<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, 1998
                   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:

                        Common Shares, $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.
   X    Yes    _______ 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.


     Approximate aggregate market value of the registrant's Common Shares held
by non-affiliates (based on the closing sales price of such stock as reported in
the NASDAQ National Market System) on July 1, 1998 was $323,029,409.00.

     As of July 1, 1998, the number of shares of Common Shares $0.10 par value,
outstanding was 17,928,798.
<PAGE>
 
                      DOCUMENTS INCORPORATED BY REFERENCE


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

1.   Annual Report to Shareholders for fiscal year ended
     April 30, 1998                                              II

2.   Proxy Statement for Annual Meeting of Shareholders
     scheduled to be held on July 15, 1998                      III



_______________

*    Excludes, among other shares, 3,417,368 Common shares held by officers and
     directors at June 1, 1998.  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>
 
                          FORWARD-LOOKING STATEMENTS
                          --------------------------

     In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company wishes to caution readers that the
following important factors, among others, in some cases have affected, and in
the future could affect, the Company's actual results and could cause its actual
results to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, the Company.



     Competition.  The Company encounters and expects to continue to encounter
     -----------                                                              
significant competition in the sale of its products and services.  The Company's
competitors include a number of large multinational corporations, some of which
may be able to adapt more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the promotion and sale
of their products than the Company.  Competition could increase if new companies
enter the market or if existing competitors expand their product lines or
intensify efforts within existing product lines.  There can be no assurance that
the Company's current products, products under development, or ability to
develop new technologies will be sufficient to enable it to compete effectively.


     Risks Associated with International Operations.  International revenues
     ----------------------------------------------                         
account for a substantial portion of the Company's revenues, and the Company
intends to continue to expand its presence in international markets.
International revenues are subject to a number of risks, including the
following: fluctuations in exchange rates may affect product demand and
adversely affect the profitablity in U.S. dollars of products and services
provided by the Company in foreign markets where payment for the Company's
products and services is made in the local currency; agreements may be difficult
to enforce and receivables difficult to collect through a foreign country's
legal system; foreign customers may have longer payment cycles; foreign
countries may impose additional withholding taxes or otherwise tax the Company's
foreign income, impose tariffs, or adopt other restrictions on foreign trade;
U.S. export licenses may be difficult to obtain; and the protection of
intellectual property in foreign countries may be more difficult to enforce.
There can be no assurance that any of these factors will not have a material
adverse impact on the Company's business and results of operations.


     Rapid and Significant Technological Change and New Products. The markets
     -----------------------------------------------------------             
for the Company's products are characterized by rapid and significant
technological change, evolving industry standards

                                       3
<PAGE>
 
and frequent new product introductions and enhancements.  Many of the Company's
products and products under development are technologically innovative and
require significant planning, design, development, and testing at the
technological, product, and manufacturing-process levels.  These activities
require significant capital commitments and investment by the Company.  In
addition, products that are competitive in the Company's markets are
characterized by rapid and significant technological change due to industry
standards that may change on short notice and by the introduction of new
products and technologies that render existing products and technologies
uncompetitive or obsolete.  There can be no assurance that any of the products
currently being developed by the Company, or those to be developed in the
future, will be technologically feasible or accepted by the marketplace, that
any such development will be completed in any particular time frame, or that the
Company's products or proprietary technologies will not become uncompetitive or
obsolete.


     Government Regulation; No Assurance of Regulatory Approvals. Many of the
     -----------------------------------------------------------             
Company's products are subject to pre-marketing clearance or approval by the
U.S. Food and Drug Administration (FDA) and similar agencies in foreign
countries.  The use or sale of certain of the Company's products under
development may require approvals by other government agencies.  The process of
obtaining clearance and approval from the FDA and other government agencies is
time-consuming and expensive.  Furthermore, there can be no assurance that the
necessary clearances or approvals for the Company's products, services, and
products and services under development will be obtained on a timely basis, if
at all.

