UNITED STATES
                           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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                           COMMISSION FILE NO. 0-18602

                                ATS MEDICAL, INC.

             (Exact name of registrant as specified in its charter)

           MINNESOTA                                             41-1595629
(State or other jurisdiction of                                I.R.S. Employer
 incorporation or organization)                              Identification No.)

          3905 ANNAPOLIS LANE
         MINNEAPOLIS, MINNESOTA                                    55447
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code: (763) 553-7736

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock $.01
par value

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                Yes _X_  No ____

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. _X_

         The aggregate market value of voting stock held by nonaffiliates of the
registrant as of March 8, 2001, was approximately $248,932,373 (based on the
last sale price of such stock as reported by the NASDAQ National Market).

         The number of shares outstanding of each of the registrant's classes of
common stock as of March 8, 2001, was:

         Common Stock, $.01 par value                 22,127,322 shares

                       DOCUMENTS INCORPORATED BY REFERENCE

         Pursuant to General Instruction G, the responses to Items 5, 6, 7, and
8 of Part II of this report are incorporated by reference to certain information
contained in the Registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 2000 and the responses to Items 10, 11, 12 and 13 of Part III
of this report are incorporated herein by reference to certain information
contained in the Registrant's definitive Proxy Statement for its 2001 Annual
Meeting of Shareholders to be held on May 1, 2001.


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                                ATS MEDICAL, INC.

                                 2000 FORM 10-K

                                     PART I

ITEM 1.  BUSINESS

OVERVIEW

ATS Medical, Inc. is a Minnesota corporation founded by Manuel A. Villafana in
June, 1987. We manufacture and market a mechanical bileaflet heart valve with a
unique open pivot design. Our valve is used to treat heart valve failure caused
by the natural aging process, rheumatic heart disease, prosthetic valve failure
and congenital defects. Our Chairman, Chief Executive Officer and founder,
Manuel Villafana, has led ATS in the development of a valve designed to achieve
a significant advancement in mechanical heart valve technology. Mechanical heart
valves have been in use since the early 1960s. In 1976, Mr. Villafana founded
St. Jude Medical, Inc. to develop a bileaflet mechanical heart valve that has
become the world's most frequently implanted prosthetic heart valve and is
currently the industry standard. The U.S. market for replacement heart valves in
2000 was estimated to be over $285 million.

The ATS heart valve is designed to "advance the standard" among mechanical heart
valves by incorporating a pivot consisting of protruding spheres upon which the
leaflets of the valve pivot to open and close. This unique open pivot has been
designed to eliminate the cavity associated with the pivot of other bileaflet
valves and to improve the ability of the blood to flow through the valve without
forming clots.

PROSTHETIC HEART VALVE MARKET

There are two types of replacement heart valves: tissue and mechanical. Tissue
valves are made from animal or cadaver tissue or in some cases the patient's own
tissue. Tissue valves do not present the same level of risk of blood clotting
around the valve as mechanical valves. Tissue valves, however, have limited
long-term durability due to calcification and deterioration. If a tissue valve
fails, a new prosthetic valve must be implanted, requiring another open heart
surgery. Mechanical valves are made from durable materials such as metals and
carbon. In vitro testing of current pyrolytic carbon mechanical valves has
yielded estimated useful lives in excess of any patient's lifetime. Current
mechanical valves, however, require the use of anti-coagulants to prevent
formation of blood clots; tissue valves generally do not require anti-coagulant
treatment. Tissue valves are generally prescribed for patients who are less able
to tolerate anti-coagulants due to conditions such as gastrointestinal ulcers or
liver dysfunction, elderly patients, women in their childbearing years and very
active people.

