8-K

UNITES STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 18, 2008

Medtronic, Inc.

(Exact name of Registrant as Specified in its Charter)

Minnesota	1-7707	41-0793183
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

710 Medtronic Parkway Minneapolis, Minnesota	55432
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code): (763) 514-4000

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1

Item 2.02. Results of Operations and Financial Condition

     On November 18, 2008, Medtronic, Inc. issued a press release announcing its second quarter 2009 financial results. A copy of the press release is furnished as Exhibit 99.1 to this report.

Item 9.01. Exhibits.

     (d)     Exhibit   99.1     Press release of Medtronic, Inc. dated November 18, 2008.

SIGNATURES

     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 hereunto duly authorized.

	MEDTRONIC, INC.
	By	/s/ Gary L. Ellis
Date: November 18, 2008		Gary L. Ellis
		Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Medtronic, Inc.
Form 8-K Current Report

Exhibit Number	Description
99.1	Press release dated November 18, 2008

EX-99.1

Exhibit 99.1

NEWS RELEASE

Contacts:
Jeff Warren	Chuck Grothaus
Investor Relations	Public Relations
763-505-2696	763-505-2614

FOR IMMEDIATE RELEASE

MEDTRONIC SECOND QUARTER REVENUE INCREASES 14 PERCENT
TO $3.570 BILLION

• Revenue in U.S. Up 12%; Revenue Outside the U.S. Up 18%

• Non-GAAP Operating Income Up 25%; GAAP Operating Income Down 7%

• $3.6 Billion in Cash and Investments and Strong Quarterly Cash Flow

MINNEAPOLIS – Nov. 18, 2008 – Medtronic, Inc. (NYSE:MDT) today announced financial results for its second quarter of fiscal year 2009, which ended Oct. 24, 2008.

The company recorded second quarter revenue of $3.570 billion, a 14 percent increase over the $3.124 billion in the second quarter reported in fiscal year 2008. Revenue outside the United States of $1.374 billion grew 18 percent, including a $65 million positive benefit of currency translation. Revenue outside the United States represented 38 percent of revenue for the quarter. Net earnings in the second quarter were $571 million, or $0.51 per diluted share, a decrease of 14 percent and 12 percent, respectively, over the same period a year ago. As detailed in the attached table, after adjusting for certain litigation after-tax charges of $176 million, or $0.15 per share, and in-process research and development after-tax charges of $11 million, or $0.01 per share, non-GAAP net earnings and diluted earnings per share in the period were $758 million, or $0.67 per diluted share, an increase of 14 percent and 16 percent, respectively. Earnings in the quarter were also impacted by a $0.03 per share charge related to the write-off of

inventory made obsolete by the recent launch of angioplasty products on a rapid exchange delivery system in the United States.

“Our results in challenging economic times reflect the benefit of a globally diversified product portfolio,” said Bill Hawkins, Medtronic chairman and CEO. “During the quarter we were pleased to see strong cash flows and continued progress in our efforts to deliver operating leverage as demonstrated by the growth in operating income after adjustments.”

Cardiac Rhythm Disease Management

Cardiac Rhythm Disease Management revenue of $1.242 billion increased 8 percent in the quarter. Revenue from implantable cardioverter defibrillators (ICDs) grew 13 percent to $724 million. Worldwide pacing revenue of $506 million increased 2 percent. During the quarter, the CRDM business advanced its portfolio of ICD leads, increased the number of patients using the Medtronic CareLink Network to nearly 300,000, and announced the acquisition of CryoCath Technologies, providing Medtronic with minimally invasive therapies designed to treat atrial fibrillation.

Spinal and Biologics

Spinal revenue of $829 million grew 26 percent, including Kyphon, which contributed $146 million. Excluding Kyphon, revenue grew 3 percent, driven by the growth of core spinal and biologic products outside the United States.

