10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 2, 2011 OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________.

Commission File Number: 1-12441

ST. JUDE MEDICAL, INC.

(Exact name of registrant as specified in its charter)

Minnesota	41-1276891
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One St. Jude Medical Drive, St. Paul, Minnesota 55117
(Address of principal executive offices, including zip code)

(651) 756-2000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes x No

The number of shares of common stock, par value $.10 per share, outstanding on August 1, 2011 was 329,503,297.

TABLE OF CONTENTS

ITEM		DESCRIPTION	PAGE
	PART I – FINANCIAL INFORMATION
1.	Financial Statements
	Condensed Consolidated Statements of Earnings		1
	Condensed Consolidated Balance Sheets		2
	Condensed Consolidated Statements of Cash Flows		3
	Notes to the Condensed Consolidated Financial Statements
	Note 1 – Basis of Presentation		4
	Note 2 – New Accounting Pronouncements		4
	Note 3 – Goodwill and Other Intangible Assets		4
	Note 4 – Inventories		5
	Note 5 – Debt		5
	Note 6 – Commitments and Contingencies		7
	Note 7 – Purchased In-Process Research and Development and Special Charges		10
	Note 8 – Net Earnings Per Share		11
	Note 9 – Comprehensive Income		12
	Note 10 – Other Income (Expense), Net		12
	Note 11 – Income Taxes		12
	Note 12 – Fair Value Measurements and Financial Instruments		13
	Note 13 – Derivative Financial Instruments		14
	Note 14 – Segment and Geographic Information		15
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
	Overview		18
	New Accounting Pronouncements		19
	Critical Accounting Policies and Estimates		19
	Segment Performance		20
	Results of Operations		22
	Liquidity		25
	Debt and Credit Facilities		26
	Share Repurchases		27
	Dividends		27
	Commitments and Contingencies		27
	Cautionary Statements		28
3.	Quantitative and Qualitative Disclosures About Market Risk		29
4.	Controls and Procedures		29
	PART II – OTHER INFORMATION
1.	Legal Proceedings		29
1A.	Risk Factors		29
5.	Other Information		31
6.	Exhibits		31
	Signature		33
	Index to Exhibits		34

PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

ST. JUDE MEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Net sales	$	1,446,751		$	1,312,769		$	2,822,264		$	2,574,465
Cost of sales:
Cost of sales before special charges		383,877			345,302			748,319			666,471
Special charges		11,046			—			11,046			—
Total cost of sales		394,923			345,302			759,365			666,471
Gross profit		1,051,828			967,467			2,062,899			1,907,994
Selling, general and administrative expense		513,841			447,610			1,027,161			890,900
Research and development expense		176,334			155,104			352,067			306,334
Purchased in-process research and development charges		4,400			—			4,400			—
Special charges		32,169			—			32,169			—
Operating profit		325,084			364,753			647,102			710,760
Other income (expense), net		(25,013	)		(20,230	)		(51,465	)		(40,546	)
Earnings before income taxes		300,071			344,523			595,637			670,214
Income tax expense		59,177			90,485			121,315			177,607
Net earnings	$	240,894		$	254,038		$	474,322		$	492,607
Net earnings per share:
Basic	$	0.73		$	0.78		$	1.45		$	1.51
Diluted	$	0.72		$	0.77		$	1.43		$	1.50
Cash dividends declared per share:	$	0.21		$	—		$	0.42		$	—
Weighted average shares outstanding:
Basic		328,618			326,924			326,941			326,113
Diluted		332,635			329,313			330,757			328,684

See notes to the condensed consolidated financial statements.

1

ST. JUDE MEDICAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)

	July 2, 2011 (Unaudited)			January 1, 2011
ASSETS
Current Assets
Cash and cash equivalents	$	832,817		$	500,336
Accounts receivable, less allowance for doubtful accounts of $39,101 at July 2, 2011 and $35,354 at January 1, 2011		1,443,614			1,331,210
Inventories		699,163			667,545
Deferred income taxes, net		204,207			196,599
Other current assets		178,715			216,458
Total current assets		3,358,516			2,912,148
Property, plant and equipment, at cost		2,393,776			2,224,349
Less accumulated depreciation		(1,009,260	)		(900,418	)
Net property, plant and equipment		1,384,516			1,323,931
Goodwill		2,979,493			2,955,602
Other intangible assets, net		945,393			987,060
Other assets		427,479			387,707
TOTAL ASSETS	$	9,095,397		$	8,566,448
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current debt obligations	$	80,465		$	79,637
Accounts payable		166,080			297,551
Dividends payable		69,136			—
Accrued expenses
Employee compensation and related benefits		322,836			320,323
Other		367,805			319,739
Total current liabilities		1,006,322			1,017,250
Long-term debt		2,486,016			2,431,966
Deferred income taxes, net		303,313			310,503
Other liabilities		464,064			435,058
Total liabilities		4,259,715			4,194,777
Commitments and Contingencies (Note 6)		—			—
Shareholders’ Equity
Preferred stock ($1.00 par value; 25,000,000 shares authorized; none outstanding)		—			—
Common stock ($0.10 par value; 500,000,000 shares authorized; 329,217,266 and 329,018,166 shares issued and outstanding at July 2, 2011 and January 1, 2011, respectively)		32,922			32,902
Additional paid-in capital		275,521			156,126
Retained earnings		4,333,840			4,098,639
Accumulated other comprehensive income (loss):
Cumulative translation adjustment		177,575			68,897
Unrealized gain on available-for-sale securities		15,824			15,107
Total shareholders’ equity		4,835,682			4,371,671
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	9,095,397		$	8,566,448

See notes to the condensed consolidated financial statements.

2

ST. JUDE MEDICAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended	July 2, 2011				July 3, 2010
OPERATING ACTIVITIES
Net earnings	$	474,322		$	492,607
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization		148,793			115,364
Amortization of debt discount (premium)		(2,701	)		454
Inventory step-up amortization		29,442			—
Stock-based compensation		37,998			36,441
Excess tax benefits from stock-based compensation		(8,518	)		(8,002	)
Purchased in-process research and development charges		4,400			—
Deferred income taxes		(16,583	)		11,386
Changes in operating assets and liabilities, net of business acquisitions:
Accounts receivable		(48,223	)		(135,361	)
Inventories		(48,074	)		(19,860	)
Other current assets		44,030			(38,140	)
Accounts payable and accrued expenses		(57,013	)		43,625
Income taxes payable		13,837			—
Other, net		12,113			(3,133	)
Net cash provided by operating activities		583,823			495,381
INVESTING ACTIVITIES
Purchases of property, plant and equipment		(162,625	)		(145,752	)
Business acquisition payments, net of cash acquired		—			(135,601	)
Other, net		(19,491	)		(16,152	)
Net cash used in investing activities		(182,116	)		(297,505	)
FINANCING ACTIVITIES
Proceeds from exercise of stock options and stock issued		241,587			65,187
Excess tax benefits from stock-based compensation		8,518			8,002
Common stock repurchased, including related costs		(309,204	)		—
Dividends paid		(68,647	)		—
Issuances/payments of commercial paper borrowings, net		46,300			—
Borrowings under debt facilities		—			671,094
Payments under debt facilities		—			(655,723	)
Net cash provided by (used in) financing activities		(81,446	)		88,560
Effect of currency exchange rate changes on cash and cash equivalents		12,220			(12,309	)
Net increase in cash and cash equivalents		332,481			274,127
Cash and cash equivalents at beginning of period		500,336			392,927
Cash and cash equivalents at end of period	$	832,817		$	667,054

See notes to the condensed consolidated financial statements.

3

ST. JUDE MEDICAL, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of St. Jude Medical, Inc. (St. Jude Medical or the Company) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (U.S. GAAP) for complete financial statements. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company’s consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. Preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and footnotes. Actual results could differ from those estimates. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and footnotes included in its Annual Report on Form 10-K for the fiscal year ended January 1, 2011 (2010 Annual Report on Form 10-K).

NOTE 2 – NEW ACCOUNTING PRONOUNCEMENTS

In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-6, Fair Value Measurements and Disclosures (ASC Topic 820): Improving Disclosures about Fair Value Measurements, which requires reporting entities to make new disclosures about recurring or nonrecurring fair value measurements including (i) significant transfers into and out of Level 1 and Level 2 fair value measurements and (ii) information on purchases, sales, issuances and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. ASC Topic 820 was effective for interim and annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which were effective for interim and annual periods beginning after December 15, 2010. The Company adopted the additional disclosures required for Level 1 and Level 2 fair value measurements beginning in fiscal year 2010 and adopted Level 3 disclosures beginning in fiscal year 2011.

NOTE 3 – GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for each of the Company’s reportable segments (see Note 14) for the six months ended July 2, 2011 were as follows (in thousands):

	CRM/NMD		CV/AF		Total
Balance at January 1, 2011	$	1,231,120	$	1,724,482	$	2,955,602
Foreign currency translation and other		5,062		18,829		23,891
Balance at July 2, 2011	$	1,236,182	$	1,743,311	$	2,979,493

4

The following table provides the gross carrying amount of other intangible assets and related accumulated amortization (in thousands):

	July 2, 2011				January 1, 2011
		Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Definite-lived intangible assets:
Purchased technology and patents	$	913,974	$	245,210	$	910,035	$	208,362
Customer lists and relationships		184,871		110,080		184,327		100,608
Trademarks and tradenames		24,460		7,544		24,370		7,431
Licenses, distribution agreements and other		6,240		4,388		6,170		4,511
	$	1,129,545	$	367,222	$	1,124,902	$	320,912
Indefinite-lived intangible assets:
Acquired IPR&D	$	134,270			$	134,270
Trademarks and tradenames		48,800				48,800
	$	183,070			$	183,070

NOTE 4 – INVENTORIES
The Company’s inventories consisted of the following (in thousands):
	July 2, 2011		January 1, 2011
Finished goods	$	492,540	$	466,191
Work in process		67,347		62,607
Raw materials		139,276		138,747
	$	699,163	$	667,545
NOTE 5 – DEBT
The Company’s debt consisted of the following (in thousands):
	July 2, 2011		January 1, 2011
2.20% senior notes due 2013	$	463,998	$	467,168
3.75% senior notes due 2014		699,354		699,248
2.50% senior notes due 2016		497,331		489,496
4.875% senior notes due 2019		494,880		494,563
1.58% Yen-denominated senior notes due 2017		100,774		99,737
2.04% Yen-denominated senior notes due 2020		157,879		156,254
Yen-denominated term loan due 2011		—		79,637
Yen-denominated credit facilities due 2012		80,465		—
Commercial paper borrowings		71,800		25,500
Total debt		2,566,481		2,511,603
Less: current debt obligations		80,465		79,637
Long-term debt	$	2,486,016	$	2,431,966

Expected future minimum principal payments under the Company’s debt obligations are as follows: $80.5 million in 2012; $450.0 million in 2013; $700.0 million in 2014; $500.0 million in 2016; and $830.5 million in years thereafter.

Senior notes due 2013: On March 10, 2010, the Company issued $450.0 million principal amount of 3-year, 2.20% unsecured senior notes (2013 Senior Notes) that mature in September 2013. The majority of the net proceeds from the issuance of the 2013 Senior Notes was used to retire outstanding debt obligations. Interest payments are required on a semi-annual basis. The 2013 Senior Notes were issued at a discount, yielding an effective interest rate of 2.23% at issuance. The Company may redeem the 2013 Senior Notes at any time at the applicable redemption price. The debt discount is being amortized as interest expense through maturity.

5

Concurrent with the issuance of the 2013 Senior Notes, the Company entered into a 3-year, $450.0 million notional amount interest rate swap designated as a fair value hedge of the changes in fair value of the Company’s fixed-rate 2013 Senior Notes. On November 8, 2010, the Company terminated the interest rate swap and received a cash payment of $19.3 million. The gain from terminating the interest rate swap agreement is being amortized as a reduction of interest expense resulting in a net average interest rate of 0.8% that will be recognized over the remaining term of the 2013 Senior Notes.

Senior notes due 2014: On July 28, 2009, the Company issued $700.0 million principal amount, 5-year, 3.75% unsecured senior notes (2014 Senior Notes) that mature in July 2014. Interest payments are required on a semi-annual basis. The 2014 Senior Notes were issued at a discount, yielding an effective interest rate of 3.78% at issuance. The debt discount is being amortized as interest expense through maturity. The Company may redeem the 2014 Senior Notes at any time at the applicable redemption price.

Senior notes due 2016: On December 1, 2010, the Company issued $500.0 million principal amount of 5-year, 2.50% unsecured senior notes (2016 Senior Notes) that mature in January 2016. The majority of the net proceeds from the issuance of the 2016 Senior Notes was used for general corporate purposes including the repurchase of the Company’s common stock. Interest payments are required on a semi-annual basis. The 2016 Senior Notes were issued at a discount, yielding an effective interest rate of 2.54% at issuance. The debt discount is being amortized as interest expense through maturity. The Company may redeem the 2016 Senior Notes at any time at the applicable redemption price.

Concurrent with the issuance of the 2016 Senior Notes, the Company entered into a 5-year, $500.0 million notional amount interest rate swap designated as a fair value hedge of the changes in fair value of the Company’s fixed-rate 2016 Senior Notes. As of July 2, 2011, the fair value of the swap was a $2.3 million liability which was classified as other liabilities on the consolidated balance sheet, with a corresponding adjustment to the carrying value of the 2016 Senior Notes. Refer to Note 13 for additional information regarding the interest rate swap.

Senior notes due 2019: On July 28, 2009, the Company issued $500.0 million principal amount, 10-year, 4.875% unsecured senior notes (2019 Senior Notes) that mature in July 2019. Interest payments are required on a semi-annual basis. The 2019 Senior Notes were issued at a discount, yielding an effective interest rate of 5.04% at issuance. The debt discount is being amortized as interest expense through maturity. The Company may redeem the 2019 Senior Notes at any time at the applicable redemption price.

1.58% Yen-denominated senior notes due 2017: On April 28, 2010, the Company issued 7-year, 1.58% unsecured senior notes in Japan (1.58% Yen Notes) totaling 8.1 billion Yen (the equivalent of $100.8 million at July 2, 2011 and $99.7 million at January 1, 2011). The net proceeds from the issuance of the 1.58% Yen Notes were used to repay the 1.02% Yen-denominated Notes due May 2010 (1.02% Yen Notes). The principal amount of the 1.58% Yen Notes recorded on the balance sheet fluctuates based on the effects of foreign currency translation. Interest payments are required on a semi-annual basis and the entire principal balance is due on April 28, 2017.

2.04% Yen-denominated senior notes due 2020: On April 28, 2010, the Company issued 10-year, 2.04% unsecured senior notes in Japan (2.04% Yen Notes) totaling 12.8 billion Yen (the equivalent of $157.9 million at July 2, 2011 and $156.3 million at January 1, 2011). The net proceeds from the issuance of the 2.04% Yen Notes were used to repay the 1.02% Yen Notes. The principal amount of the 2.04% Yen Notes recorded on the balance sheet fluctuates based on the effects of foreign currency translation. Interest payments are required on a semi-annual basis and the entire principal balance is due on April 28, 2020.

Yen–denominated credit facilities: In March 2011, the Company borrowed 6.5 billion Japanese Yen under uncommitted credit facilities with two commercial Japanese banks that provide for borrowings up to a maximum of 11.25 billion Japanese Yen. The proceeds from the borrowings were used to repay the outstanding balance on the Yen-denominated term loan due December 2011. The outstanding 6.5 billion Japanese Yen balance was the equivalent of $80.5 million at July 2, 2011. The principal amount reflected on the balance sheet fluctuates based on the effects of foreign currency translation. Half of the borrowings bear interest at Yen LIBOR plus 0.25% and the other half of the borrowings bear interest at Yen LIBOR plus 0.275%. The entire principal balance is due in March 2012.

Other available borrowings: In December 2010, the Company entered into a $1.5 billion unsecured committed credit facility (Credit Facility) that it may draw on for general corporate purposes and to support its commercial paper program. The Credit Facility expires in February 2015. Borrowings under the Credit Facility bear interest initially at LIBOR plus 0.875%, subject to adjustment in the event of a change in the Company’s credit ratings. As of July 2, 2011 and January 1, 2011, the Company had no outstanding borrowings under the Credit Facility.

6

The Company’s commercial paper program provides for the issuance of short-term, unsecured commercial paper with maturities up to 270 days. The Company began issuing commercial paper during November 2010 and had an outstanding commercial paper balance of $71.8 million as of July 2, 2011 and $25.5 million as of January 1, 2011. During the first six months of 2011, the Company’s weighted average effective interest rate on its commercial paper borrowings was approximately 0.28%. Any future commercial paper borrowings would bear interest at the applicable then-current market rates. The Company classifies all of its commercial paper borrowings as long-term debt, as the Company has the ability to repay any short-term maturity with available cash from its existing long-term, committed Credit Facility.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Litigation

Silzone® Litigation and Insurance Receivables: The Company has been sued in various jurisdictions beginning in March 2000 by some patients who received a heart valve product with Silzone® coating, which the Company stopped selling in January 2000. The Company has vigorously defended against the claims that have been asserted and will continue to do so with respect to any remaining claims.

The Company has two outstanding class action cases in Ontario and one individual case in British Columbia by the Provincial health insurer. In Ontario, a class action case involving Silzone patients has been certified, and the trial on common class issues began in February 2010. The testimony and evidence submissions for this trial were completed in March 2011, and closing briefing and argument is presently scheduled to be completed by the end of September 2011. Depending on the Court’s ruling in this common issues trial, there may be further proceedings, including appeal, in the future. A second case seeking class action status in Ontario has been stayed pending resolution of the ongoing Ontario class action. The complaints in the Ontario cases request damages up to 2.0 billion Canadian Dollars (the equivalent of $2.1 billion at July 2, 2011). Based on the Company’s historical experience, the amount ultimately paid, if any, often does not bear any relationship to the amount claimed. The British Columbia Provincial health insurer has a lawsuit seeking to recover the cost of insured services furnished or to be furnished to class members in the British Columbia class action resolved in 2010, and that lawsuit remains pending in the British Columbia court.

The Company has recorded an accrual for probable legal costs, settlements and judgments for Silzone related litigation. The Company is not aware of any unasserted claims related to Silzone-coated products. For all Silzone legal costs incurred, the Company records insurance receivables for the amounts that it expects to recover based on its assessment of the specific insurance policies, the nature of the claim and the Company’s experience with similar claims. Any costs (the material components of which are settlements, judgments, legal fees and other related defense costs) not covered by the Company’s product liability insurance policies or existing reserves could be material to the Company’s consolidated earnings, financial position and cash flows. The following table summarizes the Company’s Silzone legal accrual and related insurance receivable at July 2, 2011 and January 1, 2011 (in thousands):

	July 2, 2011		January 1, 2011
Silzone legal accrual	$	23,832	$	24,032
Silzone insurance receivable	$	14,700	$	12,799

The Company’s current and final insurance layer for Silzone claims consists of $30 million of coverage with two insurance carriers. To the extent that the Company’s future Silzone costs and expenses exceed its remaining insurance coverage, the Company would be responsible for such costs. The Company has not recorded an expense related to any potential future damages as they are not probable or reasonably estimable at this time.

Volcano Corporation & LightLab Imaging Inc. (LightLab Imaging) Litigation: The Company’s subsidiary, LightLab Imaging, has pending litigation with Volcano Corporation (Volcano) and Axsun Technologies, Inc. (Axsun), a subsidiary of Volcano, in the Superior Court of Massachusetts and in state court in Delaware. LightLab Imaging makes and sells optical coherence tomography (OCT) imaging systems. Volcano is a LightLab Imaging competitor in medical imaging. Axsun makes and sells lasers and is a supplier of lasers to LightLab Imaging for use in OCT imaging systems. The lawsuits arise out of Volcano’s acquisition of Axsun in December 2008. Before Volcano acquired Axsun, LightLab Imaging and Axsun had worked together to develop a tunable laser for use in OCT imaging systems. While the laser was in development, LightLab Imaging and Axsun entered into an agreement pursuant to which Axsun agreed to sell its tunable lasers exclusively to LightLab in the field of human coronary artery imaging for a period of years.

7

After Volcano acquired Axsun in December 2008, LightLab Imaging sued Axsun and Volcano in Massachusetts, asserting a number of claims arising out of Volcano’s acquisition of Axsun. In January 2011, the court ruled that Axsun’s and Volcano’s conduct constituted knowing and willful violations of a statute that prohibits unfair or deceptive acts or practices or acts of unfair competition, entitling LightLab Imaging to double damages, and furthermore, that LightLab Imaging was entitled to recover attorneys’ fees. In February 2011, Volcano and Axsun were ordered to pay the Company for reimbursement of attorneys’ fees and double damages which Volcano paid to the Company in July. The Court also issued certain injunctions against Volcano and Axsun when it entered its final judgment.

In Delaware, Axsun and Volcano commenced an action in February 2010 against LightLab Imaging, seeking a declaration as to whether Axsun may supply a certain light source for use in OCT imaging systems to Volcano. Axsun’s and Volcano’s position is that this light source is not a tunable laser and hence falls outside Axsun’s exclusivity obligations to Volcano. LightLab Imaging’s position, among other things, is that this light source is a tunable laser. The parties have conducted expedited discovery. Though the trial of this matter was expected to occur in early 2011, in a March 2011 ruling, the Delaware Court postponed the trial of this case because Axsun and Volcano do not yet have a finalized light source product to present to the Court.

In May 2011, LightLab Imaging initiated a lawsuit against Volcano and Axsun in the Delaware state court. The suit seeks to enforce LightLab Imaging’s exclusive contract with Axsun, to prevent Volcano from interfering with that contract, to bar Axsun and Volcano from using LightLab Imaging confidential information and trade secrets, and to prevent Volcano and Axsun from violating a Massachusetts statute prohibiting unfair methods of competition and unfair or deceptive acts or practices relating to LightLab Imaging’s tunable laser technology. Volcano and Axsun have filed a motion seeking to dismiss this lawsuit, and this motion is scheduled to be heard by the Court in September 2011.

Volcano Corporation & St. Jude Medical Patent Litigation: In July 2010, the Company filed a lawsuit in federal district court in Delaware against Volcano for patent infringement. In the suit, the Company asserted five patents against Volcano and seeks injunctive relief and monetary damages. The infringed patents are part of the St. Jude Medical PressureWire® technology platform, which was acquired as part of St. Jude Medical’s purchase of Radi Medical Systems in December 2008.Volcano has filed counterclaims against the Company in this case, alleging certain St. Jude Medical patent claims are unenforceable and that certain St. Jude Medical products infringe four Volcano patents. The Company believes the assertions and claims made by Volcano are without merit. Trial in this case is scheduled for October 2012.

Securities Class Action Litigation: In March 2010, a securities class action lawsuit was filed in federal district court in Minnesota against the Company and certain officers on behalf of purchasers of St. Jude Medical common stock between April 22, 2009 and October 6, 2009. The lawsuit relates to the Company’s earnings announcements for the first, second and third quarters of 2009, as well as a preliminary earnings release dated October 6, 2009. The complaint, which seeks unspecified damages and other relief as well as attorneys’ fees, alleges that the Company failed to disclose that it was experiencing a slowdown in demand for its products and was not receiving anticipated orders for Cardiac Rhythm Management (CRM) devices. Class members allege that the Company’s failure to disclose the above information resulted in the class purchasing St. Jude Medical stock at an artificially inflated price. The Company intends to vigorously defend against the claims asserted in this lawsuit. In October 2010, the Company filed a motion to dismiss the lawsuit, which was heard by the district court in April 2011.

AGA Securities Class Action: In connection with the acquisition of AGA Medical Inc. (AGA Medical), the Company, in addition to AGA Medical and other defendants, has been named as a defendant in two putative stockholder class action complaints, one filed in the Fourth Judicial District Court of Minnesota and the other filed in the Delaware Court of Chancery, both in October 2010. The plaintiffs in the complaints allege, among other claims, that AGA Medical’s directors breached their fiduciary duties to AGA Medical’s stockholders by accepting an inadequate price, failing to make full disclosure and utilizing unreasonable deal protection devices and further alleges that AGA Medical and the Company aided and abetted the purported breaches of fiduciary duty. The complaints seek injunctive relief, including to enjoin the transaction, in addition to unspecified compensatory damages, attorneys’ fees, other fees and costs and other relief. The acquisition of AGA Medical was completed on November 18, 2010 and the parties to this action entered into a memorandum of understanding in November 2010 to settle the litigation, the amount of which was not material. The parties have executed a stipulation of settlement and the settlement approval hearing with the Delaware Court of Chancery is scheduled for September 2011.

Other than disclosed above, the Company has not recorded an expense related to any potential damages in connection with these litigation matters because any potential loss is not probable or reasonably estimable.

8

Regulatory Matters

The FDA inspected the Company’s manufacturing facility in Minnetonka, Minnesota at various times between December 8 and December 19, 2008. On December 19, 2008, the FDA issued a Form 483 identifying certain observed non-conformity with current Good Manufacturing Practice (cGMP) primarily related to the manufacture and assembly of the Safire^TM ablation catheter with a 4 mm or 5 mm non-irrigated tip. Following the receipt of the Form 483, the Company’s AF division provided written responses to the FDA detailing proposed corrective actions and immediately initiated efforts to address the FDA’s observations of non-conformity. The Company subsequently received a warning letter dated April 17, 2009 from the FDA relating to these non-conformities with respect to this facility.

The FDA inspected the Company’s Plano, Texas manufacturing facility at various times between March 5 and April 6, 2009. On April 6, 2009, the FDA issued a Form 483 identifying certain observed nonconformities with cGMP. Following the receipt of the Form 483, the Company’s Neuromodulation division provided written responses to the FDA detailing proposed corrective actions and immediately initiated efforts to address FDA’s observations of nonconformity. The Company subsequently received a warning letter dated June 26, 2009 from the FDA relating to these non-conformities with respect to its Neuromodulation division’s Plano, Texas and Hackettstown, New Jersey facilities.

With respect to each of these warning letters, the FDA notes that it will not grant requests for exportation certificates to foreign governments or approve pre-market approval applications for Class III devices to which the quality system regulation deviations are reasonably related until the violations have been corrected. The Company is working cooperatively with the FDA to resolve all of its concerns.

On April 23, 2010, the FDA issued a warning letter based upon a July 29, 2009 inspection of the Company’s Sunnyvale, California facility and a review of its website. The warning letter cited the Company for its promotion and marketing of the Epicor™ LP Cardiac Ablation System and the Epicor UltraCinch LP Ablation Device based on certain statements made in the Company’s marketing materials. The Company worked cooperatively with the FDA to resolve the issues noted, and the Company’s corrective actions were verified during a follow-up FDA audit of the facility with no observations noted.

Customer orders have not been and are not expected to be impacted while the Company works to resolve the FDA’s concerns. The Company is working diligently to respond timely and fully to the FDA’s requests. While the Company believes the issues raised by the FDA can be resolved without a material impact on the Company’s financial results, the FDA has recently been increasing its scrutiny of the medical device industry and raising the threshold for compliance. The government is expected to continue to scrutinize the industry closely with inspections, and possibly enforcement actions, by the FDA or other agencies. The Company is regularly monitoring, assessing and improving its internal compliance systems and procedures to ensure that its activities are consistent with applicable laws, regulations and requirements, including those of the FDA.

Other Matters

Boston U.S. Attorney Investigation: In December 2008, the U.S. Attorney’s Office in Boston delivered a subpoena issued by the U.S. Department of Health and Human Services, Office of the Inspector General (OIG) requesting the production of documents relating to implantable cardiac rhythm device and pacemaker warranty claims. The Company has been cooperating with the investigation.

U.S. Department of Justice - Civil Investigative Demand: In March 2010, the Company received a Civil Investigative Demand (CID) from the Civil Division of the U.S. Department of Justice. The CID requests documents and sets forth interrogatories related to communications by and within the Company on various indications for tachycardia implantable cardioverter defibrillator systems (ICDs) and a National Coverage Decision issued by Centers for Medicare and Medicaid Services. Similar requests were made of the Company’s major competitors. The Company is cooperating with the investigation and is continuing to work with the U.S. Department of Justice in responding to the CID.

The Company has not recorded an expense related to any potential damages in connection with these matters because any potential loss is not probable or reasonably estimable. The Company is also involved in various other lawsuits, claims and proceedings that arise in the ordinary course of business.

Product Warranties

The Company offers a warranty on various products, the most significant of which relates to its ICDs and pacemakers systems. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time the product is sold. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

9

Changes in the Company’s product warranty liability during the three months and six months ended July 2, 2011 and July 3, 2010 were as follows (in thousands):

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Balance at beginning of period	$	26,941		$	21,157		$	25,127		$	19,911
Warranty expense recognized		3,282			1,645			5,668			3,382
Warranty credits issued		(1,255	)		(589	)		(1,827	)		(1,080	)
Balance at end of period	$	28,968		$	22,213		$	28,968		$	22,213

Other Commitments

The Company has certain contingent commitments to acquire various businesses involved in the distribution of the Company’s products and to pay other contingent acquisition consideration payments. While it is not certain if and/or when these payments will be made, as of July 2, 2011, the Company estimates it could be required to pay approximately $25.8 million in future periods to satisfy such commitments. Refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Off-Balance Sheet Arrangements and Contractual Obligations of the Company’s 2010 Annual Report on Form 10-K for additional information.

