<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                                   Form 10-K



  [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                   For the fiscal year ended April 30, 1997


     Commission file number            0-18724
                            ------------------------------

                        MARQUETTE MEDICAL SYSTEMS, INC.
            (Exact name of registrant as specified in its charter)

         Wisconsin                                              39-1046671
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

8200 West Tower Avenue, Milwaukee, Wisconsin                      53223
  (Address of Principal Executive Offices)                     (Zip Code)

                                (414) 355-5000
             (Registrant's Telephone Number, Including Area Code)

          Securities registered pursuant to Section 12(b) of the Act:

                                     None

          Securities registered pursuant to Section 12(g) of the Act:

                     Class A Common Stock, $0.10 Par Value
                               (Title of Class)

     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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes   X    No     
                                               -----     -----

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  Yes   X    No     
                -----     -----

     Approximate aggregate market value of the registrant's Class A Common Stock
held by non-affiliates (based on the closing sales price of such stock as
reported in the NASDAQ National Market System) on July 1, 1997 was $264,616,590.

     As of July 1, 1997, the number of shares of Class A Common Stock, $0.10 par
value, outstanding was 17,640,934.


                      DOCUMENTS INCORPORATED BY REFERENCE


               Document                                       Form 10-K Part
               --------                                       --------------

1.   Annual Report to Shareholders for fiscal year ended
     April 30, 1997                                                  II

2.   Proxy Statement for Annual Meeting of Shareholders
     scheduled to be held on August 13, 1997                        III


_______________

*    Excludes, among other shares, 3,569,857 shares of Common stock held by
     officers and directors at July 1, 1997. Exclusion of such shares should not
     be construed to indicate that any such person possesses the power, direct
     or indirect, to direct or cause the direction of the management or policies
     of the registrant or that such person is controlled by or under common
     control with the registrant.
<PAGE>
 
     ITEM 1.  BUSINESS


 
     Overview

          Marquette Medical Systems, Inc. (including its subsidiaries, the
     "Company" or "Marquette") is a worldwide leader in the development and
     manufacture of medical equipment and integrated systems for patient
     monitoring and diagnostic cardiology applications.  Marquette also develops
     clinical information systems, designed to be integrated with medical
     equipment, consisting of hardware and software used by integrated health
     care delivery networks and individual hospitals to electronically acquire,
     record, store, analyze and distribute patient medical data.  The Company
     believes that its ability to offer integrated clinical information systems
     and patient monitoring and diagnostic cardiology equipment provides it with
     significant competitive advantages over companies that market only
     equipment or clinical information systems.  The Company has made a
     substantial commitment to research and development and is well known for
     its technological innovation and quality, dating back to 1965 when it
     introduced the first centralized ECG processing and storage system.

          Patient monitoring systems and diagnostic cardiology products
     accounted for approximately 48% and 33% of net sales, respectively, for the
     year ended April 30, 1997 ("Fiscal 1997") with the remaining 19% of net
     sales relating to supplies and after market services.  The Company's
     products are sold in more than 65 countries throughout the world, with the
     U.S. and international markets accounting for approximately 61% and 39%,
     respectively, of net sales for Fiscal 1997. The Company's products are used
     principally in critical and intensive care units, operating and recovery
     rooms, step-down units, labor and delivery units, the cardiology
     department, the Cath Lab and related areas of acute care hospitals.  In
     addition, Marquette products increasingly are being used in smaller
     hospitals, medical clinics, outpatient surgery centers, physician offices
     and the home.

          The Company estimates that the worldwide market for patient monitoring
     systems is approximately $1.6 billion, of which approximately $800 million
     is attributable to the U.S.  Marquette's patient monitoring systems
     continuously acquire, analyze, store, display and print patient
     physiological information, providing attending medical personnel a means to
     continuously evaluate a patient's condition.  Patient monitoring systems
     include bedside, telemetry, anesthetic and respiratory gas, maternal/fetal,
     neonatal and

                                       2
<PAGE>
 
     home care and clinical information systems.  The Company believes it is one
     of the leading manufacturers of maternal/fetal, bedside and telemetry
     monitoring systems.  The Company offers fully integrated, networked, open
     architecture clinical information systems that process information obtained
     from patient monitors and various other sources, including Marquette's and
     other companies' products, to create an interactive electronic patient
     medical record.

          The Company estimates that the worldwide market for diagnostic
     cardiology products is approximately $1 billion, of which approximately
     $430 million is attributable to the U.S.  Marquette's diagnostic cardiology
     products are used to diagnose cardiac disorders through the detection,
     recording and analysis of electrical signals and other information relating
     to the heart.  These include resting, exercise testing and Holter
     (ambulatory) ECG equipment, cardiovascular information systems, cardiac
     defibrillators, cardiac catheterization laboratory monitors, and photo
     image and digital image processing equipment.  The Company believes it is
     one of the leading manufacturers of cardiovascular information systems and
     cardiac catheterization laboratory monitors.  The Company offers an open
     architecture cardiovascular information system that accepts and stores data
     from electrocardiographs and other diagnostic cardiology products to create
     a patient-specific cardiology database for comparative and other purposes.

     Addressing Market Needs

          Health care providers are increasingly differentiating medical
     equipment vendors based on their ability to provide clinical management and
     patient administration systems that deliver better quality care at lower
     costs.  Marquette is addressing these market needs with a total systems
     approach based on a combination of its broad product lines, open
     architecture Unity Network and its clinical process expertise.

          Marquette's Unity Network is an integrated system which enables a wide
     range of patient monitoring, diagnostic cardiology and clinical information
     systems to be interconnected and to interface with hospital information
     systems maintained by its customers.  Reports can be generated that provide
     the data in both clinical and administrative form to aid in improving the
     quality of care in the most cost effective manner.  The Unity Network is
     designed to (i) communicate patient information from bedside and telemetry
     monitors to central nurses' stations, (ii) allow clinicians to view patient
     information from various areas of the hospital or from remote locations via
     telephone lines and modems, and (iii) electronically transfer patient
     information

                                       3
<PAGE>
 
     to care units, outpatient facilities or physicians' offices.

          Marquette differentiates itself from other medical equipment vendors
     by addressing market needs with a total solutions approach:

          First, Marquette offers its customers a broad product line and the
     ability to equip and supply multiple areas along the continuum of care,
     thereby enabling integrated health care delivery networks and hospitals to
     gain efficiencies through standardization with a single vendor.

          Second, Marquette offers its customers the ability to construct an
     information network infrastructure and clinical information systems to
     enhance the utilization and clinical value of the Company's patient
     monitoring and diagnostic cardiology products as well as other medical
     equipment vendors' products to which the Unity Network can be interfaced.

          Third, Marquette provides its customers expertise in clinical problem
     solving, systems integration and process improvement to customize the
     configuration of the Company's products and systems to optimize clinical
     applications for the customers' various care areas and patient management
     needs.

     Business Strategy

          The Company's objective is to be the premier provider of medical
     systems for patient monitoring and diagnostic cardiology across the
     continuum of care.  The elements of the Company's strategy to achieve this
     objective are identified below.
 
          Enter New Care Areas.  The Company seeks to capitalize on the shift
     from critical care to subacute care, physician offices and home care
     through the introduction of newly designed patient monitoring and
     diagnostic cardiology products aimed specifically at these evolving care
     areas.  The Company believes that there is a greater potential for growth
     in these care areas than in the hospital market in which the Company's
     products have historically been sold.  The Company is developing new
     products that address the functional needs of these lower acuity care areas
     based on the Company's technological expertise developed in connection with
     its hospital products.

          Broaden and Enhance Existing Product Lines.  The Company is adding
     depth to its product lines by introducing products at lower price points.
     The Company has implemented this strategy by developing

                                       4
<PAGE>
 
     products internally, forming strategic alliances and through acquisitions.
     For example, as part of the E for M acquisition, the Company obtained
     Hellige's development efforts relating to a high performance, compact,
     portable, battery-powered, multiparameter patient monitor.

          Continue Development of Clinical Information Systems.  The networking
     of the Company's products through clinical information systems enhances the
     value of the Company's products to customers and will continue to be a
     focus of the Company's product development efforts.  The Company believes
     that the development of expanded clinical information systems capabilities
     is an important element of Marquette's competitive advantage in the patient
     monitoring and diagnostic cardiology markets.

          Increase Penetration of International Markets.  International sales
     have increased from approximately 33% of net sales for the year ended April
     30, 1996 ("Fiscal 1996") to approximately 39% of net sales for Fiscal 1997
     primarily due to the acquisition of E for M.  The Company will continue to
     seek greater penetration of the European market, where the E for M
     acquisition has substantially broadened the Company's distribution network.
     The Asia/Pacific market accounted for approximately 7% of the Company's net
     sales for Fiscal 1997 and has been identified by the Company as an area for
     potential growth.