CardioVascular

CardioVascular revenue grew 22 percent, generating revenue of $596 million. Growth in the quarter resulted from strong performances in both the Endovascular product

lines, which grew 36 percent, and the Coronary and Peripheral product lines, which grew 29 percent. The recent U.S. launch of angioplasty products on a rapid exchange delivery system is expected to contribute to growth during the remainder of this fiscal year.

Neuromodulation

Neuromodulation revenue of $343 million grew 7 percent over the same period last year. Contributors to the growth of this business include RestoreULTRA^® spinal cord stimulators and Activa^® deep brain stimulation therapies.

Diabetes

Diabetes revenue of $272 million grew 11 percent in the quarter. Growth was driven by the rapid expansion of the company’s continuous glucose monitoring product line. Durable pump systems growth was highlighted by strong performance in many international markets.

Surgical Technologies

Surgical Technologies revenue grew 15 percent to $213 million driven by sales of Navigation equipment used for image-guided surgery, service revenue and strength across international markets.

Physio-Control

Physio-Control reported $75 million in revenue, based on the sale of external defibrillators and accessories. Physio-Control continues to work with the FDA to resolve outstanding quality issues in an effort to resume unrestricted product distribution.

“The strength of our globally diversified product portfolio gives us confidence that we will continue to deliver sustainable long-term growth,” said Hawkins. “As we look to the remainder of our fiscal year, our focus will be on maximizing the potential of new product launches, leveraging growth in markets outside the United States and continuing to deliver meaningful operating leverage.”

Webcast Information

Medtronic will host a webcast today, Nov. 18, at 8 a.m. Eastern Time (7 a.m. Central Time), to provide information about its businesses for the public, analysts and news media.  This quarterly webcast can be accessed by clicking on the Investor Relations link on the Medtronic home page at www.medtronic.com and this earnings release will be archived at www.medtronic.com/newsroom. Within 24 hours, a replay of the webcast and a transcript of the company’s prepared remarks will be available in the “Presentations & Transcripts” section of the Investor Relations homepage.

About Medtronic

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

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

-end-

MEDTRONIC, INC.
REVENUE BY OPERATING SEGMENT — WORLD WIDE

(Unaudited)

	FY 08		FY 08		FY 08		FY 08		FY 08		FY 09		FY 09		FY 09		FY 09		FY 09
($ millions)	QTR 1		QTR 2		QTR 3		QTR 4		Total		QTR 1		QTR 2		QTR 3		QTR 4		Total
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT	$	1,235	$	1,148	$	1,218	$	1,363	$	4,963	$	1,303	$	1,242	$	—	$	—	$	2,546
Pacing Systems		494		495		478		540		2,008		526		506		—		—		1,033
Defibrillation Systems		726		639		726		806		2,897		764		724		—		—		1,488
Other		15		14		14		17		58		13		12		—		—		25
SPINAL	$	644	$	660	$	808	$	869	$	2,982	$	859	$	829	$	—	$	—	$	1,687
Core Spinal		454		462		455		498		1,869		477		485		—		—		961
Biologics		190		198		206		221		815		221		198		—		—		419
Kyphon Business		—		—		147		150		298		161		146		—		—		307
CARDIOVASCULAR	$	486	$	490	$	512	$	643	$	2,131	$	631	$	596	$	—	$	—	$	1,227
Coronary Stents		152		149		157		251		710		236		208		—		—		445
Other Coronary/Peripheral		95		96		103		116		408		113		107		—		—		220
Endovascular		69		70		70		76		285		87		95		—		—		182
Revasc & Surgical Therapies		102		105		109		115		431		117		112		—		—		229
Structural Heart Disease		68		70		73		85		297		78		74		—		—		151
NEUROMODULATION	$	289	$	321	$	320	$	381	$	1,311	$	348	$	343	$	—	$	—	$	691
Neuro Implantables		237		264		260		308		1,069		284		271		—		—		555
Gastroenterology & Urology		52		57		60		73		242		64		72		—		—		136
DIABETES	$	241	$	246	$	258	$	275	$	1,019	$	269	$	272	$	—	$	—	$	541
SURGICAL TECHNOLOGIES	$	172	$	185	$	195	$	228	$	780	$	202	$	213	$	—	$	—	$	415
Core Ear, Nose and Throat (ENT)		75		75		81		92		323		87		86		—		—		172
Neurologic Technologies		69		74		73		82		298		79		80		—		—		160
Navigation		28		36		41		54		159		36		47		—		—		83
PHYSIO-CONTROL	$	60	$	74	$	94	$	101	$	329	$	94	$	75	$	—	$	—	$	169
TOTAL	$	3,127	$	3,124	$	3,405	$	3,860	$	13,515	$	3,706	$	3,570	$	—	$	—	$	7,276
ADJUSTMENTS :
CURRENCY IMPACT (1)	$	—	$	—	$	—	$	—	$	—	$	157	$	65	$	—	$	—	$	221
COMPARABLE OPERATIONS (1)	$	3,127	$	3,124	$	3,405	$	3,860	$	13,515	$	3,549	$	3,505	$	—	$	—	$	7,055