Heart surgeons choose a particular type of mechanical valve based on a number of
factors. A principal factor in the choice of a valve is the potential for
forming blood clots, or thrombosis, resulting from areas in the valve where the
blood can stagnate. Blood clots can impair the performance of a valve and, if
the clot detaches and moves through the bloodstream (a thromboembolism), result
in an arterial blockage or stroke. Another principal factor in the choice of a
mechanical valve is the blood flow efficiency, or hemodynamics, of the valve. A
mechanical valve should allow blood to flow easily through the valve with
minimal pressure required to open the valve and minimal backflow of blood when
the valve closes. The valve also should not exert force on the blood that could
damage the fragile blood cells. Other factors that are important in a surgeon's
choice of a mechanical valve are the ease in implanting and monitoring the
valve's performance, the patient's quality of life and the physician's
familiarity with and confidence in the valve.

In addition to heart surgeons, administrators or business managers at hospitals
and clinics have become increasingly influential in the purchase decision-making
process in recent years. The increasing emphasis on medical cost containment in
most world markets has elevated the decision-making power of the administrator
to a level equal to or greater than that of the surgeon. The administrator tends
to focus on cost-effectiveness and, in some markets, primarily on the cost of
the valve.

We estimate that the total heart valve market in the U.S. in 1999 was
approximately $275 million. We estimate that approximately 73,000 heart valve
replacement surgeries were conducted in the United States in 1999. Of the total
number of heart valve replacement surgeries, approximately 46,000, or 65%,
involved mechanical heart valves and approximately


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24,500, or 35%, involved tissue heart valves. Since 1993, the total U.S.
replacement heart valve market grew at a compound annual growth rate of 2.5 to
3.0%, with mechanical valves growing at an annual rate of 1.5 to 2.0%.

THE ATS OPEN PIVOT BILEAFLET VALVE

Our product is designed to advance the standard of existing mechanical heart
valves by combining a proprietary open pivot design and other innovative
features with the widely accepted biocompatibility and durability of pyrolytic
carbon. The standard ATS heart valve is available in seven sizes ranging from
19mm to 31mm in diameter, with sewing cuffs for either aortic valve or mitral
valve replacement. In 1994, we introduced the Advanced Performance series of the
ATS heart valve in international markets. This valve is available in seven sizes
ranging from 16mm to 28mm in diameter. Our 16mm valve is currently the world's
smallest mechanical valve.

The major design features of the ATS heart valve are:

         OPEN PIVOT AREAS. The proprietary open pivot areas of the ATS heart
         valve feature spherical protrusions from the orifice that match
         spherical notches in the leaflets. The pivot areas protrude into the
         orifice and so are exposed to the washing action of the blood flowing
         through the heart valve. All other currently marketed bileaflet valves
         contain pivot cavities in the orifice wall into which protrusions from
         the semi-circular leaflets extend to allow the leaflets to open and
         close. The open pivot design also features angled inflow and outflow
         pivot stops.

         A THIN BUT DURABLE ORIFICE. The orifice of the ATS heart valve is
         manufactured using a mandrel which is coated with pyrolytic carbon. The
         mandrel is then removed, leaving a solid pyrolytic carbon orifice. In
         contrast, the industry standard valve's orifice is composed of a soft
         graphite substrate coated with pyrolytic carbon. By eliminating the
         graphite substrate, we have made the orifice wall thinner, resulting in
         a larger average inside diameter. The orifice is surrounded by a
         titanium stiffening ring and is rotatable.

         LOW PROFILE DESIGN. The ATS heart valve has a low profile design. The
         profile of a mechanical heart valve refers to the extension of the
         orifice and leaflets above and below the natural tissue anulus, or
         location of the natural heart valve. The inflow side of the orifice of
         the ATS heart valve is flat, unlike the most popular cavity pivot valve
         which has upward protrusions on the orifice to house the cavity.

         AN ADVANCED SEWING CUFF. The sewing cuff surrounding the orifice of the
         ATS heart valve is made of double velour polyester and includes a
         surgical felt ring for ease of sewing. An extended sewing cuff is used
         with the 31mm carbon components to create a 33mm valve for special
         mitral valve replacements. The Advanced Performance series offers a
         reconfigured sewing cuff, allowing a valve with a larger inside
         diameter to be used in small anulus situations.