          Increase Recurring Revenue Streams.  The Company is focused on
     increasing its recurring revenue by actively developing the disposable
     supplies market for the products it sells.  The Company seeks to continue
     to leverage its installed based to further increase sales of supplies and
     services related to its equipment.  Additionally, the Company seeks to
     leverage the brand-name recognition generated through its equipment sales
     to increase sales of technology-distinguished supplies related to a broad
     range of medical products manufactured by the Company and others.

          Enhance Profit Margins.  The Company continually seeks to improve
     gross margins by increasing capacity utilization at existing manufacturing
     facilities and utilizing global purchasing contracts to reduce material and
     component costs.  Additionally, the Company seeks to control operating
     costs such as engineering and general and administrative expenses relative
     to sales growth in order to increase operating margins.

                                       5
<PAGE>
 
     Patient Monitoring

          Marquette's patient monitoring systems continuously acquire, analyze,
     store, display and print patient physiological information such as ECGs,
     pulse rate, blood pressure, temperature, gas measurements, respiration rate
     and oxygen saturation in the blood. This information provides attending
     medical personnel a means to continuously evaluate a patient's condition.

          The Company estimates the worldwide market for patient monitoring is
     approximately $1.6 billion, of which approximately $800 million is
     attributable to the U.S.  Recent market growth has been driven principally
     by demographic trends resulting in larger numbers of ill and elderly
     patients. Future market growth is also expected to result from emerging
     monitoring demand in new care areas which previously did not use or require
     monitoring.  As health care providers seek to reduce costs, significant
     portions of patient care are being delivered in lower acuity care areas.
     Many patients who in the past would have remained in the intensive care
     unit and received care with a 1:1 patient-to-nurse ratio for extended
     periods of time are being moved to lower acuity care areas with a 4:1 or
     6:1 patient-to-nurse ratio in which portable monitors or telemetry is used.
     These areas, which include step-down and subacute areas of hospitals,
     outpatient care facilities and home care, are expected to provide
     significant growth opportunities.

          Marquette has leveraged its expertise in microprocessor design,
     advanced circuit development and software programming to establish itself
     as a global leader in physiological data acquisition and analysis.  The
     Company has well known core competencies in ECG signal acquisition and
     analysis, pulse oximetry monitoring, invasive and non-invasive blood
     pressure measurement, cardiac output determination and respiratory gas
     analysis, and is actively involved in the advancement of measurement
     techniques and algorithms in these areas.

          In May 1994 the Company acquired Corometrics Medical Systems, Inc.
     ("Corometrics"), a designer and manufacturer of fetal and neonatal
     monitoring systems, and one of the leading providers of clinical
     information systems for labor and delivery applications.  The Corometrics
     acquisition allowed the Company to expand its product offerings to the
     labor and delivery care area with a well recognized trade name and an
     established market position.  The Company believes that its Corometrics and
     Marquette brand names are widely recognized for excellence and innovation
     in the patient monitoring sector.

                                       6
<PAGE>
 
          The following table provides information with respect to the Company's
     principal patient monitoring systems.

<TABLE>
<CAPTION>
                               Approximate                             Introduc-
                                  List              Principal            tion          Care
      Product Category         Price Range           Product             Date          Areas
      ----------------         -----------           -------           ---------      ------
<S>                           <C>            <C>                       <C>        <C>
Modular Bedside Monitors      $13,000-       Solar 8000                   1995    Intensive Care,
                              $25,000        Solar 9000                   1996    Acute Care
 
Configured Bedside            $ 6,500-       Eagle 3000                   1995    Intensive Care,
Monitors                      $20,000        Eagle 4000                   1995    Acute Care, General
                                             Eagle 1000 (Portable)        1996    Care, Portable and
                                                                                  Transport
 
Telemetry Monitoring          $6,500 per     CD - Telemetry LAN           1991    Ambulatory Care and
Systems                       bed            System                       1995    Sub Acute Care
                                             APEX Transmitter

Anesthetic and Respiratory    $10,000-       RAMS Mass Spectrometer       1995    Intensive Care,
Gas Monitoring Equipment      $60,000        SAM IR Anesthetic            1995    Acute Care
                                             Agent
                                             Module

Maternal/Fetal Monitoring     $4,800-        Model 150/Antepartum         1992    Labor and Delivery
Equipment                     $18,000        Model 151/Intrapartum        1994
                                             Model 118/Intrapartum        1994
                                             Model 155/Antepartum         1996
                                             Model 340 Telemetry          1996
                                             /Intrapartum
                                             Model 120 Series             1997
 
Neonatal Monitoring           $8,000-        Eagle 4000N                  1993    Intensive Care
Equipment                     $20,000        Model 556 (color)            1994
                                             Solar 7000N                  1995
                                             Eagle 3000N                  1996
                                             Solar 8000N                  1996
 
Home Care Monitoring          $1,500-$3,800  500E                         1986    Home Care
Equipment                                    500EXL                       1995
                                             510/511                      1996
                                             Event-Link                   1996
 
Clinical Information          $40,000-       QS System                    1996    All care areas
Systems                       $1,500,000
</TABLE>

          Modular Bedside Monitors are used to continuously acquire, analyze and
     monitor physiological information from critically ill patients located in
     intensive and critical care units and operating rooms.  These devices use
     multiple software modules for separate physiological parameters to adjust
     the device configuration at the point of care to meet the monitoring needs
     and acuity of any particular patient.

          The Solar 8000, the Company's principal modular bedside monitor,
     features a hardware base which offers the user the flexibility to choose
     among various features and capabilities, including acquisition and analysis
     of 12-lead ECGs and point-of-care blood gas analysis,

                                       7
<PAGE>
 
     through the addition of software modules.  A new single parameter Solar
     module library can be configured for between one and eight physiological
     parameters to meet a full range of monitoring configuration needs.

          Marquette recently introduced the Solar 9000, a more advanced modular
     bedside monitor that provides local area network computer and internet
     connection capabilities.  Initially, the Solar 9000 is targeted to
     operating rooms that require combined vital signs monitoring and clinical
     information management.

          Configured Bedside Monitors are very similar to the modular bedside
     monitors in their continuous vital signs monitoring capabilities.  However,
     they do not permit point-of-care configurability.  In most cases, these
     devices are used to monitor patients in less acute settings or in places
     where general purpose monitoring is needed, such as post-anesthesia
     care/recovery units or the emergency department.

          The Company offers the Eagle 4000, 3000 and 1000 configured bedside
     monitors.  The Eagle 4000 is the most advanced of these products and is
     capable of monitoring 12-lead ECGs, (including the ST segment of the ECG
     waveform) and carbon dioxide levels.  The Eagle 3000 is lower priced and
     offers fewer features than the Eagle 4000.  The Company believes that the
     current features of the Eagle 3000, together with its lower price compared
     to the Eagle 4000, should enable the Eagle 3000 to further penetrate the
     configured bedside monitor market. The Eagle 1000 is a low cost battery-
     powered portable monitor that is available in a variety of configurations
     and is especially well suited to compete in cost sensitive markets outside
     the U.S.

          Telemetry Monitoring Systems continuously collect ECGs from a device
     worn by the patient and transmit the data via radio frequency to a central
     receiver unit and viewing station.  These systems are designed for patients
     who are not confined to their beds, which generally includes post-operative
     patients and others in the recovery process.  Telemetry monitoring systems
     represent an increasing share of the market for monitoring equipment
     because they allow patients to be ambulatory, which facilitates earlier
     discharge from the hospital.

          Marquette competes in this category with its CD-Telemetry LAN System
     and APEX Telemetry Transmitter.  The Company has entered into several
     recent strategic alliances which add patient and staff tracking and
     location capabilities, and clinician/caregiver paging with alarm

                                       8
<PAGE>
 
     event view on the pager.

          Anesthetic and Respiratory Gas Monitoring Equipment are used in tandem
     with the Company's other vital sign monitors and diagnostic products for
     cardiopulmonary monitoring in anesthesia, post-operative recovery, critical
     care and pulmonary function laboratories.  Gas monitoring products are used
     to verify the accuracy of anesthetic gas vaporizers and delivery systems
     before, during and after surgery, and measure pulmonary functions such as
     oxygenation and ventilation.  Gas monitors also detect potentially life-
     threatening conditions such as hyperventilation (excessive pulmonary gas
     exchange), hypoventilation (inadequate pulmonary gas exchange), pulmonary
     air embolus (air bubbles in the pulmonary blood stream), and equipment
     malfunction during surgery.

