$	-		$	-		$	181
RESTORATIVE THERAPIES GROUP		$	498		$	495		$	517		$	576		$	2,083		$	502			$	524			$	-		$	-		$	1,027
TOTAL		$	1,542		$	1,541		$	1,615		$	1,754		$	6,451		$	1,544			$	1,608			$	-		$	-		$	3,153
ADJUSTMENTS :
CURRENCY IMPACT (1)		$	-		$	-		$	-		$	-		$	-		$	(21	)		$	(29	)		$	-		$	-		$	(49	)
COMPARABLE OPERATIONS (1)		$	1,542		$	1,541		$	1,615		$	1,754		$	6,451		$	1,565			$	1,637			$	-		$	-		$	3,202

(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.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
		Three months ended							Six months ended
		October 29,			October 30,				October 29,			October 30,
		2010			2009				2010			2009
		(in millions, except per share data)
Net sales		$	3,903		$	3,838			$	7,677		$	7,771
Costs and expenses:
Cost of products sold			961			922				1,855			1,888
Research and development expense			373			369				743			739
Selling, general, and administrative expense			1,371			1,323				2,705			2,691
Restructuring charges			-			-				-			62
Certain litigation charges, net			279			(70	)			279			374
Purchased in-process research and development (IPR&D) and certain acquisition-related costs			24			-				39			-
Other expense, net			76			130				123			224
Interest expense, net			67			54				141			121
Total costs and expenses			3,151			2,728				5,885			6,099
Earnings before income taxes			752			1,110				1,792			1,672
Provision for income taxes			186			242				396			358
Net earnings		$	566		$	868			$	1,396		$	1,314
Basic earnings per share		$	0.52		$	0.78			$	1.29		$	1.18
Diluted earnings per share		$	0.52		$	0.78			$	1.28		$	1.18
Basic weighted average shares outstanding			1,080.1			1,106.8				1,083.1			1,109.7
Diluted weighted average shares outstanding			1,083.7			1,109.2				1,086.7			1,111.9
Cash dividends declared per common share		$	0.225		$	0.205			$	0.450		$	0.410

	MEDTRONIC, INC.
	RECONCILIATION OF CONSOLIDATED GAAP NET EARNINGS
	TO CONSOLIDATED NON-GAAP NET EARNINGS
	(Unaudited)
	(in millions, except per share data)
			Three months ended
			October 29, 2010						October 30, 2009						Percentage Change
	Net earnings, as reported		$	566					$	868					-35	%
	Certain litigation charges, net			278		(a)				(44	)		(d)
	IPR&D and certain acquisition-related costs			16		(b)				-
	Impact of authoritative convertible debt guidance on interest expense, net			27		(c)				26			(c)
	Non-GAAP net earnings		$	887					$	850					4	%
	MEDTRONIC, INC.
	RECONCILIATION OF CONSOLIDATED GAAP DILUTED EPS
	TO CONSOLIDATED NON-GAAP DILUTED EPS
	(Unaudited)
			Three months ended
			October 29, 2010						October 30, 2009						Percentage Change
	Diluted EPS, as reported		$	0.52					$	0.78					-33	%
	Certain litigation charges, net			0.26		(a)				(0.04	)		(d)
	IPR&D and certain acquisition-related costs			0.01		(b)				-
	Impact of authoritative convertible debt guidance on interest expense, net			0.02		(c)				0.02			(c)
	Non-GAAP diluted EPS		$	0.82		(1	)		$	0.77			(1)		6	%

(1) The data in this schedule has been intentionally rounded to the nearest $0.01 and therefore may not sum.

(a) The $278 million ($0.26 per share) after-tax ($279 million pre-tax) certain litigation charges, net relate primarily to a settlement involving the Sprint Fidelis family of defibrillation leads and an accounting charge for Other Matters litigation. The Sprint Fidelis settlement relates to the resolution of certain outstanding product litigation related to the Sprint Fidelis family of defibrillation leads that were subject to a field action announced October 15, 2007. The terms of the agreement stipulate Medtronic will, if it elects not to cancel the agreement, pay plaintiffs to settle substantially all pending U.S. lawsuits and claims, subject to certain conditions. In addition to disclosing certain litigation charges, net that are determined in accordance with U.S. generally accepted accounting principles (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.