(1)

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

Note:

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

MEDTRONIC, INC.
REVENUE BY OPERATING SEGMENT — US
(Unaudited)

($ millions)

	FY 08		FY 08		FY 08		FY 08		FY 08		FY 09		FY 09		FY 09		FY 09		FY 09
	QTR 1		QTR 2		QTR 3		QTR 4		Total		QTR 1		QTR 2		QTR 3		QTR 4		Total
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT	$	754	$	679	$	726	$	765	$	2,922	$	731	$	702	$	—	$	—	$	1,435
Pacing Systems		244		237		218		242		940		233		228		—		—		462
Defibrillation Systems		504		434		502		515		1,955		492		472		—		—		964
Other		6		8		6		8		27		6		2		—		—		9
SPINAL	$	530	$	540	$	642	$	683	$	2,395	$	682	$	647	$	—	$	—	$	1,328
Core Spinal		349		352		341		363		1,405		358		358		—		—		715
Biologics		181		188		195		208		772		208		184		—		—		392
Kyphon Business		—		—		106		112		218		116		105		—		—		221
CARDIOVASCULAR	$	167	$	173	$	165	$	256	$	761	$	253	$	235	$	—	$	—	$	488
Coronary Stents		20		21		20		98		158		92		68		—		—		161
Other Coronary/Peripheral		24		24		26		28		104		28		26		—		—		52
Endovascular		35		37		31		35		138		41		51		—		—		93
Revasc & Surgical Therapies		49		52		49		51		200		52		51		—		—		103
Structural Heart Disease		39		39		39		44		161		40		39		—		—		79
NEUROMODULATION	$	201	$	239	$	227	$	262	$	929	$	238	$	249	$	—	$	—	$	487
Neuro Implantables		160		192		180		207		738		189		192		—		—		381
Gastroenterology & Urology		41		47		47		55		191		49		57		—		—		106
DIABETES	$	163	$	170	$	170	$	176	$	681	$	167	$	180	$	—	$	—	$	347
SURGICAL TECHNOLOGIES	$	112	$	120	$	124	$	141	$	497	$	127	$	136	$	—	$	—	$	263
Core Ear, Nose and Throat (ENT)		48		47		51		56		201		53		54		—		—		106
Neurologic Technologies		45		50		48		52		195		51		53		—		—		104
Navigation		19		23		25		33		101		23		29		—		—		53
PHYSIO-CONTROL	$	21	$	37	$	44	$	49	$	151	$	51	$	47	$	—	$	—	$	97
TOTAL	$	1,948	$	1,958	$	2,098	$	2,332	$	8,336	$	2,249	$	2,196	$	—	$	—	$	4,445
ADJUSTMENTS :
CURRENCY IMPACT	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
COMPARABLE OPERATIONS	$	1,948	$	1,958	$	2,098	$	2,332	$	8,336	$	2,249	$	2,196	$	—	$	—	$	4,445