          The Company offers products using two methodologies for multiple gas
     detection and analysis:  mass spectrometry and infrared spectroscopy.  The
     Company's mass spectrometry product, the RAMS, provides a comprehensive
     analysis of gases administered/monitored during surgery.  The Company's
     infrared spectroscopy product, consisting of the SAM IR Anesthetic Agent
     Modules, allows for cost-effective intraoperative monitoring of anesthetic
     agents, carbon dioxide, and oxygen.

          Maternal/Fetal Monitoring Equipment provides electronic monitoring of
     the fetal heart rate and uterine activity as well as maternal parameters
     such as ECG, non-invasive blood pressure and pulse oximetry.  The Company
     offers a broad line of Corometrics brand perinatal products used in
     hospitals, physician offices and other clinical settings for care of mother
     and child during pregnancy (antepartum) and delivery (intrapartum).

          The antepartum monitors, Models 145, 150 and 155 offer a full range of
     non-invasive fetal surveillance throughout high risk pregnancies.  The
     ability to offer dual ultrasound heart rate for twin monitoring, external
     uterine contraction monitoring and electronic fetal movement detection
     allows flexibility in assessing fetal well-being during pregnancy.

          The intrapartum monitors, Models 151, 118 and 340 Telemetry allow for
     both non-invasive and invasive fetal ECG monitoring and uterine
     contractions.  In addition, the Model 118 was the first product to combine
     fetal monitoring with maternal vital signs, non-invasive blood pressure and
     oxygen saturation.  This combined maternal/fetal monitor allows assessment
     of the maternal and fetal response to labor events

                                       9
<PAGE>
 
     which may affect the intrauterine environment, including anesthesia,
     induction of labor and recovery of the mother.  The Model 118 is ideally
     suited to the new concept in obstetrical care of providing labor, delivery,
     recovery and postpartum (LDRP) in one room.  The Model 120 series expands
     the capability of the Model 118 and provides a display of maternal ECG
     waveforms.  This feature allows the clinician advanced monitoring
     capability.  The Model 340 Telemetry system allows ambulatory patients to
     be monitored during labor.

          Neonatal Monitoring Equipment provides continuous monitoring of
     neonates and allows clinicians to record, analyze and react to a neonate's
     changing conditions.  The Company's neonatal product line meets the
     monitoring requirements of the less critical to the most critically ill
     neonate.  These monitors are capable of displaying multiple measurements
     such as ECG, respiration, invasive pressures, temperatures, pulse oximetry
     and non-invasive blood pressure.  Using the Eagle and Solar monitoring
     platforms, the Corometrics brand products have added neonatal features such
     as superior respiration detection algorithms and trending, thereby
     customizing these monitors to the needs of the neonate in the neonatal
     intensive care unit.  In addition, the more compact and cost effective
     Model 556 monitor is designed for lower acuity nurseries.

          Home Care Monitoring Equipment incorporates the technological advances
     of the Corometrics brand hospital based monitors with the simplicity that
     home use requires.  Corometrics introduced the first battery backup and
     internal memory apnea monitor in the 1980s.  In 1995, the Model 510/511
     became the first apnea monitor with integrated pulse oximetry cleared by
     the FDA for use in the home, and the Company believes the Model 510/511
     remains the only monitor of its kind on the market today.  The 500 series
     of apnea products and Event-Link software allows home care clinicians to
     collect, store and analyze monitoring data to provide objective
     documentation of alarm cause and effect, allowing more cost efficient care
     of the patient in the home.

          Clinical Information Systems integrate and store data coming from
     multiple patient care areas.  The data can be charted, reviewed and
     presented in hospital selected formats that provide clinicians with a
     comprehensive overview of patient status.  Reports can then be generated
     that provide the data in both clinical and administrative form to aid in
     improving the quality of care in the most effective manner.

          The Company's product platform, the QS System, is designed to
     integrate data from all care areas, including labor and delivery, the

                                       10
<PAGE>
 
     neonatal intensive care unit, general floor, intensive care unit, critical
     care unit, operating room and perioperative unit.  Interfaces also exist
     for most lab and hospital information systems as well as for all Company
     patient monitoring systems and the patient monitoring products of other
     companies.  Integrated clinical applications can include remote site access
     that enables satellite hospitals, clinics and physicians to be linked to
     the centrally-located system.  The QS System can be customized to meet the
     most basic entry level requirements to the most complex whole hospital
     solutions involving wide area networks.  The Company believes that one of
     the primary advantages of the QS System is its ability to interconnect and
     interface with hospital information systems through the Unity Network.

     Diagnostic Cardiology

          Marquette's diagnostic cardiology products are used to diagnose
     cardiac disorders through the detection, recording and analysis of
     electrical signals and other information relating to the heart. Coronary
     artery disease is the leading cause of death of adult Americans today, and
     accounts for over 20 percent of the national health care budget.

          The Company estimates the worldwide market for diagnostic cardiology
     products is approximately $1 billion, of which approximately $430 million
     is attributable to the U.S.  An aging population, the increasing trend
     towards preventative rather than corrective medicine and a general
     preference for less invasive procedures are the factors expected to
     generate increased demand for the Company's diagnostic cardiology products.

          Marquette believes its cardiovascular information solution, the MUSE
     CV/TM/ information system, is one of the leading products used to store,
     manage, process and deliver the entire cardiology patient file. The system
     delivers advances in patient databasing, hospital information system
     interfaces, network connectivity, internet technology, e-mail accessibility
     and health care protocol standards.

          In January 1996, the Company acquired E for M Corporation ("E for M").
     Through the acquisition, Marquette added new cardiac imaging capabilities,
     broadened its diagnostic cardiology product line and expanded its customer
     base for cardiology systems.  E for M's product lines also include high
     quality cineangiography film and digital imaging products.  Also, the E for
     M acquisition, which included all of the stock in Hellige GmbH ("Hellige"),
     added European manufacturing, marketing and distribution facilities.  The
     acquisition of E for M

                                       11
<PAGE>
 
     allowed the Company's MUSE CV cardiovascular information system to expand
     its functionality into image and electrophysiology management. Management
     believes Marquette has the only complete Cath Lab solution providing
     electrophysiology and hemodynamic monitoring, digital imaging and
     cardiology patient information management.

          The following table provides information with respect to the Company's
     principal diagnostic cardiology products.

<TABLE>
<CAPTION>
 
                               Approximate                      Introduc-       
                                   List         Principal         tion          Care
      Product Category         Price Range       Products         Date          Area
      ----------------         -----------      ---------       ---------       ----
<S>                            <C>          <C>                <C>         <C>
Resting ECG Equipment          $1,800-      Mac PC                 1985    Intensive Care,
                               $15,000      Mac 6                  1989    Acute Care,
                                            Mac VU                 1991    General Purpose,
                                            Mac 8                  1993    Emergency Care,
                                            CardioSmart            1994    Sub Acute
                                            MicroSmart             1996
 
Exercise Testing ECG           $4,000-      MAX 1                  1989    General Purpose,
Systems                        $23,000      CASE 16                1994    Sub Acute
                                            MAX Personal           1995
                                            CardioSys XT           1996
                                            CardioSmart ST         1997
 
Holter (Ambulatory) ECG        $21,000-     CENTRA                 1989    Ambulatory Care,
Equipment                      $60,000      SXP                    1991    Home Care
                                            Memoport               1995
                                            MARS                   1996
 
Cardiovascular Information     $30,000-     MUSE CV                1996    Intensive Care,
Systems                        $300,000                                    Acute Care,
                                                                           General Purpose,
                                                                           Emergency Care,
                                                                           Sub Acute Care

Cardiac Defibrillators         $2,000-      CardioServ 360+        1991    Intensive Care,
                               $14,500      1250 Series            1991    Acute Care,
                                            1500 Series            1991    General Purpose,
                                            CardioServ             1993    Emergency Care,
                                            2500 Series            1996    Portable and
                                                                           Transport, Sub
                                                                           Acute Care

Cardiac Catheterization        $90,000-     Mac Lab                1990    Intensive Care
Equipment                      $160,000     Midas 6000             1993
                                            Midas 8000             1995
 
Photo Image and Digital        $10,000-     AccuVision Series      1995    Intensive Care
Image Processing Equipment     $125,000
</TABLE>

          Resting ECG Equipment is designed to record an ECG of a patient who is
     at rest, and are generally mounted on a wheeled cart for movement to the
     patient's bedside or elsewhere as needed.  The Company's
     electrocardiographs permit as many as 14 lead wires to be attached to
     patients, maximizing the amount of data that can be

                                       12
<PAGE>
 
     acquired.  The Company's extensive line of resting electrocardiographs is
     designed for use across the spectrum of care areas, including acute care
     hospitals, outpatient surgery centers, ambulances and physicians' offices.
     The Company's resting electrocardiographs perform immediate analysis of
     ECGs, store ECGs for further analysis and can communicate ECGs
     electronically to other electrocardiographs or other equipment, including
     cardiovascular information systems, for storage and comparison.