     FDA regulations also require continuing compliance with specific standards
in conjunction with the maintenance and marketing of products and services that
have been approved or cleared.  Failure to comply with applicable regulatory
requirements can result in, among other things, civil and criminal penalties,
suspension of approvals, recalls, or seizures of products, injunctions, and
criminal prosecutions.


     Risks Associated with Dependence on Capital Spending Policies and
     -----------------------------------------------------------------
Government Funding.  The Company's customers include hospitals, laboratories,
------------------                                                           
universities, health care providers, government agencies, and public and private
research institutions.  The capital spending of these entities can have a
significant effect on the demand for the Company's products.  Such spending is
based on a wide variety of factors, including the resources available to make
purchases, the spending priorities among various types of equipment, public
policy, and the effects of different economic cycles.  Any decrease in capital
spending by any of the customer groups that account for a significant portion of
the Company's

                                       4
<PAGE>
 
sales could have a material adverse effect on the Company's business and results
of operations.


     Effect of Laws.  Changes in the law or new interpretations of existing laws
     --------------                                                             
may have a significant effect on the definition of permissible or impermissible
activities, the relative costs associated with doing business and the amount of
reimbursement by both government and third party payers.  In addition, economic
forces, regulatory influences and political initiatives are subjecting the
health care industry to fundamental changes.  Health care reform proposals have
been formulated by the current administration and by members of Congress.
Federal, state and local government representatives are likely to continue to
review and assess alternative health care delivery systems and payment methods
and ongoing public debate of these issues can be expected. There can be no
assurance that any such efforts or reforms will not have an adverse affect on
the business, results of operations or financial condition of the Company.


     Potential Impact of Year 2000 on Processing of Date-Sensitive Information.
     -------------------------------------------------------------------------  
The Company is currently assessing the potential impact of the year 2000 on the
processing of date-sensitive information by the Company's computerized
information systems and on products sold as well as products purchased from key
suppliers by the Company.  The Company believes that its internal information
systems and current products are either year 2000 compliant or will be so prior
to the year 2000 without incurring material costs. There can be no assurance,
however, that the Company will not experience unexpected costs and delays in
achieving year 2000 compliance for its internal information systems and current
products, which could result in a material adverse effect on the Company's
future results of operations.

     The Company is presently assessing the effect that the year 2000 problem
may have on its previously sold products.  The Company has not completed its
analysis and is unable to conclude at this time whether the year 2000 problem as
it relates to its previously sold products is likely to have a material adverse
effect on the Company's future operations.



     ITEM 1.  BUSINESS


     OVERVIEW

     Marquette Medical Systems, Inc. (including its subsidiaries, the "Company"
or "Marquette") is a worldwide leader in the

                                       5
<PAGE>
 
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.

          The following table shows certain information relating to the
Company's products (dollars in thousands):

<TABLE> 
<CAPTION> 
                              Year Ended April 30
-----------------------------------------------------------------------------------------
                1996             1997                     1998
-----------------------------------------------------------------------------------------
                           Percentage               Percentage                Percentage  
                 Net         of net        Net        of net         Net        of net
                Sales        Sales        Sales       Sales         Sales       Sales
                -----      ----------    -------    ----------     -------    ----------      
<S>             <C>        <C>           <C>        <C>            <C>        <C> 
Cardiology       124,413        29.9%    178,321          32.8%     182,621         31.6 
Group                                                                                    
                                                                                         
Monitoring       208,321        50.0%    260,953          48.0%     294,054         50.9 
Group                                                                                    
                                                                                         
Supplies          83,559        20.1%    104,042          19.1%     101,586         17.6%
and Service     --------------------     ---------------------      -------------------- 
                 416,293         100%    543,317           100%     578,260          100% 
                ====================     =====================      ====================
 </TABLE>

The Company's products are sold in more than 65 countries throughout the world,
with the U.S. and international markets accounting for approximately 64% and
36%, respectively, of net sales for Fiscal 1998. 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 $1.65 billion, of which approximately $850 million is
attributable to the U.S.  Marquette's patient monitoring systems continuously
acquire, analyze, store,

                                       6
<PAGE>
 
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 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 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:

                                       7
<PAGE>
 
     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 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

                                       8
<PAGE>
 
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.