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

MEDTRONIC, INC.
REVENUE BY OPERATING SEGMENT — INTERNATIONAL
(Unaudited)

($ millions)

	FY 08		FY 08		FY 08		FY 08		FY 08		FY 09		FY 09		FY 09		FY 09		FY 09
	QTR 1		QTR 2		QTR 3		QTR 4		Total		QTR 1		QTR 2		QTR 3		QTR 4		Total
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE MANAGEMENT	$	481	$	469	$	492	$	598	$	2,041	$	572	$	540	$	—	$	—	$	1,111
Pacing Systems		250		258		260		298		1,068		293		278		—		—		571
Defibrillation Systems		222		205		224		291		942		272		252		—		—		524
Other		9		6		8		9		31		7		10		—		—		16
SPINAL	$	114	$	120	$	166	$	186	$	587	$	177	$	182	$	—	$	—	$	359
Core Spinal		105		110		114		135		464		119		127		—		—		246
Biologics		9		10		11		13		43		13		14		—		—		27
Kyphon Business		—		—		41		38		80		45		41		—		—		86
CARDIOVASCULAR	$	319	$	317	$	347	$	387	$	1,370	$	378	$	361	$	—	$	—	$	739
Coronary Stents		132		128		137		153		552		144		140		—		—		284
Other Coronary/Peripheral		71		72		77		88		304		85		81		—		—		168
Endovascular		34		33		39		41		147		46		44		—		—		89
Revasc & Surgical Therapies		53		53		60		64		231		65		61		—		—		126
Structural Heart Disease		29		31		34		41		136		38		35		—		—		72
NEUROMODULATION	$	88	$	82	$	93	$	119	$	382	$	110	$	94	$	—	$	—	$	204
Neuro Implantables		77		72		80		101		331		95		79		—		—		174
Gastroenterology & Urology		11		10		13		18		51		15		15		—		—		30
DIABETES	$	78	$	76	$	88	$	99	$	338	$	102	$	92	$	—	$	—	$	194
SURGICAL TECHNOLOGIES	$	60	$	65	$	71	$	87	$	283	$	75	$	77	$	—	$	—	$	152
Core Ear, Nose and Throat (ENT)		27		28		30		36		122		34		32		—		—		66
Neurologic Technologies		24		24		25		30		103		28		27		—		—		56
Navigation		9		13		16		21		58		13		18		—		—		30
PHYSIO-CONTROL	$	39	$	37	$	50	$	52	$	178	$	43	$	28	$	—	$	—	$	72
TOTAL	$	1,179	$	1,166	$	1,307	$	1,528	$	5,179	$	1,457	$	1,374	$	—	$	—	$	2,831
ADJUSTMENTS :
CURRENCY IMPACT (1)	$	—	$	—	$	—	$	—	$	—	$	157	$	65	$	—	$	—	$	221
COMPARABLE OPERATIONS (1)	$	1,179	$	1,166	$	1,307	$	1,528	$	5,179	$	1,300	$	1,309	$	—	$	—	$	2,610

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

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

MEDTRONIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)

	Three months ended					Six months ended
	October 24,		October 26,			October 24,		October 26,
	2008		2007			2008		2007
	(in millions, except per share data)
Net sales	$	3,570	$	3,124		$	7,276	$	6,250
Costs and expenses:
Cost of products sold		883		840			1,738		1,632
Research and development expense		326		298			650		598
Selling, general and administrative expense		1,263		1,107			2,581		2,203
Restructuring charges		—		—			96		14
Certain litigation charges		266		—			266		—
Purchased in-process research and development (IPR&D) charges		18		—			18		33
Other expense, net		143		72			294		128
Interest expense/(income), net		10		(61	)		19		(105	)
Total costs and expenses		2,909		2,256			5,662		4,503
Earnings before income taxes		661		868			1,614		1,747
Provision for income taxes		90		202			296		406
Net earnings	$	571	$	666		$	1,318	$	1,341
Earnings per share:
Basic	$	0.51	$	0.59		$	1.18	$	1.18
Diluted	$	0.51	$	0.58		$	1.17	$	1.17
Weighted average shares outstanding:
Basic		1,120.4		1,133.1			1,120.5		1,136.1
Diluted		1,128.5		1,147.7			1,128.6		1,150.6
Cash dividends declared per common share	$	0.188	$	0.125		$	0.376	$	0.250