          Exercise Testing ECG Systems are used to diagnose cardiac disease and
     assess its severity by stressing the heart through physical exercise to
     elevate its blood flow requirement.  While this stress exists, any
     significant obstruction in the coronary arteries limits the flow of blood
     and results in cardiac dysfunction, which can be detected by a physician
     using electrocardiography.  The Company's exercise testing ECG systems are
     predominantly used in physician offices and hospitals.  The Company's
     CardioSys/TM/ system is capable of communicating ECGs electronically to
     other electrocardiographs or other equipment, including cardiovascular
     information systems, for storage and comparison.

          Holter (Ambulatory) ECG Equipment is designed to provide ECG
     information from an ambulatory patient who experiences intermittent
     symptoms such as palpitations, angina or loss of consciousness through a
     small recording device over the course of an extended period (usually 24
     hours), in or out of the hospital.  The Company has recently introduced
     MARS (Multiparameter Analysis Review Station), a new generation of Holter
     (ambulatory) ECG equipment. It combines the ability to analyze signals
     acquired from the Company's line of intensive care or telemetry monitors
     with those of a traditional Holter monitor, thus reducing the length of
     stay for many patients who might otherwise be delayed in the hospital
     waiting for tests to be performed or interpreted.

          Cardiovascular Information Systems are designed to accept data from
     outlying electrocardiographs via telephone line, diskette or direct
     connection, store hundreds of thousands of ECGs and quickly retrieve them
     for comparison with ECGs currently being reviewed.

          The Company's latest cardiovascular information system, the MUSE
     CV/TM/, is an open architecture system designed for hospitals. In addition
     to storing, analyzing and retrieving ECGs taken at rest, MUSE CV provides
     similar capability for Holter ECGs, exercise testing ECGs, and other
     testing procedures and integrates all of the Company's diagnostic
     cardiology products together through networking and computer processing,
     creating a complete cardiology patient file.  MUSE CV also provides an
     interface to the hospital's information system.  MUSE CV can generate
     billing and activity reports which can assist a hospital or other user in
     cost control and decrease the possibility of tests remaining unbilled.
     Many

                                       13
<PAGE>
 
     MUSE CV systems serve more than one hospital, with outlying hospitals
     employing workstations connected to the central MUSE CV by telephone lines,
     permitting cardiologists at the central hospital to assist in treating
     large numbers of patients in wide geographical areas.

          Cardiac Defibrillators are designed to restart the heart of victims of
     sudden cardiac arrest, a severe form of heart attack. Cardiac arrest is
     among the leading causes of death in the U.S. The highest incidence of
     cardiac arrest occurs outside the hospital.  The Company markets a number
     of defibrillator models for pre-hospital and hospital use.  Marquette's
     Model 1500 is the only pre-hospital defibrillator that provides 12-lead ECG
     acquisition and pacing, and can transmit ECGs directly to the hospital's
     cardiovascular information system.  The Company's hospital line of
     defibrillators can be used in all care areas, including the exercise
     testing lab, patient transport and the emergency department.

          Cardiac Catheterization Equipment is used in various cardiovascular
     procedures performed in the Cath Lab and the EP Lab. In vascular or
     "hemodynamic" studies, the catheter, with attached physiological sensors,
     is used to measure temperature and blood pressure in various parts of the
     heart and the surrounding circulatory system, as well as determining the
     volume of blood being pumped by the heart.  Electrophysiology studies are
     performed to evaluate the process of the conduction of electricity through
     the heart as the heart contracts and to diagnose the mechanisms of abnormal
     heart rhythm.  The Company's Midas System 8000 is the only system that
     combines complete electrophysiology and hemodynamics into one workstation,
     maximizing the utilization of the workstation.  The system is specially
     configured to assist cardiologists with fast, accurate collection and
     analysis of physiological data.

          Photo Image and Digital Image Processing Equipment is used to view the
     performance and function of a patient's coronary vasculature to assist in
     the detection, diagnosis, treatment and prevention of cardiac diseases and
     injuries, particularly in connection with cardiac catheterization.  The
     Company's photographic and digital imaging systems allow the capture,
     storage and review of these images.  The Company's photographic systems
     utilize a variety of 35mm high grade films produced under the Company's
     label by third-party manufacturers and offer a number of different
     processing chemistries.  The Company's digital image processing systems
     capture analog images from X-ray, ultrasound and other common imaging
     sources and convert them to digital images. These systems then manage the
     digitized images so they can be enhanced, quantified, reviewed in real-
     time, transmitted over networks and/or archived on CD-R media.  The Company
     does not manufacture or sell the X-ray, ultrasound or other imaging source

                                       14
<PAGE>
 
     associated with this process.

     Supplies and Disposables

          The Company manufactures, markets and distributes a broad spectrum of
     disposable supplies and disposables used primarily in conjunction with the
     Company's large installed base of patient monitoring systems and diagnostic
     cardiology products.  These products include ECG and other recording paper,
     monitoring and diagnostic electrodes, patient belts and straps, disposable
     and reusable blood pressure cuffs, disposable water traps, temperature
     probes, pulse oximetry probes and ambulatory ECG/telemetry hookup kits.  In
     addition, the Company utilizes its product expertise and manufacturing
     capacity to produce private label products for third parties.

          The Company seeks to continue to leverage its installed base to
     further increase sales of supplies and services related to its equipment.
     Additionally, the Company seeks to leverage the brand-name recognition
     generated through its equipment sales to increase sales of technology-
     distinguished supplies related to a broad range of medical products
     manufactured by the Company and others.  To implement this strategy the
     Company recently created supplies and disposable products as a separate
     division of the Company and devoted additional management resources to the
     division.

     Customer Service

          The Company's service operations are responsible for equipment
     installation at customers' sites and for the fulfillment of the Company's
     warranty and maintenance commitments.  Most equipment sold by the Company
     is fully warranted for all parts and labor for one year.  The Company
     offers a variety of post-warranty service agreements permitting customers
     to contract for the level of equipment maintenance and repair they require.

          In addition to warranty and post-warranty maintenance service, the
     Company performs circuit board repairs on a 48-hour return basis, and
     manufactures and markets replacement parts to the Company's dealers and
     equipment users.  The Company offers repair and maintenance training
     classes throughout the year for customers and dealers.  In addition, the
     Company supports customers, dealers and the Company's field personnel by
     providing telephone assistance on service problems.

          The Company has a national network of approximately 167 service
     technicians located throughout the U.S., and approximately 125 service
     technicians located in Europe.  At its operations in Germany, the Company
     operates a parts and support center for European service.  In some foreign
     countries, if direct Company field engineers and technicians are not
     conveniently located,

                                       15
<PAGE>
 
     employees of local dealers provide warranty and field maintenance service.

     Research and Development

          Marquette has made a substantial commitment to product research and
     development throughout its history and has introduced major new products in
     each of its product lines during the past three years.  The Company
     expended $30.7 million, $37.3 million, and $48.1 million on research and
     development, which represented approximately 9.0%, 9.0% and 8.9% of net
     sales for the fiscal years ending April 30, 1995, 1996 and 1997,
     respectively.  Marquette has leveraged its expertise in microprocessor
     design, advanced circuit development and software programming to establish
     itself as a global leader in physiological data acquisition and analysis.
     The Company has well-known core competencies in ECG signal acquisition and
     analysis, pulse oximetry monitoring, invasive and non-invasive blood
     pressure measurement, cardiac output determination and respiratory gas
     analysis, and is actively involved in the advancement of measurement
     techniques and algorithms associated with each area.  The Company's primary
     product development efforts are carried out at the division level.  In
     addition, the Company maintains a 17,000 square foot dedicated Research and
     Development Center approximately one mile from its corporate offices in
     Milwaukee, Wisconsin.

          The Company's research and development strategy is to improve and
     expand its product line through innovative engineering and to create
     diagnostic and monitoring technologies that address problems brought to its
     attention by contacts in the medical community, particularly those
     technologies which improve quality of care and reduce costs.  For example,
     Marquette's telemetry products improve the quality of care by tracking
     ambulatory patients and alerting the nurse at the central control station
     if the patient has an event.  Additionally, the Solar 8000 modular bedside
     monitor was recently redesigned to reduce production costs by reducing the
     number of circuit boards from three to one and by utilizing an off-the-
     shelf display.  In addition, the Company seeks to be first to market with
     new products, to enter new markets and to respond to market trends.

          The Company's product engineers work closely with the Company's sales
     force and customers to modify and improve current products.  In addition,
     these engineers assist with the integration of components or technologies
     across several Company product lines to enhance product competitiveness.