NOTE 7 – PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT (IPR&D) AND SPECIAL CHARGES

IPR&D Charges

During the second quarter of 2011, the Company recorded IPR&D charges of $4.4 million in conjunction with the purchase of intellectual property in its CRM segment since the related technological feasibility had not yet been reached and such technology had no future alternative use.

Special Charges

The Company incurred special charges totaling $43.2 million primarily related to restructuring actions initiated during the second quarter of 2011 to realign certain activities in the Company’s CRM business. A key component of these restructuring activities related to the Company’s decision to transition CRM manufacturing out of Sweden to more cost-advantaged locations. As part of these actions, the Company recorded $21.5 million related to severance and benefit costs for approximately 335 employees. These costs were recognized after management determined that such severance and benefits were probable and estimable, in accordance with Accounting Standards Codification (ASC) Topic 712, Nonretirement Postemployment Benefits. The Company also recorded a $12.0 million impairment charge to write-down its CRM manufacturing facility in Sweden to its fair value. The impairment charge was recognized in accordance with ASC Topic 360, Property, Plant and Equipment after it was determined that its remaining undiscounted future cash flows did not exceed its carrying value. The Company also recorded charges of $9.7 million associated with contract terminations, inventory obsolescence charges and other costs.

As part of the Company’s decision to transition CRM manufacturing out of Sweden, the Company expects to incur additional costs of approximately $60 - $80 million over the next several quarters related to additional employee termination costs, accelerated depreciation and other restructuring related costs. The Company expects to fully transition its manufacturing operations out of Sweden by the end of fiscal year 2012.

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NOTE 8 – NET EARNINGS PER SHARE

The table below sets forth the computation of basic and diluted net earnings per share (in thousands, except per share amounts):

	Three Months Ended				Six Months Ended
	July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010
Numerator:
Net earnings	$	240,894	$	254,038	$	474,322	$	492,607
Denominator:
Basic weighted average shares outstanding		328,618		326,924		326,941		326,113
Effect of dilutive securities:
Employee stock options		3,843		2,389		3,684		2,570
Restricted stock units		172		—		130		—
Restricted stock awards		2		—		2		1
Diluted weighted average shares outstanding		332,635		329,313		330,757		328,684
Basic net earnings per share	$	0.73	$	0.78	$	1.45	$	1.51
Diluted net earnings per share	$	0.72	$	0.77	$	1.43	$	1.50

Approximately 6.6 million and 17.7 million shares of common stock subject to stock options, restricted stock awards and restricted stock units were excluded from the diluted net earnings per share computation for the three months ended July 2, 2011 and July 3, 2010, respectively, because they were not dilutive. Additionally, approximately 7.0 million and 18.0 million shares of common stock subject to stock options, restricted stock awards and restricted stock units were excluded from the diluted net earnings per share computation for the six months ended July 2, 2011 and July 3, 2010, respectively, because they were not dilutive.

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NOTE 9 – COMPREHENSIVE INCOME

The table below sets forth the principal components in other comprehensive income (loss), net of the related income tax impact (in thousands):

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011		July 3, 2010
Net earnings	$	240,894		$	254,038		$	474,322	$	492,607
Other comprehensive income (loss):
Cumulative translation adjustment		21,616			(65,380	)		108,678		(117,758	)
Unrealized gain (loss) on available-for-sale securities		(1,163	)		2,639			717		2,584
Total comprehensive income	$	261,347		$	191,297		$	583,717	$	377,433

NOTE 10 – OTHER INCOME (EXPENSE), NET

The Company’s other income (expense) consisted of the following (in thousands):

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Interest income	$	606		$	471		$	1,945		$	722
Interest expense		(17,194	)		(15,430	)		(34,761	)		(35,585	)
Other		(8,425	)		(5,271	)		(18,649	)		(5,683	)
Total other income (expense), net	$	(25,013	)	$	(20,230	)	$	(51,465	)	$	(40,546	)

During 2011, legislation became effective in Puerto Rico that levied a 4% excise tax for most purchases from Puerto Rico. As the excise tax is not levied on income, the Company has classified the tax as other expense. The Company recognized $7.9 million and $15.2 million of excise tax expense in the second quarter and first six months of 2011, respectively, for purchases made from its Puerto Rico subsidiary. This tax is almost entirely offset by the foreign tax credits which are recognized as a benefit to income tax expense.

NOTE 11 – INCOME TAXES

As of July 2, 2011, the Company had $173.1 million accrued for unrecognized tax benefits, all of which would affect the Company’s effective tax rate if recognized. Additionally, the Company had $34.7 million accrued for interest and penalties as of July 2, 2011. At January 1, 2011, the liability for unrecognized tax benefits was $162.9 million and the accrual for interest and penalties was $33.8 million. The Company recognizes interest and penalties related to income tax matters in income tax expense. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for all tax years through 2001. Additionally, substantially all material foreign, state, and local income tax matters have been concluded for all tax years through 1999. The U.S. Internal Revenue Service (IRS) completed an audit of the Company’s 2002 through 2005 tax returns and proposed adjustments in its audit report issued in November 2008. The IRS completed an audit of the Company’s 2006 and 2007 tax returns and proposed adjustments in its audit report issued in March 2011. The Company is vigorously defending its positions and initiated defense at the IRS appellate level in January 2009 for the 2002 through 2005 adjustments and in May 2011 for the 2006 through 2007 adjustments. An unfavorable outcome could have a material negative impact on the Company’s effective income tax rate in future periods.

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NOTE 12 – FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The fair value measurement accounting standard, codified in ASC Topic 820, provides a framework for measuring fair value and defines fair value as the price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. The standard establishes a valuation hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on independent market data sources. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available. The valuation hierarchy is composed of three categories. The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The categories within the valuation hierarchy are described as follows:

• Level 1 – Inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

• Level 3 – Inputs to the fair value measurement are unobservable inputs or valuation techniques.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The fair value measurement standard applies to certain financial assets and liabilities that are measured at fair value on a recurring basis (each reporting period). These financial assets and liabilities include money-market securities, trading marketable securities, available-for-sale marketable securities and derivative instruments. The Company continues to record these items at fair value on a recurring basis and the fair value measurements are applied using ASC Topic 820. The Company does not have any material nonfinancial assets or liabilities that are measured at fair value on a recurring basis. A summary of the valuation methodologies used for the respective financial assets and liabilities measured at fair value on a recurring basis is as follows:

Money-market securities: The Company’s money-market securities include funds that are traded in active markets and are recorded at fair value based upon the quoted market prices. The Company classifies these securities as level 1.

Trading securities: The Company’s trading securities include publicly-traded mutual funds that are traded in active markets and are recorded at fair value based upon the net asset values of the shares. The Company classifies these securities as level 1.

Available-for-sale securities: The Company’s available-for-sale securities include publicly-traded equity securities that are traded in active markets and are recorded at fair value based upon the closing stock prices. The Company classifies these securities as level 1.

Derivative instruments: The Company’s derivative instruments consist of foreign currency exchange contracts and interest rate swap contracts. The Company classifies these instruments as level 2 as the fair value is determined using inputs other than observable quoted market prices. These inputs include spot and forward foreign currency exchange rates and interest rates that the Company obtains from standard market data providers. The fair value of the Company’s outstanding foreign currency exchange contracts was not material at July 2, 2011 or January 1, 2011.

A summary of financial assets measured at fair value on a recurring basis at July 2, 2011 and January 1, 2011 is as follows (in thousands):

	Balance Sheet Classification	July 2, 2011		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money-market securities	Cash and cash equivalents	$	594,794	$	594,794	$	—	$	—
Trading marketable securities	Other assets		223,014		223,014		—		—
Available-for-sale marketable securities	Other current assets		34,984		34,984		—		—
Total assets		$	852,792	$	852,792	$	—	$	—
Liabilities
Interest rate swap	Other liabilities	$	2,257	$	—	$	2,257	$	—
Total liabilities		$	2,257	$	—	$	2,257	$	—

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	Balance Sheet Classification	January 1, 2011		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money-market securities	Cash and cash equivalents	$	364,418	$	364,418	$	—	$	—
Trading marketable securities	Other assets		190,438		190,438		—		—
Available-for-sale marketable securities	Other current assets		33,745		33,745		—		—
Total assets		$	588,601	$	588,601	$	—	$	—
Liabilities
Interest rate swap	Other liabilities	$	10,046	$	—	$	10,046	$	—
Total liabilities		$	10,046	$	—	$	10,046	$	—

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

The fair value measurement standard also applies to certain nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis. For example, certain long-lived assets such as goodwill, intangible assets and property, plant and equipment are measured at fair value in connection with business combinations or when an impairment is recognized and the related assets are written down to fair value. The Company did not make any material business combinations during the first six months of 2011 or 2010. Additionally, no material impairments of the Company’s long-lived assets were recognized during the first three months or six months of 2010. During the second quarter of 2011, the Company initiated restructuring actions resulting in the planned future closure of its CRM manufacturing facility in Sweden, resulting in the recognition of a $12.0 million impairment charge to write-down the facility to its estimated fair value.

The Company also holds investments in equity securities that are accounted for as cost method investments, which are classified as other assets and measured at fair value on a nonrecurring basis. The carrying value of these investments approximated $126 million at July 2, 2011 and $124 million at January 1, 2011. The fair value of the Company’s cost method investments is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of these investments. When measured on a nonrecurring basis, the Company’s cost method investments are considered Level 3 in the fair value hierarchy, due to the use of unobservable inputs to measure fair value.

Fair Value Measurements of Other Financial Instruments

The aggregate fair value of the Company’s fixed-rate debt obligations at July 2, 2011 (measured using quoted prices in active markets) was $2,490.8 million compared to the aggregate carrying value of $2,414.2 million (inclusive of unamortized debt discounts and interest rate swap fair value adjustments). The fair value of the Company’s variable-rate debt obligations at July 2, 2011 approximated the aggregate $152.3 million carrying value due to the short-term, variable rate interest rate structure of these instruments.

NOTE 13 – DERIVATIVE FINANCIAL INSTRUMENTS

The Company follows the provisions of ASC Topic 815, Derivatives and Hedging (ASC Topic 815), in accounting for and disclosing derivative instruments and hedging activities. All derivative financial instruments are recognized on the balance sheet at fair value. Changes in the fair value of derivatives are recognized in net earnings or other comprehensive income depending on whether the derivative is designated as part of a qualifying hedging transaction. Derivative assets and derivative liabilities are classified as other current assets, other assets, other current liabilities or other liabilities, as appropriate.

Foreign Currency Forward Contracts

The Company hedges a portion of its foreign currency exchange rate risk through the use of forward exchange contracts. The Company uses forward exchange contracts to manage foreign currency exposures related to intercompany receivables and payables arising from intercompany purchases of manufactured products. These forward contracts are not designated as qualifying hedging relationships under ASC Topic 815. The Company measures its foreign currency exchange contracts at fair value on a recurring basis. The fair value of outstanding contracts was immaterial as of July 2, 2011 and January 1, 2011. During the second quarter of 2011 and 2010, the net amount of gains (losses) the Company recorded to other income (expense) for its forward currency exchange contracts not designated as hedging instruments under ASC Topic 815 was a net loss of $4.6 million and a net gain of $4.4 million, respectively. During the first six months of 2011 and 2010, the net amount of gains (losses) recorded to other income (expense) for its forward currency exchange contracts not designated as hedging instruments was a net loss of $8.3 million and a net gain of $6.7 million, respectively. These net gains (losses) were almost entirely offset by corresponding net (losses) gains on the foreign currency exposures being managed. The Company does not enter into contracts for trading or speculative purposes. The Company’s policy is to enter into hedging contracts with major financial institutions that have at least an “A” (or equivalent) credit rating.

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Interest Rate Swap

The Company hedges the fair value of certain debt obligations through the use of interest rate swap contracts. For interest rate swap contracts that are designated and qualify as fair value hedges, the gain or loss on the swap and the offsetting gain or loss on the hedged debt instrument attributable to the hedged risk are recognized in net earnings. Changes in the value of the fair value hedge are recognized in interest expense, offsetting the changes in the fair value of the hedged debt instrument. Additionally, any payments made or received under the swap contracts are accrued and recognized as interest expense. The Company’s current interest rate swap is designed to manage the exposure to changes in the fair value of its 2016 Senior Notes. The swap is designated as a fair value hedge of the variability of the fair value of the fixed-rate 2016 Senior Notes due to changes in the long-term benchmark interest rates. Under the swap agreement, the Company agrees to exchange, at specified intervals, fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. As of July 2, 2011, the fair value of the interest rate swap was a $2.3 million liability which was classified as other liabilities on the condensed consolidated balance sheet.

NOTE 14 – SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

The Company’s four operating segments are Cardiac Rhythm Management (CRM), Cardiovascular (CV), Atrial Fibrillation (AF), and Neuromodulation (NMD). The primary products produced by each operating segment are: CRM – ICDs and pacemakers; CV – vascular products, which include vascular closure products, pressure measurement guidewires, optical coherence tomography (OCT) imaging products, vascular plugs and other vascular accessories, and structural heart products, which include heart valve replacement and repair products and structural heart defect devices; AF – EP introducers and catheters, advanced cardiac mapping, navigation and recording systems and ablation systems; and NMD – neurostimulation products, which include spinal cord and deep brain stimulation devices.

The Company has aggregated the four operating segments into two reportable segments based upon their similar operational and economic characteristics: CRM/NMD and CV/AF. Net sales of the Company’s reportable segments include end-customer revenues from the sale of products they each develop and manufacture or distribute. The costs included in each of the reportable segments’ operating results include the direct costs of the products sold to customers and operating expenses managed by each of the reportable segments. Certain operating expenses managed by the Company’s selling and corporate functions, including all stock-based compensation expense, impairment charges, certain acquisition-related charges IPR&D charges, excise tax expense and special charges have not been recorded in the individual reportable segments. As a result, reportable segment operating profit is not representative of the operating profit of the products in these reportable segments. Additionally, certain assets are managed by the Company’s selling and corporate functions, principally including trade receivables, inventory, corporate cash and cash equivalents, certain marketable securities and deferred income taxes. For management reporting purposes, the Company does not compile capital expenditures by reportable segment; therefore, this information has not been presented as it is impracticable to do so.

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The following table presents net sales and operating profit by reportable segment (in thousands):

	CRM/NMD		CV/AF		Other			Total
Three Months ended July 2, 2011:
Net sales	$	896,622	$	550,129	$	—		$	1,446,751
Operating profit		564,966		288,878		(528,760	)		325,084
Three Months ended July 3, 2010:
Net sales	$	882,835	$	429,934	$	—		$	1,312,769
Operating profit		556,653		244,397		(436,297	)		364,753
Six Months ended July 2, 2011:
Net sales	$	1,750,061	$	1,072,203	$	—		$	2,822,264
Operating profit		1,100,913		553,300		(1,007,111	)		647,102
Six Months ended July 3, 2010:
Net sales	$	1,718,866	$	855,599	$	—		$	2,574,465
Operating profit		1,080,590		488,111		(857,941	)		710,760

The following table presents the Company’s total assets by reportable segment (in thousands):

Total Assets	July 2, 2011		January 1, 2011
CRM/NMD	$	2,418,948	$	2,150,359
CV/AF		3,139,034		3,097,190
Other		3,537,415		3,318,899
	$	9,095,397	$	8,566,448

Geographic Information

The following table presents net sales by geographic location of the customer (in thousands):

	Three Months Ended				Six Months Ended
Net Sales	July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010
United States	$	678,327	$	690,095	$	1,354,402	$	1,339,028
International
Europe		410,758		331,443		780,070		668,523
Japan		156,714		129,593		304,207		258,255
Asia Pacific		106,145		80,419		198,655		149,307
Other (a)		94,807		81,219		184,930		159,352
		768,424		622,674		1,467,862		1,235,437
	$	1,446,751	$	1,312,769	$	2,822,264	$	2,574,465

          (a) No one geographic market is greater than 5% of consolidated net sales.

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The amounts for long-lived assets by significant geographic market include net property, plant and equipment by physical location of the asset as follows (in thousands):

Long-Lived Assets	July 2, 2011		January 1, 2011
United States	$	994,201	$	965,936
International
Europe		99,253		85,961
Japan		27,570		25,583
Asia Pacific		77,013		74,537
Other		186,479		171,914
		390,315		357,995
	$	1,384,516	$	1,323,931

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Our business is focused on the development, manufacture and distribution of cardiovascular medical devices for the global cardiac rhythm management, cardiology, cardiac surgery and atrial fibrillation therapy areas and implantable neurostimulation medical devices for the management of chronic pain. We sell our products in more than 100 countries around the world. Our largest geographic markets are the United States, Europe, Japan and Asia Pacific. Our four operating segments are Cardiac Rhythm Management (CRM), Cardiovascular (CV), Atrial Fibrillation (AF), and Neuromodulation (NMD). Our principal products in each operating segment are as follows: CRM – tachycardia implantable cardioverter defibrillator systems (ICDs) and bradycardia pacemaker systems (pacemakers); CV – vascular products, which include vascular closure products, pressure measurement guidewires, optical coherence tomography (OCT) imaging products, vascular plugs and other vascular accessories, and structural heart products, which include heart valve replacement and repair products and structural heart defect devices; AF – atrial fibrillation products which include electrophysiology (EP) introducers and catheters, advanced cardiac mapping, navigation and recording systems and ablation systems; and NMD – neurostimulation products, which include spinal cord stimulation and deep brain stimulation devices. References to “St. Jude Medical,” “St. Jude,” “the Company,” “we,” “us” and “our” are to St. Jude Medical, Inc. and its subsidiaries.

Our industry has undergone significant consolidation in the last decade and is highly competitive. Our strategy requires significant investment in research and development in order to introduce new products. We are focused on improving our operating margins through a variety of techniques, including the production of high quality products, the development of leading edge technology, the enhancement of our existing products and continuous improvement of our manufacturing processes. We expect competitive pressures in the industry, cost containment pressure on healthcare systems and the implementation of U.S. healthcare reform legislation to continue to place downward pressure on prices for our products, impact reimbursement for our products and potentially reduce medical procedure volumes.

In March 2010, significant U.S. healthcare reform legislation was enacted into law. As a U.S. headquartered company with significant sales in the United States, this health care reform legislation will materially impact us. Certain provisions of the legislation are not effective for a number of years and there are many programs and requirements for which the details have not yet been fully established or consequences not fully understood, and it is unclear what the full impacts will be from the legislation. The legislation does levy a 2.3% excise tax on all U.S. medical device sales beginning in 2013. This is a significant new tax that will materially and adversely affect our business and results of operations. The legislation also focuses on a number of Medicare provisions aimed at improving quality and decreasing costs. It is uncertain at this point what impacts these provisions will have on patient access to new technologies. The Medicare provisions also include value-based payment programs, increased funding of comparative effectiveness research, reduced hospital payments for avoidable readmissions and hospital acquired conditions, and pilot programs to evaluate alternative payment methodologies that promote care coordination (such as bundled physician and hospital payments). Additionally, the provisions include a reduction in the annual rate of inflation for hospitals starting in 2011 and the establishment of an independent payment advisory board to recommend ways of reducing the rate of growth in Medicare spending. We cannot predict what healthcare programs and regulations will be ultimately implemented at the federal or state level, or the effect of any future legislation or regulation. However, any changes that lower reimbursements for our products or reduce medical procedure volumes could adversely affect our business and results of operations.

We participate in several different medical device markets, each of which has its own expected growth rate. A significant portion of our net sales relate to CRM devices – ICDs and pacemakers. During the last three weeks in March 2010, a competitor in the CRM market, Boston Scientific Inc. (Boston Scientific), suspended sales of its ICD products in the United States. Although Boston Scientific resumed sales on April 16, 2010, we experienced an incremental ICD net sales benefit to our first two weeks of second quarter 2010 net sales of approximately $15 million. We also experienced an incremental ICD net sales benefit of approximately $25 million during the first quarter of 2010, resulting in an overall $40 million benefit to the first six months of 2010 ICD net sales. Management remains focused on increasing our worldwide CRM market share, as we are one of three principal manufacturers and suppliers in the global CRM market. We are also investing in our other three major growth platforms – cardiovascular, atrial fibrillation and neuromodulation – to increase our market share in these markets.

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Net sales in the second quarter and first six months of 2011 were $1,446.8 million and $2,822.3 million, respectively, increases of approximately 10% over both the second quarter and first six months of 2010, respectively. During both the second quarter and first six months of 2011, our net sales increases were led by incremental net sales from our 2010 acquisitions of AGA Medical Inc. (AGA Medical) and LightLab Imaging, Inc. (LightLab Imaging). Our products to treat atrial fibrillation also contributed to the increase. Our AF net sales increased 18% and 16% during the second quarter and first six months of 2011, respectively, over the same periods in 2010. Compared to the same prior year period, our foreign currency translation comparisons increased our second quarter and first six month net sales during 2011 by $74.7 million and $91.7 million, respectively. After experiencing a near-term disruption in our international net sales from the March 2011 Japan earthquake and tsunami, the impact on our Japan business moderated during the second quarter of 2011. Refer to the Segment Performance section for a more detailed discussion of the results for the respective segments.

Our second quarter 2011 net earnings of $240.9 million and diluted net earnings per share of $0.72 decreased 5% and 7%, respectively, compared to our second quarter 2010 net earnings of $254.0 million and diluted net earnings per share of $0.77. Second quarter 2011 net earnings were negatively impacted by $29.0 million of after-tax charges related to realigning certain activities in our CRM operating segment, $10.0 million of AGA Medical inventory step up costs of sale expenses and $2.8 million of purchased in-process research and development charges (IPR&D) associated with the acquisition of certain pre-development technology assets. Net earnings and diluted net earnings per share for the first six months of 2011 were $474.3 million and $1.43 per diluted share, decreases of 4% and 5%, respectively, over the first six months of 2010. During the first six months of 2011, net earnings were negatively impacted by $29.0 million of restructuring charges discussed previously, $19.3 million of AGA Medical inventory step up costs of sale expenses, $18.8 million of AGA Medical-related post-acquisition expenses and $2.8 million of the aforementioned IPR&D charges.

We generated $583.8 million of operating cash flows during the first six months of 2011, compared to $495.4 million of operating cash flows during the first six months of 2010, a 17.9% increase. We ended the second quarter with $832.8 million of cash and cash equivalents and $2,566.5 million of total debt. We also repurchased 6.6 million shares of our common stock for $274.7 million at an average repurchase price of $41.44 per share. Additionally, our Board of Directors authorized two quarterly cash dividends of $0.21 per share payable on April 29, 2011 and July 29, 2011.

NEW ACCOUNTING PRONOUNCEMENTS

Certain new accounting standards became effective for us in the first quarter of fiscal year 2011. Information regarding the new accounting pronouncement that impacted our 2011 first quarter is included in Note 2 to the Condensed Consolidated Financial Statements of our first quarter 2011 Quarterly Report on Form 10-Q. Information regarding new accounting pronouncements that will impact future periods are included below.

In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05, Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income, which eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. The update to ASC Topic 220 requires an entity to present items of net income and other comprehensive income in one continuous statement – referred to as the statement of comprehensive income – or in two separate, but consecutive, statements. Each component of net income and each component of other comprehensive income is required to be presented with subtotals for each and a grand total for total comprehensive income. The updated guidance does not change the calculation of earnings per share. ASC Topic 220 is effective for interim and annual reporting periods beginning after December 15, 2011. We expect to adopt this new account pronouncement beginning in fiscal year 2012.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We have adopted various accounting policies in preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States. Our significant accounting policies are disclosed in Note 1 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2011 (2010 Annual Report on Form 10-K).

Preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to adopt various accounting policies and to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and assumptions, including those related to accounts receivable allowance for doubtful accounts; inventory reserves; valuation of IPR&D, other intangible assets and goodwill; income taxes; litigation reserves and insurance receivables; and stock-based compensation. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, and the results form the basis for making judgments about the reported values of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. There have been no material changes to our critical accounting policies and estimates from the information provided in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2010 Annual Report on Form 10-K.

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SEGMENT PERFORMANCE

Our four operating segments are Cardiac Rhythm Management (CRM), Cardiovascular (CV), Atrial Fibrillation (AF), and Neuromodulation (NMD). The primary products produced by each operating segment are: CRM – ICDs and pacemakers; CV – vascular products, which include vascular closure products, pressure measurement guidewires, optical coherence tomography (OCT) imaging products, vascular plugs and other vascular accessories, and structural heart products, which include heart valve replacement and repair products and structural heart defect devices; AF – atrial fibrillation products which include EP introducers and catheters, advanced cardiac mapping, navigation and recording systems and ablation systems; and NMD – neurostimulation products, which include spinal cord stimulation and deep brain stimulation devices.

The Company has aggregated the four operating segments into two reportable segments based upon their similar operational and economic characteristics: CRM/NMD and CV/AF. Net sales of the Company’s reportable segments include end-customer revenues from the sale of products they each develop and manufacture or distribute. The costs included in each of the reportable segments’ operating results include the direct costs of the products sold to customers and operating expenses managed by each of the reportable segments. Certain operating expenses managed by our selling and corporate functions, including all stock-based compensation expense, impairment charges, IPR&D charges and special charges have not been recorded in the individual reportable segments. As a result, reportable segment operating profit is not representative of the operating profit of the products in these reportable segments.

The following table presents net sales and operating profit by reportable segment (in thousands):

	CRM/NMD		CV/AF		Other			Total
Three Months ended July 2, 2011:
Net sales	$	896,622	$	550,129	$	—		$	1,446,751
Operating profit		564,966		288,878		(528,760	)		325,084
Three Months ended July 3, 2010:
Net sales	$	882,835	$	429,934	$	—		$	1,312,769
Operating profit		556,653		244,397		(436,297	)		364,753
Six Months ended July 2, 2011:
Net sales	$	1,750,061	$	1,072,203	$	—		$	2,822,264
Operating profit		1,100,913		553,300		(1,007,111	)		647,102
Six Months ended July 3, 2010:
Net sales	$	1,718,866	$	855,599	$	—		$	2,574,465
Operating profit		1,080,590		488,111		(857,941	)		710,760

The following discussion of the changes in our net sales is provided by class of similar products within our four operating segments, which is the primary focus of our sales activities. Effective January 2, 2011, we realigned our significant cardiovascular product categories and reclassified prior period amounts to conform to the current period presentation.

Cardiac Rhythm Management

	Three Months Ended							Six Months Ended
(in thousands)	July 2, 2011		July 3, 2010		% Change			July 2, 2011		July 3, 2010		% Change
ICD systems	$	477,332	$	471,234		1.3	%	$	942,590	$	922,709		2.2	%
Pacemaker systems		315,493		316,657		(0.4	)%		612,145		616,905		(0.8	)%
	$	792,825	$	787,891		0.6	%	$	1,554,735	$	1,539,614		1.0	%

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Cardiac Rhythm Management’s net sales increased 1% during both the second quarter and first six months of 2011, compared to the same periods in 2010. During the second quarter and first six months of 2011, foreign currency translation had a $38.8 million and $46.0 million favorable impact on net sales, respectively, compared to the same prior year periods. ICD net sales increased 1% and 2% in the second quarter and first six months of 2011, respectively, compared to the same prior year periods, as a result of favorable foreign currency translation and sales of recently launched products, partially offset by the incremental benefit on 2010 U.S. ICD net sales resulting from a suspension of a competitor’s product sales. In the United States, second quarter 2011 ICD net sales of $272.2 million decreased 9% over the prior year’s second quarter and ICD net sales in the first six months of 2011 of $552.8 million decreased 5% over the same period last year. Both decreases included the incremental benefit of approximately $15 million and $40 million during the second quarter and first six months of 2010, resulting from the suspension of U.S. ICD sales by one of our competitors in the CRM market. Internationally, second quarter 2011 ICD net sales of $205.1 million increased 19% compared to the second quarter of 2010. During the first six months of 2011 ICD net sales of $389.8 million increased 14% compared to the first six months of 2010. These increases are a result of the continued benefit from the first-half 2010 European and U.S. launches of our Unify^TM cardiac resynchronization therapy defibrillator (CRT-D) and Fortify^TM ICD, and their second quarter 2011 launch in Japan. The Unify^TM CRT-D and Fortify^TM ICD are smaller, deliver more energy and have a longer battery life than comparable conventional devices. Foreign currency translation had a $20.7 million and $23.4 million favorable impact on international ICD net sales in the second quarter and first six months of 2011, respectively, compared to the same periods in 2010.

Pacemaker net sales were flat in both the second quarter and first six months of 2011 compared to the same prior year periods. In the United States, our second quarter 2011 pacemaker net sales of $128.8 million decreased 8% compared to the second quarter of 2010. Additionally, during the first six months of 2011, U.S. pacemaker net sales of $259.4 million decreased 3% over the same period last year. Internationally, our 2011 net sales during the second quarter of $186.7 million and first six months of $352.7 million increased 5% and 1%, respectively, compared to the same prior year periods. Foreign currency translation had an $18.1 million and $22.6 million favorable impact during the second quarter and first six months of 2011, respectively, compared to the same prior year periods.