(b) The $16 million ($0.01 per share) after-tax ($24 million pre-tax) IPR&D and certain acquisition-related costs include acquisition-related legal fees and severance costs, change in control costs, and contract termination costs related to the acquisition of ATS Medical, Inc. that were expensed in the period. In addition to disclosing IPR&D and certain acquisition-related costs 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 acquisition-related costs. 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 acquisition-related costs 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 or similar to measures presented by other companies.

(c) The Financial Accounting Standards Board (FASB) authoritative guidance on accounting for convertible debt has resulted in an after-tax impact to net earnings of $27 million ($0.02 per share) and $26 million ($0.02 per share) for the three months ended October 29, 2010 and October 30, 2009, respectively. The pre-tax impact to interest expense, net was $43 million and $41 million for the three months ended October 29, 2010 and October 30, 2009, respectively. In addition to disclosing the financial statement impact of this authoritative guidance 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 the impact of this authoritative guidance. 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 the impact of this authoritative guidance 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 $44 million ($0.04 per share) after-tax ($70 million pre-tax) certain litigation gain is related to the resolution of outstanding patent litigation with W.L. Gore & Associates (Gore) related to selected patents in Medtronic's Jervis and Wiktor patent families. The terms of the agreement stipulate that neither party will sue each other in the defined field of use, subject to certain conditions. Medtronic granted Gore a worldwide, irrevocable, non-exclusive license in the defined field of use. In addition and subject to certain conditions, Gore will pay Medtronic a quarterly license payment through the fiscal quarter ending October 2018. In addition to disclosing this certain litigation gain 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 $70 million pre-tax certain litigation gain. 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 certain litigation gain 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)
			Six months ended
			October 29, 2010					October 30, 2009					Percentage Change
	Net earnings, as reported		$	1,396				$	1,314				6	%
	Restructuring charges			-					50		(d)
	Certain litigation charges, net			278		(a)			316		(e)
	IPR&D and certain acquisition-related costs			27		(b)			-
	Impact of authoritative convertible debt guidance on interest expense, net			54		(c)			54		(c)
	Non-GAAP net earnings		$	1,755				$	1,734				1	%
	MEDTRONIC, INC.
	RECONCILIATION OF CONSOLIDATED GAAP DILUTED EPS
	TO CONSOLIDATED NON-GAAP DILUTED EPS
	(Unaudited)
			Six months ended
			October 29, 2010					October 30, 2009					Percentage Change
	Diluted EPS, as reported		$	1.28				$	1.18				8	%
	Restructuring charges			-					0.04		(d)
	Certain litigation charges, net			0.26		(a)			0.28		(e)
	IPR&D and certain acquisition-related costs			0.02		(b)			-
	Impact of authoritative convertible debt guidance on interest expense, net			0.05		(c)			0.05		(c)
	Non-GAAP diluted EPS		$	1.61				$	1.56		(1)		3	%

Note: The data in this schedule has been intentionally rounded and therefore the first quarter and second quarter data may not sum to the fiscal year to date totals.

(1) The data in this schedule has been intentionally rounded to the nearest $0.01 and therefore may not sum.

(a) The $278 million ($0.26 per share) after-tax ($279 million pre-tax) certain litigation charges, net relate primarily to a settlement involving the Sprint Fidelis family of defibrillation leads and an accounting charge for Other Matters litigation. The Sprint Fidelis settlement relates to the resolution of certain outstanding product litigation related to the Sprint Fidelis family of defibrillation leads that were subject to a field action announced October 15, 2007. The terms of the agreement stipulate Medtronic will, if it elects not to cancel the agreement, pay plaintiffs to settle substantially all pending U.S. lawsuits and claims, subject to certain conditions. In addition to disclosing certain litigation charges, net that are determined in accordance with U.S. generally accepted accounting principles (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.