     Penetration of International Markets.  International sales have decreased
from approximately 39% of net sales for the year ended April 30, 1997 ("Fiscal
1997") to approximately 36% of net sales for Fiscal 1998 primarily due to the
effects of the strengthening U.S. Dollar, which results in negative currency
conversions.  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 6% of the Company's net sales for Fiscal 1998 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.


     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 $1.65 billion, of which approximately $850 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

                                       9
<PAGE>
 
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.

     The following table provides information with respect to the Company's
principal patient monitoring systems:

                                      10
<PAGE>
 
<TABLE> 
<CAPTION> 
                              Approximate                                     Intro-
                              List             Principal                      duction     Care
Product Category              Price Range      Product                        Date        Areas
----------------              -----------      ---------                      --------    -----
<S>                           <C>              <C>                            <C>         <C>
Modular Bedside               $13,000-         Solar 8000                     1995        Intensive Care,            
Monitors                      $25,000          Solar 9500                     1998        Acute Care                 
                                                                                                                     
Configured Bedside            $ 6,500-         Eagle 3000                     1995        Intensive Care,            
Monitors                      $20,000          Eagle 4000                     1995        Acute Care, General        
                                               Eagle Dash 1000(Portable)      1996        Care, Portable and           
                                                                                          Transport                  
                                                                                                                     
Telemetry                     $ 6,500 per      CD - Telemetry LAN             1991        Ambulatory Care and        
Monitoring                    bed              System                         1995        Sub Acute Care             
Systems                                        APEX Transmitter                                                      
                                                                                                                     
Anesthetic and                $10,000-         RAMS Mass Spectrometer         1995        Intensive Care,            
Respiratory Gas               $60,000          SAM IR Anesthetic Agent        1995        Acute Care                 
Monitoring                                     Module                                                                
Equipment                                                                                                            
                                                                                                                     
Maternal/Fetal                $ 4,800-         Model 150/Antepartum           1992        Labor and Delivery         
Monitoring                    $18,000          Model 151/Intrapartum          1994                                   
Equipment                                      Model 118/Intrapartum          1994                                   
                                               Model 155/Antepartum           1996                                   
                                               Model 340 Telemetry            1996                                   
                                                /Intrapartum                                                         
                                               Model 120 Series               1997                                   
                                                                                                                     
Neonatal                      $ 8,000-         Eagle 4000N                    1993        Intensive Care             
Monitoring                    $20,000          Model 556 (color)              1994                                   
Equipment                                      Eagle 3000N                    1996                                   
                                               Solar 8000N                    1996                                   
                                                                                                                     
Home Care                     $ 1,500-         500E                           1986        Home Care                   
Monitoring                    $ 3,800          500EXL                         1995
Equipment                                      510/511                        1996
                                               Event-Link                     1996
</TABLE> 
 

                                       11
<PAGE>
 
<TABLE>
<S>                           <C>             <C>                   <C>        <C>
Clinical Information          $   40,000-      QS System            1996       All care areas
Systems                       $1,500,000
 
Portable/Transport            $    4,000-      Dash 1000            1997       Transport
Monitors                      $    9,000
 
Central Stations/             $   10,000-      PRISM Clinical       1998       Intensive Care,
Clinical                      $   60,000       Information Center              Ambulatory Care,
Workstations                                                                   Sub Acute Care
</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, has
     been designed for use in virtually any care setting --from low acuity areas
     through the most sophisticated patient care environments. It features a
     hardware platform which offers the user the flexibility to mix-and-match
     screen sizes, display types (CRT or flat-panel), and networks (standalone,
     hard-wired or wireless), and to choose among various features and
     capabilities, including acquisition and analysis of 12-lead ECGs, through
     the addition of software modules. A complete library of both single-
     parameter-modules and TRAM(R) multi-parameter modules allows for bedside
     device configuration at the point-of-care to meet any monitoring need or
     acuity of any particular patient.