Cardiovascular

	Three Months Ended							Six Months Ended
(in thousands)	July 2, 2011		July 3, 2010		% Change			July 2, 2011		July 3, 2010		% Change
Vascular products	$	188,842	$	166,377		13.5	%	$	372,785	$	335,065		11.3	%
Structural heart products		153,386		87,800		74.7	%		296,812		174,669		69.9	%
	$	342,228	$	254,177		34.6	%	$	669,597	$	509,734		31.4	%

Cardiovascular net sales increased 35% and 31% during the second quarter and first six months of 2011, respectively, compared to the same periods one year ago driven by incremental net sales from our 2010 acquisitions of AGA Medical and LightLab Imaging. CV net sales were also favorably impacted by foreign currency translation of $21.1 million and $27.1 million during the second quarter and first six months of 2011, respectively, compared to the same prior year periods. Vascular products’ net sales increased 14% and 11% during the second quarter and first six months of 2011, respectively, compared to the same periods in 2010 primarily due to incremental AGA Medical net sales of vascular plugs, and LightLab Imaging net sales of Optical Coherence Tomography (OCT) products and favorable foreign currency translation, partially offset by decreased sales volumes associated with our Angio-Seal™ active closure devices. Vascular products include vascular closure products, fractional flow reserve (FFR) Pressure Wire™, OCT products, vascular plugs and other vascular accessories. Foreign currency translation favorably impacted the second quarter and first six months of 2011 by $12.6 million and $17.5 million, respectively. Structural heart products’ net sales increased 75% and 70% during the second quarter and first six months of 2011, respectively, due to the incremental AGA Medical net sales of Amplatzer® occluder products and international net sales growth associated with our Trifecta™ tissue valve, which was recently launched in the United States after receiving U.S. FDA approval in April 2011. Structural heart products include heart valve replacement and repair products and Amplatzer® occluder products. Foreign currency translation favorably impacted structural heart products’ net sales by $8.5 million and $9.6 million during the second quarter and first six months of 2011, respectively, compared to the same prior year period.

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Atrial Fibrillation

	Three Months Ended							Six Months Ended
(in thousands)	July 2, 2011		July 3, 2010		% Change			July 2, 2011		July 3, 2010		% Change
Atrial fibrillation products	$	207,901	$	175,757		18.3	%	$	402,606	$	345,865		16.4	%

In our Atrial Fibrillation division, our access, diagnosis, visualization, recording and ablation products assist physicians in diagnosing and treating atrial fibrillation and other irregular heart rhythms. AF net sales increased 18% and 16% during the second quarter and first six months of 2011, respectively, compared to the same prior year periods due to the continued increase in EP catheter ablation procedures, the continued market penetration of our EnSite® Velocity System and related connectivity tools (EnSite Connect™, EnSite Courier™ and EnSite Derexi™ modules) and the on-going rollout of recently approved EP irrigated ablation catheters in the U.S. (Safire BLU™) and internationally (Therapy™ Cool Flex™, Safire Blu™ Duo and Therapy™ Cool Path™ Duo bi-directional). Foreign currency translation had a favorable impact on AF net sales of $11.7 million and $14.9 million in the second quarter and first six months of 2011, respectively, compared to the same periods in 2010.

Neuromodulation

	Three Months Ended							Six Months Ended
(in thousands)	July 2, 2011		July 3, 2010		% Change			July 2, 2011		July 3, 2010		% Change
Neurostimulation devices	$	103,797	$	94,944		9.3	%	$	195,326	$	179,252		9.0	%

Neuromodulation net sales increased 9% during both the second quarter and first six months of 2011 compared to the same periods in 2010. The increase in NMD net sales was driven by continued market acceptance of our products and sales growth in our neurostimulation devices that help manage chronic pain. Specifically, international net sales in the second quarter and first six months of 2011 increased 49% and 42%, respectively, driven by sales growth in the Eon Mini platform and growing market acceptance of the Epiducer Lead Delivery system which gives physicians the ability to place multiple neurostimulation leads through a single entry point. Foreign currency translation had a $3.1 million and $3.7 million favorable impact on NMD net sales during the second quarter and first six months of 2011, respectively, compared to the same prior year periods.

RESULTS OF OPERATIONS

Net sales

	Three Months Ended							Six Months Ended
(in thousands)	July 2, 2011		July 3, 2010		% Change			July 2, 2011		July 3, 2010		% Change
Net sales	$	1,446,751	$	1,312,769		10.2	%	$	2,822,264	$	2,574,465		9.6	%

Overall, net sales increased 10% during both the second quarter and first six months of 2011 compared to the same prior year periods led by incremental net sales from our 2010 acquisitions of AGA Medical and LightLab Imaging and sales growth from our products to treat atrial fibrillation. Our second quarter and first six months of 2010 net sales also benefited by approximately $15 million and $40 million, respectively, from suspended Boston Scientific U.S. ICD sales. Foreign currency translation had a favorable impact on the second quarter and first six months of 2011 net sales of $74.7 million and $91.7 million, respectively, due primarily to the weakening of the U.S. Dollar against the Japanese Yen. This amount is not indicative of the net earnings impact of foreign currency translation for the second quarter and first six months of 2011 due to partially offsetting foreign currency translation impacts on cost of sales and operating expenses.

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Net sales by geographic location of the customer were as follows (in thousands):

	Three Months Ended				Six Months Ended
Net Sales	July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010
United States	$	678,327	$	690,095	$	1,354,402	$	1,339,028
International
Europe		410,758		331,443		780,070		668,523
Japan		156,714		129,593		304,207		258,255
Asia Pacific		106,145		80,419		198,655		149,307
Other (a)		94,807		81,219		184,930		159,352
		768,424		622,674		1,467,862		1,235,437
	$	1,446,751	$	1,312,769	$	2,822,264	$	2,574,465

(a) No one geographic market is greater than 5% of consolidated net sales.

Gross profit

	Three Months Ended						Six Months Ended
(in thousands)	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Gross profit	$	1,051,828		$	967,467		$	2,062,899		$	1,907,994
Percentage of net sales		72.7	%		73.7	%		73.1	%		74.1	%

Gross profit for the second quarter of 2011 totaled $1,051.8 million, or 72.7% of net sales, compared to $967.5 million, or 73.7% of net sales for the second quarter of 2010. Gross profit for the first six months of 2011 totaled $2,062.9 million, or 73.1% of net sales, compared to $1,908.0 million, or 74.1% of net sales for the first six months of 2010. Our gross profit percentage for the second quarter and first six months of 2011 was negatively impacted by $14.6 million (or 1.0 percentage point) and $29.4 million (or 1.1 percentage points), respectively, from inventory step-up amortization costs associated with our AGA Medical acquisition.

Selling, general and administrative (SG&A) expense

	Three Months Ended						Six Months Ended
(in thousands)	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Selling, general and administrative	$	513,841		$	447,610		$	1,027,161		$	890,900
Percentage of net sales		35.5	%		34.1	%		36.4	%		34.6	%

SG&A expense for the second quarter of 2011 totaled $513.8 million, or 35.5% of net sales, compared to $447.6 million, or 34.1% of net sales, for the second quarter of 2010. SG&A expense for the first six months of 2011 totaled $1,027.2 million, or 36.4% of net sales, compared to $890.9 million, or 34.6% of net sales, for the first six months of 2010. The increase in SG&A expense as a percent of net sales is primarily the result of $24.9 million of contract termination and international integration charges related to our AGA Medical acquisition, which negatively impacted our first six months SG&A expense as a percent of net sales by 0.9 percentage points. Incremental intangible asset amortization expense from the AGA Medical acquisition also negatively impacted both our 2011 second quarter and first six months of SG&A expense as a percent of net sales by 0.5 percentage points. The remaining increase in SG&A expense as a percent of net sales is primarily associated with our increased investment in sales and marketing activities to support the growth and launch of our new technologies, particularly outside of the United States.

Research and development (R&D) expense

	Three Months Ended						Six Months Ended
(in thousands)	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Research and development expense	$	176,334		$	155,104		$	352,067		$	306,334
Percentage of net sales		12.2	%		11.8	%		12.5	%		11.9	%

R&D expense in the second quarter of 2011 totaled $176.3 million, or 12.2% of net sales, compared to $155.1 million, or 11.8% of net sales, for the second quarter of 2010. R&D expense in the first six months of 2011 totaled $352.1 million, or 12.5% of net sales, compared to $306.3 million, or 11.9% of net sales, for the first six months of 2010. R&D expense as a percent of net sales increased during the second quarter and first six months of 2011 compared to the same prior year periods, reflecting our continuing commitment to fund future long-term growth opportunities. We will continue to balance delivering short-term results with our investments in long-term growth drivers.

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Purchased in-process research and development charges

During the second quarter of 2011, we recorded IPR&D charges of $4.4 million in conjunction with the purchase of intellectual property in our CRM segment since the related technological feasibility had not yet been reached and such technology had no future alternative use.

Special charges

We incurred special charges during the second quarter of 2011 totaling $43.2 million primarily related to restructuring actions initiated during the second quarter of 2011 to realign certain activities in our CRM business. A key component of these restructuring activities related to our decision to transition CRM manufacturing out of Sweden to more cost-advantaged locations. As part of these actions, we recorded $21.5 million related to severance and benefit costs for approximately 335 employees. These costs were recognized after management determined that such severance and benefits were probable and estimable, in accordance with ASC Topic 712, Nonretirement Postemployment Benefits. We also recorded a $12.0 million impairment charge to write-down our CRM manufacturing facility in Sweden to its fair value. The impairment charge was recognized in accordance with ASC Topic 360, Property, Plant and Equipment after it was determined that its remaining undiscounted future cash flows did not exceed its carrying value. We also recorded charges of $9.7 million associated with contract terminations, inventory obsolescence charges and other costs.

As part of our decision to transition CRM manufacturing out of Sweden, we expect to incur additional costs of approximately $60 - $80 million over the next several quarters related to additional employee termination costs, accelerated depreciation and other restructuring related costs. We expect to fully transition our manufacturing operations out of Sweden by the end of fiscal year 2012.

Other income (expense), net

	Three Months Ended						Six Months Ended
(in thousands)	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Interest income	$	606		$	471		$	1,945		$	722
Interest expense		(17,194	)		(15,430	)		(34,761	)		(35,585	)
Other		(8,425	)		(5,271	)		(18,649	)		(5,683	)
Total other income (expense), net	$	(25,013	)	$	(20,230	)	$	(51,465	)	$	(40,546	)

The unfavorable change in other income (expense) during the second quarter and first six months of 2011 compared to the same periods in 2010 was due to $7.9 million and $15.2 million, respectively, of Puerto Rico excise tax expense recognized in other expense. The 4% Puerto Rico excise tax became effective in 2011, and we incur this tax on most purchases made from our Puerto Rico subsidiary. This tax is almost entirely offset by the foreign tax credits which are recognized as a benefit to income tax expense.

Income taxes

	Three Months Ended						Six Months Ended
(as a percent of pre-tax income)	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Effective tax rate		19.7	%		26.3	%		20.4	%		26.5	%

Our effective income tax rate was 19.7% and 26.3% for the second quarter of 2011 and 2010, respectively, and 20.4% and 26.5% for the first six months of 2011 and 2010, respectively. As discussed previously, the 4% Puerto Rico excise tax, which is levied on most purchases from Puerto Rico, became effective beginning in 2011. Because the excise tax is not levied on income, generally accepted accounting principles do not allow for the excise tax to be recognized as part of income tax expense. However, the resulting foreign tax credit or income tax deduction is recognized as a benefit to income tax expense, thus favorably impacting our effective income tax rate. As a result, our effective tax rate was favorably impacted by 1.3 percentage points and 1.4 percentage points in the second quarter and first six months of 2011, respectively, compared to the same periods in 2010. As discussed previously, this favorable impact on our effective tax rate is almost entirely offset by the excise tax expense recognized in other expense.

Additionally, our effective tax rate for the first six months of 2010 does not include the impact of the federal research and development tax credit (R&D tax credit), as the R&D tax credit was not enacted into law until the fourth quarter of 2010. As a result, our effective tax rates for the second quarter and first six months of 2010 were negatively impacted by 2.1 percentage points and 2.0 percentage points, respectively.

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LIQUIDITY

We believe that our existing cash balances, future cash generated from operations and available borrowing capacity under our $1.5 billion long-term committed credit facility (Credit Facility) and related commercial paper program will be sufficient to fund our operating needs, working capital requirements, R&D opportunities, capital expenditures, debt service requirements and shareholder dividends over the next 12 months and in the foreseeable future thereafter. We do not have any significant debt maturities until 2013. The majority of our outstanding July 2, 2011 debt portfolio matures after December 2015.

We believe that our earnings, cash flows and balance sheet position will permit us to obtain additional debt financing or equity capital should suitable investment and growth opportunities arise. Our credit ratings are investment grade. We monitor capital markets regularly and may raise additional capital when market conditions or interest rate environments are favorable.

At July 2, 2011, substantially all of our cash and cash equivalents was held by our non-U.S. subsidiaries. A portion of these foreign cash balances are associated with earnings that we have asserted are permanently reinvested and which we plan to use to support our continued growth plans outside the U.S. through funding of operating expenses, capital expenditures, and other investment and growth opportunities. The majority of these funds are only available for use by our U.S. operations if they are repatriated into the United States. The funds repatriated would be subject to additional U.S. taxes upon repatriation; however, it is not practical to estimate the amount of additional U.S. tax liabilities we would incur. We currently have no plans to repatriate funds held by our non-U.S. subsidiaries.

We use two primary measures that focus on accounts receivable and inventory – days sales outstanding (DSO) and days inventory on hand (DIOH). We use DSO as a measure that places emphasis on how quickly we collect our accounts receivable balances from customers. We use DIOH, which can also be expressed as a measure of the estimated number of days of cost of sales on hand, as a measure that places emphasis on how efficiently we are managing our inventory levels. These measures may not be computed the same as similarly titled measures used by other companies. Our DSO (ending net accounts receivable divided by average daily sales for the most recently completed quarter) increased from 90 days at January 1, 2011 to 91 days at July 2, 2011. Our DIOH (ending net inventory divided by average daily cost of sales for the most recently completed six months) increased from 163 days at January 1, 2011 to 168 days at July 2, 2011. Special charges recognized in cost of sales as well as acquisition impacts to cost of sales and inventory during the last six months reduced our July 2, 2011 DIOH by 6 days. Special charges recognized in cost of sales in the second half of 2010 reduced our January 1, 2011 DIOH by 7 days; however, the impact of our acquisitions in the second half of 2010 offset the special charge impact, increasing our DIOH by 7 days.

A summary of our cash flows from operating, investing and financing activities is provided in the following table (in thousands):

	Six Months Ended
	July 2, 2011			July 3, 2010
Net cash provided by (used in):
Operating activities	$	583,823		$	495,381
Investing activities		(182,116	)		(297,505	)
Financing activities		(81,446	)		88,560
Effect of currency exchange rate changes on cash and cash equivalents		12,220			(12,309	)
Net increase in cash and cash equivalents	$	332,481		$	274,127

Operating Cash Flows

Cash provided by operating activities was $583.8 million during the first six months of 2011, a 17.9% increase compared to $495.4 million during the first six months of 2010. Operating cash flows can fluctuate significantly from period to period due to payment timing differences of working capital accounts such as accounts receivable, accounts payable, accrued liabilities and income taxes payable.

Investing Cash Flows

Cash used in investing activities was $182.1 million during the first six months of 2011 compared to $297.5 million during the same period last year. Our purchases of property, plant and equipment, which totaled $162.6 million and $145.8 million in the first six months of 2011 and 2010, respectively, primarily reflect our continued investment in our product growth platforms currently in place. In June 2010, we deposited $97.4 million of net cash consideration into an escrow account prior to the closing of our LightLab Imaging acquisition on July 6, 2010. In March 2010, we made our final scheduled acquisition payment of $31.3 million for MediGuide, Inc.

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Financing Cash Flows

Cash used in financing activities was $81.4 million during the first six months of 2011 compared to $88.6 million of cash provided by financing activities in the first six months of 2010. Our financing cash flows can fluctuate significantly depending upon our liquidity needs and the amount of stock option exercises. During the first six months of 2011, we repurchased $309.2 million of our common stock, which was financed primarily with cash generated from operations and net commercial paper issuances of $46.3 million. We also borrowed 6.5 billion Japanese Yen under uncommitted credit facilities with two commercial Japanese banks and used the proceeds to repay the outstanding balance on the Yen-denominated term loan due December 2011. During the first six months of 2010, we received net proceeds of $671.1 million from debt borrowings consisting of $450.0 million principal amount of 2013 Senior Notes, 2.04% Yen Notes (12.8 billion Yen) and 1.58% Yen Notes (8.1 billion Yen). The proceeds from these debt issuances were used to repay $655.7 million of outstanding debt borrowings consisting of a 3-year unsecured 2011 Term Loan ($432.0 million) and 1.02% Yen Notes (20.9 billion Yen). Proceeds from the exercise of stock options and stock issued provided cash inflows of $241.6 million and $65.2 million during the first six months of 2011 and 2010, respectively. We also paid $68.6 million of cash dividends to shareholders in the first six months of 2011.

DEBT AND CREDIT FACILITIES

We have a long-term $1.5 billion committed Credit Facility used to support our commercial paper program and for general corporate purposes. The Credit Facility expires in February 2015. Borrowings under this facility bear interest initially at LIBOR plus 0.875%, subject to adjustment in the event of a change in our credit ratings. Commitment fees under this Credit Facility are not material. There were no outstanding borrowings under the Credit Facility as of July 2, 2011 or January 1, 2011.

Our commercial paper program provides for the issuance of short-term, unsecured commercial paper with maturities up to 270 days. We began issuing commercial paper during November 2010 and had an outstanding commercial paper balance of $71.8 million and $25.5 million at July 2, 2011 and January 1, 2011, respectively. Any future commercial paper borrowings would bear interest at the applicable then-current market rates. Our commercial paper has historically been issued at lower interest rates than borrowings available under the Credit Facility.

In March 2010, we issued $450.0 million principal amount of 2013 Senior Notes and used the proceeds to retire outstanding debt obligations. Interest payments on the 2013 Senior Notes are required on a semi-annual basis. We may redeem the 2013 Senior Notes at any time at the applicable redemption price. The 2013 Senior Notes are senior unsecured obligations and rank equally with all of our existing and future senior unsecured indebtedness.

Concurrent with the issuance of the 2013 Senior Notes, we entered into a 3-year, $450.0 million notional amount interest rate swap designated as a fair value hedge of the changes in fair value of our fixed-rate 2013 Senior Notes. On November 8, 2010, we terminated the interest rate swap and received a cash payment of $19.3 million. The gain from terminating the interest rate swap agreement is being amortized as a reduction of interest expense over the remaining life of the 2013 Senior Notes.

In July 2009, we issued $700.0 million aggregate principal amount of 5-year, 3.75% Senior Notes (2014 Senior Notes) and $500.0 million aggregate principal amount of 10-year, 4.875% Senior Notes (2019 Senior Notes). In August 2009, we used $500.0 million of the net proceeds from the 2014 Senior Notes and 2019 Senior Notes to repay all amounts outstanding under our credit facility. We may redeem the 2014 Senior Notes or 2019 Senior Notes at any time at the applicable redemption prices. Both the 2014 Senior Notes and 2019 Senior Notes are senior unsecured obligations and rank equally with all of our existing and future senior unsecured indebtedness.

In December 2010, we issued our $500.0 million principal amount 5-year, 2.50% unsecured senior notes (2016 Senior Notes). The majority of the net proceeds from the issuance of the 2016 Senior Notes were used for general corporate purposes including the repurchase of our common stock. Interest payments are required on a semi-annual basis. We may redeem the 2016 Senior Notes at any time at the applicable redemption price. The 2016 Senior Notes are senior unsecured obligations and rank equally with all of our existing and future senior unsecured indebtedness.

Concurrent with the issuance of the 2016 Senior Notes, we entered into a 5-year, $500.0 million notional amount interest rate swap designated as a fair value hedge of the changes in fair value of our fixed-rate 2016 Senior Notes. As of July 2, 2011, the fair value of the swap was a $2.3 million liability which was classified as other liabilities on the consolidated balance sheet, with a corresponding adjustment to the carrying value of the 2016 Senior Notes. Refer to Note 13 of the Consolidated Financial Statements for additional information regarding the interest rate swap.

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In April 2010, we issued 10-year, 2.04% unsecured senior notes in Japan (2.04% Yen Notes) totaling 12.8 billion Yen (the equivalent of $157.9 million at July 2, 2011 and $156.3 million at January 1, 2011) and 7-year, 1.58% unsecured senior notes in Japan (1.58% Yen Notes) totaling 8.1 billion Yen (the equivalent of $100.8 million at July 2, 2011 and $99.7 million at January 1, 2011). We used the net proceeds from these issuances to repay our 1.02% Yen-denominated notes that matured on May 7, 2010 totaling 20.9 billion Yen. Interest payments on the 2.04% Yen Notes and 1.58% Yen Notes are required on a semi-annual basis and the principal amounts recorded on the balance sheet fluctuate based on the effects of foreign currency translation.

In March 2011, we borrowed 6.5 billion Japanese Yen under uncommitted credit facilities with two commercial Japanese banks that provide for borrowings up to a maximum of 11.25 billion Japanese Yen. The proceeds from the borrowings were used to repay the outstanding balance on the Yen-denominated term loan due December 2011. The outstanding 6.5 billion Japanese Yen balance was the equivalent of $80.5 million at July 2, 2011. The principal amount reflected on the balance sheet fluctuates based on the effects of foreign currency translation. Half of the borrowings bear interest at the Yen LIBOR plus 0.25% and the other half of the borrowings bear interest at the Yen LIBOR plus 0.275%. The entire principal balance is due in March 2012 with an option to renew with the lenders’ consent.

Our Credit Facility and Yen Notes contain certain operating and financial covenants. Specifically, the Credit Facility requires that we have a leverage ratio (defined as the ratio of total debt to EBITDA (net earnings before interest, income taxes, depreciation and amortization)) not exceeding 3.0 to 1.0. The Yen Notes require that we have a ratio of total debt to total capitalization not exceeding 60% and a ratio of consolidated EBIT (net earnings before interest and income taxes) to consolidated interest expense of at least 3.0 to 1.0. Under the Credit Facility, our senior notes and Yen Notes we also have certain limitations on how we conduct our business, including limitations on additional liens or indebtedness and limitations on certain acquisitions, mergers, investments and dispositions of assets. We were in compliance with all of our debt covenants as of July 2, 2011.

SHARE REPURCHASES

On October 15, 2010, our Board of Directors authorized a share repurchase program of up to $600.0 million of our outstanding common stock. On October 21, 2010, our Board of Directors authorized an additional $300.0 million of share repurchases as part of this share repurchase program. We continued repurchasing shares in 2011 and completed the repurchases under the program on January 20, 2011, repurchasing a total of 22.0 million shares for $900.0 million at an average repurchase price of $40.87 per share. From January 1 through January 20, 2011, we repurchased 6.6 million shares for $274.7 million at an average repurchase price of $41.44 per share.

On August 2, 2011, our Board of Directors authorized a share repurchase program of up to $500.0 million of our outstanding common stock.

DIVIDENDS

On August 2, 2011, our Board of Directors authorized a cash dividend of $0.21 per share payable on October 31, 2011 to holders of record as of September 30, 2011. On May 11, 2011, our Board of Directors authorized a cash dividend of $0.21 per share paid on July 29, 2011 to holders of record as of June 30, 2011. On February 26, 2011, our Board of Directors authorized a cash dividend of $0.21 per share paid on April 29, 2011 to holders of record as of March 31, 2011. We expect to continue to pay quarterly cash dividends in the foreseeable future, subject to Board approval.

COMMITMENTS AND CONTINGENCIES

We have certain contingent commitments to acquire various businesses involved in the distribution of our products and to pay other contingent acquisition consideration payments. While it is not certain if and/or when these payments will be made, as of July 2, 2011, we could be required to pay approximately $25.8 million in future periods to satisfy such commitments. A description of our contractual obligations and other commitments is contained in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Off-Balance Sheet Arrangements and Contractual Obligations, included in our 2010 Annual Report on Form 10-K. We have no off-balance sheet financing arrangements other than that previously disclosed in our 2010 Annual Report on Form 10-K. Our significant legal proceedings are discussed in Note 6 to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

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CAUTIONARY STATEMENTS

In this Quarterly Report on Form 10-Q and in other written or oral statements made from time to time, we have included and may include statements that constitute “forward-looking statements” with respect to the financial condition, results of operations, plans, objectives, new products, future performance and business of St. Jude Medical, Inc. and its subsidiaries. Statements preceded by, followed by or that include words such as “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “forecast”, “project,” “believe” or similar expressions are intended to identify some of the forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are included, along with this statement, for purposes of complying with the safe harbor provisions of that Act. These forward-looking statements involve risks and uncertainties. By identifying these statements for you in this manner, we are alerting you to the possibility that actual results may differ, possibly materially, from the results indicated by these forward-looking statements. We undertake no obligation to update any forward-looking statements. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the risks and uncertainties discussed in the sections entitled Off-Balance Sheet Arrangements and Contractual Obligations and Market Risk in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2010 Annual Report on Form 10-K and in Part II, Item 1A, Risk Factors of this Quarterly Report on Form 10-Q and in Part I, Item 1A, Risk Factors of our 2010 Annual Report on Form 10-K as well as the various factors described below. Since it is not possible to foresee all such factors, you should not consider these factors to be a complete list of all risks or uncertainties. We believe the most significant factors that could affect our future operations and results are set forth in the list below.

1.	Any legislative or administrative reform to the U.S. Medicare or Medicaid systems or international reimbursement systems that significantly reduces reimbursement for procedures using our medical devices or denies coverage for such procedures, as well as adverse decisions relating to our products by administrators of such systems on coverage or reimbursement issues.
2.	Assertion, acquisition or grant of key patents by or to others that have the effect of excluding us from market segments or requiring us to pay royalties.
3.	Economic factors, including inflation, contraction in capital markets, changes in interest rates, changes in tax laws and changes in foreign currency exchange rates.
4.	Product introductions by competitors that have advanced technology, better features or lower pricing.
5.	Price increases by suppliers of key components, some of which are sole-sourced.
6.	A reduction in the number of procedures using our devices caused by cost-containment pressures, publication of adverse study results, initiation of investigations of our customers related to our devices or the development of or preferences for alternative therapies.
7.	Safety, performance or efficacy concerns about our products, many of which are expected to be implanted for many years, some of which may lead to recalls and/or advisories with the attendant expenses and declining sales.
8.	Declining industry-wide sales caused by product quality issues or recalls or advisories by our competitors that result in loss of physician and/or patient confidence in the safety, performance or efficacy of sophisticated medical devices in general and/or the types of medical devices recalled in particular.
9.	Changes in laws, regulations or administrative practices affecting government regulation of our products, such as FDA regulations, including those that decrease the probability or increase the time and/or expense of obtaining approval for products or impose additional burdens on the manufacture and sale of medical devices.
10.	Regulatory actions arising from concern over Bovine Spongiform Encephalopathy, sometimes referred to as “mad cow disease,” that have the effect of limiting our ability to market products using bovine collagen, such as Angio-Seal™, or products using bovine pericardial material, such as our Biocor®, Epic™ and Trifecta™ tissue heart valves, or that impose added costs on the procurement of bovine collagen or bovine pericardial material.
11.	The intent and ability of our product liability insurers to meet their obligations to us, including losses related to our Silzone® litigation, and our ability to fund future product liability losses related to claims made subsequent to becoming self-insured.
12.	Severe weather or other natural disasters that can adversely impact customers purchasing patterns and/or patient implant procedures or cause damage to the facilities of our critical suppliers or one or more of our facilities, such as an earthquake affecting our facilities in California or a hurricane affecting our facilities in Puerto Rico.
13.	Healthcare industry changes leading to demands for price concessions and/or limitations on, or the elimination of, our ability to sell in significant market segments.
14.	Adverse developments in investigations and governmental proceedings.
15.	Adverse developments in litigation, including product liability litigation, patent or other intellectual property litigation, qui tam litigation or shareholder litigation.
16.	Inability to successfully integrate the businesses that we have acquired in recent years and that we plan to acquire.
17.	Failure to successfully complete or unfavorable data from clinical trials for our products or new indications for our products and/or failure to successfully develop markets for such new indications.
18.	Changes in accounting rules that adversely affect the characterization of our results of operations, financial position or cash flows.
19.	The disruptions in the financial markets and the economic downturn that adversely impact the availability and cost of credit and customer purchasing and payment patterns.
20.	Conditions imposed in resolving, or any inability to timely resolve, any regulatory issues raised by the FDA, including Form 483 observations or warning letters, as well as risks generally associated with our regulatory compliance and quality systems.
21.	Governmental legislation, including the recently enacted Patient Protection and Affordable Care Act and the Health Care and Educational Reconciliation Act, and/or regulation that significantly impacts the healthcare system in the United States and that results in lower reimbursement for procedures using our products, reduces medical procedure volumes or otherwise adversely affects our business and results of operations, including the recently enacted medical device excise tax.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes since January 1, 2011 in our market risk. For further information on market risk, refer to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our 2010 Annual Report on Form 10-K.

Item 4. CONTROLS AND PROCEDURES

As of July 2, 2011, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of July 2, 2011.

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the second quarter of 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We are the subject of various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of our business. Such matters are subject to many uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time. We record a liability in our consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, where we have assessed that a loss is probable and an amount can be reasonably estimated. Our significant legal proceedings are discussed in Note 6 to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q and are incorporated herein by reference. While it is not possible to predict the outcome for most of the legal proceedings discussed in Note 6, the costs associated with such proceedings could have a material adverse effect on our consolidated earnings, financial position or cash flows of a future period.

Item 1A. RISK FACTORS

The risks factors identified in Part I, Item 1A of our Annual Report on Form 10-K for the year ended January 1, 2011 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the period ended April 2, 2011 have not changed in any material respect other than the updated risk factors as follows:

We are not insured against all potential losses. Natural disasters or other catastrophes could adversely affect our business, financial condition and results of operations.