(b) The $27 million ($0.02 per share) after-tax ($39 million pre-tax) IPR&D and certain acquisition-related costs represent an $11 million after-tax ($15 million pre-tax) IPR&D charge related to the NeuroPace, Inc. cross-licensing agreement and $16 million after-tax ($24 million pre-tax) of certain acquisition-related costs. The IPR&D charge related to a milestone payment under existing terms of 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. This payment was charged to IPR&D as technological feasibility has not yet been reached and such technology has no future alternative use. The certain acquisition-related costs include acquisition-related legal fees and severance costs, change in control costs, and contract termination costs related to the acquisition of ATS Medical. Inc. that were expensed in the period. In addition to disclosing IPR&D and certain acquisition-related costs 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 and certain acquisition-related costs. 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 and certain acquisition-related costs 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 or similar to measures presented by other companies.

(c) The Financial Accounting Standards Board (FASB) authoritative guidance for convertible debt accounting has resulted in an after-tax impact to net earnings of $54 million ($0.05 per share) for both the six months ended October 29, 2010 and October 30, 2009. The pre-tax impact to interest expense, net was $86 million and $84 million for the six months ended October 29, 2010 and October 30, 2009, respectively. In addition to disclosing the financial statement impact of this authoritative guidance 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 the impact of this authoritative guidance. 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 the impact of this authoritative guidance 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 $50 million ($0.04 per share) after-tax ($69 million pre-tax) restructuring charge is the net impact of a $52 million after-tax charge related to restructuring initiatives that the Company began in the fourth quarter of fiscal year 2009, offset by a $2 million after-tax net 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 were designed to streamline operations and further align resources around the Company's higher growth opportunities. This initiative impacts most businesses and certain corporate functions. In the first quarter of fiscal year 2010, the Company recognized expense associated with compensation and early retirement benefits provided to employees which could not be accrued in the fourth quarter of fiscal year 2009. In addition, the Company recorded $4 million of the after-tax expense ($7 million pre-tax) within cost of products sold related to inventory write-offs and production-related asset impairments associated with these restructuring activities. The $2 million after-tax net reversal is primarily a result of a $5 million after-tax reversal due to 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 partially offset by a $3 million after-tax charge the Company recorded in the first quarter of fiscal year 2010 related to the further write-down of a non-inventory related asset resulting from the continued decline in the international real estate market. There were no additional restructuring charges in the second quarter of fiscal year 2010. 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.

(e) The $316 million ($0.28 per share) after-tax ($374 million pre-tax) certain litigation charges, net relate to settlements with Abbott Laboratories (Abbott) and with W.L. Gore & Associates (Gore). The Abbott settlement accounted for $360 million after-tax ($444 million pre-tax) charges and the Gore settlement accounted for $44 million after-tax ($70 million pre-tax) gain of certain litigation charges, net. The Abbott settlement related to the resolution of all outstanding intellectual property litigation. The terms of the Abbott agreement stipulate that neither party will sue each other in the field of coronary stent and stent delivery systems for a period of at least 10 years, subject to certain conditions. Both parties also agreed to a cross-license of the disputed patents within the defined field. The $444 million pre-tax settlement amount includes a $400 million payment to Abbott and a $42 million success payment made to evYsio Medical Devices, LLC (evYsio). In addition, a $2 million payment was made to evYsio in order to expand the definition of the license field from evYsio. The Gore settlement related to the resolution of outstanding patent litigation related to selected patents in Medtronic's Jervis and Wiktor patent families. The terms of the agreement stipulate that neither party will sue each other in the defined field of use, subject to certain conditions. In addition and subject to certain conditions, Medtronic granted Gore a worldwide, irrevocable, non-exclusive license in the defined field of use. Gore will also pay Medtronic a quarterly license payment through the fiscal quarter ending October 2018. In addition to disclosing certain litigation charges, net 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.

