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News Release

Medtronic Annual Revenue Up 8 Percent to $14.6 Billion

Strong Performance Delivered Across Diverse Portfolio

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

MINNEAPOLIS – May 19, 2009 – Medtronic, Inc. (NYSE: MDT) today announced financial results for its fiscal year and fourth quarter ended April 24, 2009.

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

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

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

Cardiac Rhythm Disease Management

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

Spinal and Biologics

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

CardioVascular

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

Neuromodulation

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

Diabetes

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

Surgical Technologies

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

Physio-Control

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

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

Webcast Information

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

About Medtronic

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

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

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