The occurrence of one or more natural disasters, such as hurricanes, cyclones, typhoons, tropical storms, floods, earthquakes and tsunamis, severe changes in climate and geo-political events, such as acts of war, civil unrest or terrorist attacks, in a country in which we operate or in which our suppliers are located could adversely affect our operations and financial performance. For example, we have significant CRM facilities located in Sylmar and Sunnyvale, California. Earthquake insurance in California is currently difficult to obtain, extremely costly and restrictive with respect to scope of coverage. Our earthquake insurance for these California facilities provides $10 million of insurance coverage in the aggregate, with a deductible equal to 5% of the total value of the facility and contents involved in the claim. Consequently, despite this insurance coverage, we could incur uninsured losses and liabilities arising from an earthquake near one or both of our California facilities as a result of various factors, including the severity and location of the earthquake, the extent of any damage to our facilities, the impact of an earthquake on our California workforce and on the infrastructure of the surrounding communities and the extent of damage to our inventory and work in process. While we believe that our exposure to significant losses from a California earthquake could be partially mitigated by our ability to manufacture some of our CRM products at our manufacturing facilities in Sweden and Puerto Rico, the losses could have a material adverse effect on our business for an indeterminate period of time before this manufacturing transition is complete and operates without significant problems. Furthermore, our manufacturing facilities in Puerto Rico may suffer damage as a result of hurricanes which are frequent in the Caribbean and which could result in lost production and additional expenses to us to the extent any such damage is not fully covered by our hurricane and business interruption insurance.

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Further, when natural disasters, such as the recent earthquake and tsunami in Japan (whose market represents approximately 10% of our annual net revenues), result in wide-spread destruction, the impact on our business may not be readily apparent. This is especially true when trying to assess the impact of the disaster on our customers, who themselves may not fully understand the impact of the event on their business. The disaster in Japan may also result in a downturn in the Japanese economy as a whole. As a result, we are currently unable to assess the full impact of these events and there is no assurance that our results of operations may not be materially affected as a result of the impact of the disaster.

Even with insurance coverage, natural disasters or other catastrophic events, including acts of war, could cause us to suffer substantial losses in our operational capacity and could also lead to a loss of opportunity and to a potential adverse impact on our relationships with our existing customers resulting from our inability to produce products for them, for which we would not be compensated by existing insurance. This in turn could have a material adverse effect on our financial condition and results of operations.

Our products are continually the subject of clinical trials conducted by us, our competitors or other third parties, the results of which may be unfavorable, or perceived as unfavorable by the market, and could have a material adverse effect on our business, financial condition and results of operations.

As a part of the regulatory process of obtaining marketing clearance for new products and new indications for existing products, we conduct and participate in numerous clinical trials with a variety of study designs, patient populations and trial endpoints. Unfavorable or inconsistent clinical data from existing or future clinical trials conducted by us, by our competitors or by third parties, or the market’s or FDA’s perception of this clinical data, may adversely impact our ability to obtain product approvals, the size of the markets in which we participate, our position in, and share of, the markets in which we participate and our business, financial condition and results of operations.

The medical device industry and its customers are the subject of numerous governmental investigations into marketing and other business practices. Investigations against us could result in the commencement of civil and/or criminal proceedings, substantial fines, penalties and/or administrative remedies, divert the attention of our management and have an adverse effect on our financial condition and results of operations. Investigations of our customers may adversely affect the size of our markets.

We are subject to rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities. These authorities have been increasing their scrutiny of our industry. We have received subpoenas and other requests for information from state and federal governmental agencies, including, among others, the U.S. Department of Justice and the Office of Inspector General of the Department of Health and Human Services. These investigations have related primarily to financial arrangements with health care providers, regulatory compliance and product promotional practices. In December 2008, the U.S. Attorney’s Office in Boston delivered a subpoena issued by the U.S. Department of Health and Human Services, Office of the Inspector General (OIG) requesting the production of documents relating to implantable cardiac rhythm device and pacemaker warranty claims. The Company has cooperated with the investigation and has produced documents as requested. In March 2010, we received a Civil Investigative Demand (CID) from the Civil Division of the U.S. Department of Justice. The CID requests documents and sets forth interrogatories related to communications by and within our company on various indications for ICDs and a National Coverage Decision issued by Centers for Medicare and Medicaid Services. Similar requests were made of our major competitors.

We are fully cooperating with these investigations and are responding to these requests. However, we cannot predict when these investigations will be resolved, the outcome of these investigations or their impact on the company. An adverse outcome in one or more of these investigations could include the commencement of civil and/or criminal proceedings, substantial fines, penalties and/or administrative remedies, including exclusion from government reimbursement programs. In addition, resolution of any of these matters could involve the imposition of additional and costly compliance obligations. Finally, if these investigations continue over a long period of time, they could divert the attention of management from the day-to-day operations of our business and impose significant administrative burdens on us. These potential consequences, as well as any adverse outcome from these investigations or other investigations initiated by the government at any time, could have a material adverse effect on our financial condition and results of operations.

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Further, governmental investigations involving our customers, such as the U.S. Department of Justice investigation into ICD implants, may have a negative impact on the size of the CRM market. Our U.S. ICD sales represented approximately 22% percent of our worldwide consolidated net sales in 2010, and any changes in this market could have a material adverse effect on our financial condition or results of operations.

Current economic conditions could adversely affect our results of operations.

The global financial crisis that began in late 2007 caused extreme disruption in the financial markets, including severely diminished liquidity and credit availability. There can be no assurance that there will not be further deterioration in the global economy, and these and other factors beyond our control may adversely affect our ability to borrow money in the credit markets and to obtain financing for acquisitions or other general corporate and commercial purposes. Although the disruption in the global financial markets has moderated, not all global financial markets are functioning normally, and some remain reliant upon government intervention and liquidity. The global recession and disruption of the financial markets has further led to concerns over the solvency of certain European Union member states, including Greece, Ireland, Italy, Portugal and Spain. On August 5, 2011, Standard & Poor’s downgraded the U.S. credit rating to AA+ from its top rank of AAA. The current U.S. debt ceiling and budget deficit concerns have increased the possibility of other credit-rating agency downgrades which could have a material adverse effect on the financial markets and economic conditions in the United States and throughout the world.

Upheaval in the financial markets can affect our business through its effects on general levels of economic activity, employment and customer behavior. The recovery from the recent recession in the U.S. has been below historic averages and the unemployment rate is expected to remain high for some time. Inflation has fallen over the last several years, but is now rising, and Central Banks around the world have begun tightening monetary conditions to attempt to control inflation. On August 2, 2011, President Obama signed the Budget Control Act of 2011 which provides an initial increase to the U.S. debt limit, imposes significant cuts in federal spending over the next decade and involves a second increase to the debt limit pending further deficit reduction by a bipartisan Congressional committee later this year. This committee could propose cuts to, and restructuring of, entitlement programs such as Medicare and aid to states for Medicaid programs. Our hospital customers rely heavily on Medicare and Medicaid programs to fund their operations. Any cuts to these programs could negatively affect the business of our customers and our business. As a result of recent or future poor economic conditions, our customers may experience financial difficulties or be unable to borrow money to fund their operations which may adversely impact their ability or decision to purchase our products or to pay for products they do purchase or have purchased on a timely basis, if at all. While the economic environment has begun to show signs of improvement, the strength and timing of any economic recovery remains uncertain, and we cannot predict to what extent the global economic slowdown may negatively impact our average selling prices, net sales, profit margins, procedural volumes and reimbursement rates from third party payors. In addition, the current economic conditions may adversely affect our suppliers, leading them to experience financial difficulties or to be unable to borrow money to fund their operations, which could cause disruptions in our ability to produce our products.

Item 5. OTHER INFORMATION

At the Annual Meeting of Shareholders held on May 12, 2011, the Company’s shareholders voted, on an advisory basis, in favor of holding an annual advisory vote on the compensation of our named executive officers (“Say-on-Pay Vote”).  In light of this recommendation by our shareholders, our Board of Directors has determined that the Company will hold an annual Say-on-Pay Vote.

Item 6.	EXHIBITS
12	Computation of Ratio of Earnings to Fixed Charges.
10.1	Form of Non-Qualified Stock Option Agreement (amended 2011) and related Notice of Non-Qualified Stock Option Grant under the St. Jude Medical, Inc. 2002 Stock Plan.
10.2	Form of Non-Qualified Stock Option Agreement for Non-Employee Directors (amended 2011) and related Notice of Non-Qualified Stock Option Grant under the St. Jude Medical, Inc. 2006 Stock Plan.
10.3	Form of Non-Qualified Stock Option Agreement for Employees (amended 2011) and related Notice of Non-Qualified Stock Option Grant under the St. Jude Medical, Inc. 2006 Stock Plan.
10.4	Form of Non-Qualified Stock Option Agreement (amended 2011) and related Notice of Non-Qualified Stock Option Grant under the St. Jude Medical, Inc. 2007 Stock Incentive Plan.
10.5	Form of Non-Qualified Stock Option Agreement for Non-Employee Directors (amended 2011) and related Notice of Non-Qualified Stock Option Grant under the St. Jude Medical, Inc. 2007 Stock Incentive Plan.
10.6	Form of Restricted Stock Award Agreement (amended 2011) and related Restricted Stock Award Certificate under the St. Jude Medical, Inc. 2007 Stock Incentive Plan.
10.7	Form of Restricted Stock Units Award Agreement (amended 2011) and related Restricted Stock Units Award Certificate under the St. Jude Medical, Inc. 2007 Stock Incentive Plan.

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10.8	St. Jude Medical, Inc. 2007 Stock Incentive Plan, as amended and restated (2011), is incorporated by reference to Exhibit 10.1 to St. Jude Medical’s Current Report of Form 8-K filed on May 13, 2011.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial statements from the quarterly report on Form 10-Q of St. Jude Medical, Inc. for the quarter ended July 2, 2011, formatted in XBRL: (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) the Notes to the Condensed Consolidated Financial Statements.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ST. JUDE MEDICAL, INC.
August 10, 2011	/s/ JOHN C. HEINMILLER
DATE	JOHN C. HEINMILLER
	Executive Vice President
	and Chief Financial Officer
	(Duly Authorized Officer and
	Principal Financial and Accounting Officer)

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INDEX TO EXHIBITS

Exhibit No.	Description
12	Computation of Ratio of Earnings to Fixed Charges. #
10.1	Form of Non-Qualified Stock Option Agreement (amended 2011) and related Notice of Non-Qualified Stock Option Grant under the St. Jude Medical, Inc. 2002 Stock Plan. #
10.2	Form of Non-Qualified Stock Option Agreement for Non-Employee Directors (amended 2011) and related Notice of Non-Qualified Stock Option Grant under the St. Jude Medical, Inc. 2006 Stock Plan. #
10.3	Form of Non-Qualified Stock Option Agreement for Employees (amended 2011) and related Notice of Non-Qualified Stock Option Grant under the St. Jude Medical, Inc. 2006 Stock Plan. #
10.4	Form of Non-Qualified Stock Option Agreement (amended 2011) and related Notice of Non-Qualified Stock Option Grant under the St. Jude Medical, Inc. 2007 Stock Incentive Plan. #
10.5	Form of Non-Qualified Stock Option Agreement for Non-Employee Directors (amended 2011) and related Notice of Non-Qualified Stock Option Grant under the St. Jude Medical, Inc. 2007 Stock Incentive Plan. #
10.6	Form of Restricted Stock Award Agreement (amended 2011) and related Restricted Stock Award Certificate under the St. Jude Medical, Inc. 2007 Stock Incentive Plan. #
10.7	Form of Restricted Stock Units Award Agreement (amended 2011) and related Restricted Stock Units Award Certificate under the St. Jude Medical, Inc. 2007 Stock Incentive Plan. #
10.8	St. Jude Medical, Inc. 2007 Stock Incentive Plan, as amended and restated (2011), is incorporated by reference to Exhibit 10.1 to St. Jude Medical’s Current Report of Form 8-K filed on May 13, 2011.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. #
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. #
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. #
32.1	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. #
101	Financial statements from the quarterly report on Form 10-Q of St. Jude Medical, Inc. for the quarter ended July 2, 2011, formatted in XBRL: (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) the Notes to the Condensed Consolidated Financial Statements. *

#	Filed as an exhibit to this Quarterly Report on Form 10-Q.
*	Furnished herewith.

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EX-10.1

EXHIBIT 10.1

ST. JUDE MEDICAL, INC.
NON-QUALIFIED STOCK OPTION AWARD
(2002 STOCK PLAN)

[Name and Address of Optionee]

[Social Security Number of Optionee]

          THIS CERTIFIES that St. Jude Medical, Inc. (the “Company”) has granted you an option (the “Option”) to purchase shares (the “Option Shares”) of common stock, par value $.10 per share, of the Company (the “Common Stock”) pursuant to the St. Jude Medical, Inc. 2002 Stock Plan, as amended (the “Plan”), as follows:

Grant Type:      Non-Qualified Stock Option

Grant Date:

Exercise Price Per Share:

Total Number of Option Shares:

Expiration Date:

          The Option is granted under and governed by the following terms and conditions and the terms and conditions contained in the Plan. A copy of the Plan is available upon request. Any capitalized terms not defined in this Award will have the meaning set forth in the Plan.

ST. JUDE MEDICAL, INC.
By:	___________________________________
Name:
Title:

TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION AWARD

          1.          Vesting and Term of Option.

          (a)         The Option will become exercisable as to 25% of the Option Shares on each anniversary of the Grant Date (stated on the first page of this Award), commencing with the first anniversary of the Grant Date, unless the Option terminates or the vesting accelerates as provided in this Award. Once the Option has become exercisable for all or a portion of the Option Shares, it will remain exercisable for all or such portion of the Option Shares, as the case may be, until the Option expires or is terminated as provided in this Award. The Option will expire on the Expiration Date (stated on the first page of this Award), unless it is terminated prior to that time in accordance with the terms and conditions of this Award.

          (b)         Notwithstanding the vesting provision contained in Section 1(a) above, but subject to the other terms and conditions set forth herein, from and after a Change of Control (as hereinafter defined) the Option will become immediately exercisable in full. As used herein, “Change of Control” shall mean any of the following events:

             (i)          the acquisition by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or any of its Subsidiaries, or any employee benefit plan of the Company and/or one or more of its Subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as hereinafter defined); or

             (ii)         individuals who, as of the Grant Date, constitute the Board of Directors of the Company (generally the “Directors” and as of the Grant Date the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the Grant Date whose nomination for election was approved in advance by a vote of at least three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

             (iii)         the consummation of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors; or

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             (iv)         the first purchase under any tender offer or exchange offer (other than an offer by the Company or any of its Subsidiaries) pursuant to which shares of Common Stock are purchased; or

             (v)          at least a majority of the Continuing Directors determines in their sole discretion that there has been a change in control of the Company.

          3.          Effect of Termination of Employment.

          (a)          If your employment is terminated by reason of your death, the Option may be exercised at any time within 12 months after the date of your death, to the extent that the Option was exercisable by you on the date of death, by your personal representatives or administrators or by any person or persons to whom the Option has been transferred by will or the applicable laws of descent and distribution, subject to the condition that the Option will not be exercisable after the Expiration Date of the Option.

          (b)          If your employment is terminated by reason of Disability, you may exercise the Option at any time within 12 months after such termination of employment, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option will not be exercisable after the Expiration Date of the Option.

          (c)          If your employment is terminated by reason of Retirement, you may exercise the Option at any time within 36 months after such termination of employment, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option will not be exercisable after the Expiration Date of the Option.

          (d)          If your employment is terminated for Cause, the Option will terminate immediately upon termination of employment and will not be exercisable thereafter.

          (e)          If your employment terminates for any reason other than your death, Disability, Retirement or for Cause, you may exercise the Option at any time within 90 days after the date of such termination of employment, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option will not be exercisable after the Expiration Date of the Option. However, if upon termination of your employment you become a consultant to the Company pursuant to a written consulting agreement, then you may continue to exercise the Option at any time until 90 days after the date of termination of such consulting agreement to the extent the Option was exercisable by you on the date of your termination of employment and subject to the condition that the Option may not be exercised after the termination of the Option.

          4.           Method of Exercising Option.

          (a)          Subject to the terms and conditions of this Award, the Option may be exercised by written notice to the Company, to the attention of the Stock Option Administrator at Corporate Headquarters. Such notice must state the election to exercise the Option, the number of Option Shares as to which the Option is being exercised and the manner of payment, and must be signed by the person or persons so exercising the Option. The notice must be accompanied by payment in full of the Exercise Price (stated on the first page of this Award) for all Option Shares designated in the notice. To the extent that the Option is exercised by a person or persons other than you, the notice of exercise also must be accompanied by appropriate proof of the right of such person or persons to exercise the Option.

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          (b)         Payment of the Exercise Price must be made to the Company through one or a combination of the following methods:

             (i)          delivery of a check payable to the Company or cash, in United States currency;

             (ii)         delivery of shares of Common Stock acquired by you (or the other person(s) exercising the Option) more than six months prior to the date of exercise having a Fair Market Value on the date of exercise equal to the Exercise Price. You (or such other person(s)) must duly endorse all certificates delivered to the Company in blank and must represent and warrant in writing that you are the owner of the shares so delivered, free and clear of all liens, encumbrances, security interests and restrictions; or

             (iii)         delivery of a combination of cash or a check and Common Stock acquired by you (or the other person(s) exercising the Option) more than six months prior to the date of exercise having an aggregate Fair Market Value on the date of exercise equal to the Exercise Price.

          5.          Income Tax Withholding.

          In order to provide the Company with the opportunity to claim the benefit of any income tax deduction that may be available to it upon the exercise of the Option, and in order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable minimum federal or state income, withholding, social, payroll or other taxes, which are your sole and absolute responsibility, are withheld or collected from you or the other person(s) exercising the Option. You or such other person(s) exercising the Option may, at your election (the “Tax Election”), satisfy the applicable minimum tax withholding obligations by (a) electing to have the Company withhold a portion of the Option Shares otherwise to be delivered upon exercise of the Option having a Fair Market Value equal to the amount of such taxes or (b) delivering to the Company shares of Common Stock having a Fair Market Value equal to the amount of such taxes. The Tax Election must be made on or before the date that the amount of tax to be withheld is determined.

          6.          Restriction on Transfer or Sale of Option Shares.

          (a)        Each time that all or a portion of the Option is exercised in accordance with the terms and conditions of this Award, 50% of the Option Shares (after deducting any Option Shares used or sold by you to pay the exercise price or to satisfy the applicable minimum tax withholding obligations in connection with such exercise, and rounded down to the nearest whole share) received by you from such exercise shall be held by you for one year from the date of such exercise; provided, however, the Committee, in its sole discretion, may waive such restriction on transfer or sale on all or a portion of such Option Shares prior to the expiration of such one-year period. Nothing in this Section 6(a) shall prevent you from accepting a payment of cash or other property or securities in consideration for the Option or the Option Shares in connection with a Change of Control, provided that the restriction on transfer or sale set forth in this Section 6(a) shall continue to apply to any securities received by you in consideration for the Option or the Option Shares in connection with any such Change of Control to the same extent as if those securities had been received upon the exercise of the Option, unless your employment is terminated and the restriction ceases to apply as provided in Section 6(b).

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          (b)          Notwithstanding Section 6(a), if your employment is terminated pursuant to Section 3(a), (b) or (c) above, the restriction on transfer or sale pursuant to Section 6(a) will automatically cease and, so long as all federal and state securities laws are adhered to, any Option Shares which you (or in the case of your death, your personal representatives or administrators or any person or persons to whom the Option or the Option Shares have been transferred by will or the applicable laws of descent and distribution) receive or have received pursuant to the exercise of the Option may be immediately transferred or sold.

          7.          Adjustments.

          If the Committee determines that any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, other change in corporate structure affecting the Common Stock, spin-off, split-up or other distribution of assets to shareholders, or other similar corporate transaction or event affects the shares of Common Stock such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Award, then an appropriate adjustment automatically will be made in the number and kind of Option Shares with a corresponding adjustment in the Exercise Price; provided that the number of Option Shares always will be a whole number.

          8.          Securities Matters.

          No Option Shares will be issued hereunder prior to such time as counsel to the Company has determined that the issuance of the Option Shares will not violate any federal or state securities or other laws, rules or regulations. The Company will not be required to deliver any Option Shares until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

          9.          General Provisions.

          (a)          Interpretations. This Award is subject in all respects to the terms of the Plan. In the event that any provision of this Award is inconsistent with the terms of the Plan, the terms of the Plan will govern. Any question of administration or interpretation arising under this Award will be determined by the Committee, and such determination will be final, conclusive and binding upon all parties in interest.

          (b)          No Rights as a Shareholder. Neither you nor your legal representatives will have any of the rights and privileges of a shareholder of the Company with respect to the Option Shares unless and until certificates for such Option Shares have been issued upon exercise of the Option.

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          (c)          No Right to Employment. Nothing in this Agreement or the Plan will be construed as giving you the right to be retained as an employee of the Company. In addition, the Company may at any time dismiss you from employment, free from any liability or any claim under this Award.

          (d)          Option Not Transferable. The Option may not be transferred, pledged, alienated, attached or otherwise encumbered, and any purported transfer, pledge, alienation, attachment or encumbrance of the Option will be void and unenforceable against the Company, except that the Option may be transferred (i) by will or by the laws of descent and distribution or (ii) by gift, without consideration, under a written instrument that is approved in advance by the Committee, to a member of your family, as defined in Section 267 of the Internal Revenue Code of 1986, as amended, or to a trust or similar entity whose sole beneficiaries are you and/or members of your family (such family member or other entity, a “Permitted Transferee”), provided that such transfer and the exercise of the Option by such Permitted Transferee do not violate any federal or state securities laws. During your lifetime the Option will be exercisable only by you or such Permitted Transferee.

          (e)          Reservation of Shares. The Company will at all times during the term of the Option reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Award.

          (f)          Headings. Headings are given to the sections and subsections of this Award solely as a convenience to facilitate reference. Such headings will not be deemed in any way material or relevant to the construction or interpretation of this Award or any provision hereof.

          (g)          Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota will govern all questions concerning the validity, construction and effect of this Award.

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EX-10.2

EXHIBIT 10.2

NOTICE OF NON-QUALIFIED STOCK OPTION GRANT
TO NON-EMPLOYEE DIRECTOR

          This certifies that ___________________________ has an option to purchase ___________________ shares of common stock, par value $.10 per share, of St. Jude Medical, Inc., a Minnesota corporation.

          Social Security Number: ____________________

          Address: ______________________

          Grant Date: _____________________

          Purchase Price Per Share: $_______

          Expiration Date: ____________________

          Exercisable Date: 100% exercisable on _____________________

          This stock option is governed by, and subject in all respects to, the terms and conditions of the Non-Qualified Stock Option Agreement for Non-Employee Directors, a copy of which is attached to and made a part of this document, and the St. Jude Medical, Inc. 2006 Stock Plan, a copy of which is available upon request. This Notice of Non-Qualified Stock Option Grant to Non-Employee Director has been duly executed, by manual or facsimile signature, on behalf of St. Jude Medical, Inc.

ST. JUDE MEDICAL, INC.

By:

Name: 

Title: 

ST. JUDE MEDICAL, INC. 2006 STOCK PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS     

          This Non-Qualified Stock Option Agreement for Non-Employee Directors (this “Agreement”) is between St. Jude Medical, Inc., a Minnesota corporation (the “Company”), and you, the person named in the attached Notice of Non-Qualified Stock Option Grant to Non-Employee Director (the “Notice”). This Agreement is effective as of the date of grant set forth in the attached Notice (the “Grant Date”).

          The Company desires to provide you with an opportunity to purchase shares of the Company’s common stock, $.10 par value (the “Common Stock”), as provided in this Agreement in order to carry out the purpose of the St. Jude Medical, Inc. 2006 Stock Plan (the “Plan”).

          Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and you hereby agree as follows:

          1.          Grant of Option.

          The Company hereby grants to you, effective as of the Grant Date, the right and option (the “Option”) to purchase all or any part of the aggregate number of shares of Common Stock set forth in the attached Notice, on the terms and conditions contained in this Agreement and in accordance with the terms of the Plan. The Option is not intended to be an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

          2.          Exercise Price.

          The per share purchase price of the shares subject to the Option shall be the purchase price per share set forth in the attached Notice.

          3.          Term of Option and Exercisability.

          The term of the Option shall be for a period of eight years from the Grant Date, terminating at the close of business on the expiration date set forth in the attached Notice (the “Expiration Date”) or such shorter period as is prescribed in Section 5 of this Agreement. The Option shall become exercisable, or vest, on the date set forth in the attached Notice, subject to the provisions of Sections 4 and 5 of this Agreement. To the extent the Option is exercisable, you may exercise it in whole or in part, at any time, or from time to time, prior to the termination of the Option.

          4.          Change of Control.

          Notwithstanding the vesting provisions contained in Section 3 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change of Control (as defined below) the Option shall become immediately exercisable in full. As used herein, “Change of Control” shall mean any of the following events:

          (i)          the acquisition by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or any of its Subsidiaries, or any employee benefit plan of the Company and/or one or more of its Subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as defined below); or

          (ii)         individuals who, as of the Grant Date, constitute the Board of Directors of the Company (generally the “Directors” and as of the Grant Date the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the Grant Date whose nomination for election was approved in advance by a vote of at least three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

          (iii)        the consummation of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors; or

          (iv)        the first purchase under any tender offer or exchange offer (other than an offer by the Company or any of its Subsidiaries) pursuant to which shares of Common Stock are purchased; or

          (v)         at least a majority of the Continuing Directors determines in their sole discretion that there has been a change in control of the Company.

          5.        Effect of Termination of Board Service.

          (a)       If your board service terminates by reason of your death, the Option may be exercised at any time within 12 months after the date of your death, to the extent that the Option was exercisable by you on the date of death, by your personal representatives or administrators or by any person or persons to whom the Option has been transferred by will or the applicable laws of descent and distribution, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option.

          (b)       If your board service terminates by reason of Disability, you may exercise the Option at any time within 12 months after such termination of service, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option.

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          (c)        If your board service is terminated for Cause, the Option shall terminate immediately upon termination of service and shall not be exercisable thereafter.

          (d)        If your board service terminates for any reason other than your death, Disability or for Cause, you may exercise the Option after the date of such termination of service in accordance with its terms to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option.

          6.          Method of Exercising Option.

          (a)        Subject to the terms and conditions of this Agreement, you may exercise your Option by following the procedures established by the Company from time to time. In addition, you may exercise your Option by written notice to the Company as provided in Section 9(i) of this Agreement that states (i) your election to exercise the Option, (ii) the Grant Date of the Option, (iii) the purchase price of the shares, (iv) the number of shares as to which the Option is being exercised and (v) the manner of payment. The notice shall be signed by you or the person(s) exercising the Option. The notice shall be accompanied by payment in full of the exercise price for all shares designated in the notice. To the extent that the Option is exercised after your death, the notice of exercise shall also be accompanied by appropriate proof of the right of such person(s) to exercise the Option.

          (b)        Payment of the exercise price shall be made to the Company through one or a combination of the following methods:

           (i)        cash, in United States currency (including check, draft, money order or wire transfer made payable to the Company); or

           (ii)       delivery (either actual delivery or by attestation) of shares of Common Stock acquired by you more than six months prior to the date of exercise having a Fair Market Value on the date of exercise equal to the Option exercise price. You shall represent and warrant in writing that you are the owner of the shares so delivered, free and clear of all liens, encumbrances, security interests and restrictions, and you shall duly endorse in blank all certificates delivered to the Company.

           7.          Income Tax.

          You acknowledge that you will consult with your personal tax adviser regarding the income tax consequences of exercising the Option or any other matters related to this Agreement and that any federal, state, local or foreign payroll, withholding, income or other taxes are your sole and absolute responsibility. In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, if and to the extent required by applicable law, are withheld or collected from you.

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          8.          Adjustments.

          If the Committee administering the Plan determines that any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, other change in corporate structure affecting the Common Stock, spin-off, split-up or other distribution of assets to shareholders, or other similar corporate transaction or event affects the shares of Common Stock such that an adjustment is determined by the Committee administering the Plan to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then the Committee administering the Plan shall, in such manner as it may deem equitable, in its sole discretion, adjust any or all of the number and type of the shares covered by the Option and the exercise price of the Option.

          9.          General Provisions.

         (a)          Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all parties in interest.

          (b)        No Rights as a Shareholder.  Neither you nor your legal representatives shall have any of the rights and privileges of a shareholder of the Company with respect to the shares of Common Stock subject to the Option unless and until certificates for such shares have been issued upon exercise of the Option.

          (c)        No Right to Board Service. Nothing in this Agreement or the Plan shall be construed as giving you the right to continue to serve on the Company’s Board of Directors.

          (d)        Option Not Transferable. The Option may not be transferred, pledged, alienated, attached or otherwise encumbered, and any purported transfer, pledge, alienation, attachment or encumbrance of the Option will be void and unenforceable against the Company, except that the Option may be transferred (i) by will or by the laws of descent and distribution or (ii) if approved in advance by the Committee administering the Plan, in its discretion and subject to such additional terms and conditions as it determines, by gift, without consideration, under a written instrument that is approved in advance by the Committee administering the Plan, to a member of your family, as defined in Section 267 of the Code, or to a trust or similar entity whose sole beneficiaries are you and/or members of your family (such family member or other entity, a “Permitted Transferee”), provided that such transfer and the exercise of the Option by such Permitted Transferee do not violate any federal or state securities laws. During your lifetime the Option will be exercisable only by you or such Permitted Transferee.