MEDTRONIC, INC.
RECONCILIATION OF WORLDWIDE REVENUE GROWTH TO CONSTANT CURRENCY GROWTH
(Unaudited)
(in millions)
		Three months ended											Currency Impact							Constant
		October 29,			October 30,			Reported					on Growth (a)							Currency
		2010			2009			Growth					Dollar			Percentage				Growth (a)
Reported Revenue:
Pacing Systems		$	472		$	498		(5	)	%		$	(7	)		(1	)	%		(4	)	%
Defibrillation Systems			745			754		(1	)				(4	)		-				(1	)
Other			31			26		19					-			-				19
Cardiac Rhythm Disease Management			1,248			1,278		(2	)				(11	)		(1	)			(1	)
Coronary & Peripheral			379			369		3					-			-				3
Structural Heart			237			206		15					(3	)		(2	)			17
Endovascular			122			121		1					(3	)		(2	)			3
CardioVascular			738			696		6					(6	)		(1	)			7
Physio-Control			109			94		16					(2	)		(2	)			18
Cardiac & Vascular Group			2,095			2,068		1					(19	)		(1	)			2
Core Spinal			634			642		(1	)				(1	)		-				(1	)
Biologics			216			220		(2	)				1			-				(2	)
Spinal			850			862		(1	)				-			-				(1	)
Neuromodulation			388			384		1					(4	)		(1	)			2
Diabetes			326			300		9					(6	)		(2	)			11
Surgical Technologies			244			224		9					-			-				9
Restorative Therapies Group			1,808			1,770		2					(10	)		(1	)			3
Total		$	3,903		$	3,838		2		%		$	(29	)		-		%		2		%

(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.

MEDTRONIC, INC.
RECONCILIATION OF INTERNATIONAL REVENUE GROWTH TO CONSTANT CURRENCY GROWTH
(Unaudited)
(in millions)
		Three months ended											Currency Impact						Constant
		October 29,			October 30,			Reported					on Growth (a)						Currency
		2010			2009			Growth					Dollar			Percentage			Growth (a)
Reported Revenue:
Pacing Systems		$	262		$	277		(5	)	%		$	(7	)		(2	)	%	(3	)	%
Defibrillation Systems			264			262		1					(4	)		(1	)		2
Other			23			18		28					-			-			28
Cardiac Rhythm Disease Management			549			557		(1	)				(11	)		(2	)		1
Coronary & Peripheral			276			263		5					-			-			5
Structural Heart			146			119		23					(3	)		(2	)		25
Endovascular			68			62		10					(3	)		(5	)		15
CardioVascular			490			444		10					(6	)		(2	)		12
Physio-Control			45			45		-					(2	)		(4	)		4
Cardiac & Vascular Group			1,084			1,046		4					(19	)		(1	)		5
Core Spinal			189			185		2					(1	)		(1	)		3
Biologics			16			15		7					1			7			-
Spinal			205			200		3					-			-			3
Neuromodulation			110			112		(2	)				(4	)		(5	)		3
Diabetes			113			99		14					(6	)		(6	)		20
Surgical Technologies			96			84		14					-			-			14
Restorative Therapies Group			524			495		6					(10	)		(2	)		8
Total		$	1,608		$	1,541		4		%		$	(29	)		(2	)	%	6		%

(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.

MEDTRONIC, INC.
RECONCILIATION OF NEUROMODULATION REVENUE GROWTH TO CONSTANT CURRENCY
REVENUE GROWTH ADJUSTED FOR THE DIVESTITURE OF THE BRAVO pH MONITORING BUSINESS
(Unaudited)
		Three months ended October 29, 2010				Three months ended October 30, 2009				Percentage Change
Neuromodulation revenue, as reported		$	388			$	384				1	%
Foreign currency impact			4				-
Bravo pH monitoring business revenue			-				(3	)
Neuromodulation revenue, adjusted		$	392			$	381		(a)		3	%

(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 and the divestiture of the Bravo pH monitoring business on revenue. In addition, Medtronic management uses Neuromodulation revenue adjusted for foreign currency translation and the divestiture of Bravo pH monitoring to evaluate 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.