                                       16
<PAGE>
 
     Sales, Distribution and Marketing

          The Company's products are used principally in the critical and
     intensive care units, operating and recovery rooms, step-down units and
     related areas of acute care hospitals, particularly those institutions
     specializing in the diagnosis and treatment of heart disease, together with
     labor and delivery units.  Marquette products increasingly are also being
     used in medical clinics, outpatient surgery centers, physician offices and
     the home.

          The U.S. has been the principal geographic market for the Company's
     products.  Over the past ten years the Company has sought to develop its
     international market standing, and international sales increased from
     approximately 33% in Fiscal 1996 to approximately 39% in Fiscal 1997.  The
     Company will continue to seek greater penetration of the European market,
     where the E for M acquisition has substantially broadened the Company's
     distribution network.

          The Company has a direct sales force in the U.S. of approximately 282
     sales representatives, clinical specialists, and managers, as well as 7
     national account managers.  In addition, the Company has approximately 120
     and 8 direct sales employees in Europe and Australia, respectively, as well
     as numerous dealers in both markets.  The remaining international markets,
     primarily Japan, China, Southeast Asia, India, Latin America and Canada,
     are served by distributorship arrangements under which a local dealer buys
     products from the Company at a discount for resale within its own
     territory.

          Because most Company products are highly technical requiring extensive
     training in their application and operation, the Company's sales
     organization is organized along divisional product lines, including
     technical support groups which consist primarily of nurses, biomedical
     engineers and clinicians.  In addition, the Company believes its reputation
     in diagnostic cardiology enables it to obtain an entry to patient
     monitoring systems sales.  The Company has also designated certain senior
     sales personnel to act as "Unity Team Managers" to coordinate multiple
     product line sales to the same customer.  The Company maintains
     demonstration equipment so that sales personnel can make on-site clinical
     demonstrations for equipment sales.  The Company offers technical seminars
     and training sessions on a worldwide basis, and furnishes instruction
     manuals, maintenance manuals, operator guides, application information and
     software in foreign languages, as required.

          In recent years, many hospitals have joined buying groups or have been
     acquired by large hospital chains permitting them to negotiate with
     suppliers of hospital equipment to obtain more favorable pricing on large
     quantity purchases.  In addition, some

                                       17
<PAGE>
 
     large hospitals, chains and buying groups prefer to negotiate with a
     limited number of vendors who can provide a broad range of products used by
     the hospital or group.  While the Company believes that the existence of
     these groups will present a marketing opportunity for the Company, there
     can be no assurance that the Company will be able to negotiate purchasing
     arrangements with all of these groups or on terms that are favorable to the
     Company.  The Company currently has purchasing arrangements in place with
     many national and regional hospital systems, including Columbia/HCA
     Healthcare Corporation, Tenet Healthcare, Inc., and many purchasing groups,
     including MAGNET, AmeriNet, and CMMA (Catholic Materials Management
     Alliance), as well as with various subdivisions of the federal government.

          The Company has an arrangement with a third party leasing company
     which provides customer financing.  Under this arrangement, the Company is
     paid in full for its products, and the leasing company assumes credit
     risks.  The Company also directly provides lease financing in certain
     circumstances and equipment rentals.

          The Company also offers a Managed Use Program, permitting hospitals to
     make payments to the Company based upon the frequency of use of equipment
     by the hospital.  Under the Managed Use Program, the Company has the right
     to increase or reduce the number of equipment units deployed at the
     hospital to correlate with the degree of use of the units at the hospital.
     The Company believes that the program is being well received by the market
     and will further facilitate distribution of the Company's products by
     permitting hospitals to better correlate their equipment to their needs.

          The Company markets and distributes its supplies in the U.S. through
     an in-house telemarketing group, its national direct sales force and a
     number of dealers.  The Company distributes its supplies outside of the
     U.S. through its direct sales force in Europe, its Australian subsidiary
     and through independent dealers.

     Manufacturing

          Marquette internally controls all critical manufacturing processes,
     including state-of-the-art circuit board assembly and thick film hybrid and
     multichip module assembly, utilizing advanced assembly and subassembly
     burn-in systems.  The Company partners with major suppliers by locating
     supplier inventories on Marquette premises, thereby reducing Company
     inventory costs and improving access to technical components.

          The Company believes that its facilities are modern, well maintained
     and adequate for its present needs.  (See Item 2-Properties).

                                       18
<PAGE>
 
     Competition

          The markets for the Company's products have historically been highly
     competitive.  The consolidation of health care providers in the U.S. and
     the national effort to curtail increases in medical care costs have
     increased the level of competition.  Although the Company competes directly
     with other providers of medical equipment, no one company or group of
     companies competes with the Company across its full line of products.  The
     Company's primary competitors in patient information monitoring include
     Hewlett-Packard Corporation, Siemens Medical Systems, Inc., SpaceLabs
     Medical, Inc. and Datex Company, and in diagnostic cardiology include
     Hewlett-Packard Corporation, Schiller AG and Quinton Instrument Company, a
     subsidiary of American Home Products Corporation.  Certain of these
     competitors are larger and have greater financial and marketing resources
     than Marquette.  The principal competitive factors that differentiate one
     manufacturer from another in the market are a manufacturer's reputation for
     producing accurate, reliable and technically advanced products, product
     features, product line breadth, price, expected medical cost savings and
     effectiveness of sales and marketing efforts.

          The Company believes that it has a reputation for technological
     leadership and product reliability, which, with its working relationship
     with physicians at teaching and research hospitals as well as the breadth
     of its product line, have provided it with a strong competitive position.
     The Company's competitive position is strongest with respect to its
     cardiology product line and fetal and neonatal monitoring products, where
     the Company has been selling its products for the longest period of time,
     has the greatest name recognition and competes primarily on the basis of
     product features and technological advances.

     Government Regulation

          The medical devices manufactured and marketed by the Company are
     subject to extensive and rigorous regulation by the FDA and, in many
     instances, by state and foreign governments.  Under the FDC Act, the FDA
     regulates, among other things, the testing, manufacturing, labeling,
     distribution and promotion of medical devices in the U.S.  To facilitate
     compliance with the FDC Act and regulations promulgated thereunder, the
     Company, from time to time, may institute voluntary compliance actions such
     as product recalls when it believes it advisable to do so.  The failure of
     the Company to comply with FDA requirements could result in warning
     letters, injunctions, civil penalties, mandatory recall or seizure of
     products, total or partial suspension of production, the government's
     refusal to grant, or withdrawal of, marketing authorizations, and criminal
     prosecution.

          In general, before a new medical device may be marketed in the

                                       19
<PAGE>
 
     U.S., the manufacturer must obtain marketing authorization from the FDA
     through either clearance of a pre-market notification submission (a "510(k)
     submission") or approval of a pre-market approval application.  In
     addition, changes to a medical device that significantly affect the safety
     or efficacy of a marketed device are subject to FDA review and clearance or
     approval.

          The Company's products have not generally been subject to the
     comprehensive pre-market approval requirements, but are generally subject
     to pre-market notification requirements.  The FDA may grant marketing
     clearance of a new medical device pursuant to a 510(k) submission if it
     determines that the device is substantially equivalent to a predicate
     device that did not require pre-market approval.  A 510(k) submission must
     be supported by information demonstrating substantial equivalence.  The FDA
     recently has been requiring more rigorous demonstration of substantial
     equivalence than in the past, including the submission of clinical data in
     some cases.  It generally takes from four to 12 months from submission to
     obtain clearance of a 510(k) submission, but it may take longer. The FDA
     has no specific time limit by which it must respond to a pre-market
     notification submission.

          As a manufacturer of medical devices, the Company is also subject to
     certain other FDA regulations, including compliance with current good
     marketing practices ("GMPs") and similar regulations in other countries,
     which include testing, control and documentation requirements, and medical
     device reporting requirements.  The FDA recently revised its medical device
     GMP regulation, and the new regulation, which goes into effect later this
     year, permit the FDA to regulate the design as well as manufacture of
     medical devices and make a number of other significant changes in
     regulatory requirements.  Ongoing compliance with GMP and other applicable
     regulatory requirements is monitored through periodic inspections by
     federal and state agencies, including the FDA, and by comparable agencies
     in other countries.

          Federal, state and foreign regulations regarding the development,
     manufacture and sale of medical devices are subject to change.  The Company
     cannot predict what impact, if any, such changes might have on its
     business.  The Company also seeks, where appropriate, to comply with safety
     standards of Underwriters Laboratories, the Canadian Standards Association,
     the European Economic Community and other countries in which it markets
     products.