          (e)        Reservation of Shares. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement.

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          (f)        Securities Matters. The Company shall not be required to deliver any shares of Common Stock until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

          (g)        Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.

          (h)        Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota will govern all questions concerning the validity, construction and effect of this Agreement.

          (i)         Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the following address:

St. Jude Medical, Inc.

Stock Option Administrator
One Lillehei Plaza
St. Paul, MN 55117

          (j)        Notice of Non-Qualified Stock Option Grant to Non-Employee Director. This Agreement is attached to and made part of a Notice of Non-Qualified Stock Option Grant to Non-Employee Director and shall have no force or effect unless such Notice is duly executed and delivered by the Company to you.

* * * * * * * *

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EX-10.3

EXHIBIT 10.3

NOTICE OF NON-QUALIFIED STOCK OPTION GRANT
TO EMPLOYEE
(2006 STOCK PLAN)

          This certifies that ____________________ has an option to purchase ____________________ shares of common stock, par value $.10 per share, of St. Jude Medical, Inc., a Minnesota corporation.

Social Security Number: ____________________

Address: ________________________________

Grant Date: ______________________________

Purchase Price Per Share: $ _________________

Expiration Date: __________________________

Exercisable Date: [insert vesting schedule, e.g., 25% exercisable on each of first four anniversaries of grant date]

          This stock option is governed by, and subject in all respects to, the terms and conditions of the Non-Qualified Stock Option Agreement for Employees, a copy of which is attached to and made a part of this document, and the St. Jude Medical, Inc. 2006 Stock Plan, a copy of which is available upon request. This Notice of Non-Qualified Stock Option Grant to Employee has been duly executed, by manual or facsimile signature, on behalf of St. Jude Medical, Inc.

ST. JUDE MEDICAL, INC.

By:

Name:

Title:

ST. JUDE MEDICAL, INC. 2006 STOCK PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT FOR EMPLOYEES

          This Non-Qualified Stock Option Agreement for Employees (this “Agreement”) is between St. Jude Medical, Inc., a Minnesota corporation (the “Company”), and you, the person named in the attached Notice of Non-Qualified Stock Option Grant to Employee (the “Notice”). This Agreement is effective as of the date of grant set forth in the attached Notice (the “Grant Date”).

          The Company desires to provide you with an opportunity to purchase shares of the Company’s common stock, $.10 par value (the “Common Stock”), as provided in this Agreement in order to carry out the purpose of the St. Jude Medical, Inc. 2006 Stock Plan (the “Plan”).

          Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and you hereby agree as follows:

1. Grant of Option.

          The Company hereby grants to you, effective as of the Grant Date, the right and option (the “Option”) to purchase all or any part of the aggregate number of shares of Common Stock set forth in the attached Notice, on the terms and conditions contained in this Agreement and in accordance with the terms of the Plan. The Option is not intended to be an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Exercise Price.

          The per share purchase price of the shares subject to the Option shall be the purchase price per share set forth in the attached Notice.

3. Term of Option and Exercisability.

          The term of the Option shall be for a period of eight years from the Grant Date, terminating at the close of business on the expiration date set forth in the attached Notice (the “Expiration Date”), or such shorter period as is prescribed in the attached Notice or in Section 5 of this Agreement. The Option shall become exercisable, or vest, on the date or dates and in the amount or amounts set forth in the attached Notice, subject to the provisions of Sections 4 and 5 of this Agreement. To the extent the Option is exercisable, you may exercise it in whole or in part, at any time, or from time to time, prior to the termination of the Option.

4. Change of Control.

          Notwithstanding the vesting provisions contained in Section 3 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change of Control (as defined below) the Option shall become immediately exercisable in full. As used herein, “Change of Control” shall mean any of the following events:

(i)          the acquisition by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or any of its Subsidiaries, or any employee benefit plan of the Company and/or one or more of its Subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as defined below); or
(ii)         individuals who, as of the Grant Date, constitute the Board of Directors of the Company (generally the “Directors” and as of the Grant Date the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the Grant Date whose nomination for election was approved in advance by a vote of at least three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or
(iii)        the consummation of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors; or
(iv)        the first purchase under any tender offer or exchange offer (other than an offer by the Company or any of its Subsidiaries) pursuant to which shares of Common Stock are purchased; or
(v)         at least a majority of the Continuing Directors determines in their sole discretion that there has been a change in control of the Company.
5.	Effect of Termination of Employment.

          (a)      If your employment is terminated by reason of your death, the Option may be exercised at any time within 12 months after the date of your death, to the extent that the Option was exercisable by you on the date of death, by your personal representatives or administrators or by any person or persons to whom the Option has been transferred by will or the applicable laws of descent and distribution, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option.

          (b)      If your employment is terminated by reason of Disability, you may exercise the Option at any time within 12 months after such termination of employment, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option.

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          (c)      If your employment is terminated by reason of Retirement, you may exercise the Option at any time within 36 months after such termination of employment, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option.

          (d)      If your employment is terminated for Cause, the Option shall terminate immediately upon termination of employment and shall not be exercisable thereafter.

          (e)      If your employment is terminated for any reason other than your death, Disability, Retirement or for Cause, you may exercise the Option at any time within 90 days after the date of such termination of employment, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option. However, if concurrently with the termination of your employment you become a consultant to the Company pursuant to a written consulting agreement, then you may continue to exercise the Option at any time until 90 days after the date of termination of such consulting agreement, to the extent the Option was exercisable by you on the date of your termination of employment, subject to the condition that the Option will not be exercisable after the Expiration Date of the Option.

6. Method of Exercising Option.

          (a)      Subject to the terms and conditions of this Agreement, you may exercise the Option by following the procedures established by the Company from time to time. In addition, you may exercise the Option by written notice to the Company, as provided in Section 9(i) of this Agreement, that states (i) your election to exercise the Option, (ii) the Grant Date of the Option, (iii) the purchase price of the shares, (iv) the number of shares as to which the Option is being exercised, (v) the manner of payment of the exercise price and (vi) the manner of payment for any income tax withholding amount. The notice shall be signed by you or the person(s) exercising the Option. The notice shall be accompanied by payment in full of the exercise price for all shares designated in the notice. To the extent that the Option is exercised after your death, the notice of exercise shall also be accompanied by appropriate proof of the right of such person(s) to exercise the Option.

          (b)      Payment of the exercise price shall be made to the Company through one or a combination of the following methods:

          (i)          cash, in United States currency (including check, draft, money order or wire transfer made payable to the Company); or

          (ii)         delivery (either actual delivery or by attestation) of shares of Common Stock acquired by you more than six months prior to the date of exercise having a Fair Market Value on the date of exercise equal to the Option exercise price. You shall represent and warrant in writing that you are the owner of the shares so delivered, free and clear of all liens, encumbrances, security interests and restrictions, and you shall duly endorse in blank all certificates delivered to the Company.

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7. Income Tax Withholding.

          (a)      You acknowledge that you will consult with your personal tax adviser regarding the income tax consequences of exercising the Option or any other matters related to this Agreement and that any federal, state, local or foreign payroll, withholding, income or other taxes are your sole and absolute responsibility. In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes are withheld or collected from you.

          (b)      In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering the Plan, you may elect to satisfy any applicable tax withholding obligations arising from the exercise of the Option by (i) delivering cash (including check, draft, money order or wire transfer made payable to the order of the Company), (ii) having the Company withhold a portion of the shares of Common Stock otherwise to be delivered upon exercise of the Option having a Fair Market Value equal to the amount of such taxes or (iii) delivering to the Company shares of Common Stock having a Fair Market Value equal to the amount of such taxes. The Company will not deliver any fractional share of Common Stock but will pay, in lieu thereof, the Fair Market Value of such fractional share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

8. Adjustments.

          If the Committee administering the Plan determines that any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, other change in corporate structure affecting the Common Stock, spin-off, split-up or other distribution of assets to shareholders, or other similar corporate transaction or event affects the shares of Common Stock such that an adjustment is determined by the Committee administering the Plan to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then the Committee administering the Plan shall, in such manner as it may deem equitable, in its sole discretion, adjust any or all of the number and type of the shares covered by the Option and the exercise price of the Option.

9. General Provisions.

          (a)      Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all parties in interest.

          (b)      No Rights as a Shareholder. Neither you nor your legal representatives shall have any of the rights and privileges of a shareholder of the Company with respect to the shares of Common Stock subject to the Option unless and until certificates for such shares have been issued upon exercise of the Option.

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          (c)          No Right to Employment. Nothing in this Agreement or the Plan shall be construed as giving you the right to be retained as an employee of the Company. In addition, the Company may at any time dismiss you from employment, free from any liability or any claim under this Agreement, unless otherwise expressly provided in this Agreement.

          (d)          Option Not Transferable. The Option may not be transferred, pledged, alienated, attached or otherwise encumbered, and any purported transfer, pledge, alienation, attachment or encumbrance of the Option will be void and unenforceable against the Company, except that the Option may be transferred (i) by will or by the laws of descent and distribution or (ii) if approved in advance by the Committee administering the Plan, in its discretion and subject to such additional terms and conditions as it determines, by gift, without consideration, under a written instrument that is approved in advance by the Committee administering the Plan, to a member of your family, as defined in Section 267 of the Code, or to a trust or similar entity whose sole beneficiaries are you and/or members of your family (such family member or other entity, a “Permitted Transferee”), provided that such transfer and the exercise of the Option by such Permitted Transferee do not violate any federal or state securities laws. During your lifetime the Option will be exercisable only by you or such Permitted Transferee.

          (e)          Reservation of Shares. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement.

          (f)          Securities Matters. The Company shall not be required to deliver any shares of Common Stock until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

          (g)          Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.

          (h)          Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota will govern all questions concerning the validity, construction and effect of this Agreement.

          (i)          Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the following address:

St. Jude Medical, Inc.
Stock Option Administrator
One Lillehei Plaza
St. Paul, MN 55117

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          (j)          Notice of Non-Qualified Stock Option Grant to Employee. This Agreement is attached to and made part of a Notice of Non-Qualified Stock Option Grant to Employee and shall have no force or effect unless such Notice is duly executed and delivered by the Company to you.

* * * * * * * *

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EX-10.4

EXHIBIT 10.4

ST. JUDE MEDICAL, INC. 2007 STOCK INCENTIVE PLAN

NOTICE OF NON-QUALIFIED
STOCK OPTION GRANT

          This certifies that ________________ has an option to purchase ________________ shares of common stock, $.10 par value, of St. Jude Medical, Inc., a Minnesota corporation.

Social Security Number: ___________________

Address: ________________________________

Grant Date: _______________________, 20____

Purchase Price Per Share: $__________________

Expiration Date: __________________________

Exercisable Date: [vesting schedule]

          This stock option is governed by, and subject in all respects to, the terms and conditions of the Non-Qualified Stock Option Agreement, a copy of which is attached to and made a part of this document, and the St. Jude Medical, Inc. 2007 Stock Incentive Plan, a copy of which is available upon request. This Notice of Non-Qualified Stock Option Grant has been duly executed, by manual or facsimile signature, on behalf of St. Jude Medical, Inc.

ST. JUDE MEDICAL, INC.

By:

Name:

Title:

ST. JUDE MEDICAL, INC.
2007 STOCK INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

          This Non-Qualified Stock Option Agreement is between St. Jude Medical, Inc., a Minnesota corporation (the “Company”), and you, the person named in the attached Notice of Non-Qualified Stock Option Grant (the “Notice”). This Agreement is effective as of the date of grant set forth in the attached Notice (the “Grant Date”).

          The Company desires to provide you with an opportunity to purchase shares of the Company’s Common Stock, $.10 par value (the “Common Stock”), as provided in this Agreement in order to carry out the purpose of the St. Jude Medical, Inc. 2007 Stock Incentive Plan, as amended from time to time (the “Plan”).

          Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and you hereby agree as follows:

          1.          Grant of Option.

          The Company hereby grants to you, effective as of the Grant Date, the right and option (the “Option”) to purchase all or any part of the aggregate number of shares of Common Stock set forth in the attached Notice, on the terms and conditions contained in this Agreement and in accordance with the terms of the Plan. The Option is not intended to be an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

          2.          Exercise Price.

          The per share purchase price of the shares subject to the Option shall be the purchase price per share set forth in the attached Notice.

          3.          Term of Option and Exercisability.

          The term of the Option shall be for a period of eight years from the Grant Date, terminating at the close of business on the expiration date set forth in the attached Notice (the “Expiration Date”) or such shorter period as is prescribed in Section 5 of this Agreement. The Option shall become exercisable, or vest, on the date or dates and in the amount or amounts set forth in the attached Notice, subject to the provisions of Section 4 and Section 5 of this Agreement. To the extent the Option is exercisable, you may exercise it in whole or in part, at any time, or from time to time, prior to the termination of the Option.

          4.          Change of Control.

          Notwithstanding the vesting provisions contained in Section 3 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change of Control (as defined below) the Option shall become immediately exercisable in full. As used herein, “Change of Control” shall mean any of the following events:

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          (a)          the acquisition by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or any of its Affiliates, or any employee benefit plan of the Company and/or one or more of it Affiliates, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as defined below); or

          (b)          individuals who, as of the Grant Date, constitute the Board of Directors of the Company (generally the “Directors” and as of the Grant Date the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the Grant Date whose nomination for election was approved in advance by a vote of at least three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

          (c)          the consummation of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors; or

          (d)          the first purchase under any tender offer or exchange offer (other than an offer by the Company or any of its Affiliates) pursuant to which shares of Common Stock are purchased; or

          (e)          at least a majority of the Continuing Directors determines in their sole discretion that there has been a change in control of the Company.

          5.           Effect of Termination of Board Service.

          (a)          If your employment terminates by reason of your death, the Option may be exercised at any time within 12 months after the date of your death, to the extent that the Option was exercisable by you on the date of death, by your personal representatives or administrators or by any person or persons to whom the Option has been transferred by will or the applicable laws of descent and distribution, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option.

          (b)          If your employment terminates by reason of Disability, you may exercise the Option at any time within 12 months after such termination, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option. For purposes of this Section 5, “Disability” means total and permanent disability as approved by the Committee administering the Plan.

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          (c)          If your employment terminates by reason of Early Retirement or Normal Retirement, you may exercise the Option at any time within 36 months after such termination, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option. For purposes of this Section 5, “Normal Retirement” means retirement on or after age 65 and “Early Retirement” means retirement with the consent of the Committee.

          (d)          If your employment terminates for Cause, the Option shall terminate immediately upon such termination and shall not be exercisable thereafter. For purposes of this Section 5, “Cause” refers to (i) the felony conviction of the employee, (ii) the failure of the employee to contest the prosecution of a felony, or (iii) the willful misconduct, dishonesty or intentional violation of a statute, rule or regulation by the employee, any of which in the judgment of the Company, is harmful to the business or reputation of the Company.

          (e)          If your employment is terminated for any reason other than your death, Disability, Normal Retirement or Early Retirement, or for Cause, you may exercise the Option at any time within 90 days after the date of such termination of employment, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option. However, if concurrently with the termination of your employment you become a consultant to the Company pursuant to a written consulting agreement, then you may continue to exercise the option at any time until 90 days after the date of termination of such consulting agreement, to the extent the Option was exercisable by you on the date of your termination of employment, subject to the condition that the Option will not be exercisable after the Expiration Date of the Option.

          6.           Method of Exercising Option.

          (a)          Subject to the terms and conditions of this Agreement, you may exercise your Option by following the procedures established by the Company from time to time. In addition, you may exercise your Option by written notice to the Company as provided in Section 9(h) of this Agreement that states (i) your election to exercise the Option, (ii) the Grant Date of the Option, (iii) the purchase price of the shares, (iv) the number of shares as to which the Option is being exercised, (v) the manner of payment and (vi) the manner of payment for any income tax withholding amount. The notice shall be signed by you or the Person or Persons exercising the Option. The notice shall be accompanied by payment in full of the exercise price for all shares designated in the notice. To the extent that the Option is exercised after your death, the notice of exercise shall also be accompanied by appropriate proof of the right of such Person or Persons to exercise the Option.

          (b)          Payment of the exercise price shall be made to the Company through one or a combination of the following methods:

              (i)          cash, in United States currency (including check, draft, money order or wire transfer made payable to the Company); or

              (ii)         delivery (either actual delivery or by attestation) of shares of Common Stock acquired by you more than six months prior to the date of exercise having a Fair Market Value on the date of exercise equal to the Option exercise price. You shall represent and warrant in writing that you are the owner of the shares so delivered, free and clear of all liens, encumbrances, security interests and restrictions, and you shall duly endorse in blank all certificates delivered to the Company.

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          7.           Taxes.

          (a)          You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of exercising the Option or any other matters related to this Agreement. In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you, if and to the extent required by applicable law.

          (b)          In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering the Plan, you may elect to satisfy any applicable tax withholding obligations arising from the exercise of the Option by (i) delivering cash (including check, draft, money order or wire transfer made payable to the order of the Company ), (ii) having the Company withhold a portion of the shares of Common Stock otherwise to be delivered upon exercise of the Option having a Fair Market Value equal to the amount of such taxes or (iii) delivering to the Company shares of Common Stock having a Fair Market Value equal to the amount of such taxes. The Company will not deliver any fractional share of Common Stock but will pay, in lieu thereof, the Fair Market Value of such fractional share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

          8.           Adjustments.

          In the event that any dividend or other distribution (whether in the form of cash, shares of Common Stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares or other securities of the Company, issuance of warrants or other rights to purchase shares or other securities of the Company or other similar corporate transaction or event affects the shares covered by the Option such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the attached Notice of Non-Qualified Stock Option Grant and this Agreement, then the Committee administering the Plan shall, in such manner as it may deem equitable, adjust any or all of the number and type of the shares covered by the Option and the exercise price of the Option.

          9.           General Provisions.

          (a)          Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all parties in interest.

5

          (b)          No Rights as a Shareholder. Neither you nor your legal representatives shall have any of the rights and privileges of a shareholder of the Company with respect to the shares of Common Stock subject to the Option unless and until such shares are issued upon exercise of the Option.

          (c)          No Right to Employment. Nothing in this Agreement or the Plan shall be construed as giving you the right to be retained as an employee of the Company. In addition, the Company may at any time dismiss you from employment, free from any liability or any claim under this Agreement, unless otherwise expressly provided in this Agreement.

          (d)          Option Not Transferable. Except as otherwise provided by the Plan or by the Committee administering the Plan, the Option shall not be transferable other than by will or by the laws of descent and distribution or to a family member in accordance with Section 6(h)(v) of the Plan and the Option shall be exercisable during your lifetime only by you or, if permissible under applicable law, by your guardian or legal representative. The Option may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Option shall be void and unenforceable against the Company.

          (e)          Securities Matters. The Company shall not be required to deliver any shares of Common Stock until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

          (f)          Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.

          (g)          Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota will govern all questions concerning the validity, construction and effect of this Agreement.

          (h)          Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the following address:

St. Jude Medical, Inc.
One St. Jude Medical Drive
St. Paul, MN 55117
Attn.: Stock Plan Administrator

          (i)          Notice of Non-Qualified Stock Option Grant. This Non-Qualified Stock Option Agreement is attached to and made part of a Notice of Non-Qualified Stock Option Grant and shall have no force or effect unless such Notice is duly executed and delivered by the Company to you.

* * * * * * * *

6

EX-10.5

EXHIBIT 10.5

NOTICE OF NON-QUALIFIED STOCK OPTION GRANT
(2007 STOCK INCENTIVE PLAN)

          This certifies that ___________________________ has an option to purchase ___________________ shares of common stock, par value $.10 per share, of St. Jude Medical, Inc., a Minnesota corporation.

	Social Security Number: ____________________
	Address: ______________________
	Grant Date: _____________________
	Purchase Price Per Share: $_______
	Expiration Date: ____________________
Exercisable Date: [insert vesting schedule, e.g., 25% exercisable on each of first four anniversaries of grant date]

          This stock option is governed by, and subject in all respects to, the terms and conditions of the St. Jude Medical, Inc. 2007 Stock Incentive Plan Non-Qualified Stock Option Agreement, a copy of which is attached to and made a part of this document, and the St. Jude Medical, Inc. 2007 Stock Incentive Plan, a copy of which is available upon request. This Notice of Non-Qualified Stock Option Grant has been duly executed, by manual or facsimile signature, on behalf of St. Jude Medical, Inc.

ST. JUDE MEDICAL, INC.

By:

Name:

Title:

ST. JUDE MEDICAL, INC.
2007 STOCK INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT FOR
NON-EMPLOYEE DIRECTORS

          This Non-Qualified Stock Option Agreement is between St. Jude Medical, Inc., a Minnesota corporation (the “Company”), and you, the person named in the attached Notice of Non-Qualified Stock Option Grant (the “Notice”). This Agreement is effective as of the date of grant set forth in the attached Notice (the “Grant Date”).

          The Company desires to provide you with an opportunity to purchase shares of the Company’s Common Stock, $.10 par value (the “Common Stock”), as provided in this Agreement in order to carry out the purpose of the St. Jude Medical, Inc. 2007 Stock Incentive Plan, as amended from time to time (the “Plan”).

          Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and you hereby agree as follows:

          1.          Grant of Option.

          The Company hereby grants to you, effective as of the Grant Date, the right and option (the “Option”) to purchase all or any part of the aggregate number of shares of Common Stock set forth in the attached Notice, on the terms and conditions contained in this Agreement and in accordance with the terms of the Plan. The Option is not intended to be an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

          2.          Exercise Price.

          The per share purchase price of the shares subject to the Option shall be the purchase price per share set forth in the attached Notice.

          3.          Term of Option and Exercisability.

          The term of the Option shall be for a period of eight years from the Grant Date, terminating at the close of business on the expiration date set forth in the attached Notice (the “Expiration Date”) or such shorter period as is prescribed in Section 5 of this Agreement. The Option shall become exercisable, or vest, on the date or dates and in the amount or amounts set forth in the attached Notice, subject to the provisions of Section 4 and Section 5 of this Agreement. To the extent the Option is exercisable, you may exercise it in whole or in part, at any time, or from time to time, prior to the termination of the Option.

          4.          Change of Control.

          Notwithstanding the vesting provisions contained in Section 3 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change of Control (as defined below) the Option shall become immediately exercisable in full. As used herein, “Change of Control” shall mean any of the following events:

2

          (a)          the acquisition by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or any of its Affiliates, or any employee benefit plan of the Company and/or one or more of it Affiliates, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as defined below); or

          (b)          individuals who, as of the Grant Date, constitute the Board of Directors of the Company (generally the “Directors” and as of the Grant Date the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the Grant Date whose nomination for election was approved in advance by a vote of at least three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

          (c)          the consummation of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors; or

          (d)          the first purchase under any tender offer or exchange offer (other than an offer by the Company or any of its Affiliates) pursuant to which shares of Common Stock are purchased; or

          (e)          at least a majority of the Continuing Directors determines in their sole discretion that there has been a change in control of the Company.

          5.           Effect of Termination of Board Service.

          (a)          If your board service terminates by reason of your death, the Option may be exercised at any time within 12 months after the date of your death, to the extent that the Option was exercisable by you on the date of death, by your personal representatives or administrators or by any person or persons to whom the Option has been transferred by will or the applicable laws of descent and distribution, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option.

          (b)          If your board service terminates by reason of Disability, you may exercise the Option at any time within 12 months after such termination, to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option. For purposes of this Section 5, “Disability” means total and permanent disability as approved by the Committee administering the Plan.

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          (c)          If your board service terminates for Cause, the Option shall terminate immediately upon such termination and shall not be exercisable thereafter. For purposes of this Section 5, “Cause” refers to (i) the felony conviction of the director, (ii) the failure of the director to contest the prosecution of a felony, or (iii) the willful misconduct, dishonesty or intentional violation of a statute, rule or regulation by the director, any of which in the judgment of the Company, is harmful to the business or reputation of the Company.

          (d)          If your board service terminates for any reason other than your death, Disability or for Cause, you may exercise the Option after the date of such termination of service in accordance with its terms to the extent that the Option was exercisable by you on the date of such termination, subject to the condition that the Option shall not be exercisable after the Expiration Date of the Option.

           6.          Method of Exercising Option.

          (a)          Subject to the terms and conditions of this Agreement, you may exercise your Option by following the procedures established by the Company from time to time. In addition, you may exercise your Option by written notice to the Company as provided in Section 9(h) of this Agreement that states (i) your election to exercise the Option, (ii) the Grant Date of the Option, (iii) the purchase price of the shares, (iv) the number of shares as to which the Option is being exercised and (v) the manner of payment. The notice shall be signed by you or the Person or Persons exercising the Option. The notice shall be accompanied by payment in full of the exercise price for all shares designated in the notice. To the extent that the Option is exercised after your death, the notice of exercise shall also be accompanied by appropriate proof of the right of such Person or Persons to exercise the Option.

          (b)          Payment of the exercise price shall be made to the Company through one or a combination of the following methods:

             (i)          cash, in United States currency (including check, draft, money order or wire transfer made payable to the Company); or

             (ii)         delivery (either actual delivery or by attestation) of shares of Common Stock acquired by you more than six months prior to the date of exercise having a Fair Market Value on the date of exercise equal to the Option exercise price. You shall represent and warrant in writing that you are the owner of the shares so delivered, free and clear of all liens, encumbrances, security interests and restrictions, and you shall duly endorse in blank all certificates delivered to the Company.

          7.          Taxes.

          You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of exercising the Option or any other matters related to this Agreement. In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you, if and to the extent required by applicable law.

4

          8.           Adjustments.

          In the event that any dividend or other distribution (whether in the form of cash, shares of Common Stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares or other securities of the Company, issuance of warrants or other rights to purchase shares or other securities of the Company or other similar corporate transaction or event affects the shares covered by the Option such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the attached Notice of Non-Qualified Stock Option Grant and this Agreement, then the Committee administering the Plan shall, in such manner as it may deem equitable, adjust any or all of the number and type of the shares covered by the Option and the exercise price of the Option.

          9.           General Provisions.

          (a)          Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all parties in interest.

          (b)          No Rights as a Shareholder. Neither you nor your legal representatives shall have any of the rights and privileges of a shareholder of the Company with respect to the shares of Common Stock subject to the Option unless and until such shares are issued upon exercise of the Option.

          (c)          No Right to Board Service. Nothing in this Agreement or the Plan shall be construed as giving you the right to continue to serve on the Company’s Board of Directors.

          (d)          Option Not Transferable. Except as otherwise provided by the Plan or by the Committee administering the Plan, the Option shall not be transferable other than by will or by the laws of descent and distribution or to a family member in accordance with Section 6(h)(v) of the Plan and the Option shall be exercisable during your lifetime only by you or, if permissible under applicable law, by your guardian or legal representative. The Option may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Option shall be void and unenforceable against the Company.

          (e)          Securities Matters. The Company shall not be required to deliver any shares of Common Stock until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

5

          (f)          Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.

          (g)          Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota will govern all questions concerning the validity, construction and effect of this Agreement.

          (h)          Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the following address:

St. Jude Medical, Inc.

One St. Jude Medical Drive

St. Paul, MN 55117

Attn.: Stock Plan Administrator

          (i)          Notice of Non-Qualified Stock Option Grant. This Non-Qualified Stock Option Agreement is attached to and made part of a Notice of Non-Qualified Stock Option Grant and shall have no force or effect unless such Notice is duly executed and delivered by the Company to you.

* * * * * * * *

6

EX-10.6

EXHIBIT 10.6

ST. JUDE MEDICAL, INC. 2007 STOCK INCENTIVE PLAN

AWARD CERTIFICATE

Restricted Stock Award

This certifies that [name]

is granted a Restricted Stock Award for **[number]* shares of Common Stock,

$.10 par value, of St. Jude Medical, Inc., a Minnesota corporation.

Social Security Number:		_____________________________
Address:		_____________________________
Grant Date:		, 20___
Expiration Date of Restricted Period:		[____] [vesting schedule]
	This Restricted Stock Award is governed by, and subject in all respects to, the terms and conditions of the Restricted Stock Award Agreement, a copy of which is attached to and made a part of this document, and the St. Jude Medical, Inc. 2007 Stock Incentive Plan, a copy of which is available upon request. This Award Certificate has been duly executed, by manual or facsimile signature, on behalf of St. Jude Medical, Inc.

     ST. JUDE MEDICAL, INC.

By:

Name:

Title:

ST. JUDE MEDICAL, INC.
2007 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

          This Restricted Stock Award Agreement is between St. Jude Medical, Inc., a Minnesota corporation (the “Company”), and you, the person named in the attached Restricted Stock Award Certificate (the “Award Certificate”), who is an employee or a director of the Company. This Agreement is effective as of the date of grant set forth in the attached Award Certificate (the “Grant Date”).

          The Company wishes to award to you a number of shares of the Company’s Common Stock, $.10 par value (the “Common Stock”), subject to certain restrictions as provided in this Agreement, in order to carry out the purpose of the St. Jude Medical, Inc. 2007 Stock Incentive Plan (the “Plan”).

          Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and you hereby agree as follows:

          1.          Award of Restricted Stock.

          The Company hereby grants to you, effective as of the Grant Date, an Award of Restricted Stock for that number of shares of Common Stock set forth in the attached Award Certificate (the “Shares”), on the terms and conditions set forth in this Agreement and the Award Certificate and in accordance with the terms of the Plan.