          Marquette recently introduced the first in a new class of monitors
     that maximizes modular monitoring capabilities and options, the SOLAR 9500
     Information Monitor. The SOLAR 9500 Information Monitor is a powerful real-
     time, modular, vital signs monitor that combines the accuracy and
     reliability of a medical instrument with the information accessibility of a
     PC to create a system that simplifies access to, and management of, patient
     information. Using standard, non-proprietary network protocols and
     technologies developed for the worldwide web, the SOLAR 9500 will interface
     with other hospital record keeping systems and databases. It features a
     highly-customizable graphical user interface (GUI) that gives the user the
     freedom to design and "build" their own displays, placing information on
     screen in whatever configuration that specifically meets their ever-
     changing needs.

                                       12
<PAGE>
 
          Configured Bedside Monitors are very similar to modular bedside
     monitors in their continuous vital signs monitoring capabilities. However,
     configured monitors do not permit point-of-care configurability. In most
     cases, these devices are used to monitor patients in places other than the
     intensive care area such as, the emergency department, the general purpose
     operating room, post-anesthesia care/recovery units or where general
     purpose monitoring is needed.

          The Company offers the EAGLE 4000, EAGLE 3000 and EAGLE/DASH 1000
     configured bedside monitors.

          The EAGLE 4000 is the most advanced of these products and is capable
     of monitoring ECG with arrhythmia detection and alarm, respiration, non-
     invasive and invasive blood pressure, temperature, oxygen saturation (using
     the pulse oximetry), cardiac output and end tidal carbon dioxide levels in
     its most highly configured form. The device can be purchased with either a
     color TFT LCD or monochrome EL display. The EAGLE 4000 also accepts an
     optional software module that provides for the acquisition and analysis of
     12-lead ECGs. A battery operation and wireless LAN capabilities are
     available as options.

          The EAGLE 3000 is a lower priced instrument that offers fewer features
     and a slightly smaller display than the EAGLE 4000. During 1997, the EAGLE
     3000 expanded its capabilities by interfacing and integrating its SAM Smart
     Anesthesia Multi-gas analysis module into the device. Through this
     integration, patient information, vital signs values, data trends, alarms,
     waveforms and gas analysis information now appear in one place on a single
     display. The Company believes that this enhancement, together with the
     device's feature set and price point, should enable the EAGLE 3000 to
     further penetrate the configured bedside market segment.

          The DASH 1000, or EAGLE 1000 as it is labeled outside the U.S., is the
     first in a family of battery-powered portable monitors to be offered by the
     Company. The device is a low-cost device available in a variety of
     configurations and is especially well suited to compete in the cost-
     sensitive markets outside the U.S.

          In addition to bedside patient monitoring devices and systems, the
     Company also offers Telemetry Monitoring Systems. Telemetry Monitoring
     Systems continuously collect ECGs using small, battery-powered patient-worn
     devices that transmit collected data via VHF or UHF radio frequency to
     receiver units a central viewing station. Telemetry systems are designed
     for patients who require at minimum ECG monitoring, but who are not
     confined to their beds. In general, the patient populations requiring this
     type of monitoring would consist of suspect cardiac patients, patients
     recovering from a cardiac event, post surgical patients, or others in the
     diagnostic or recovery process. Telemetry monitoring systems

                                       13
<PAGE>
 
     represent an increasing share of the market for monitoring equipment
     because it allows patients to be ambulatory, which facilitates earlier
     discharge from the hospital.

          The Company competes in this category with its CD-Telemetry LAN System
     and Apex-S Telemetry Transmitter. The Apex-S is a true multi-lead
     transmitter capable of providing simultaneous multi-lead transmission and
     display of any of seven standard leads (I, II, III, V, a VR, a VL, a VF).
     In addition to multi-lead ECG transmission, the Apex-S also provides for
     multi-parameter telemetry transmission. The Apex-S transmitter compliments
     modular multi-parameter telemetry by interfacing to secondary pulse
     oximetry and non-invasive blood pressure devices.