          The Company's products are used by health care providers for
     diagnostic testing services and other services for which the providers may
     seek reimbursement under the federal Medicare and Medicaid programs or from
     other governmental and private payers. Such reimbursement is subject to
     federal regulations and policies and regulations of other payers.  For
     example, the Medicare

                                       20
<PAGE>
 
     program, which reimburses hospitals and physicians for services provided to
     a significant percentage of hospital patients, places certain limitations
     on the methods and levels of reimbursement of hospitals for procedure costs
     and for capital expenditures made to purchase equipment such as that sold
     by the Company.  The Medicare program also limits the level of
     reimbursement to physicians for diagnostic tests and recently has
     instituted changes that may further limit the amount of such reimbursement
     of both facilities and physicians for services provided in connection with
     diagnostic and clinical procedures.  Federal and state regulations
     regarding the amount and manner of reimbursement are subject to change.
     National health remains a priority item on its legislative agenda and there
     are a number of bills presently being considered in both Houses of
     Congress.  The Company is unable to predict the impact, if any, that such
     change or legislation might have on its business.

          In addition to laws and regulations enforced by the FDA, the Company
     is also subject to regulation under the Occupational Safety and Health Act,
     the Environmental Protection Act, the Resource Conservation and Recovery
     Act and other present and potential future federal, state and local
     regulations.

     Product Liability and Insurance

          The use of the Company's products in the delivery of medical services
     involves the possibility of adverse effects that could expose the Company
     to product liability claims.  A recent U.S. Supreme Court decision held
     that product liability may exist despite FDA approval and future court
     decisions may also increase the Company's risk of product liability.  The
     Company is involved in various legal proceedings, including product
     liability suits of a nature considered normal to its business.  The
     Company's products are used by health care providers in connection with the
     treatment of patients, who will, on occasion, sustain injury or die as a
     result of their condition or medical treatment.  If a lawsuit is filed
     because of that occurrence, the Company, along with physicians and nurses,
     hospitals and other medical suppliers, may be named as a defendant, and
     whether or not the Company is ultimately determined to be liable, the
     Company may incur significant legal expenses.  In addition, such litigation
     could damage the Company's reputation and therefore impair its ability to
     market its products, and impair its ability to obtain product liability
     insurance or cause the premiums for such insurance to increase.  The
     Company carries product liability insurance coverage under several policies
     with an aggregate loss coverage which the Company believes is sufficient.
     However, in the future the Company may be unable to obtain adequate product
     liability coverage on acceptable terms, if at all.  A successful product
     liability claim or series of claims brought against the Company that are
     not covered by insurance or exceed policy limits could have a material
     adverse effect on the Company's business, financial condition and

                                       21
<PAGE>
 
     results of operations.

     Employees

          At April 30, 1997, the Company had approximately 2,347 employees in
     the U.S. and approximately 803 employees outside the U.S., including
     approximately 1,005 employees engaged primarily in sales, approximately 927
     employees engaged primarily in manufacturing, approximately 461 employees
     engaged primarily in research and product development and approximately 353
     employees primarily engaged in service.  Management considers employee
     relations to be excellent.

          The Company believes that high levels of employee support and
     participation significantly contribute to the Company's business success.
     Therefore, the Company has implemented various employee benefit programs
     and work-related policies.  Employees are permitted to personalize their
     work areas and determine their own flexible work schedules.  The Company
     also provides many of its employees with day care facilities, exercise
     facilities, and a tuition reimbursement program.  It also encourages direct
     and individual ownership by employees of Common Stock through its 401(k)-
     Profit Sharing Plan and grants of stock options.


                      EXECUTIVE OFFICERS OF THE REGISTRANT

          Set forth below is information regarding executive officers who are
     not also directors.

     <TABLE>
     <CAPTION>
            Name                     Age              Position with the Company
     <S>                             <C>              <C>       
 
     Mary M. Kabacinski               48              Senior Vice President,
                                                      Chief Financial Officer and
                                                      Treasurer
 
     Karl F. Braun                    64              Vice President-EMEA
 
     Gerald G. Woodard                50              Division President-Patient
                                                      Monitoring
 
     Steven G. Books                  47              Division President-Cardiology
 
     Gerald J. Lentz                  50              Division President-Service
 
     P. Michael Breedlove             53              Division President-E for M
                                                      Imaging Systems
 
     James R. Mertens                 44              Division President-E for M
     </TABLE>

                                       22
<PAGE>
 
     <TABLE>
     <S>                             <C>              <C>       
                                                      Cath Lab
 
     Louis P. Scafuri                 45              Division President-
                                                      Corometrics Medical
                                                      Systems
 
     Mark R. Tauscher                 45              Division President-Supplies
                                                      Division
     </TABLE>

          Mary M. Kabacinski became the Senior Vice President of the Company in
     August, 1996, Vice President and Chief Financial Officer of the Company in
     July, 1991 and Treasurer of the Company in 1989. Prior to her employment
     with the Company, Mrs. Kabacinski was a tax manager at Arthur Andersen LLP.

          Gerald G. Woodard became Division President-Patient Monitoring in
     January, 1997.  Mr. Woodard was Vice President-Sales and Marketing from
     October, 1995 to January, 1997 and Director of Operations of Quantitative
     Medicine, Inc. from January, 1992 to October, 1995.

          Karl F. Braun became Vice President-EMEA in May, 1996.  Mr. Braun
     became Managing Director of Hellige GmbH, a wholly-owned subsidiary of the
     Company, in May, 1994 and was Director of Marketing and Development for
     Hellige from June, 1993 to May, 1994. Mr. Braun was Vice President-
     Cardiology of Hellige from September, 1989 to June, 1993.

          Steven G. Books became Division President-Cardiology in May, 1996. Mr.
     Books was Vice President-Cardiology Division from June, 1994 to May, 1996
     and a manager in the Company's manufacturing and engineering departments
     from 1982 to June, 1994.

          Gerald J. Lentz became Division President-Service in May, 1996.  Mr.
     Lentz was a Product Manager from June, 1994 to May, 1996 and National
     Service Manager from February, 1977 to June, 1994.

          Mark R. Tauscher became Division President-Supplies in November, 1996.
     Mr. Tauscher was General Manager of Medical Supplies for Hewlett Packard
     Corporation from 1994 to November, 1996.  Prior to joining the Company, Mr.
     Tauscher was employed at Hewlett Packard for 21 years, where he also held
     the positions of Director of National Accounts and Marketing Manager for
     medical customer service.

               P. Michael Breedlove became Division President-E for M Imaging
     Services in May, 1996.  Mr. Breedlove was Vice President-Field Operations
     for E For M from October, 1995 to May, 1996, and a Vice President of Cerner
     Corporation from 1993 until October, 1995 and Managing Director of Cerner
     Corporation PTY LTD from 1991 until

                                       23
<PAGE>
 
     1993.  Mr. Breedlove was Vice President-Sales and Marketing of Cerner
     Corporation from 1984 to 1991.

          James R. Mertens became Division President-E For M Cathlab, in May,
     1996.  Mr. Mertens was Vice President-Software Technology for E For M from
     June, 1994 to May, 1996 and Software Manager for Mortara Instruments
     Company from November, 1983 to June, 1994.  Mr. Mertens was a software
     engineer for the Company from 1981 to November, 1983.

          Louis P. Scafuri became Division President-Corometrics Medical
     Systems, in May, 1996.  Mr. Scafuri has also been President of Corometrics
     since September, 1995.  Mr. Scafuri was a Vice President of Aspect Medical
     Systems, Inc. from September, 1992 to August, 1995.  Mr. Scafuri was
     Director of Sales, Western Hemisphere, for the Company from May, 1991 to
     September, 1992 and held various field sales management positions
     throughout the Company prior to May, 1991.


     ITEM 2.  PROPERTIES

          The following table sets forth certain information as of April 30,
     1997, relating to the Company's principal real estate facili ties:

     <TABLE> 
     <CAPTION> 
     Location
     (Owned or            Approximate
      Leased)             Square Feet               Principal Uses
     ---------            -----------               --------------
     <S>                  <C>          <C>  

     Freiburg, Germany
       (owned)              140,000    Engineering, research and development,
                                       marketing and manu facturing of
                                       diagnostic and monitoring products,
                                       primarily for European distribution.

     Freiburg, Germany       35,100    Research and development,
      (leased until                    marketing and sale and
     September 30, 2006)               purchasing for Hellige
                                       manufactured products

     Jupiter, Florida       180,000    Manufacturing, engineering and
       (owned)                         marketing of supplies and car-
                                       diac catheterization products
                                       and repair and maintenance of
                                       products.
 