          2.          Rights with Respect to the Shares.

          With respect to the Shares, you shall be entitled to exercise the rights of a shareholder of Common Stock of the Company, including the right to vote the Shares and the right to receive cash dividends thereon as provided in Section 8 of this Agreement, unless and until the Shares are forfeited pursuant to Section 5 hereof. Your rights with respect to the Shares shall remain forfeitable at all times prior to the date or dates on which such rights become vested, and the restrictions with respect to the Shares lapse, in accordance with Section 3, Section 4 or Section 5 hereof.

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          3.          Vesting.

          Subject to the terms and conditions of this Agreement, the Shares shall vest, and the restrictions with respect to the Shares shall lapse, on the date or dates and in the amount or amounts set forth in the attached Award Certificate if you remain continuously employed by the Company or if you continuously serve on the Company’s Board of Directors until the respective vesting dates.

          4.          Change of Control.

          Notwithstanding the vesting provisions contained in Section 3 above, but subject to the other terms and conditions in this Agreement, upon the occurrence of a Change of Control (as defined below) you shall become immediately and unconditionally vested in all Shares and the restrictions with respect to all of the Shares shall lapse. For purposes of this Agreement, “Change of Control” shall mean any of the following events:

          (a)         the acquisition by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or any of its Affiliates, or any employee benefit plan of the Company and/or one or more of its Affiliates, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as defined below); or

          (b)         individuals who, as of the Grant Date, constitute the Board of Directors of the Company (generally the “Directors” and as of the Grant Date the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the Grant Date whose nomination for election was approved in advance by a vote of at lease three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

          (c)         the consummation of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors; or

          (d)         the first purchase under any tender offer or exchange offer (other than an offer by the Company or any of its Affiliates) pursuant to which shares of Common Stock are purchased; or

3

          (e)         at least a majority of the Continuing Directors determines in their sole discretion that there has been a change in control of the Company.

          5.          Early Vesting; Forfeiture.

          If your employment terminates or if you resign or are removed from or otherwise cease to serve on, the Company’s Board of Directors prior to the vesting of the Shares pursuant to Section 3 or Section 4 hereof, your rights to all of the unvested Shares shall be immediately and irrevocably forfeited, including the right to vote such Shares and the right to receive cash dividends on such Shares, unless otherwise determined by the Committee administering the Plan, except that if you die, become Disabled, or in the case of an employee, terminate employment by reason of Normal Retirement or Early Retirement prior to the vesting or forfeiture of all Shares pursuant to Section 3 or Section 4 hereof, you shall become immediately and unconditionally vested in all of the Shares for which vesting has occurred as a result of such event in accordance with the terms of the Award Certificate and your rights to all of the unvested Shares shall be immediately and irrevocably forfeited pursuant to the terms of this Agreement and the attached Award Certificate, and the restrictions with respect to all such vested Shares shall lapse, on the date of your death, that you become Disabled or you terminate employment by reason of Normal Retirement or Early Retirement. For purposes of this Section 5, “Disabled” refers to a permanent and total disability as approved by the Committee, “Normal Retirement” means the retirement of an employee on or after age 65 and “Early Retirement” means the retirement of an employee with the consent of the Committee. No transfer by will or the applicable laws of descent and distribution of any Shares which vest by reason of your death shall be effective to bind the Company unless the Committee administering the Plan shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.

          6.          Restriction on Transfer.

          Until the Shares vest pursuant to Section 3, Section 4 or Section 5 hereof, none of the Shares may be sold, assigned, transferred, pledged, attached or otherwise encumbered, and no attempt to transfer the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Shares.

          7.          Issuance and Custody of Certificates.

          (a)         The Company shall cause the Shares to be issued in your name, either by book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company. The Shares shall be restricted from transfer and shall be subject to an appropriate stop-transfer order. If any certificate is issued, the certificate shall bear an appropriate legend referring to the restrictions applicable to the Shares.

          (b)         If any certificate is issued, you shall be required to execute and deliver to the Company a stock power or stock powers relating to the Shares as a condition to the receipt of this Award of Restricted Stock.

          (c)         After any Shares vest pursuant to Section 3, Section 4 or Section 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 9 hereof, the Company shall promptly cause such vested Shares (less any Shares withheld to pay taxes), free of the restrictions and/or legend described in Section 7(a) hereof, to be delivered, either by book-entry registration or in the form of a certificate or certificates, registered in your name or in the names of your legal representatives, beneficiaries or heirs, as the case may be.

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          8.          Distributions and Adjustments.

          (a)         If any Shares vest subsequent to any change in the number or character of the Common Stock of the Company (through any stock dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation split-up, spin-off, combination, repurchase or exchange of shares or otherwise), you shall then receive upon such vesting the number and type of securities or other consideration which you would have received if such Shares had vested prior to the event changing the number or character of the outstanding Common Stock.

          (b)         Any additional shares of Common Stock of the Company, any other securities of the Company and any other property (except for cash dividends or other cash distributions) distributed with respect to the Shares prior to the date or dates the Shares vest shall be subject to the same restrictions, terms and conditions as the Shares to which they relate and shall be promptly deposited with the Secretary of the Company or a custodian designated by the Secretary.

          (c)         Any cash dividends or other cash distributions payable with respect to the Shares shall be distributed to you at the same time cash dividends or other cash distributions are distributed to shareholders of the Company generally.

          9.          Taxes.

          (a)         You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the grant of the Shares, payment of dividends on the Shares, the vesting of the Shares and any other matters related to this Agreement. In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.

          (b)         In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering the Plan, you may elect to satisfy any applicable tax withholding obligations arising from the receipt of, or the lapse of restrictions relating to, the Shares by (i) delivering cash (including check, draft, money order or wire transfer made payable to the order of the Company), (ii) having the Company withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Company shares of Common Stock having a Fair Market Value equal to the amount of such taxes. The Company will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

5

          10.         General Provisions.

          (a)          Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all parties in interest.

          (b)          No Right to Employment or Board Service. Nothing in this Agreement or the Plan shall be construed as giving you the right to be retained as an employee of the Company or to continue to serve on the Company’s Board of Directors. In addition, the Company may at any time dismiss you from employment, free from any liability or any claim under this Agreement, unless otherwise expressly provided in this Agreement.

          (c)          Securities Matters. The Company shall not be required to deliver any Shares until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

          (d)          Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.

          (e)          Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota will govern all questions concerning the validity, construction and effect of this Agreement.

          (f)          Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the following address:

St. Jude Medical, Inc.

One Lillehei Plaza

St. Paul, MN 55117

Attn.: Stock Plan Administrator

          (g)          Award Certificate. This Restricted Stock Award Agreement is attached to and made part of an Award Certificate and shall have no force or effect unless such Award Certificate is duly executed and delivered by the Company to you.

* * * * * * * *

6

EX-10.7

EXHIBIT 10.7

ST. JUDE MEDICAL, INC. 2007 STOCK INCENTIVE PLAN
AWARD CERTIFICATE

Restricted Stock Units Award

This certifies that   [name]

is granted an Award of **[number]* Restricted Stock Units,
representing the opportunity to earn shares of Common Stock, $.10 par value,
of St. Jude Medical, Inc., a Minnesota corporation, on the dates and in the amounts
set forth in the attached Restricted Stock Units Award Agreement.

Social Security Number:	_________________________
Address:	_________________________
Grant Date:	_________________, 20 ____
Expiration Date of Restricted Period:	_________________________
Vesting:	[          vesting schedule           ]

This Restricted Stock Units Award is governed by, and subject in all respects to, the terms and conditions of the Restricted Stock Units Award Agreement, a copy of which is attached to and made a part of this document, and the St. Jude Medical, Inc. 2007 Stock Incentive Plan, a copy of which is available upon request. This Award Certificate has been duly executed, by manual or facsimile signature, on behalf of St. Jude Medical, Inc.

ST. JUDE MEDICAL, INC.

By:

Name:

Title:

ST. JUDE MEDICAL, INC.
2007 STOCK INCENTIVE PLAN

RESTRICTED STOCK UNITS AWARD AGREEMENT
(UNITED STATES)

          This Restricted Stock Units Award Agreement is between St. Jude Medical, Inc., a Minnesota corporation (the “Company”), and you, the person named in the attached Award Certificate who is an employee of the Company. This Agreement is effective as of the date of grant set forth in the attached Award Certificate (the “Grant Date”).

          The Company wishes to award to you Restricted Stock Units representing the opportunity to earn shares of the Company’s Common Stock, $.10 par value (the “Common Stock”), subject to the terms and conditions set forth in this Agreement, in order to carry out the purpose of the St. Jude Medical, Inc. 2007 Stock Incentive Plan (the “Plan”).

          Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and you hereby agree as follows:

          1.           Award of Restricted Stock Units.

          The Company hereby grants to you, effective as of the Grant Date, an Award of Restricted Stock Units for that number of Units set forth in the attached Award Certificate (the “Restricted Stock Units”), on the terms and conditions set forth in this Agreement and the Award Certificate and in accordance with the terms of the Plan.

          2.           Rights with Respect to the Restricted Stock Units.

          The Restricted Stock Units granted pursuant to the attached Award Certificate and this Agreement do not and shall not give you any of the rights and privileges of a shareholder of Common Stock. Your rights with respect to the Restricted Stock Units shall remain forfeitable at all times prior to the date or dates on which such rights become vested, and the restrictions with respect to the Restricted Stock Units lapse, in accordance with Section 3 or Section 4 hereof.

          3.           Vesting.

          Subject to the terms and conditions of this Agreement, the Restricted Stock Units shall vest, and the restrictions with respect to the Restricted Stock Units shall lapse, on the date or dates and in the amount or amounts set forth in the attached Award Certificate if you remain continuously employed by the Company until the respective vesting dates.

          4.           Change of Control.

          Notwithstanding the vesting provisions contained in Section 3 above, but subject to the other terms and conditions in this Agreement, upon the occurrence of a Change of Control (as defined below) you shall become immediately and unconditionally vested in all Restricted Stock Units for which vesting or forfeiture has not yet occurred pursuant to the terms of this Agreement and the attached Award Certificate, and the restrictions with respect to all such Restricted Stock Units shall lapse. For purposes of this Agreement, “Change of Control” shall mean any of the following events:

2

          (a)          the acquisition by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or any of its Affiliates, or any employee benefit plan of the Company and/or one or more of it Affiliates, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as defined below); or

          (b)          individuals who, as of the Grant Date, constitute the Board of Directors of the Company (generally the “Directors” and as of the Grant Date the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the Grant Date whose nomination for election was approved in advance by a vote of at lease three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

          (c)          the consummation of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors; or

          (d)          the first purchase under any tender offer or exchange offer (other than an offer by the Company or any of its Affiliates) pursuant to which shares of Common Stock are purchased; or

          (e)          at least a majority of the Continuing Directors determines in their sole discretion that there has been a change in control of the Company.

          5.           Forfeiture.

          If your employment terminates prior to the vesting of the Restricted Stock Units pursuant to Section 3 or Section 4 hereof, your rights to all of the unvested Restricted Stock Units shall be immediately and irrevocably forfeited unless otherwise determined by the Committee administering the Plan.

3

          6.           Restriction on Transfer.

          None of the Restricted Stock Units may be sold, assigned, transferred, pledged, attached or otherwise encumbered, and no attempt to transfer the Restricted Stock Units, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Restricted Stock Units.

          7.           Payment of Restricted Stock Units; Issuance of Common Stock.

          No shares of Common Stock shall be issued to you prior to the date on which the applicable Restricted Stock Units vest in accordance with the terms and conditions of the attached Award Certificate and this Agreement. After any Restricted Stock Units vest pursuant to Section 3 or Section 4 hereof, the Company shall promptly cause to be issued in your name one share of Common Stock for each vested Restricted Stock Unit. Following payment of the applicable withholding taxes pursuant to Section 9 hereof, the Company shall promptly cause the shares of Common Stock (less any shares withheld to pay taxes) to be delivered, either by book-entry registration or in the form of a certificate or certificates, registered in your name or in the names of your legal representatives, beneficiaries or heirs, as the case may be. The Company will not deliver any fractional share of Common Stock but will pay, in lieu thereof, the Fair Market Value of such fractional share of Common Stock.

          8.           Adjustments.

          If any Restricted Stock Units vest subsequent to any change in the number or character of the Common Stock of the Company (through any stock dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares or otherwise), you shall then receive upon such vesting the number and type of securities or other consideration which you would have received if such Restricted Stock Units had vested prior to the event changing the number or character of the outstanding Common Stock.

          9.           Taxes.

          (a)          You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the grant of the Restricted Stock Units, the vesting of the Restricted Stock Units and the receipt of shares of Common Stock, and any other matters related to this Agreement. In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.

          (b)          In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering the Plan, you may elect to satisfy any applicable tax withholding obligations arising from the vesting of the Restricted Stock Units and the corresponding receipt of shares of Common Stock by (i) delivering cash (including check, draft, money order or wire transfer made payable to the order of the Company), (ii) having the Company withhold a portion of the shares of Common Stock otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Company shares of Common Stock having a Fair Market Value equal to the amount of such taxes. The Company will not deliver any fractional share of Common Stock but will pay, in lieu thereof, the Fair Market Value of such fractional share of Common Stock. Your election must be made on or before the date that the amount of tax to be withheld is determined.

4

          10.          Section 409A Provisions. The payment of shares of Common Stock under this Agreement are intended to be exempt from the application of section 409A of the Code (“Section 409A”) by reason of the short-term deferral exemption set forth in Treasury Regulation §1.409A-1(b)(4). Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that any shares of Common Stock payable hereunder constitute “deferred compensation” under Section 409A and such shares are payable by reason of the occurrence of a Change of Control, such amount will not be payable by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such Change of Control meet the definition of a change in ownership or control, disability or separation from service, as the case may be, in Section 409A, or (ii) the payment would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. Any payment of shares that constitutes “deferred compensation” under Section 409A and becomes payable to you on account of your separation from service may not be made before the date which is six months after the date of your separation from service (or if earlier, upon your death) if you are a specified employee as defined in Section 409A(a)(2)(B) of the Code and the payment is not exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise.

          11.           General Provisions.

          (a)           Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all parties in interest.

          (b)           No Right to Employment. Nothing in this Agreement or the Plan shall be construed as giving you the right to be retained as an employee of the Company. In addition, the Company may at any time dismiss you from employment, free from any liability or any claim under this Agreement, unless otherwise expressly provided in this Agreement.

          (c)           Reservation of Shares. The Company shall at all times prior to the vesting of the Restricted Stock Units reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement.

          (d)           Securities Matters. The Company shall not be required to deliver any shares of Common Stock until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

5

          (e)          Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.

          (f)          Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota will govern all questions concerning the validity, construction and effect of this Agreement.

          (g)          Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the following address:

St. Jude Medical, Inc.

One St. Jude Medical Drive

St. Paul, MN 55117

Attn.: Stock Plan Administrator

          (h)          Award Certificate. This Restricted Stock Units Award Agreement is attached to and made part of an Award Certificate and shall have no force or effect unless such Award Certificate is duly executed and delivered by the Company to you.

* * * * * * * *

6

EX-12

EXHIBIT 12

ST. JUDE MEDICAL, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(amounts in thousands of dollars)

	Six Months Ended July 2, 2011
			FISCAL YEAR
			2010		2009		2008		2007		2006
EARNINGS
Earnings before income taxes	$	595,637	$	1,208,803	$	1,057,393	$	580,768	$	710,276	$	706,063
Plus fixed charges:
Interest expense (1)		34,761		67,372		45,603		72,554		72,258		48,461
Rent interest factor (2)		6,057		12,113		11,183		9,527		9,144		8,190
TOTAL FIXED CHARGES		40,818		79,485		56,786		82,081		81,402		56,651
EARNINGS BEFORE INCOME TAXES AND FIXED CHARGES	$	636,455	$	1,288,288	$	1,114,179	$	662,849	$	791,678	$	762,714
RATIO OF EARNINGS TO FIXED CHARGES		15.6		16.2		19.6		8.1		9.7		13.5

(1) Interest expense consists of interest on indebtedness and amortization of debt issuance costs.

(2) Approximately one-third of rental expense is deemed representative of the interest factor.

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel J. Starks, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of St. Jude Medical, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2011

/s/ DANIEL J. STARKS

Daniel J. Starks
Chairman, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, John C. Heinmiller, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of St. Jude Medical, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2011

/s/ JOHN C. HEINMILLER

John C. Heinmiller
Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of St. Jude Medical, Inc. (the Company) on Form 10-Q for the period ended July 2, 2011 as filed with the Securities and Exchange Commission (the Report), I, Daniel J. Starks, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DANIEL J. STARKS

Daniel J. Starks
Chairman, President and Chief
Executive Officer
August 10, 2011

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of St. Jude Medical, Inc. (the Company) on Form 10-Q for the period ended July 2, 2011 as filed with the Securities and Exchange Commission (the Report), I, John C. Heinmiller, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JOHN C. HEINMILLER

John C. Heinmiller
Executive Vice President and
Chief Financial Officer
August 10, 2011

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Condensed Consolidated Balance Sheets (USD $) In Thousands	Jul. 02, 2011	Jan. 01, 2011
ASSETS
Cash and cash equivalents	$ 832,817	$ 500,336
Accounts receivable, less allowance for doubtful accounts of $39,101 at July 2, 2011 and $35,354 at January 1, 2011	1,443,614	1,331,210
Inventories	699,163	667,545
Deferred income taxes, net	204,207	196,599
Other current assets	178,715	216,458
Total current assets	3,358,516	2,912,148
Property, plant and equipment, at cost	2,393,776	2,224,349
Less accumulated depreciation	(1,009,260)	(900,418)
Net property, plant and equipment	1,384,516	1,323,931
Goodwill	2,979,493	2,955,602
Other intangible assets, net	945,393	987,060
Other assets	427,479	387,707
TOTAL ASSETS	9,095,397	8,566,448
LIABILITIES AND SHAREHOLDERS' EQUITY
Current debt obligations	80,465	79,637
Accounts payable	166,080	297,551
Dividends payable	69,136
Accrued expenses
Employee compensation and related benefits	322,836	320,323
Other	367,805	319,739
Total current liabilities	1,006,322	1,017,250
Long-term debt	2,486,016	2,431,966
Deferred income taxes, net	303,313	310,503
Other liabilities	464,064	435,058
Total liabilities	4,259,715	4,194,777
Commitments and Contingencies (Note 6)
Shareholders' Equity
Preferred stock ($1.00 par value; 25,000,000 shares authorized; none outstanding)
Common stock ($0.10 par value; 500,000,000 shares authorized; 329,217,266 and 329,018,166 shares issued and outstanding at July 2, 2011 and January 1, 2011, respectively)	32,922	32,902
Additional paid-in capital	275,521	156,126
Retained earnings	4,333,840	4,098,639
Accumulated other comprehensive income (loss):
Cumulative translation adjustment	177,575	68,897
Unrealized gain on available-for-sale securities	15,824	15,107
Total shareholders' equity	4,835,682	4,371,671
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 9,095,397	$ 8,566,448

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data	Jul. 02, 2011	Jan. 01, 2011
Condensed Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts	$ 39,101	$ 35,354
Preferred stock, par value	$ 1	$ 1
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.1	$ 0.1
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	329,217,266	329,018,166
Common stock, shares outstanding	329,217,266	329,018,166

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Commitments And Contingencies (Tables)

6 Months Ended

Jul. 02, 2011

Commitments And Contingencies

Schedule Of Silzone Legal Accrual And Insurance Receivable

	July 2, 2011		January 1, 2011
Silzone legal accrual	$	23,832	$	24,032
Silzone insurance receivable	$	14,700	$	12,799

Product Warranty Liability

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Balance at beginning of period	$	26,941		$	21,157		$	25,127		$	19,911
Warranty expense recognized		3,282			1,645			5,668			3,382
Warranty credits issued		(1,255	)		(589	)		(1,827	)		(1,080	)
Balance at end of period	$	28,968		$	22,213		$	28,968		$	22,213

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Document And Entity Information	6 Months Ended
	Jul. 02, 2011	Aug. 01, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 02, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Entity Registrant Name	ST JUDE MEDICAL INC
Entity Central Index Key	0000203077
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		329,503,297

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Other Income (Expense), Net (Tables)

6 Months Ended

Jul. 02, 2011

Other Income (Expense), Net

Schedule Of Other Income (Expense)

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Interest income	$	606		$	471		$	1,945		$	722
Interest expense		(17,194	)		(15,430	)		(34,761	)		(35,585	)
Other		(8,425	)		(5,271	)		(18,649	)		(5,683	)
Total other income (expense), net	$	(25,013	)	$	(20,230	)	$	(51,465	)	$	(40,546	)

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Purchased In-Process Research and Development (IPR&D) And Special Charges

6 Months Ended

Jul. 02, 2011

Purchased In-Process Research and Development (IPR&D) And Special Charges

Purchased In-Process Research and Development (IPR&D) And Special Charges

NOTE 7 – PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT (IPR&D) AND SPECIAL CHARGES

IPR&D Charges

During the second quarter of 2011, the Company recorded IPR&D charges of $4.4 million in conjunction with the purchase of intellectual property in its CRM segment since the related technological feasibility had not yet been reached and such technology had no future alternative use.

Special Charges

The Company incurred special charges totaling $43.2 million primarily related to restructuring actions initiated during the second quarter of 2011 to realign certain activities in the Company's CRM business. A key component of these restructuring activities related to the Company's decision to transition CRM manufacturing out of Sweden to more cost-advantaged locations. As part of these actions, the Company recorded $21.5 million related to severance and benefit costs for approximately 335 employees. These costs were recognized after management determined that such severance and benefits were probable and estimable, in accordance with Accounting Standards Codification (ASC) Topic 712, Nonretirement Postemployment Benefits. The Company also recorded a $12.0 million impairment charge to write-down its CRM manufacturing facility in Sweden to its fair value. The impairment charge was recognized in accordance with ASC Topic 360, Property, Plant and Equipment after it was determined that its remaining undiscounted future cash flows did not exceed its carrying value. The Company also recorded charges of $9.7 million associated with contract terminations, inventory obsolescence charges and other costs.

As part of the Company's decision to transition CRM manufacturing out of Sweden, the Company expects to incur additional costs of approximately $60 - $80 million over the next several quarters related to additional employee termination costs, accelerated depreciation and other restructuring related costs. The Company expects to fully transition its manufacturing operations out of Sweden by the end of fiscal year 2012.

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Fair Value Measurements And Financial Instruments (Tables)

6 Months Ended

Jul. 02, 2011

Fair Value Measurements And Financial Instruments

Financial Assets Measured At Fair Value On A Recurring Basis

	Balance Sheet Classification	July 2, 2011		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money-market securities	Cash and cash equivalents	$	594,794	$	594,794	$	—	$	—
Trading marketable securities	Other assets		223,014		223,014		—		—
Available-for-sale marketable securities	Other current assets		34,984		34,984		—		—
Total assets		$	852,792	$	852,792	$	—	$	—
Liabilities
Interest rate swap	Other liabilities	$	2,257	$	—	$	2,257	$	—
Total liabilities		$	2,257	$	—	$	2,257	$	—

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Other Income (Expense), Net (Details) (USD $)	3 Months Ended		6 Months Ended
	Jul. 02, 2011	Jul. 03, 2010	Jul. 02, 2011	Jul. 03, 2010
Other Income (Expense), Net
Interest income	$ 606,000	$ 471,000	$ 1,945,000	$ 722,000
Interest expense	(17,194,000)	(15,430,000)	(34,761,000)	(35,585,000)
Other	(8,425,000)	(5,271,000)	(18,649,000)	(5,683,000)
Total other income (expense), net	(25,013,000)	(20,230,000)	(51,465,000)	(40,546,000)
Puerto Rico excise tax for intercompany purchases			4.00%
Puerto Rico excise tax expense	$ 7,900,000		$ 15,200,000

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Comprehensive Income (Tables)

6 Months Ended

Jul. 02, 2011

Comprehensive Income

Schedule Of Comprehensive Income (Loss), Net Of Tax

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011		July 3, 2010
Net earnings	$	240,894		$	254,038		$	474,322	$	492,607
Other comprehensive income (loss):
Cumulative translation adjustment		21,616			(65,380	)		108,678		(117,758	)
Unrealized gain (loss) on available-for-sale securities		(1,163	)		2,639			717		2,584
Total comprehensive income	$	261,347		$	191,297		$	583,717	$	377,433

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Fair Value Measurements And Financial Instruments

6 Months Ended

Jul. 02, 2011

Fair Value Measurements And Financial Instruments

Fair Value Measurements And Financial Instruments

NOTE 12 – FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The fair value measurement accounting standard, codified in ASC Topic 820, provides a framework for measuring fair value and defines fair value as the price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. The standard establishes a valuation hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on independent market data sources. Unobservable inputs are inputs that reflect the Company's assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available. The valuation hierarchy is composed of three categories. The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The categories within the valuation hierarchy are described as follows:

• Level 1 – Inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

• Level 3 – Inputs to the fair value measurement are unobservable inputs or valuation techniques.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The fair value measurement standard applies to certain financial assets and liabilities that are measured at fair value on a recurring basis (each reporting period). These financial assets and liabilities include money-market securities, trading marketable securities, available-for-sale marketable securities and derivative instruments. The Company continues to record these items at fair value on a recurring basis and the fair value measurements are applied using ASC Topic 820. The Company does not have any material nonfinancial assets or liabilities that are measured at fair value on a recurring basis. A summary of the valuation methodologies used for the respective financial assets and liabilities measured at fair value on a recurring basis is as follows:

Money-market securities: The Company's money-market securities include funds that are traded in active markets and are recorded at fair value based upon the quoted market prices. The Company classifies these securities as level 1.

Trading securities: The Company's trading securities include publicly-traded mutual funds that are traded in active markets and are recorded at fair value based upon the net asset values of the shares. The Company classifies these securities as level 1.

Available-for-sale securities: The Company's available-for-sale securities include publicly-traded equity securities that are traded in active markets and are recorded at fair value based upon the closing stock prices. The Company classifies these securities as level 1.

Derivative instruments: The Company's derivative instruments consist of foreign currency exchange contracts and interest rate swap contracts. The Company classifies these instruments as level 2 as the fair value is determined using inputs other than observable quoted market prices. These inputs include spot and forward foreign currency exchange rates and interest rates that the Company obtains from standard market data providers. The fair value of the Company's outstanding foreign currency exchange contracts was not material at July 2, 2011 or January 1, 2011.

A summary of financial assets measured at fair value on a recurring basis at July 2, 2011 and January 1, 2011 is as follows (in thousands):

	Balance Sheet Classification	July 2, 2011		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money-market securities	Cash and cash equivalents	$	594,794	$	594,794	$	—	$	—
Trading marketable securities	Other assets		223,014		223,014		—		—
Available-for-sale marketable securities	Other current assets		34,984		34,984		—		—
Total assets		$	852,792	$	852,792	$	—	$	—
Liabilities
Interest rate swap	Other liabilities	$	2,257	$	—	$	2,257	$	—
Total liabilities		$	2,257	$	—	$	2,257	$	—

	Balance Sheet Classification	January 1, 2011		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money-market securities	Cash and cash equivalents	$	364,418	$	364,418	$	—	$	—
Trading marketable securities	Other assets		190,438		190,438		—		—
Available-for-sale marketable securities	Other current assets		33,745		33,745		—		—
Total assets		$	588,601	$	588,601	$	—	$	—
Liabilities
Interest rate swap	Other liabilities	$	10,046	$	—	$	10,046	$	—
Total liabilities		$	10,046	$	—	$	10,046	$	—

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

The fair value measurement standard also applies to certain nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis. For example, certain long-lived assets such as goodwill, intangible assets and property, plant and equipment are measured at fair value in connection with business combinations or when an impairment is recognized and the related assets are written down to fair value. The Company did not make any material business combinations during the first six months of 2011 or 2010. Additionally, no material impairments of the Company's long-lived assets were recognized during the first three months or six months of 2010. During the second quarter of 2011, the Company initiated restructuring actions resulting in the planned future closure of its CRM manufacturing facility in Sweden, resulting in the recognition of a $12.0 million impairment charge to write-down the facility to its estimated fair value.

The Company also holds investments in equity securities that are accounted for as cost method investments, which are classified as other assets and measured at fair value on a nonrecurring basis. The carrying value of these investments approximated $126 million at July 2, 2011 and $124 million at January 1, 2011. The fair value of the Company's cost method investments is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of these investments. When measured on a nonrecurring basis, the Company's cost method investments are considered Level 3 in the fair value hierarchy, due to the use of unobservable inputs to measure fair value.

Fair Value Measurements of Other Financial Instruments

The aggregate fair value of the Company's fixed-rate debt obligations at July 2, 2011 (measured using quoted prices in active markets) was $2,490.8 million compared to the aggregate carrying value of $2,414.2 million (inclusive of unamortized debt discounts and interest rate swap fair value adjustments). The fair value of the Company's variable-rate debt obligations at July 2, 2011 approximated the aggregate $152.3 million carrying value due to the short-term, variable rate interest rate structure of these instruments.