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

	Three months ended
	October 24,			October 26,		Percentage
	2008			2007		Change
Net earnings, as reported	$	571		$	666		(14	%)
Certain litigation charges		176	(a)		—
IPR&D charges		11	(b)		—
Non-GAAP net earnings	$	758		$	666		14	%

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

	Three months ended
	October 24,			October 26,		Percentage
	2008			2007		Change
Diluted EPS, as reported	$	0.51		$	0.58		(12	%)
Certain litigation charges		0.15	(a)		—
IPR&D charges		0.01	(b)		—
Non-GAAP diluted EPS	$	0.67		$	0.58		16	%

(a)

The $176 million ($ 0.15 per share) after-tax certain litigation charge is related to a $229 million ($152 million after-tax) charge related to the final judgment in litigation with the Cordis Corporation (a subsidiary of Johnson & Johnson) that originated in October 1997 and a $37 million ($24 million after-tax) charge related to the settlement of litigation with Fastenetix LLC that originated in May 2006. The charge related to litigation with the Cordis Corporation was in addition to a $243 million reserve recorded in the third quarter of fiscal year 2008. In addition to disclosing certain litigation charges that are determined in accordance with U.S. generally accepted accounting principles (GAAP), Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these certain litigation charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these certain litigation charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(b)

The $11 million ($ 0.01 per share) after-tax IPR&D charge represents the purchase of certain intellectual property for use in the Spine business. These payments were expensed as IPR&D since technological feasibility of the underlying product had not yet been reached and such technology has no future alternative use. In addition to disclosing IPR&D charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these IPR&D charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these IPR&D charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

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

	Six months ended
	October 24,			October 26,
	2008			2007
Net earnings, as reported	$	1,318		$	1,341
Restructuring charges		66	(a)		11	(d)
Certain litigation charges		176	(b)		—
IPR&D charges		11	(c)		25	(e)
Non-GAAP net earnings	$	1,571		$	1,377

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

	Six months ended
	October 24,			October 26,
	2008			2007
Diluted EPS, as reported	$	1.17		$	1.17
Restructuring charges		0.06	(a)		0.01	(d)
Certain litigation charges		0.15	(b)		—
IPR&D charges		0.01	(c)		0.02	(e)
Non-GAAP diluted EPS	$	1.39		$	1.20

(a)

The $66 million ($0.06 per share) after-tax restructuring charge is related to a global realignment initiative that the Company began in the fourth quarter of fiscal year 2008. This initiative focuses on shifting resources to those areas where the Company has the greatest opportunities for growth and streamlining operations to drive operating leverage. The global realignment initiative impacts most businesses and certain corporate functions. The majority of the expense recognized in the first quarter of fiscal year 2009 is related to the execution of our global realignment initiative outside the United States. This includes the realignment of personnel throughout Europe and the Emerging Markets and the closure of an existing facility in the Netherlands that will be integrated into the U.S. operations. The remainder of the expense is associated with compensation provided to employees identified in the fourth quarter of fiscal year 2008 whose employment terminated with the Company in the first quarter of fiscal year 2009. These incremental costs were not accrued in the fourth quarter of fiscal year 2008 because these benefits had not yet been communicated to the impacted employees. In addition to disclosing restructuring charges that are determined in accordance with U.S. generally accepted accounting principles (GAAP), Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these restructuring charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these restructuring charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