          Centralized display of waveforms and other patient information
     telemetry devices and bedside monitors is accomplished using the Company's
     recently introduced PRISM Clinical Information Center (CIC). Using a
     standard PC-Intel Pentium platform and Microsoft(R) Windows NT, the device
     is capable of displaying information from 16 patients simultaneously. The
     hardware platform provides the user the flexibility to mix-and-match screen
     sizes and display types (CRT or flat-panel). The use of the Windows control
     and display interface allows the user to access additional patient
     information instantaneously.

          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

                                       14
<PAGE>
 
     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 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

                                       15
<PAGE>
 
     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
     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 in which it participates
     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 an entire cardiology patient file. The system
     delivers advances in clinical decisions, process efficiency and information
     access through hospital

                                       16
<PAGE>
 
     information system interfaces, network connectivity, internet technology,
     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 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                                   Intro-
                        List              Principal                   duction        Care
Product Category        Price Range       Products                    Date           Area
----------------        -----------       ---------                   --------       -----
<S>                     <C>               <C>                         <C>            <C>
Resting ECG             $    1,800-       Mac PC                      1985           Intensive Care,
Equipment               $   15,000        Mac 6                       1989           Acute Care,
                                          Mac VU                      1991           General Purpose,
                                          Mac 8                       1993           Emergency Care,
                                          CardioSmart                 1994           Sub Acute
                                          MicroSmart                  1996     
                                          QT Guard                    1998           Research Applications
                                                                               
Exercise Testing        $    4,000-       MAX 1                       1989           General Purpose,
ECG Systems             $   23,000        CASE 16                     1994           Sub Acute
                                          MAX Personal                1995     
                                          CardioSys XT                1996     
                                          CardioSmart ST              1997     
                                                                               
Holter (Ambulatory)     $   21,000-       CENTRA                      1989           Ambulatory Care,
ECG Equipment           $   60,000        SXP                         1991           Home Care
                                          Memoport                    1995    
                                          MARS                        1996
</TABLE> 

                                       17
<PAGE>
 
<TABLE> 
<CAPTION> 
<S>                     <C>               <C>                         <C>            <C> 
Cardiovascular          $   30,000-       MUSE CV                     1996           Intensive Care,
Information             $1,000,000                                                   Acute Care,
Systems                                                                              General Purpose,
                                                                                     Emergency Care, 
                                                                                     Sub Acute Care   
                                   
Cardiac                 $    2,000-       Marquette Responder 1000    1998           Intensive Care,
Defibrillators          $   14,500        Marquette Responder 1100    1998           Acute Care,
                                                                                     GeneralPurpose,
                                          CardioServ                  1993           Emergency Care,
                                          Marquette Responder 3000    1998           Portable and
                                                                                     Transport,
                                                                                     Sub Acute Care
                                                                           
Cardiac                 $   90,000-       MacLab                      1990           Intensive Care
Catheterization         $  125,000        E for M 6000                1996           Cardiac Cath Lab
Equipment               $  160,000        E for M 8000                1996 
                                                                           
Photo Image and         $  100,000-       AccuVision Series           1995           Cardiac Cath Lab
Digital Image           $  125,000
Processing
Equipment
</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 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

                                       18
<PAGE>
 
     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, activity and results reports which can assist a hospital or other
     user in cost control and decrease of both unbilled and inaccurately billed
     tests.

          Many 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

                                       19
<PAGE>
 
     pre-hospital and hospital use. 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 E for M 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 and
     echocardiography. 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, 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 or other imaging source 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.

                                       20
<PAGE>
 
     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 or on a 90 days labor, 3 years parts basis.
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 and modular component 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 179 service technicians
and 5 project managers 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, 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 $37.3
million, $48.1 million and $52.6 million on research and development, which
represented approximately 9.0%, 8.9% and 9.1% of net sales for the fiscal years

                                       21
<PAGE>
 
ending April 30, 1996, 1997, and 1998, 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.