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Goodwill And Other Intangible Assets

6 Months Ended

Jul. 02, 2011

Goodwill And Other Intangible Assets

Goodwill And Other Intangible Assets

NOTE 3 – GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for each of the Company's reportable segments (see Note 14) for the six months ended July 2, 2011 were as follows (in thousands):

	CRM/NMD		CV/AF		Total
Balance at January 1, 2011	$	1,231,120	$	1,724,482	$	2,955,602
Foreign currency translation and other		5,062		18,829		23,891
Balance at July 2, 2011	$	1,236,182	$	1,743,311	$	2,979,493

The following table provides the gross carrying amount of other intangible assets and related accumulated amortization (in thousands):

	July 2, 2011				January 1, 2011
		Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Definite-lived intangible assets:
Purchased technology and patents	$	913,974	$	245,210	$	910,035	$	208,362
Customer lists and relationships		184,871		110,080		184,327		100,608
Trademarks and tradenames		24,460		7,544		24,370		7,431
Licenses, distribution agreements and other		6,240		4,388		6,170		4,511
	$	1,129,545	$	367,222	$	1,124,902	$	320,912
Indefinite-lived intangible assets:
Acquired IPR&D	$	134,270			$	134,270
Trademarks and tradenames		48,800				48,800
	$	183,070			$	183,070

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Purchased In-Process Research and Development (IPR&D) And Special Charges (Details) (USD $)	3 Months Ended	6 Months Ended
	Jul. 02, 2011	Jul. 02, 2011
Research and Development in Process	$ (4,400,000)	$ (4,400,000)
Special charges	43,200,000
Severance and benefit costs	21,500,000
Severance and benefit costs, number of employees impacted	335
Impairment charge	12,000,000
Restructuring reserve period expense contract termination	9,700,000
Minimum [Member] | CRM/NMD [Member]
Severance and benefit costs		60,000,000
Maximum [Member] | CRM/NMD [Member]
Severance and benefit costs		$ 80,000,000

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Comprehensive Income

6 Months Ended

Jul. 02, 2011

Comprehensive Income

Comprehensive Income

NOTE 9 – COMPREHENSIVE INCOME

The table below sets forth the principal components in other comprehensive income (loss), net of the related income tax impact (in thousands):

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011		July 3, 2010
Net earnings	$	240,894		$	254,038		$	474,322	$	492,607
Other comprehensive income (loss):
Cumulative translation adjustment		21,616			(65,380	)		108,678		(117,758	)
Unrealized gain (loss) on available-for-sale securities		(1,163	)		2,639			717		2,584
Total comprehensive income	$	261,347		$	191,297		$	583,717	$	377,433

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Segment And Geographic Information

6 Months Ended

Jul. 02, 2011

Segment And Geographic Information

Segment And Geographic Information

NOTE 14 – SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

The Company's four operating segments are Cardiac Rhythm Management (CRM), Cardiovascular (CV), Atrial Fibrillation (AF), and Neuromodulation (NMD). The primary products produced by each operating segment are: CRM – ICDs and pacemakers; CV – vascular products, which include vascular closure products, pressure measurement guidewires, optical coherence tomography (OCT) imaging products, vascular plugs and other vascular accessories; and structural heart products, which include heart valve replacement and repair products and structural heart defect devices; AF – EP introducers and catheters, advanced cardiac mapping, navigation and recording systems and ablation systems; and NMD – neurostimulation products, which include spinal cord and deep brain stimulation devices.

The Company has aggregated the four operating segments into two reportable segments based upon their similar operational and economic characteristics: CRM/NMD and CV/AF. Net sales of the Company's reportable segments include end-customer revenues from the sale of products they each develop and manufacture or distribute. The costs included in each of the reportable segments' operating results include the direct costs of the products sold to customers and operating expenses managed by each of the reportable segments. Certain operating expenses managed by the Company's selling and corporate functions, including all stock-based compensation expense, impairment charges, certain acquisition-related charges IPR&D charges, excise tax expense and special charges have not been recorded in the individual reportable segments. As a result, reportable segment operating profit is not representative of the operating profit of the products in these reportable segments. Additionally, certain assets are managed by the Company's selling and corporate functions, principally including trade receivables, inventory, corporate cash and cash equivalents, certain marketable securities and deferred income taxes. For management reporting purposes, the Company does not compile capital expenditures by reportable segment; therefore, this information has not been presented as it is impracticable to do so.

The following table presents net sales and operating profit by reportable segment (in thousands):

	CRM/NMD		CV/AF		Other			Total
Three Months ended July 2, 2011:
Net sales	$	896,622	$	550,129	$	—		$	1,446,751
Operating profit		564,966		288,878		(528,760	)		325,084
Three Months ended July 3, 2010:
Net sales	$	882,835	$	429,934	$	—		$	1,312,769
Operating profit		556,653		244,397		(436,297	)		364,753
Six Months ended July 2, 2011:
Net sales	$	1,750,061	$	1,072,203	$	—		$	2,822,264
Operating profit		1,100,913		553,300		(1,007,111	)		647,102
Six Months ended July 3, 2010:
Net sales	$	1,718,866	$	855,599	$	—		$	2,574,465
Operating profit		1,080,590		488,111		(857,941	)		710,760

The following table presents the Company's total assets by reportable segment (in thousands):

Total Assets	July 2, 2011		January 1, 2011
CRM/NMD	$	2,418,948	$	2,150,359
CV/AF		3,139,034		3,097,190
Other		3,537,415		3,318,899
	$	9,095,397	$	8,566,448

Geographic Information

The following table presents net sales by geographic location of the customer (in thousands):

	Three Months Ended				Six Months Ended
Net Sales	July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010
United States	$	678,327	$	690,095	$	1,354,402	$	1,339,028
International
Europe		410,758		331,443		780,070		668,523
Japan		156,714		129,593		304,207		258,255
Asia Pacific		106,145		80,419		198,655		149,307
Other (a)		94,807		81,219		184,930		159,352
		768,424		622,674		1,467,862		1,235,437
	$	1,446,751	$	1,312,769	$	2,822,264	$	2,574,465

           (a) No one geographic market is greater than 5% of consolidated net sales.

The amounts for long-lived assets by significant geographic market include net property, plant and equipment by physical location of the asset as follows (in thousands):

Long-Lived Assets	July 2, 2011		January 1, 2011
United States	$	994,201	$	965,936
International
Europe		99,253		85,961
Japan		27,570		25,583
Asia Pacific		77,013		74,537
Other		186,479		171,914
		390,315		357,995
	$	1,384,516	$	1,323,931

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Other Income (Expense), Net

6 Months Ended

Jul. 02, 2011

Other Income (Expense), Net

Other Income (Expense), Net

NOTE 10 – OTHER INCOME (EXPENSE), NET

The Company's other income (expense) consisted of the following (in thousands):

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Interest income	$	606		$	471		$	1,945		$	722
Interest expense		(17,194	)		(15,430	)		(34,761	)		(35,585	)
Other		(8,425	)		(5,271	)		(18,649	)		(5,683	)
Total other income (expense), net	$	(25,013	)	$	(20,230	)	$	(51,465	)	$	(40,546	)

During 2011, legislation became effective in Puerto Rico that levied a 4% excise tax for most purchases from Puerto Rico. As the excise tax is not levied on income, the Company has classified the tax as other expense. The Company recognized $7.9 million and $15.2 million of excise tax expense in the second quarter and first six months of 2011, respectively, for purchases made from its Puerto Rico subsidiary. This tax is almost entirely offset by the foreign tax credits which are recognized as a benefit to income tax expense.

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Debt (Narrative) (Details)	0 Months Ended		12 Months Ended				0 Months Ended	6 Months Ended		0 Months Ended	6 Months Ended		0 Months Ended	6 Months Ended		0 Months Ended	6 Months Ended		0 Months Ended	6 Months Ended		0 Months Ended	6 Months Ended					6 Months Ended		6 Months Ended		6 Months Ended			1 Months Ended
	Dec. 01, 2010 USD ($)	Mar. 10, 2010 USD ($)	Jan. 01, 2011	Jul. 02, 2011 USD ($)	Jan. 01, 2011 USD ($)	Nov. 08, 2010 USD ($)	Mar. 10, 2010 Senior Notes Due 2013 [Member] USD ($)	Jul. 02, 2011 Senior Notes Due 2013 [Member] USD ($)	Jan. 01, 2011 Senior Notes Due 2013 [Member] USD ($)	Jul. 28, 2009 Senior Notes Due 2014 [Member] USD ($)	Jul. 02, 2011 Senior Notes Due 2014 [Member] USD ($)	Jan. 01, 2011 Senior Notes Due 2014 [Member] USD ($)	Dec. 01, 2010 Senior Notes Due 2016 [Member] USD ($)	Jul. 02, 2011 Senior Notes Due 2016 [Member] USD ($)	Jan. 01, 2011 Senior Notes Due 2016 [Member] USD ($)	Jul. 28, 2009 Senior Notes Due 2019 [Member] USD ($)	Jul. 02, 2011 Senior Notes Due 2019 [Member] USD ($)	Jan. 01, 2011 Senior Notes Due 2019 [Member] USD ($)	Apr. 28, 2010 Yen Denominated Senior Note 1.58% [Member] JPY (¥)	Jul. 02, 2011 Yen Denominated Senior Note 1.58% [Member] USD ($)	Jan. 01, 2011 Yen Denominated Senior Note 1.58% [Member] USD ($)	Apr. 28, 2010 Yen Denominated Senior Note 2.04% [Member] JPY (¥)	Jul. 02, 2011 Yen Denominated Senior Note 2.04% [Member] USD ($)	Jan. 01, 2011 Yen Denominated Senior Note 2.04% [Member] USD ($)	May 07, 2010 Yen Denominated Senior Note 1.02% [Member]	Jul. 02, 2011 Yen Denominated Credit Facilities [Member] USD ($)	Mar. 31, 2011 Yen Denominated Credit Facilities [Member] JPY (¥)	Jul. 02, 2011 Yen Denominated Term Loan [Member] USD ($)	Jan. 01, 2011 Yen Denominated Term Loan [Member] USD ($)	Jul. 02, 2011 Commercial Paper Borrowing [Member] USD ($)	Jan. 01, 2011 Commercial Paper Borrowing [Member] USD ($)	Jul. 02, 2011 Yen Denominated Credit Facilities Due 2012 [Member] USD ($)	Jan. 01, 2011 Yen Denominated Credit Facilities Due 2012 [Member] USD ($)	Dec. 31, 2010 Credit Facility [Member] USD ($)	Mar. 31, 2011 Yen Denominated Credit Facility 1 [Member]	Mar. 31, 2011 Yen Denominated Credit Facility 2 [Member]
Total debt				$ 2,566,481,000	$ 2,511,603,000			$ 463,998,000	$ 467,168,000		$ 699,354,000	$ 699,248,000		$ 497,331,000	$ 489,496,000		$ 494,880,000	$ 494,563,000		$ 100,774,000	$ 99,737,000		$ 157,879,000	$ 156,254,000					$ 79,637,000	$ 71,800,000	$ 25,500,000	$ 80,465,000
Expected minimum principal payments in 2012				80,500,000
Expected minimum principal payments in 2013				450,000,000
Expected minimum principal payments in 2014				700,000,000
Expected minimum principal payments in 2016				500,000,000
Expected minimum principal payments after year five				830,500,000
Issued principal amount							450,000,000			700,000,000			500,000,000			500,000,000			8,100,000,000	100,800,000	99,700,000	12,800,000,000	157,900,000	156,300,000
Debt instrument, due date								2013			2014			2016			2019			2017			2020					2011				2012
Debt instrument term, years							3			5			5			10			7			10
Debt instrument, stated percentage rate							2.20%			3.75%			2.50%			4.875%			1.58%			2.04%			1.02%
Debt instrument, effective percentage rate							2.23%			3.78%			2.54%			5.04%
Debt instrument, maturity date																				Apr. 28, 2017			Apr. 28, 2020
Interest rate swap term, years	5	3
Notional amount interest rate swap designated as a fair value hedge	500,000,000	450,000,000												2,300,000
Proceeds from termination of interest rate swap						19,300,000
Net average interest rate		0.80%
Outstanding balance under yen denominated credit facilities																										80,500,000	6,500,000,000
Maximum borrowing capacity																											11,250,000,000
Incremental interest rate above Yen LIBOR																																			0.25%	0.275%
Unused borrowing capacity																																		$ 1,500,000,000
Incremental interest rate % above LIBOR																																		0.875%
Maximum days commercial paper program provides for the issuance of short-term, unsecured commercial paper			270
Weighted average effective interest rate																														0.28%

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Net Earnings Per Share

6 Months Ended

Jul. 02, 2011

Net Earnings Per Share

Net Earnings Per Share

NOTE 8 – NET EARNINGS PER SHARE

The table below sets forth the computation of basic and diluted net earnings per share (in thousands, except per share amounts):

	Three Months Ended				Six Months Ended
	July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010
Numerator:
Net earnings	$	240,894	$	254,038	$	474,322	$	492,607
Denominator:
Basic weighted average shares outstanding		328,618		326,924		326,941		326,113
Effect of dilutive securities:
Employee stock options		3,843		2,389		3,684		2,570
Restricted stock units		172		—		130		—
Restricted stock awards		2		—		2		1
Diluted weighted average shares outstanding		332,635		329,313		330,757		328,684
Basic net earnings per share	$	0.73	$	0.78	$	1.45	$	1.51
Diluted net earnings per share	$	0.72	$	0.77	$	1.43	$	1.50

Approximately 6.6 million and 17.7 million  shares of common stock subject to stock options, restricted stock awards and restricted stock units were excluded from the diluted net earnings per share computation for the three months ended July 2, 2011 and July 3, 2010, respectively, because they were not dilutive. Additionally, approximately 7.0 million and 18.0 million shares of common stock subject to stock options, restricted stock awards and restricted stock units were excluded from the diluted net earnings per share computation for the six months ended July 2, 2011 and July 3, 2010, respectively, because they were not dilutive.

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Basis Of Presentation

6 Months Ended

Jul. 02, 2011

Basis Of Presentation

Basis Of Presentation

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of St. Jude Medical, Inc. (St. Jude Medical or the Company) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (U.S. GAAP) for complete financial statements. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company's consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. Preparation of the Company's financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and footnotes. Actual results could differ from those estimates. This Quarterly Report on Form 10-Q should be read in conjunction with the Company's consolidated financial statements and footnotes included in its Annual Report on Form 10-K for the fiscal year ended January 1, 2011 (2010 Annual Report on Form 10-K).

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Inventories

6 Months Ended

Jul. 02, 2011

Inventories

Inventories

NOTE 4 – INVENTORIES
The Company's inventories consisted of the following (in thousands):
	July 2, 2011		January 1, 2011
Finished goods	$	492,540	$	466,191
Work in process		67,347		62,607
Raw materials		139,276		138,747
	$	699,163	$	667,545

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Fair Value Measurements And Financial Instruments (Details) (USD $)	Jul. 02, 2011	Jan. 01, 2011
Assets
Money-market securities	$ 594,794,000	$ 364,418,000
Trading marketable securities	223,014,000	190,438,000
Available-for-sale marketable securities	34,984,000	33,745,000
Total assets	852,792,000	588,601,000
Interest rate swap	2,257,000	10,046,000
Total liabilities	2,257,000	10,046,000
Carrying value of cost method investments in equity securities	126,000,000	124,000,000
Aggregate fair value fixed-rate debt obligations	2,490,800,000
Aggregate carrying value fixed-rate debt obligations	2,414,200,000
Aggregate carrying value other debt obligations	152,300,000
Fair Value, Inputs, Level 1 [Member]
Assets
Money-market securities	594,794,000	364,418,000
Trading marketable securities	223,014,000	190,438,000
Available-for-sale marketable securities	34,984,000	33,745,000
Total assets	852,792,000	588,601,000
Interest rate swap
Total liabilities
Fair Value, Inputs, Level 2 [Member]
Assets
Money-market securities
Trading marketable securities
Available-for-sale marketable securities
Total assets
Interest rate swap	2,257,000	10,046,000
Total liabilities	2,257,000	10,046,000
Fair Value, Inputs, Level 3 [Member]
Assets
Money-market securities
Trading marketable securities
Available-for-sale marketable securities
Total assets
Interest rate swap
Total liabilities

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Inventories (Details) (USD $) In Thousands	Jul. 02, 2011	Jan. 01, 2011
Inventories
Finished goods	$ 492,540	$ 466,191
Work in process	67,347	62,607
Raw materials	139,276	138,747
Total inventory, net	$ 699,163	$ 667,545

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Debt

6 Months Ended

Jul. 02, 2011

Debt

Debt

NOTE 5 – DEBT
The Company's debt consisted of the following (in thousands):
	July 2, 2011		January 1, 2011
2.20% senior notes due 2013	$	463,998	$	467,168
3.75% senior notes due 2014		699,354		699,248
2.50% senior notes due 2016		497,331		489,496
4.875% senior notes due 2019		494,880		494,563
1.58% Yen-denominated senior notes due 2017		100,774		99,737
2.04% Yen-denominated senior notes due 2020		157,879		156,254
Yen-denominated term loan due 2011		—		79,637
Yen-denominated credit facilities due 2012		80,465		—
Commercial paper borrowings		71,800		25,500
Total debt		2,566,481		2,511,603
Less: current debt obligations		80,465		79,637
Long-term debt	$	2,486,016	$	2,431,966

Expected future minimum principal payments under the Company's debt obligations are as follows: $80.5 million in 2012; $450.0 million in 2013; $700.0 million in 2014; $500.0 million in 2016; and $830.5 million in years thereafter.

Senior notes due 2013: On March 10, 2010, the Company issued $450.0 million principal amount of 3-year, 2.20% unsecured senior notes (2013 Senior Notes) that mature in September 2013. The majority of the net proceeds from the issuance of the 2013 Senior Notes was used to retire outstanding debt obligations. Interest payments are required on a semi-annual basis. The 2013 Senior Notes were issued at a discount, yielding an effective interest rate of 2.23% at issuance. The Company may redeem the 2013 Senior Notes at any time at the applicable redemption price. The debt discount is being amortized as interest expense through maturity.

Concurrent with the issuance of the 2013 Senior Notes, the Company entered into a 3-year, $450.0 million notional amount interest rate swap designated as a fair value hedge of the changes in fair value of the Company's fixed-rate 2013 Senior Notes. On November 8, 2010, the Company terminated the interest rate swap and received a cash payment of $19.3 million. The gain from terminating the interest rate swap agreement is being amortized as a reduction of interest expense resulting in a net average interest rate of 0.8% that will be recognized over the remaining term of the 2013 Senior Notes.

Senior notes due 2014: On July 28, 2009, the Company issued $700.0 million principal amount, 5-year, 3.75% unsecured senior notes (2014 Senior Notes) that mature in July 2014. Interest payments are required on a semi-annual basis. The 2014 Senior Notes were issued at a discount, yielding an effective interest rate of 3.78% at issuance. The debt discount is being amortized as interest expense through maturity. The Company may redeem the 2014 Senior Notes at any time at the applicable redemption price.

Senior notes due 2016: On December 1, 2010, the Company issued $500.0 million principal amount of 5-year, 2.50% unsecured senior notes (2016 Senior Notes) that mature in January 2016. The majority of the net proceeds from the issuance of the 2016 Senior Notes was used for general corporate purposes including the repurchase of the Company's common stock. Interest payments are required on a semi-annual basis. The 2016 Senior Notes were issued at a discount, yielding an effective interest rate of 2.54% at issuance. The debt discount is being amortized as interest expense through maturity. The Company may redeem the 2016 Senior Notes at any time at the applicable redemption price.

Concurrent with the issuance of the 2016 Senior Notes, the Company entered into a 5-year, $500.0 million notional amount interest rate swap designated as a fair value hedge of the changes in fair value of the Company's fixed-rate 2016 Senior Notes. As of July 2, 2011, the fair value of the swap was a $2.3 million liability which was classified as other liabilities on the consolidated balance sheet, with a corresponding adjustment to the carrying value of the 2016 Senior Notes. Refer to Note 13 for additional information regarding the interest rate swap.

Senior notes due 2019: On July 28, 2009, the Company issued $500.0 million principal amount, 10-year, 4.875% unsecured senior notes (2019 Senior Notes) that mature in July 2019. Interest payments are required on a semi-annual basis. The 2019 Senior Notes were issued at a discount, yielding an effective interest rate of 5.04% at issuance. The debt discount is being amortized as interest expense through maturity. The Company may redeem the 2019 Senior Notes at any time at the applicable redemption price.

1.58% Yen-denominated senior notes due 2017: On April 28, 2010, the Company issued 7-year, 1.58% unsecured senior notes in Japan (1.58% Yen Notes) totaling 8.1 billion Yen (the equivalent of $100.8 million at July 2, 2011 and $99.7 million at January 1, 2011). The net proceeds from the issuance of the 1.58% Yen Notes were used to repay the 1.02% Yen-denominated Notes due May 2010 (1.02% Yen Notes). The principal amount of the 1.58% Yen Notes recorded on the balance sheet fluctuates based on the effects of foreign currency translation. Interest payments are required on a semi-annual basis and the entire principal balance is due on April 28, 2017.

2.04% Yen-denominated senior notes due 2020: On April 28, 2010, the Company issued 10-year, 2.04% unsecured senior notes in Japan (2.04% Yen Notes) totaling 12.8 billion Yen (the equivalent of $157.9 million at July 2, 2011 and $156.3 million at January 1, 2011). The net proceeds from the issuance of the 2.04% Yen Notes were used to repay the 1.02% Yen Notes. The principal amount of the 2.04% Yen Notes recorded on the balance sheet fluctuates based on the effects of foreign currency translation. Interest payments are required on a semi-annual basis and the entire principal balance is due on April 28, 2020.

Yen–denominated credit facilities: In March 2011, the Company borrowed 6.5 billion Japanese Yen under uncommitted credit facilities with two commercial Japanese banks that provide for borrowings up to a maximum of 11.25 billion Japanese Yen. The proceeds from the borrowings were used to repay the outstanding balance on the Yen-denominated term loan due December 2011. The outstanding 6.5 billion Japanese Yen balance was the equivalent of $80.5 million at July 2, 2011. The principal amount reflected on the balance sheet fluctuates based on the effects of foreign currency translation. Half of the borrowings bear interest at Yen LIBOR plus 0.25% and the other half of the borrowings bear interest at Yen LIBOR plus 0.275%. The entire principal balance is due in March 2012.

Other available borrowings: In December 2010, the Company entered into a $1.5 billion unsecured committed credit facility (Credit Facility) that it may draw on for general corporate purposes and to support its commercial paper program. The Credit Facility expires in February 2015. Borrowings under the Credit Facility bear interest initially at LIBOR plus 0.875%, subject to adjustment in the event of a change in the Company's credit ratings. As of July 2, 2011 and January 1, 2011, the Company had no outstanding borrowings under the Credit Facility.

The Company's commercial paper program provides for the issuance of short-term, unsecured commercial paper with maturities up to 270 days. The Company began issuing commercial paper during November 2010 and had an outstanding commercial paper balance of $71.8 million as of July 2, 2011 and $25.5 million as of January 1, 2011. During the first six months of 2011, the Company's weighted average effective interest rate on its commercial paper borrowings was approximately 0.28%. Any future commercial paper borrowings would bear interest at the applicable then-current market rates. The Company classifies all of its commercial paper borrowings as long-term debt, as the Company has the ability to repay any short-term maturity with available cash from its existing long-term, committed Credit Facility.

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Segment And Geographic Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jul. 02, 2011		Jul. 03, 2010		Jul. 02, 2011		Jul. 03, 2010		Jan. 01, 2011
Net sales	$ 1,446,751		$ 1,312,769		$ 2,822,264		$ 2,574,465
Operating profit	325,084		364,753		647,102		710,760
Total assets	9,095,397				9,095,397				8,566,448
Foreign sales, total	768,424		622,674		1,467,862		1,235,437
Long-lived assets	1,384,516				1,384,516				1,323,931
Total international long-lived assets	390,315				390,315				357,995
Concentration of revenue in a geographic market					5.00%		5.00%
CRM/NMD [Member]
Net sales	896,622		882,835		1,750,061		1,718,866
Operating profit	564,966		556,653		1,100,913		1,080,590
Total assets	2,418,948				2,418,948				2,150,359
CV/AF [Member]
Net sales	550,129		429,934		1,072,203		855,599
Operating profit	288,878		244,397		553,300		488,111
Total assets	3,139,034				3,139,034				3,097,190
Other Segment [Member]
Net sales
Operating profit	(528,760)		(436,297)		(1,007,111)		(857,941)
Total assets	3,537,415				3,537,415				3,318,899
United States [Member]
Net sales	678,327		690,095		1,354,402		1,339,028
Long-lived assets	994,201				994,201				965,936
Europe [Member]
Net sales	410,758		331,443		780,070		668,523
Long-lived assets	99,253				99,253				85,961
Japan [Member]
Net sales	156,714		129,593		304,207		258,255
Long-lived assets	27,570				27,570				25,583
Asia Pacific [Member]
Net sales	106,145		80,419		198,655		149,307
Long-lived assets	77,013				77,013				74,537
Other Countries [Member]
Net sales	94,807	[1]	81,219	[1]	184,930	[1]	159,352	[1]
Long-lived assets	$ 186,479				$ 186,479				$ 171,914

[1] No one geographic market is greater than 5% of consolidated net sales.

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Segment And Geographic Information (Tables)

6 Months Ended

Jul. 02, 2011

Segment And Geographic Information

Reportable Segment Net Sales And Operating Profit

	CRM/NMD		CV/AF		Other			Total
Three Months ended July 2, 2011:
Net sales	$	896,622	$	550,129	$	—		$	1,446,751
Operating profit		564,966		288,878		(528,760	)		325,084
Three Months ended July 3, 2010:
Net sales	$	882,835	$	429,934	$	—		$	1,312,769
Operating profit		556,653		244,397		(436,297	)		364,753
Six Months ended July 2, 2011:
Net sales	$	1,750,061	$	1,072,203	$	—		$	2,822,264
Operating profit		1,100,913		553,300		(1,007,111	)		647,102
Six Months ended July 3, 2010:
Net sales	$	1,718,866	$	855,599	$	—		$	2,574,465
Operating profit		1,080,590		488,111		(857,941	)		710,760

Reportable Segment Total Assets

Total Assets	July 2, 2011		January 1, 2011
CRM/NMD	$	2,418,948	$	2,150,359
CV/AF		3,139,034		3,097,190
Other		3,537,415		3,318,899
	$	9,095,397	$	8,566,448

Net Sales By Geographic Location

	Three Months Ended				Six Months Ended
Net Sales	July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010
United States	$	678,327	$	690,095	$	1,354,402	$	1,339,028
International
Europe		410,758		331,443		780,070		668,523
Japan		156,714		129,593		304,207		258,255
Asia Pacific		106,145		80,419		198,655		149,307
Other (a)		94,807		81,219		184,930		159,352
		768,424		622,674		1,467,862		1,235,437
	$	1,446,751	$	1,312,769	$	2,822,264	$	2,574,465

           (a) No one geographic market is greater than 5% of consolidated net sales.

Long-Lived Assets By Geographic Location

Long-Lived Assets	July 2, 2011		January 1, 2011
United States	$	994,201	$	965,936
International
Europe		99,253		85,961
Japan		27,570		25,583
Asia Pacific		77,013		74,537
Other		186,479		171,914
		390,315		357,995
	$	1,384,516	$	1,323,931

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Debt (Long-Term Debt) (Details) In Thousands, unless otherwise specified			6 Months Ended			6 Months Ended			6 Months Ended			6 Months Ended			6 Months Ended			6 Months Ended			6 Months Ended		6 Months Ended
	Jul. 02, 2011 USD ($)	Jan. 01, 2011 USD ($)	Jul. 02, 2011 Senior Notes Due 2013 [Member] USD ($)	Jan. 01, 2011 Senior Notes Due 2013 [Member] USD ($)	Mar. 10, 2010 Senior Notes Due 2013 [Member]	Jul. 02, 2011 Senior Notes Due 2014 [Member] USD ($)	Jan. 01, 2011 Senior Notes Due 2014 [Member] USD ($)	Jul. 28, 2009 Senior Notes Due 2014 [Member]	Jul. 02, 2011 Senior Notes Due 2016 [Member] USD ($)	Jan. 01, 2011 Senior Notes Due 2016 [Member] USD ($)	Dec. 01, 2010 Senior Notes Due 2016 [Member]	Jul. 02, 2011 Senior Notes Due 2019 [Member] USD ($)	Jan. 01, 2011 Senior Notes Due 2019 [Member] USD ($)	Jul. 28, 2009 Senior Notes Due 2019 [Member]	Jul. 02, 2011 Yen Denominated Senior Note 1.58% [Member] USD ($)	Jan. 01, 2011 Yen Denominated Senior Note 1.58% [Member] USD ($)	Apr. 28, 2010 Yen Denominated Senior Note 1.58% [Member]	Jul. 02, 2011 Yen Denominated Senior Note 2.04% [Member] USD ($)	Jan. 01, 2011 Yen Denominated Senior Note 2.04% [Member] USD ($)	Apr. 28, 2010 Yen Denominated Senior Note 2.04% [Member]	Jul. 02, 2011 Yen Denominated Term Loan [Member] USD ($)	Jan. 01, 2011 Yen Denominated Term Loan [Member] USD ($)	Jul. 02, 2011 Yen Denominated Credit Facilities Due 2012 [Member] USD ($)	Jan. 01, 2011 Yen Denominated Credit Facilities Due 2012 [Member] USD ($)	Jul. 02, 2011 Commercial Paper Borrowing [Member] USD ($)	Jan. 01, 2011 Commercial Paper Borrowing [Member] USD ($)
Total debt	$ 2,566,481	$ 2,511,603	$ 463,998	$ 467,168		$ 699,354	$ 699,248		$ 497,331	$ 489,496		$ 494,880	$ 494,563		$ 100,774	$ 99,737		$ 157,879	$ 156,254			$ 79,637	$ 80,465		$ 71,800	$ 25,500
Less: current debt obligations	80,465	79,637
Long-term debt	$ 2,486,016	$ 2,431,966
Debt instrument, stated percentage rate					2.20%			3.75%			2.50%			4.875%			1.58%			2.04%
Debt instrument, due date			2013			2014			2016			2019			2017			2020			2011		2012

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Derivative Financial Instruments (Details) (USD $)	3 Months Ended		6 Months Ended
	Jul. 02, 2011	Jul. 03, 2010	Jul. 02, 2011	Jul. 03, 2010	Jan. 01, 2011
Derivative Financial Instruments
The net amount of gains (losses) recorded to other income (expense)	$ (4,600,000)	$ 4,400,000	$ (8,300,000)	$ 6,700,000
Interest rate swap	$ 2,257,000		$ 2,257,000		$ 10,046,000

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Goodwill And Other Intangible Assets (Carrying Amount Of Other Intangible Assets And Related Accumulated Amortization) (Details) (USD $) In Thousands	Jul. 02, 2011	Jan. 01, 2011
Gross carrying amount	$ 1,129,545	$ 1,124,902
Accumulated amortization	367,222	320,912
Indefinite-lived intangible assets	183,070	183,070
Trademarks And Tradenames [Member]
Indefinite-lived intangible assets	48,800	48,800
Trademarks And Tradenames [Member]
Gross carrying amount	24,460	24,370
Accumulated amortization	7,544	7,431
Purchased Technology And Patents [Member]
Gross carrying amount	913,974	910,035
Accumulated amortization	245,210	208,362
Customer Lists And Relationships [Member]
Gross carrying amount	184,871	184,327
Accumulated amortization	110,080	100,608
Licenses, Distribution Agreements And Other [Member]
Gross carrying amount	6,240	6,170
Accumulated amortization	4,388	4,511
Acquired In-Process Research And Development [Member]
Indefinite-lived intangible assets	$ 134,270	$ 134,270

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Derivative Financial Instruments

6 Months Ended

Jul. 02, 2011

Derivative Financial Instruments

Derivative Financial Instruments

NOTE 13 – DERIVATIVE FINANCIAL INSTRUMENTS

The Company follows the provisions of ASC Topic 815, Derivatives and Hedging (ASC Topic 815), in accounting for and disclosing derivative instruments and hedging activities. All derivative financial instruments are recognized on the balance sheet at fair value. Changes in the fair value of derivatives are recognized in net earnings or other comprehensive income depending on whether the derivative is designated as part of a qualifying hedging transaction. Derivative assets and derivative liabilities are classified as other current assets, other assets, other current liabilities or other liabilities, as appropriate.