(b)

The $176 million ($ 0.15 per share) after-tax certain litigation charge is related to a $229 million ($152 million after-tax) charge related to the final judgment in litigation with the Cordis Corporation (a subsidiary of Johnson & Johnson) that originated in October 1997 and a $37 million ($24 million after-tax) charge related to the settlement of litigation with Fastenetix LLC that originated in May 2006. The charge related to litigation with the Cordis Corporation was in addition to a $243 million reserve recorded in the third quarter of fiscal year 2008. In addition to disclosing certain litigation charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these certain litigation charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these certain litigation charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for,

	financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.
(c)	The $11 million ($ 0.01 per share) after-tax IPR&D charge represents the purchase of certain intellectual property for use in the Spine business. These payments were expensed as IPR&D since technological feasibility of the underlying product had not yet been reached and such technology has no future alternative use. In addition to disclosing IPR&D charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these IPR&D charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these IPR&D charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.
(d)	The $11 million ($0.01 per share) after-tax restructuring charge is related to restructuring initiatives that the Company began in the fourth quarter of fiscal year 2007. These initiatives were designed to drive manufacturing efficiencies in our CardioVascular business, downsize our Physio-Control business due to our voluntary suspension of U.S. shipments, and rebalance resources within our Cardiac Rhythm Disease Management (CRDM) business to reflect the market dynamics. In the first quarter of fiscal year 2008, the Company recognized expense associated with compensation and early retirement benefits provided to employees whose employment terminated with the Company in the first quarter of fiscal year 2008 which could not be accrued in the fourth quarter of fiscal year 2007. In addition to disclosing restructuring charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these restructuring charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these restructuring charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.
(e)	The $25 million ($0.02 per share) after-tax IPR&D charge is related to a $25 million ($18 million after-tax) milestone payment under a royalty bearing, non-exclusive patent cross-licensing agreement with NeuroPace, Inc. that the Company entered into in the first quarter of fiscal year 2006. The additional $8 million ($7 million after-tax) charge is related to purchases of certain intellectual property. These payments were expensed as IPR&D since technological feasibility of the underlying projects have not yet been reached and such technology has no future alternative use. In addition to disclosing IPR&D charges that are determined in accordance with U.S. GAAP, Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding these IPR&D charges. Management believes that the resulting non-GAAP financial measure provides useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates these IPR&D charges when evaluating the operating performance of the Company. Investors should consider this non-GAAP measure in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP financial measure may not be the same as similar measures presented by other companies.

MEDTRONIC, INC.
RECONCILIATION OF SPINAL GAAP REVENUE AND REVENUE GROWTH
TO NON-GAAP REVENUE AND REVENUE GROWTH
(Unaudited)
(in millions, except per share data)

	Three months ended			Three months ended		Percentage
	October 24,2008			October 26, 2007		Change
Spinal revenue, as reported	$	829		$	660		26	%
Less: Kyphon revenue		146	(a)		—
Spinal revenue, adjusted	$	683		$	660		3	%

MEDTRONIC, INC.
RECONCILIATION OF EARNINGS BEFORE INCOME TAXES
TO NON-GAAP OPERATING INCOME
(Unaudited)

	Three months ended			Three months ended			Percentage
	October 24,2008			October 26, 2007			Change
Earnings before income taxes	$	661		$	868			(24	%)
Other expense, net		143			72
Interest expense/(income), net		10			(61	)
GAAP operating income		814	(b)		879	(b)		(7	%)
Certain litigation charges		266			—
IPR&D charges		18			—
Non-GAAP operating income	$	1,098	(c)	$	879	(c)		25	%