     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. International sales decreased from approximately
39% in fiscal 1997 to

                                       22
<PAGE>
 
approximately 36% in fiscal 1998, such decrease being principally attributable
to the effects of the strengthening U.S. Dollar.

     The Company has a direct sales force in the U.S. of approximately 277 sales
representatives, clinical specialists, and managers, as well as 7 national
account managers.  In addition, the Company has approximately 120 and 10 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 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.

                                       23
<PAGE>
 
     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).


     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.,

                                       24
<PAGE>
 
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 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.

                                       25
<PAGE>
 
     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 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

                                       26
<PAGE>
 
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  results of
operations.


     EMPLOYEES

                                       27
<PAGE>
 
     At April 30, 1998, the Company had approximately 2,371 employees in the
U.S. and approximately 754 employees outside the U.S., including approximately
832 employees engaged primarily in sales, approximately 959 employees engaged
primarily in manufacturing, approximately 540 employees engaged primarily in
research and product development and approximately 595 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
                                          
Steven G. Books               48           Senior Vice President
                                          
Gerald J. Lentz               51           Senior Vice
                                           President-Service
                                          
Gary Close                    46           Senior Vice President-
                                           Monitoring
                                          
P. Michael Breedlove          54           Vice President-Business
                                           Development-Imaging 
                                          
Louis P. Scafuri              46           Chief Operating
                                           Officer, President-
                                           Cardiology Group
                                           Diagnostics
</TABLE> 
 

                                       28
<PAGE>

<TABLE> 
<S>                            <C>         <C> 
Mark R. Tauscher               46          Senior Vice President-
                                           Supplies

Kevin Lindsey                  41          Vice President and
                                           Comptroller
</TABLE> 

     Mary M. Kabacinski became a 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.

     Steven G. Books became a Senior Vice President of the Company in February,
1998.  Mr. Books was Division President-Cardiology from May, 1996 to February,
1998.  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 Senior Vice President-Service in February, 1998.
Mr. Lentz was Division President-Service from May, 1996 to February, 1998.  Mr.
Lentz was a Product Manager from June, 1994 to May, 1996 and National Service
Manager from February, 1977 to June, 1994.

     P. Michael Breedlove became Vice President-Business Development-Imaging in
May, 1998.  Mr. Breedlove was Division President-E for M Imaging Services from
May, 1996 until February, 1998 when he was named Senior Vice President-
Cardiology.  Mr. Breedlove was Division President-E For M Imaging Services from
May, 1996 to February, 1998, 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 1993.  Mr. Breedlove was Vice President-Sales and Marketing of Cerner
Corporation from 1984 to 1991.

     Louis P. Scafuri became Chief Operating Officer and President-Cardiology
Group in February, 1998 and was Division President-Corometrics Medical Systems,
from May, 1996 to February, 1998.  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.

     Mark R. Tauscher became Senior Vice President-Supplies in February, 1998.
Mr. Tauscher was Division President-Supplies from

                                       29
<PAGE>
 
November, 1996 to February, 1998.  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.

     Kevin Lindsey became Comptroller of the Company in 1985 and a Vice
President of the Company in August, 1997.  From 1982 until 1985, Mr. Lindsey
served as Tax Manager of the Company.

     Gary Close became Senior Vice President-Monitoring of the Company in May,
1998.  Mr. Close was Vice President of Marketing-Monitoring Division from July,
1996 until May, 1998, Director of Marketing-Monitoring Division in June, 1995
until July, 1996, and as Marketing Manager from September, 1994 until June,
1995.  Prior to joining the Company, Mr. Close was Vice President of Marketing
and Sales of Digital Ocean, Inc., a WLAN manufacturer, from March, 1994 until
September, 1994.  He was Vice President-Marketing and Engineering  of Criticare
Systems, Inc. from September, 1991 until March, 1994.