Foreign Currency Forward Contracts

The Company hedges a portion of its foreign currency exchange rate risk through the use of forward exchange contracts. The Company uses forward exchange contracts to manage foreign currency exposures related to intercompany receivables and payables arising from intercompany purchases of manufactured products. These forward contracts are not designated as qualifying hedging relationships under ASC Topic 815. The Company measures its foreign currency exchange contracts at fair value on a recurring basis. The fair value of outstanding contracts was immaterial as of July 2, 2011 and January 1, 2011. During the second quarter of 2011 and 2010, the net amount of gains (losses) the Company recorded to other income (expense) for its forward currency exchange contracts not designated as hedging instruments under ASC Topic 815 was a net loss of $4.6 million and a net gain of $4.4 million, respectively. During the first six months of 2011 and 2010, the net amount of gains (losses) recorded to other income (expense) for its forward currency exchange contracts not designated as hedging instruments was a net loss of $8.3 million and a net gain of $6.7 million, respectively. These net gains (losses) were almost entirely offset by corresponding net (losses) gains on the foreign currency exposures being managed. The Company does not enter into contracts for trading or speculative purposes. The Company's policy is to enter into hedging contracts with major financial institutions that have at least an "A" (or equivalent) credit rating.

Interest Rate Swap

The Company hedges the fair value of certain debt obligations through the use of interest rate swap contracts. For interest rate swap contracts that are designated and qualify as fair value hedges, the gain or loss on the swap and the offsetting gain or loss on the hedged debt instrument attributable to the hedged risk are recognized in net earnings. Changes in the value of the fair value hedge are recognized in interest expense, offsetting the changes in the fair value of the hedged debt instrument. Additionally, any payments made or received under the swap contracts are accrued and recognized as interest expense. The Company's current interest rate swap is designed to manage the exposure to changes in the fair value of its 2016 Senior Notes. The swap is designated as a fair value hedge of the variability of the fair value of the fixed-rate 2016 Senior Notes due to changes in the long-term benchmark interest rates. Under the swap agreement, the Company agrees to exchange, at specified intervals, fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. As of July 2, 2011, the fair value of the interest rate swap was a $2.3 million liability which was classified as other liabilities on the condensed consolidated balance sheet.

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Commitments And Contingencies

6 Months Ended

Jul. 02, 2011

Commitments And Contingencies

Commitments And Contingencies

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Litigation

Silzone® Litigation and Insurance Receivables: The Company has been sued in various jurisdictions beginning in March 2000 by some patients who received a heart valve product with Silzone® coating, which the Company stopped selling in January 2000. The Company has vigorously defended against the claims that have been asserted and will continue to do so with respect to any remaining claims.

The Company has two outstanding class action cases in Ontario and one individual case in British Columbia by the Provincial health insurer. In Ontario, a class action case involving Silzone patients has been certified, and the trial on common class issues began in February 2010. The testimony and evidence submissions for this trial were completed in March 2011, and closing briefing and argument is presently scheduled to be completed by the end of September 2011. Depending on the Court's ruling in this common issues trial, there may be further proceedings, including appeal, in the future. A second case seeking class action status in Ontario has been stayed pending resolution of the ongoing Ontario class action. The complaints in the Ontario cases request damages up to 2.0 billion Canadian Dollars (the equivalent of $2.1 billion at July 2, 2011). Based on the Company's historical experience, the amount ultimately paid, if any, often does not bear any relationship to the amount claimed. The British Columbia Provincial health insurer has a lawsuit seeking to recover the cost of insured services furnished or to be furnished to class members in the British Columbia class action resolved in 2010, and that lawsuit remains pending in the British Columbia court.

The Company has recorded an accrual for probable legal costs, settlements and judgments for Silzone related litigation. The Company is not aware of any unasserted claims related to Silzone-coated products. For all Silzone legal costs incurred, the Company records insurance receivables for the amounts that it expects to recover based on its assessment of the specific insurance policies, the nature of the claim and the Company's experience with similar claims. Any costs (the material components of which are settlements, judgments, legal fees and other related defense costs) not covered by the Company's product liability insurance policies or existing reserves could be material to the Company's consolidated earnings, financial position and cash flows. The following table summarizes the Company's Silzone legal accrual and related insurance receivable at July 2, 2011 and January 1, 2011 (in thousands):

	July 2, 2011		January 1, 2011
Silzone legal accrual	$	23,832	$	24,032
Silzone insurance receivable	$	14,700	$	12,799

The Company's current and final insurance layer for Silzone claims consists of $30 million of coverage with two insurance carriers. To the extent that the Company's future Silzone costs and expenses exceed its remaining insurance coverage, the Company would be responsible for such costs. The Company has not recorded an expense related to any potential future damages as they are not probable or reasonably estimable at this time.

Volcano Corporation & LightLab Imaging Inc. (LightLab Imaging) Litigation: The Company's subsidiary, LightLab Imaging, has pending litigation with Volcano Corporation (Volcano) and Axsun Technologies, Inc. (Axsun), a subsidiary of Volcano, in the Superior Court of Massachusetts and in state court in Delaware. LightLab Imaging makes and sells optical coherence tomography (OCT) imaging systems. Volcano is a LightLab Imaging competitor in medical imaging. Axsun makes and sells lasers and is a supplier of lasers to LightLab Imaging for use in OCT imaging systems. The lawsuits arise out of Volcano's acquisition of Axsun in December 2008. Before Volcano acquired Axsun, LightLab Imaging and Axsun had worked together to develop a tunable laser for use in OCT imaging systems. While the laser was in development, LightLab Imaging and Axsun entered into an agreement pursuant to which Axsun agreed to sell its tunable lasers exclusively to LightLab in the field of human coronary artery imaging for a period of years.

After Volcano acquired Axsun in December 2008, LightLab Imaging sued Axsun and Volcano in Massachusetts, asserting a number of claims arising out of Volcano's acquisition of Axsun. In January 2011, the court ruled that Axsun's and Volcano's conduct constituted knowing and willful violations of a statute that prohibits unfair or deceptive acts or practices or acts of unfair competition, entitling LightLab Imaging to double damages, and furthermore, that LightLab Imaging was entitled to recover attorneys' fees. In February 2011, Volcano and Axsun were ordered to pay the Company for reimbursement of attorneys' fees and double damages which Volcano paid to the Company in July. The Court also issued certain injunctions against Volcano and Axsun when it entered its final judgment.

In Delaware, Axsun and Volcano commenced an action in February 2010 against LightLab Imaging, seeking a declaration as to whether Axsun may supply a certain light source for use in OCT imaging systems to Volcano. Axsun's and Volcano's position is that this light source is not a tunable laser and hence falls outside Axsun's exclusivity obligations to Volcano. LightLab Imaging's position, among other things, is that this light source is a tunable laser. The parties have conducted expedited discovery. Though the trial of this matter was expected to occur in early 2011, in a March 2011 ruling, the Delaware Court postponed the trial of this case because Axsun and Volcano do not yet have a finalized light source product to present to the Court.

In May 2011, LightLab Imaging initiated a lawsuit against Volcano and Axsun in the Delaware state court. The suit seeks to enforce LightLab Imaging's exclusive contract with Axsun, to prevent Volcano from interfering with that contract, to bar Axsun and Volcano from using LightLab Imaging confidential information and trade secrets, and to prevent Volcano and Axsun from violating a Massachusetts statute prohibiting unfair methods of competition and unfair or deceptive acts or practices relating to LightLab Imaging's tunable laser technology. Volcano and Axsun have filed a motion seeking to dismiss this lawsuit, and this motion is scheduled to be heard by the Court in September 2011.

Volcano Corporation & St. Jude Medical Patent Litigation: In July 2010, the Company filed a lawsuit in federal district court in Delaware against Volcano for patent infringement. In the suit, the Company asserted five patents against Volcano and seeks injunctive relief and monetary damages. The infringed patents are part of the St. Jude Medical PressureWire® technology platform, which was acquired as part of St. Jude Medical's purchase of Radi Medical Systems in December 2008.Volcano has filed counterclaims against the Company in this case, alleging certain St. Jude Medical patent claims are unenforceable and that certain St. Jude Medical products infringe four Volcano patents. The Company believes the assertions and claims made by Volcano are without merit. Trial in this case is scheduled for October 2012.

Securities Class Action Litigation: In March 2010, a securities class action lawsuit was filed in federal district court in Minnesota against the Company and certain officers on behalf of purchasers of St. Jude Medical common stock between April 22, 2009 and October 6, 2009. The lawsuit relates to the Company's earnings announcements for the first, second and third quarters of 2009, as well as a preliminary earnings release dated October 6, 2009. The complaint, which seeks unspecified damages and other relief as well as attorneys' fees, alleges that the Company failed to disclose that it was experiencing a slowdown in demand for its products and was not receiving anticipated orders for Cardiac Rhythm Management (CRM) devices. Class members allege that the Company's failure to disclose the above information resulted in the class purchasing St. Jude Medical stock at an artificially inflated price. The Company intends to vigorously defend against the claims asserted in this lawsuit. In October 2010, the Company filed a motion to dismiss the lawsuit, which was heard by the district court in April 2011.

AGA Securities Class Action: In connection with the acquisition of AGA Medical Inc. (AGA Medical), the Company, in addition to AGA Medical and other defendants, has been named as a defendant in two putative stockholder class action complaints, one filed in the Fourth Judicial District Court of Minnesota and the other filed in the Delaware Court of Chancery, both in October 2010. The plaintiffs in the complaints allege, among other claims, that AGA Medical's directors breached their fiduciary duties to AGA Medical's stockholders by accepting an inadequate price, failing to make full disclosure and utilizing unreasonable deal protection devices and further alleges that AGA Medical and the Company aided and abetted the purported breaches of fiduciary duty. The complaints seek injunctive relief, including to enjoin the transaction, in addition to unspecified compensatory damages, attorneys' fees, other fees and costs and other relief. The acquisition of AGA Medical was completed on November 18, 2010 and the parties to this action entered into a memorandum of understanding in November 2010 to settle the litigation, the amount of which was not material. The parties have executed a stipulation of settlement and the settlement approval hearing with the Delaware Court of Chancery is scheduled for September 2011.

Other than disclosed above, the Company has not recorded an expense related to any potential damages in connection with these litigation matters because any potential loss is not probable or reasonably estimable.

Regulatory Matters

The FDA inspected the Company's manufacturing facility in Minnetonka, Minnesota at various times between December 8 and December 19, 2008. On December 19, 2008, the FDA issued a Form 483 identifying certain observed non-conformity with current Good Manufacturing Practice (cGMP) primarily related to the manufacture and assembly of the Safire^TM ablation catheter with a 4 mm or 5 mm non-irrigated tip. Following the receipt of the Form 483, the Company's AF division provided written responses to the FDA detailing proposed corrective actions and immediately initiated efforts to address the FDA's observations of non-conformity. The Company subsequently received a warning letter dated April 17, 2009 from the FDA relating to these non-conformities with respect to this facility.

The FDA inspected the Company's Plano, Texas manufacturing facility at various times between March 5 and April 6, 2009. On April 6, 2009, the FDA issued a Form 483 identifying certain observed nonconformities with cGMP. Following the receipt of the Form 483, the Company's Neuromodulation division provided written responses to the FDA detailing proposed corrective actions and immediately initiated efforts to address FDA's observations of nonconformity. The Company subsequently received a warning letter dated June 26, 2009 from the FDA relating to these non-conformities with respect to its Neuromodulation division's Plano, Texas and Hackettstown, New Jersey facilities.

With respect to each of these warning letters, the FDA notes that it will not grant requests for exportation certificates to foreign governments or approve pre-market approval applications for Class III devices to which the quality system regulation deviations are reasonably related until the violations have been corrected. The Company is working cooperatively with the FDA to resolve all of its concerns.

On April 23, 2010, the FDA issued a warning letter based upon a July 29, 2009 inspection of the Company's Sunnyvale, California facility and a review of its website. The warning letter cited the Company for its promotion and marketing of the Epicor™ LP Cardiac Ablation System and the Epicor UltraCinch LP Ablation Device based on certain statements made in the Company's marketing materials. The Company worked cooperatively with the FDA to resolve the issues noted, and the Company's corrective actions were verified during a follow-up FDA audit of the facility with no observations noted.

Customer orders have not been and are not expected to be impacted while the Company works to resolve the FDA's concerns. The Company is working diligently to respond timely and fully to the FDA's requests. While the Company believes the issues raised by the FDA can be resolved without a material impact on the Company's financial results, the FDA has recently been increasing its scrutiny of the medical device industry and raising the threshold for compliance. The government is expected to continue to scrutinize the industry closely with inspections, and possibly enforcement actions, by the FDA or other agencies. The Company is regularly monitoring, assessing and improving its internal compliance systems and procedures to ensure that its activities are consistent with applicable laws, regulations and requirements, including those of the FDA.

Other Matters

Boston U.S. Attorney Investigation: In December 2008, the U.S. Attorney's Office in Boston delivered a subpoena issued by the U.S. Department of Health and Human Services, Office of the Inspector General (OIG) requesting the production of documents relating to implantable cardiac rhythm device and pacemaker warranty claims. The Company has been cooperating with the investigation.

U.S. Department of Justice - Civil Investigative Demand: In March 2010, the Company received a Civil Investigative Demand (CID) from the Civil Division of the U.S. Department of Justice. The CID requests documents and sets forth interrogatories related to communications by and within the Company on various indications for tachycardia implantable cardioverter defibrillator systems (ICDs) and a National Coverage Decision issued by Centers for Medicare and Medicaid Services. Similar requests were made of the Company's major competitors. The Company is cooperating with the investigation and is continuing to work with the U.S. Department of Justice in responding to the CID.

The Company has not recorded an expense related to any potential damages in connection with these matters because any potential loss is not probable or reasonably estimable. The Company is also involved in various other lawsuits, claims and proceedings that arise in the ordinary course of business.

Product Warranties

The Company offers a warranty on various products, the most significant of which relates to its ICDs and pacemakers systems. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time the product is sold. Factors that affect the Company's warranty liability include the number of units sold, historical and anticipated rates of warranty claims and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Changes in the Company's product warranty liability during the three months and six months ended July 2, 2011 and July 3, 2010 were as follows (in thousands):

	Three Months Ended						Six Months Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Balance at beginning of period	$	26,941		$	21,157		$	25,127		$	19,911
Warranty expense recognized		3,282			1,645			5,668			3,382
Warranty credits issued		(1,255	)		(589	)		(1,827	)		(1,080	)
Balance at end of period	$	28,968		$	22,213		$	28,968		$	22,213

Other Commitments

The Company has certain contingent commitments to acquire various businesses involved in the distribution of the Company's products and to pay other contingent acquisition consideration payments. While it is not certain if and/or when these payments will be made, as of July 2, 2011, the Company estimates it could be required to pay approximately $25.8 million in future periods to satisfy such commitments. Refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations – Off-Balance Sheet Arrangements and Contractual Obligations of the Company's 2010 Annual Report on Form 10-K for additional information.

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Inventories (Tables)

6 Months Ended

Jul. 02, 2011

Inventories

Type Of Inventory

	July 2, 2011		January 1, 2011
Finished goods	$	492,540	$	466,191
Work in process		67,347		62,607
Raw materials		139,276		138,747
	$	699,163	$	667,545

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Income Taxes (Narrative) (Details) (USD $) In Millions	Jul. 02, 2011	Jan. 01, 2011
Income Taxes
Unrecognized tax benefits	$ 173.1	$ 162.9
Accrued interest and penalties	$ 34.7	$ 33.8

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Goodwill And Other Intangible Assets (Changes In Goodwill Carrying Amount) (Details) (USD $) In Thousands	6 Months Ended
	Jul. 02, 2011
Goodwill, Beginning Balance	$ 2,955,602
Foreign currency translation and other	23,891
Goodwill, Ending Balance	2,979,493
CRM/NMD [Member]
Goodwill, Beginning Balance	1,231,120
Foreign currency translation and other	5,062
Goodwill, Ending Balance	1,236,182
CV/AF [Member]
Goodwill, Beginning Balance	1,724,482
Foreign currency translation and other	18,829
Goodwill, Ending Balance	$ 1,743,311

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands	6 Months Ended
	Jul. 02, 2011	Jul. 03, 2010
OPERATING ACTIVITIES
Net earnings	$ 474,322	$ 492,607
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization	148,793	115,364
Amortization of debt discount (premium)	(2,701)	454
Inventory step-up amortization	29,442
Stock-based compensation	37,998	36,441
Excess tax benefits from stock-based compensation	(8,518)	(8,002)
Purchased in-process research and development charges	4,400
Deferred income taxes	(16,583)	11,386
Changes in operating assets and liabilities, net of business acquisitions:
Accounts receivable	(48,223)	(135,361)
Inventories	(48,074)	(19,860)
Other current assets	44,030	(38,140)
Accounts payable and accrued expenses	(57,013)	43,625
Income taxes payable	13,837
Other, net	12,113	(3,133)
Net cash provided by operating activities	583,823	495,381
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(162,625)	(145,752)
Business acquisition payments, net of cash acquired		(135,601)
Other, net	(19,491)	(16,152)
Net cash used in investing activities	(182,116)	(297,505)
FINANCING ACTIVITIES
Proceeds from exercise of stock options and stock issued	241,587	65,187
Excess tax benefits from stock-based compensation	8,518	8,002
Common stock repurchased, including related costs	(309,204)
Dividends paid	(68,647)
Issuances/payments of commercial paper borrowings, net	46,300
Borrowings under debt facilities		671,094
Payments under debt facilities		(655,723)
Net cash provided by (used in) financing activities	(81,446)	88,560
Effect of currency exchange rate changes on cash and cash equivalents	12,220	(12,309)
Net increase in cash and cash equivalents	332,481	274,127
Cash and cash equivalents at beginning of period	500,336	392,927
Cash and cash equivalents at end of period	$ 832,817	$ 667,054

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Debt (Tables)

6 Months Ended

Jul. 02, 2011

Debt

Long-Term Debt

July 2, 2011		January 1, 2011
2.20% senior notes due 2013	$	463,998	$	467,168
3.75% senior notes due 2014		699,354		699,248
2.50% senior notes due 2016		497,331		489,496
4.875% senior notes due 2019		494,880		494,563
1.58% Yen-denominated senior notes due 2017		100,774		99,737
2.04% Yen-denominated senior notes due 2020		157,879		156,254
Yen-denominated term loan due 2011		—		79,637
Yen-denominated credit facilities due 2012		80,465		—
Commercial paper borrowings		71,800		25,500
Total debt		2,566,481		2,511,603
Less: current debt obligations		80,465		79,637
Long-term debt	$	2,486,016	$	2,431,966

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Net Earnings Per Share (Tables)

6 Months Ended

Jul. 02, 2011

Net Earnings Per Share

Schedule Of Basic And Diluted Earnings Per Share

	Three Months Ended				Six Months Ended
	July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010
Numerator:
Net earnings	$	240,894	$	254,038	$	474,322	$	492,607
Denominator:
Basic weighted average shares outstanding		328,618		326,924		326,941		326,113
Effect of dilutive securities:
Employee stock options		3,843		2,389		3,684		2,570
Restricted stock units		172		—		130		—
Restricted stock awards		2		—		2		1
Diluted weighted average shares outstanding		332,635		329,313		330,757		328,684
Basic net earnings per share	$	0.73	$	0.78	$	1.45	$	1.51
Diluted net earnings per share	$	0.72	$	0.77	$	1.43	$	1.50

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New Accounting Pronouncements

6 Months Ended

Jul. 02, 2011

New Accounting Pronouncements

New Accounting Pronouncements

NOTE 2 – NEW ACCOUNTING PRONOUNCEMENTS

In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-6, Fair Value Measurements and Disclosures (ASC Topic 820): Improving Disclosures about Fair Value Measurements, which requires reporting entities to make new disclosures about recurring or nonrecurring fair value measurements including (i) significant transfers into and out of Level 1 and Level 2 fair value measurements and (ii) information on purchases, sales, issuances and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. ASC Topic 820 was effective for interim and annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which were effective for interim and annual periods beginning after December 15, 2010. The Company adopted the additional disclosures required for Level 1 and Level 2 fair value measurements beginning in fiscal year 2010 and adopted Level 3 disclosures beginning in fiscal year 2011.

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Income Taxes

6 Months Ended

Jul. 02, 2011

Income Taxes

Income Taxes

NOTE 11 – INCOME TAXES

As of July 2, 2011, the Company had $173.1 million accrued for unrecognized tax benefits, all of which would affect the Company's effective tax rate if recognized. Additionally, the Company had $34.7 million accrued for interest and penalties as of July 2, 2011. At January 1, 2011, the liability for unrecognized tax benefits was $162.9 million and the accrual for interest and penalties was $33.8 million. The Company recognizes interest and penalties related to income tax matters in income tax expense. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for all tax years through 2001. Additionally, substantially all material foreign, state, and local income tax matters have been concluded for all tax years through 1999. The U.S. Internal Revenue Service (IRS) completed an audit of the Company's 2002 through 2005 tax returns and proposed adjustments in its audit report issued in November 2008. The IRS completed an audit of the Company's 2006 and 2007 tax returns and proposed adjustments in its audit report issued in March 2011. The Company is vigorously defending its positions and initiated defense at the IRS appellate level in January 2009 for the 2002 through 2005 adjustments and in May 2011 for the 2006 through 2007 adjustments. An unfavorable outcome could have a material negative impact on the Company's effective income tax rate in future periods.

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Commitments And Contingencies (Details)	3 Months Ended		6 Months Ended					6 Months Ended
	Jul. 02, 2011 USD ($)	Jul. 03, 2010 USD ($)	Jul. 02, 2011 USD ($)	Jul. 03, 2010 USD ($)	Jul. 02, 2011 CAD	Jan. 01, 2011 USD ($)	Jan. 01, 2011 Silzone Product Liability Insurance [Member] USD ($)	Jul. 02, 2011 British Columbia Class Action Matters [Member]	Jul. 02, 2011 Ontario Class Action Matters [Member]
Number of outstanding class actions								1	2
Outstanding class actions	$ 2,100,000,000		$ 2,100,000,000		2,000,000,000
Silzone legal accrual	23,832,000		23,832,000			24,032,000
Silzone insurance receivable	14,700,000		14,700,000			12,799,000
Remaining insurance coverage for Silzone claims							30,000,000
Product warranty liability beginning	26,941,000	21,157,000	25,127,000	19,911,000
Warranty expense recognized	3,282,000	1,645,000	5,668,000	3,382,000
Warranty credits issued	(1,255,000)	(589,000)	(1,827,000)	(1,080,000)
Product warranty liability ending	28,968,000	22,213,000	28,968,000	22,213,000
Estimated future contingent consideration	$ 25,800,000		$ 25,800,000

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Goodwill And Other Intangible Assets (Tables)

6 Months Ended

Jul. 02, 2011

Goodwill And Other Intangible Assets

Changes In Goodwill Carrying Amount

	CRM/NMD		CV/AF		Total
Balance at January 1, 2011	$	1,231,120	$	1,724,482	$	2,955,602
Foreign currency translation and other		5,062		18,829		23,891
Balance at July 2, 2011	$	1,236,182	$	1,743,311	$	2,979,493

Carrying Amount Of Other Intangible Assets And Related Accumulated Amortization

	July 2, 2011				January 1, 2011
		Gross carrying amount		Accumulated amortization		Gross carrying amount		Accumulated amortization
Definite-lived intangible assets:
Purchased technology and patents	$	913,974	$	245,210	$	910,035	$	208,362
Customer lists and relationships		184,871		110,080		184,327		100,608
Trademarks and tradenames		24,460		7,544		24,370		7,431
Licenses, distribution agreements and other		6,240		4,388		6,170		4,511
	$	1,129,545	$	367,222	$	1,124,902	$	320,912
Indefinite-lived intangible assets:
Acquired IPR&D	$	134,270			$	134,270
Trademarks and tradenames		48,800				48,800
	$	183,070			$	183,070

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Condensed Consolidated Statements Of Earnings (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jul. 02, 2011	Jul. 03, 2010	Jul. 02, 2011	Jul. 03, 2010
Condensed Consolidated Statements Of Earnings
Net sales	$ 1,446,751	$ 1,312,769	$ 2,822,264	$ 2,574,465
Cost of sales before special charges	383,877	345,302	748,319	666,471
Special charges	11,046		11,046
Total cost of sales	394,923	345,302	759,365	666,471
Gross profit	1,051,828	967,467	2,062,899	1,907,994
Selling, general and administrative expense	513,841	447,610	1,027,161	890,900
Research and development expense	176,334	155,104	352,067	306,334
Purchased in-process research and development charges	4,400		4,400
Special charges	32,169		32,169
Operating profit	325,084	364,753	647,102	710,760
Other income (expense), net	(25,013)	(20,230)	(51,465)	(40,546)
Earnings before income taxes	300,071	344,523	595,637	670,214
Income tax expense	59,177	90,485	121,315	177,607
Net earnings	$ 240,894	$ 254,038	$ 474,322	$ 492,607
Net earnings per share:
Basic	$ 0.73	$ 0.78	$ 1.45	$ 1.51
Diluted	$ 0.72	$ 0.77	$ 1.43	$ 1.50
Cash dividends declared per share:	$ 0.21		$ 0.42
Weighted average shares outstanding:
Basic	328,618	326,924	326,941	326,113
Diluted	332,635	329,313	330,757	328,684

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Net Earnings Per Share (Details) (USD $) In Thousands, except Share data	3 Months Ended		6 Months Ended
	Jul. 02, 2011	Jul. 03, 2010	Jul. 02, 2011	Jul. 03, 2010
Numerator:
Net earnings	$ 240,894	$ 254,038	$ 474,322	$ 492,607
Denominator:
Basic weighted average shares outstanding	328,618,000	326,924,000	326,941,000	326,113,000
Diluted weighted average shares outstanding	332,635,000	329,313,000	330,757,000	328,684,000
Basic net earnings per share	$ 0.73	$ 0.78	$ 1.45	$ 1.51
Diluted net earnings per share	$ 0.72	$ 0.77	$ 1.43	$ 1.50
Common stock subject to stock options, restricted stock awards and restricted stock units excluded from the diluted net earnings per share computation	6,600,000	17,700,000	7,000,000	18,000,000
Restricted Stock Units [Member]
Denominator:
Dilutive securities	172,000		130,000
Restricted Stock Awards [Member]
Denominator:
Dilutive securities	2,000		2,000	1,000
Employee Stock Options [Member]
Denominator:
Dilutive securities	3,843,000	2,389,000	3,684,000	2,570,000

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Comprehensive Income (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jul. 02, 2011	Jul. 03, 2010	Jul. 02, 2011	Jul. 03, 2010
Comprehensive Income
Net earnings	$ 240,894	$ 254,038	$ 474,322	$ 492,607
Other comprehensive income (loss):
Cumulative translation adjustment	21,616	(65,380)	108,678	(117,758)
Unrealized gain (loss) on available-for-sale securities	(1,163)	2,639	717	2,584
Total comprehensive income	$ 261,347	$ 191,297	$ 583,717	$ 377,433