MEDTRONIC, INC.
RECONCILIATION OF SURGICAL TECHNOLOGIES REVENUE GROWTH TO CONSTANT CURRENCY
REVENUE GROWTH ADJUSTED FOR THE DIVESTITURE OF THE OPHTHALMIC BUSINESS
(Unaudited)
		Three months ended October 29, 2010				Three months ended October 30, 2009				Percentage Change
Surgical Technologies revenue, as reported		$	244			$	224				9	%
Foreign currency impact			-				-
Ophthalmic business revenue			-				(5	)
Surgical Technologies revenue, adjusted		$	244			$	219		(a)		11	%

(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 and the divestiture of the Ophthalmic business on revenue. In addition, Medtronic management uses Surgical Technologies revenue adjusted for foreign currency translation and the divestiture of the Ophthalmic business to evaluate 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.

MEDTRONIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
		October 29, 2010				April 30, 2010
		(in millions, except per share data)
ASSETS
Current assets:
Cash and cash equivalents		$	1,256			$	1,400
Short-term investments			2,288				2,375
Accounts receivable, less allowances of $73 and $67, respectively			3,453				3,335
Inventories			1,635				1,481
Deferred tax assets, net			681				544
Prepaid expenses and other current assets			581				704
Total current assets			9,894				9,839
Property, plant, and equipment			5,586				5,358
Accumulated depreciation			(3,128	)			(2,937	)
Property, plant, and equipment, net			2,458				2,421
Goodwill			8,624				8,391
Other intangible assets, net			2,573				2,559
Long-term investments			5,448				4,632
Other assets			314				248
Total assets		$	29,311			$	28,090
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings		$	3,417			$	2,575
Accounts payable			438				420
Accrued compensation			707				1,001
Accrued income taxes			163				235
Other accrued expenses			1,170				890
Total current liabilities			5,895				5,121
Long-term debt			7,148				6,944
Long-term accrued compensation and retirement benefits			507				516
Long-term accrued income taxes			634				595
Long-term deferred tax liabilities, net			6				89
Other long-term liabilities			296				196
Total liabilities			14,486				13,461
Commitments and contingencies
Shareholders' equity:
Preferred stock-- par value $1.00			-				-
Common stock-- par value $0.10			108				110
Retained earnings			15,114				14,826
Accumulated other comprehensive loss			(397	)			(307	)
Total shareholders' equity			14,825				14,629
Total liabilities and shareholders' equity		$	29,311			$	28,090

MEDTRONIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Six months ended
		October 29,				October 30,
		2010				2009
		(in millions)
Operating Activities:
Net earnings		$	1,396			$	1,314
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			402				372
Amortization of discount on senior convertible notes			86				84
IPR&D charges			15				-
Provision for doubtful accounts			18				19
Deferred income taxes			(77	)			143
Stock-based compensation			104				128
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net			(72	)			(89	)
Inventories			(108	)			(15	)
Accounts payable and accrued liabilities			(429	)			(74	)
Other operating assets and liabilities			94				89
Certain litigation charges, net			279				374
Certain litigation payments			(5	)			(939	)
Net cash provided by operating activities			1,703				1,406
Investing Activities:
Acquisitions, net of cash acquired			(452	)			-
Purchase of intellectual property			(17	)			(40	)
Additions to property, plant, and equipment			(258	)			(279	)
Purchases of marketable securities			(3,425	)			(2,916	)
Sales and maturities of marketable securities			2,793				1,745
Other investing activities, net			(80	)			(88	)
Net cash used in investing activities			(1,439	)			(1,578	)
Financing Activities:
Change in short-term borrowings, net			1,181				618
Payments on long-term debt			(402	)			(6	)
Dividends to shareholders			(488	)			(455	)
Issuance of common stock			42				103
Repurchase of common stock			(760	)			(609	)
Net cash used in financing activities			(427	)			(349	)
Effect of exchange rate changes on cash and cash equivalents			19				76
Net change in cash and cash equivalents			(144	)			(445	)
Cash and cash equivalents at beginning of period			1,400				1,271
Cash and cash equivalents at end of period		$	1,256			$	826
Supplemental Cash Flow Information
Income taxes paid		$	552			$	193
Interest paid			219				181

SOURCE: Medtronic, Inc.

Medtronic, Inc.
Jeff Warren, 763-505-2696
Investor Relations
Brian Henry, 763-505-2796
Public Relations