     ITEM 2.  PROPERTIES

     The following table sets forth certain information as of April 30, 1998,
relating to the Company's principal real estate facilities:

<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 manufacturing of 
                                        diagnostic and monitoring products,
                                        primarily for European distribution.
                                        
Freiburg, Germany         35,100        Research and development, marketing and
 (leased until                          sale and purchasing until for Hellige 
   September 30, 2006)                  manufactured products
</TABLE> 

                                       30
<PAGE>
 
Jupiter, Florida         180,000        Manufacturing, engineering and marketing
                                        of supplies and (owned) cardiac
                                        catheterization products and repair and
                                        maintenance of products
                                                                                
Milwaukee,               295,000        Corporate offices, engineering, research
                                        and Wisconsin development, and marketing
                                        and (owned) manufacturing of diagnostic
                                        and adult monitoring products
                                        
Paris, France             8,000         Marketing and sales, general 
(leased until                           administration                  
February, 1999)                                                                 
                                                                                
Torrance, California     65,500         Engineering, research and development
(leased until December,                 and marketing and manufacturing of
2004)                                   imaging systems            
                                                                                
Wallingford, CT         180,000         Engineering, research and development
 (owned)                                and marketing and manufacturing of fetal
                                        and neo-natal monitoring and diagnostic
                                        products              



     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

                                       31
<PAGE>
 
          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 49 of the
Company's 1998 Annual Report to Shareholders is incorporated herein by
reference.

     The Registrant has two classes of stock, Common Shares, $0.10 par value,
and Preferred Shares, without par value.  There are no Preferred Shares
outstanding.

     ITEM 6.  Selected Financial Data

     The section labeled "Five Year Summary of Selected Financial Data"
appearing on page 5 of the Company's 1998 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 42 through 47 of the
Company's 1998 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 41 and the
Consolidated Financial Statements and Notes to Consolidated Financial Statements
appearing on pages 20 through 40 of the Company's 1998 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

                                       32
<PAGE>
 
     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 June 25, 1998 is incorporated herein by
reference.

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

          (c) Section 16(a) Beneficial Ownership Reporting Compliance.  Section
              -------------------------------------------------------          
16(a) of the Securities Exchange Act of 1934 requires the Company's Directors
and Executive Officers, and persons who own more than 10% of a registered class
of the Company's equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
equity securities of the Company. Officers, directors and greater than 10%
shareholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file.

     To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, the Company believes that its officers, directors and
greater than 10% beneficial owners complied with all applicable Section 16(a)
filing requirements, except for the omission to reflect on the Form 4 (Statement
of Changes in Beneficial Ownership) by Frederick A. Robertson for the month of
December, 1997, the purchase of 2,000 shares of the Company's equity securities.
An amended Form 4 was filed by Dr. Robertson for April, 1998 correcting the
omission.


     ITEM 11.  Executive Compensation

     The sections labeled "Executive Officer Compensation" and "Report of the
Human Resources Committee" appearing on pages 6 through 10 of the Company's
Proxy Statement dated June 25, 1998 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 June 25, 1998 is
incorporated herein by reference.

                                       33
<PAGE>
 
     ITEM 13.  Certain Relationships and Related Transactions

     The subsection labeled "Certain Transactions" appearing on pages 11 and 12
of the Company's Proxy Statement dated June 25, 1998 is incorporated herein by
reference.

                                       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
     1998 Annual Report to Shareholders                Page in 1998
     and are incorporated herein by                    Annual Report
     reference pursuant to Item 8:                     to Shareholders


     Consolidated Balance Sheets at                             2
     April 30, 1998 and 1997

     Consolidated Statements of Income                         22    
     for the years ended April 30, 1998,
     1997 and 1996

     Consolidated Statements of Cash Flows                     23
     for the years ended April 30, 1998,
     1997 and 1996

     Consolidated Statements of Shareholders'                  24
     Equity for the years ended April 30,
     1998, 1997 and 1996

     Notes to Consolidated Financial                           25
     Statements

     Selected Quarterly Data (Unaudited)                       40

     Report of Independent Public Accountants                  41


               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 Accountants on Supplementary
Schedule" included herein.

                                       34
<PAGE>
 
           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 consolidated statements or the notes
thereto, or is not applicable or required under the rules of Regulation S-X.