(a)	In the third quarter of fiscal year 2008, we acquired Kyphon Inc. The $146 million represents the revenue earned by Kyphon in the second quarter of fiscal year 2009. In addition to disclosing revenue and growth rates that are determined in accordance with U.S. generally accepted accounting principles (GAAP), Medtronic management believes that in order to properly understand its short-term and long-term financial trends, investors may find it useful to consider the impact of excluding the Kyphon revenue from these metrics. Management believes that the resulting non-GAAP financial measures provide useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations and is useful for period over period comparisons of such operations. Medtronic management eliminates this revenue when evaluating the operating performance of the Company. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with U.S. GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies.
(b)	Medtronic calculates GAAP operating income by adding back other expenses, net and interest expense/(income), net to earnings before income taxes.
(c)	Medtronic calculates non-GAAP operating income by adding back certain litigation charges, IPR&D charges, other expenses, net and interest expense/(income), net to earnings before income taxes.

MEDTRONIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	October 24,			April 25,
	2008			2008
	(in millions, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	541		$	1,060
Short-term investments		501			553
Accounts receivable, less allowances of $77 and $99, respectively		2,947			3,287
Income tax receivable		148			73
Inventories		1,348			1,280
Deferred tax assets, net		384			600
Prepaid expenses and other current assets		633			469
Total current assets		6,502			7,322
Property, plant and equipment		4,865			4,743
Accumulated depreciation		(2,631	)		(2,522	)
Property, plant and equipment, net		2,234			2,221
Goodwill		7,515			7,519
Other intangible assets, net		2,198			2,193
Long-term investments		2,803			2,322
Long-term deferred tax assets, net		-			103
Other assets		781			518
Total assets	$	22,033		$	22,198
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	1,018		$	1,154
Accounts payable		364			383
Accrued compensation		734			789
Other accrued expenses		798			1,209
Total current liabilities		2,914			3,535
Long-term debt		5,523			5,802
Long-term accrued compensation and retirement benefits		302			304
Long-term accrued income taxes		553			519
Long-term deferred tax liabilities, net		18			-
Other long-term liabilities		99			502
Total liabilities		9,409			10,662
Commitments and contingencies		-			-
Shareholders’ equity:
Preferred stock— par value $1.00		-			-
Common stock— par value $0.10		112			112
Retained earnings		12,468			11,710
Accumulated other comprehensive income (loss)		44			(286	)
Total shareholders’ equity		12,624			11,536
Total liabilities and shareholders’ equity	$	22,033		$	22,198

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

	Six months ended
	October 24,			October 26,
	2008			2007
	(in millions)
Operating Activities:
Net earnings	$	1,318		$	1,341
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		352			276
IPR&D charges		18			33
Provision for doubtful accounts		16			17
Deferred income taxes		71			3
Stock-based compensation		108			92
Excess tax benefit from exercise of stock-based awards		(26	)		(32	)
Change in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable		270			(128	)
Inventories		(141	)		(12	)
Accounts payable and accrued liabilities		(90	)		98
Other operating assets and liabilities		(276	)		117
Net cash provided by operating activities		1,620			1,805
Investing Activities:
Acquisitions, net of cash acquired		(29	)		(26	)
Purchase of intellectual property		(135	)		(52	)
Additions to property, plant and equipment		(263	)		(280	)
Purchases of marketable securities		(1,877	)		(4,279	)
Sales and maturities of marketable securities		1,321			6,959
Other investing activities, net		(5	)		(67	)
Net cash (used in) provided by investing activities		(988	)		2,255
Financing Activities:
Change in short-term borrowings, net		(124	)		266
Payments on long-term debt		(300	)		—
Dividends to shareholders		(421	)		(284	)
Issuance of common stock		367			285
Excess tax benefit from exercise of stock-based awards		26			32
Repurchase of common stock		(639	)		(901	)
Net cash used in financing activities		(1,091	)		(602	)
Effect of exchange rate changes on cash and cash equivalents		(60	)		(31	)
Net change in cash and cash equivalents		(519	)		3,427
Cash and cash equivalents at beginning of period		1,060			1,256
Cash and cash equivalents at end of period	$	541		$	4,683