     Milwaukee,             295,000    Corporate offices, engineering,
     </TABLE>

                                       24
<PAGE>
 
     <TABLE>
     <S>                  <C>          <C>  
     Wisconsin                         research and development, and
       (owned)                         marketing and manufacturing of
                                       diagnostic and adult monitoring
                                       products
 
     Paris, France            8,000    Marketing and sales,
     (leased until                     general administration
     February, 1999)

     Torrance, California    65,500    Engineering, research and
     (leased until December,           development and marketing
     2004)                             and manufacturing of
                                       imaging systems

     Wallingford, CT        180,000    Engineering, research and
       (owned)                         development and marketing and 
                                       manufacturing of fetal and neo- 
                                       natal monitoring and diagnostic 
                                       products
     </TABLE> 

          The Company believes that its manufacturing facilities are sufficient
     for its current needs.  Because approximately 75% of its manufacturing
     capacity is presently being utilized, the Company believes that such
     facilities are sufficient for the next three years based on the Company's
     expected rate of growth.


     ITEM 3.  LEGAL PROCEEDINGS

          The Company is not a party to any material legal proceeding other than
     ordinary routine litigation incident to its business.


     ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None


                                    PART II


     ITEM 5.  Market for the Registrant's Common Equity and Related Security
              Holder Matters

          The section labeled "General Information" appearing on page  42 of the
     Company's 1997 Annual Report to Shareholders is incorpo rated herein by
     reference.

                                       25
<PAGE>
 
          The Registrant has three classes of stock, Class A Common Stock, $0.10
     par value, Class C Common Stock, $0.01 par value and Preferred Stock,
     without par value.  There are no shares of Class C Common Stock or
     Preferred Stock outstanding.


     ITEM 6.  Selected Financial Data

          The section labeled "Five Year Summary of Selected Financial Data"
     appearing on page 3 of the Company's 1997 Annual Report to Shareholders is
     incorporated herein by reference.


     ITEM 7.  Management's Discussion and Analysis of Financial Condition and
              Results of Operations

          The section labeled "Management's Discussion and Analysis of
     Financial Condition and Results of Operations" appearing on pages 34
     through 40 of the Company's 1997 Annual Report to Shareholders is
     incorporated herein by reference.


     ITEM 8.  Financial Statements and Supplementary Data

          The Report of Independent Public Accountants appearing on page 33 and
     the Consolidated Financial Statements and Notes to Consoli dated Financial
     Statements appearing on pages 16 through 32 of the Company's 1997 Annual
     Report to Shareholders are incorporated herein by reference.


     ITEM 9.  Changes in, and Disagreements with Accountants on Accounting and
              Financial Disclosure

               None.


                                    PART III


     ITEM 10.  Directors and Executive Officers of the Registrant

          (a) The section labeled "Nominees" appearing on page 2 of the
     Company's Proxy Statement dated July 17, 1997 is incorporated herein by
     reference.

                                       26
<PAGE>
 
          (b) Information concerning the Company's executive officers who are
     not directors is set forth in Part I of this Form 10-K.


     ITEM 11.  Executive Compensation

          The sections labeled "Executive Officer Compensation" and "Report of
     the Human Resources Committee" appearing on pages 7 through 10 of the
     Company's Proxy Statement dated July 17, 1997 is incorporated herein by
     reference to the extent necessary to be responsive to the requirements of
     this Item.


     ITEM 12.  Security Ownership of Certain Beneficial Owners and Management

          The section labeled "Stock Ownership of Management and Others"
     appearing on pages 5 and 6 of the Company's Proxy Statement dated July 17,
     1997 is incorporated herein by reference.


     ITEM 13.  Certain Relationships and Related Transactions

          The subsection labeled "Certain Transactions" appearing on page 12 of
     the Company's Proxy Statement dated July 17, 1997 is incorporated herein by
     reference.

                                       27
<PAGE>
 
                                      PART IV


     ITEM 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

     (a)  1.   Index to Financial Statements
 
          The following Financial Statements
          are included in the Company's
          1997 Annual Report to Shareholders                 Page in  1997
          and are incorporated herein by                     Annual Report
          reference pursuant to Item 8:                     to Shareholders
                                                            ---------------
 
          Consolidated Balance Sheets at                          16-17
          April 30, 1997 and 1996
 
          Consolidated Statements of Income                         18
          for the years ended April 30, 1997, 1996
          and 1995
 
          Consolidated Statements of Cash Flows                     19
          for the years ended April 30, 1997,
          1996 and 1995
 
          Consolidated Statements of Shareholders'                  20
          Equity for the years ended April 30,
          1997, 1996 and 1995
 
          Notes to Consolidated Financial                         21-32
          Statements
 
          Selected Quarterly Data (Unaudited)                       32
    
          Report of Independent Public Accountants                  33
 

          2.   Index to Financial Statement Schedules

          The following schedule is filed as part of this Report on Form 10-K
     and is covered by the "Report of Independent Public Accoun tants on
     Supplementary Schedule" included herein.

           Schedule
            Number            Description
           --------           -----------

              II     Valuation and Qualifying Accounts

          All other financial statement schedules not listed have been omitted
     since the required information is included in the con solidated statements
     or the notes thereto, or is not applicable or required under the rules of
     Regulation S-X.

                                       28
<PAGE>
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                           ON SUPPLEMENTARY SCHEDULE



     To the Shareholders of Marquette Medical Systems, Inc.:


          We have audited in accordance with generally accepted auditing
     standards, the financial statements included in Marquette Medical Systems,
     Inc.'s annual report to shareholders incorporated by reference in this Form
     10-K, and have issued our report thereon dated June 5, 1997.  Our audit was
     made for the purpose of forming an opinion on those statements taken as a
     whole.  The following schedule is presented for purposes of complying with
     the Securities and Exchange Commission's rules and is not part of the basic
     financial statements.  This schedule has been subjected to the auditing
     procedures applied in the audit of the basic financial statements and, in
     our opinion, fairly states in all material respects the financial data
     required to be set forth therein in relation to the basic financial
     statements taken as a whole.



                                    ARTHUR ANDERSEN LLP



                                    /s/ Arthur Andersen LLP

     Milwaukee, Wisconsin
     June 5, 1997

                                       29
<PAGE>
 
                MARQUETTE MEDICAL SYSTEMS, INC. AND SUBSIDIARIES
                       VALUATION AND QUALIFYING ACCOUNTS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
               Balance   Additions   Additions    Write-Offs   Balance
              Beginning   Charged      Due to       Net of       End
               of Year   to Income  Acquisitions  Recoveries   of Year
              ---------  ---------  ------------  -----------  -------
<S>           <C>        <C>        <C>           <C>          <C>
 
Year ended
April 30,
1995            $  458      $196       $  347       $  (65)     $1,066
 
Year ended
April 30,
1996            $1,066      $817       $5,427       $  880      $6,430
 
Year ended
April 30,
1997            $6,430      $398       $  -0-       $2,664      $4,164
</TABLE>

                                       30
<PAGE>
 
     3.   Exhibits

     Exhibit
     No.

     2.1       Stock Purchase Agreement by and between the Company, AHP
               Subsidiary Holding Corporation and American Home Products
               Corporation dated April 7, 1994 (filed as Exhibit 2 to Form 8-K
               dated May 31, 1994 and incorporated herein by reference). All
               schedules to the Agreement have been omitted, the Company hereby
               agreeing to furnish supplementary a copy of any omitted schedule
               to the Commission upon request.

     2.2       Closing Date Agreement between Marquette Electronics, Inc., AHP
               Subsidiary Holding Corporation and American Home Products Corpo
               ration dated May 23, 1994 (filed as Exhibit 2 to Form 8-K dated
               May 31, 1994 and incorporat ed herein by reference)

     2.3       Offer to Purchase for Cash dated November 10, 1995 made by
               Marquette Subcorp (filed as Exhibit (a)(1) to Schedule 14D-1
               filed on November 13, 1995 and incorporated herein by reference)

     2.4       Agreement and Plan of Merger dated as of November 5, 1995 between
               Registrant, Marquette Subcorp and E For M Corporation (filed as
               Exhibit (a)(10) to Schedule 14D-1 filed on November 13, 1995 and
               incorporated herein by reference)

     3.1       (a) Restated Articles of Incorporation (filed as Exhibit 1.1 to
               Form S-1 Registration Statement No. 33-35642, filed June 29, 1990
               and incorporated herein by reference)

               (b) Articles of Amendment to Amended and Restated Articles of
               Incorporation (filed as Exhibit 99.2 to Form 8-K dated August 22,
               1996 and incorporated herein by reference)

     3.2       (a) Amended and Restated By-Laws of the Registrant adopted as of
               January 8, 1996 (filed as Exhibit 3.2(a) to Form 10-K for the
               fiscal year ended April 30, 1996 and incorporated herein by
               reference)

                                       31
<PAGE>
 
     Exhibit
     No.