                                       35
<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 1, 1998. Our audit was made for the purpose
of forming an opinion on those statements taken as a whole. The schedule listed
in the index at item 14(a)(2) is the responsibility of the Company's management
and 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 1, 1998

                                       36
<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,              
1996         $1,066      $817         $5,427        $880       $6,430
                       
Year ended             
April 30,              
1997         $6,430      $398         $  -0-        $2,664     $4,164
                       
Year ended             
April 30,              
1998         $4,164      $   89       $  -0-        $ ( 30)     $4,283
</TABLE> 

    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.

                                       37
<PAGE>
 
    2.2       Closing Date Agreement between Marquette Electronics, Inc., AHP
              Subsidiary Holding Corporation and American Home Products
              Corporation dated May 23, 1994 (filed as Exhibit 2 to Form 8-K
              dated May 31, 1994 and incorporated 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)

              (c) Articles of Amendment to Amended and Restated Articles of
              Incorporation dated December 18, 1996

              (d) Articles of Amendment to Amended and Restated Articles of
              Incorporation dated August 13, 1997

    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)

              (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

                                       38
<PAGE>
 
               (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 incorporated herein by
               reference)

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

     10.5      Amendment No. 2 to Amended and Restated Stock Option Plan for
               Employees of Marquette Electronics, 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 Electronics, 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)

                                       39
<PAGE>
 
     10.8      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)

     10.9      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)

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

     10.11     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)

     10.12     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)

     10.13     Commercial and Industrial Lease Agreement dated March 29, 1995
               between Bond Street Building Co. and E For M Corporation (a
               wholly-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)

     10.14     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)

     10.15     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)

                                       40
<PAGE>
 
     10.16     Severance Agreement dated February 27, 1998 between the
               Registrant and Frederick A. Robertson

     10.17     Severance Agreement dated March 11, 1998 between Registrant and
               Timothy C. Mickelson

     10.18     Marquette Medical Systems, Inc. Global Employee Stock Sharing
               Plan

     10.19     Indemnity Agreement dated February 27, 1998 between Registrant
               and Frederick A. Robertson

     10.20     Marquette Medical Systems, Inc. Profit-Sharing and 401(k) Plan
               (as amended and restated) effective as of January 1, 1998

     10.21     Amendment No. 1 adopted February 20, 1998 to the Marquette
               Medical Systems, Inc. Profit-Sharing and 401(k) Plan (as amended
               and restated)

     13.1      1998 Annual Report to Shareholders



     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

          None

                                       41
<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 15, 1998.


                                    MARQUETTE MEDICAL SYSTEMS, INC.


                                    By:  /s/ Frederick A. Robertson
                                        ---------------------------
                                         Chief Executive Officer


     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.

     Signature                          Title             Date



Principal Executive Officer:
                                    Chief Executive
 /s/Frederick A. Robertson          Officer,
-----------------------------       Director            July 15, 1998         
     Frederick A. Robertson         


Principal Financial Officer:        Senior Vice
                                    Vice President,
 /s/ Mary M. Kabacinski             Chief Financial
-----------------------------       Officer,                         
    Mary M. Kabacinski              Assistant                        
                                    Secretary           July 15, 1998 
                                    

 
Directors:
 
 /s/ John G. Bollinger
-----------------------------
     John G. Bollinger              Director            July 15, 1998

 
 /s/ Michael J. Cudahy              Chairman of the
-----------------------------       Board, Director     July 15, 1998 
     Michael J. Cudahy              
 
                                       42
<PAGE>
 
  /s/ Frederick G. Luber            Director            July 15, 1998
 ----------------------------                                        
     Frederick G. Luber


  /s/ Melvin S. Newman
 ----------------------------
     Melvin S. Newman               Director            July 15, 1998


  /s/ Walter L. Robb
 ----------------------------
     Walter L. Robb                 Director            July 15, 1998


  /s/ Frederick A. Robertson
 ----------------------------
     Frederick A. Robertson         Director            July 15, 1998

                                       43