               (b) Amendment No. 1 to Amended and Restated By-Laws of the
               Registrant adopted May 21, 1996 (filed as Exhibit 3.2(b) to Form
               10-K for the fiscal year ended April 30, 1996 and incorporated
               herein by reference)

               (c) Amendment No. 2 to Amended and Restated By-Laws of the
               Registrant adopted November 20, 1996

               (d) Amendment No. 3 to Amended and Restated By-Laws of the
               Registrant adopted June 24, 1997

               (e) A complete copy of the By-Laws as amended to date

     4.1       Rights Agreement dated as of December 18, 1996 between Registrant
               and Firstar Trust Company as Rights Agent (filed as Exhibit 4 to
               Form 8-K dated December 18, 1996 and incorporated herein by
               reference)

     10.1      Post-Death Option Agreement, by and between Marquette
               Electronics, Inc. and Michael J. Cudahy, dated April 6, 1992
               (filed as Exhibit 10.67 to Form 10-K for the fiscal year ended
               April 30, 1992 and incorporated herein by reference)

     10.2      Post-Death Option Agreement, by and between Marquette
               Electronics, Inc. and Warren B. Cozzens, dated April 6, 1992
               (filed as Exhibit 10.68 to Form 10-K for the fiscal year ended
               April 30, 1992 and incorporated herein by reference)

     10.3      Amended and Restated Stock Option Plan for Employees of Marquette
               Electronics, Inc. (filed as Exhibit 10.70 to Form 10-K for the
               fiscal year ended April 30, 1992 and incorpo-

                                       32
<PAGE>
 
     Exhibit
     No.

               rated herein by reference)

     10.4      Amendment No. 1 to Amended and Restated Stock Option Plan for
               Employees of Marquette Elec tronics, Inc. adopted September 10,
               1993 (filed as Exhibit 10.15 to Form 10-K for the fiscal year
               ended April 30, 1994 and incorpo rated herein by reference)

     10.5      Amendment No. 2 to Amended and Restated Stock Option Plan for
               Employees of Marquette Elec tronics, Inc. adopted June 2, 1994
               (filed as Exhibit 10.16 to Form 10-K for the fiscal year ended
               April 30, 1994 and incorporated herein by reference)

     10.6      Amendment No. 3 to Amended and Restated Stock Option Plan for
               Employees of Marquette Elec tronics, Inc. adopted May 21, 1996
               (filed as Exhibit 10.6 to Form 10-K for the fiscal year ended
               April 30, 1996 and incorporated herein by reference)

     10.7      Letter Agreement between the Company and Warren B. Cozzens dated
               July 11, 1994 (filed as Exhibit 10.21 to Form 10-K for the fiscal
               year ended April 30, 1994 and incorporated herein by reference)

     10.8      Marquette Electronics, Inc. Profit Sharing and 401(K) Plan and
               Trust (as restated and amend ed) dated April 10, 1994 (filed as
               Exhibit 10.22 to Form 10-K for the fiscal year ended April 30,
               1994 and incorporated herein by reference)

     10.9      Amendment No. 1 to Marquette Electronics, Inc. Profit-Sharing and
               401(k) Plan and Trust (as restated and amended) adopted on August
               1, 1994 (filed as Exhibit 10.9 to Form 10-K for the fiscal year
               ended April 30, 1996 and

                                       33
<PAGE>
 
     Exhibit
     No.

               incorporated herein by reference)

     10.10     Amendment No. 2 to Marquette Electronics, Inc. Profit-Sharing and
               401(k) Plan and Trust (as amended and restated) adopted on
               February 9, 1996 (filed as Exhibit 10.10 to Form 10-K for the
               fiscal year ended April 30, 1996 and incorporated herein by
               reference)

     10.11     Amendment No. 3 to Marquette Medical Systems, Inc. Profit-Sharing
               Plan and 401(k) Plan and Trust (as amended and restated) adopted
               on January 30, 1997

     10.12     Marquette Electronics, Inc. Directors (non-employee) Stock Option
               Plan adopted August 19, 1993 (filed as Exhibit 10.23 to Form 10-K
               for the fiscal year ended April 30, 1994 and incorporated herein
               by reference)

     10.13     Loan Agreement dated May 31, 1994 between Marquette Electronics,
               Inc., M&I Marshall & Ilsley Bank and NBD Bank, N.A. (filed as
               Exhibit 10.19 to Form 10-K for the fiscal year ended April 30,
               1995 and incorporated herein by reference)

     10.14     Marquette Electronics, Inc. Management Deferred Compensation 
               Plan, as adopted on Febru ary 9, 1996 (filed as Exhibit 10.13 to
               Form 10-K for the fiscal year ended April 30, 1996 and
               incorporated herein by reference)

     10.15     Employment Agreement dated September 20, 1995 between E For M
               Corporation, a wholly-owned subsidiary of the Registrant, and P.
               Michael Breedlove (filed as Exhibit 10.14 to Form 10-K for the
               fiscal year ended April 30, 1996 and incorporated herein by
               reference)

     10.16     Employment Agreement dated May 14, 1996 be-

                                       34
<PAGE>
 
     Exhibit
     No.

               tween Registrant and Peter P. Tong (filed as Exhibit 10.15 to
               Form 10-K for the fiscal year ended April 30, 1996 and
               incorporated herein by reference)

     10.17     Stock Purchase Agreement, dated July 1, 1996, between the
               Registrant, E For M Corporation and Polar Vision, Inc. (filed as
               Exhibit 10.16 to Form 10-K for the fiscal year ended April 30,
               1996 and incorporated herein by reference)

     10.18     Loan Agreement between Registrant and M & I Marshall and Ilsley
               Bank, Wachovia Bank of Georgia N.A. and NBD Bank, N.A. dated
               December 12, 1995 (filed as Exhibit 10.17 to Form 10-K for the
               fiscal year ended April 30, 1996 and incorporated herein by
               reference)

     10.19     Commercial and Industrial Lease Agreement dated March 29, 1995
               between Bond Street Building Co. and E For M Corporation (a whol
               ly-owned subsidiary of Registrant) (filed as Exhibit 10.19 to
               Form 10-K for the fiscal year ended April 30, 1996 and
               incorporated herein by reference)

     10.20     Standard Industrial/Commercial Single Tenant-Tenant Lease-Net 
               dated May 24, 1994 between Albor Properties One LP and Enhanced
               Imaging Technologies, Inc. (now known as E For M Corporation)
               (filed as Exhibit 10.20 to Form 10-K for the fiscal year ended
               April 30, 1996 and incorporated herein by reference)

     10.21     Stock Option dated June 24, 1997 issued by Registrant to Michael 
               J. Cudahy (filed as Exhibit 1 to Form 8-K dated July 2, 1997 and
               incorporated herein by reference)

     13.1      1997 Annual Report to Shareholders

                                       35
<PAGE>
 
     Exhibit
     No.

     21.1      List of subsidiaries

     23.1      Consent of Arthur Andersen LLP

     27.1      Financial Data Schedule



     (b)  Reports on Form 8-K

     Form 8-K dated February 26, 1997 (filed on February 26, 1997) reporting the
     issuance of a press release announcing a strategic alliance with Physio-
     Control Corporation (Other Events).

                                       36
<PAGE>
 
                                   SIGNATURES

          Pursuant to the requirements of section 13 or 15(d) 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.

     Date:  July 25, 1997


                                  MARQUETTE MEDICAL SYSTEMS, INC.



                                  By: /s/ Timothy C. Mickelson
                                      ---------------------------------
                                      Timothy C. Mickelson, President

          Pursuant to the requirements of the Securities Exchange Act of 1934,
     this report has been signed below by the following persons on behalf of the
     Registrant and in the capacities and on the dates indicated.

     <TABLE>
     <CAPTION>
     Signature                               Title                  Date
     ---------                               -----                  ----
     <S>                             <C>                     <C>
 
     Principal Executive Officer:
 
     /s/ Michael J. Cudahy           Chief Executive
     ------------------------------  Officer, Director          July 25, 1997
     Michael J. Cudahy               
 
     Principal Financial Officer:
 
     /s/ Mary M. Kabacinski          Senior Vice President,
     ------------------------------  Chief Financial
     Mary M. Kabacinski              Officer, Assistant
                                     Secretary                  July 25, 1997
 
     A Majority of Directors:
 
     /s/ Michael J. Cudahy           Chief Executive
     ------------------------------  Officer, Director          July 25, 1997
     Michael J. Cudahy               
 
     /s/ Frederick G. Luber          Director                   July 25, 1997
     ------------------------------
     Frederick G. Luber
 
     /s/ Timothy C. Mickelson        President,
     ------------------------------  Director                   July 25, 1997
     Timothy C. Mickelson            
 
     /s/ Melvin S. Newman            Director                   July 25, 1997
     ------------------------------
     Melvin S. Newman
     </TABLE>

                                       37