         PYROLYTIC CARBON. Pyrolytic carbon has been used in mechanical heart
         valves for over 25 years. The orifice of our heart valve is fabricated
         entirely from pyrolytic carbon, while the leaflets are fabricated by
         coating pyrolytic carbon on graphite substrates. Pyrolytic carbon used
         in other mechanical valves has been tested to function longer than any
         patient's lifetime. Pyrolytic carbon is believed to be superior to
         metal and plastics in terms of the human body's acceptance of the
         material, thus resulting in lower rates of thrombosis and
         thromboembolism than with other materials. Because of its durability
         and biocompatibility, pyrolytic carbon is used in virtually every
         mechanical heart valve in the market.

         TWO LEAFLETS. Bileaflet valves are used in substantially all mechanical
         heart valves being marketed today. The leaflets in the ATS heart valve
         have tungsten impregnated in the substrate to make them visible under
         x-ray.

The ATS heart valve is designed to provide the following primary advances over
the industry standard mechanical heart valve:

         REDUCED RATES OF THROMBOEMBOLIC COMPLICATIONS. The pivot cavities found
         in other bileaflet heart valves are areas of blood flow stagnation and
         possible blood clot formation. By eliminating the cavities in the
         orifice and placing the pivot areas within the normal blood flow, the
         improved washing action in the ATS heart valve is intended to lower the
         likelihood of blood clot formation and the resulting incidence of
         thromboembolism. The open pivot design as well as the angled inflow and
         outflow pivot stops also result in low levels of hemolysis (damage to
         blood cells), which may contribute to a low rate of thromboembolic
         complications.


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<PAGE>


         IMPROVED BLOOD FLOW EFFICIENCIES. We have made the orifice of our
         product both durable and thinner, thereby resulting in a larger inside
         diameter. The larger inside diameter of the ATS heart valve is intended
         to result in lower pressure gradients in our product. (The term
         "gradients" refers to the pressure difference between the inflow and
         outflow side of the valve needed to support the required blood flow
         through the valves.) The ATS heart valve is also designed to have less
         regurgitation (backflow of blood when the valve is closing and closed)
         due to the geometry of its angled inflow and outflow pivot stops which
         minimize the direct leakage paths. These design characteristics are
         intended to result in superior blood flow efficiencies which should
         reduce the workload on the heart.

         EASE OF IMPLANT. Our product has been designed for ease of use by the
         heart surgeon. The low profile of the ATS heart valve is intended to
         minimize implant complications. Leaflets that extend significantly
         below the natural tissue anulus in the mitral position may obstruct
         blood outflow or interfere with the septum or other parts of the heart.
         Protrusions on the inflow side of the anulus in the aortic position may
         snag sutures used to attach the mechanical valve to the heart. In
         addition, because the orifice can be rotated , the surgeon can optimize
         valve orientation by adjusting the position of the leaflets after the
         ATS heart valve has been sutured in the natural anatomical position in
         the patient's heart. Suturing the ATS heart valve into the heart is
         made easier by reducing the number of layers of polyester material in
         the aortic and mitral cuffs and by adding the surgical felt ring in the
         sewing cuff, thereby easing the passage of the suture needle through
         the sewing cuff. The packaging and accessories of the ATS heart valve
         also are designed to facilitate the implant procedure by including all
         of the required items pre-assembled in a sterilized dual barrier
         container.

         IMPROVED FOLLOW-UP DIAGNOSTIC CAPABILITY. Our product facilitates the
         follow-up diagnostic process by being more easily visible to x-rays.
         The titanium stiffening ring provides a clear image on x-rays when
         taken from any angle. The leaflets also have a higher density of
         tungsten impregnated in the substrate, making them more visible to
         x-rays.

         IMPROVED PATIENT QUALITY OF LIFE THROUGH LOWER NOISE LEVELS. Patients
         with other implanted mechanical heart valves frequently complain of
         disturbances resulting from the clicking sound created as the valve
         closes. These disturbances range from irritability and insomnia to
         paranoia and depression. Spouses of patients with implanted mechanical
         valves also report disturbances resulting from the noise of the valve.
         Based on informal surveys, we believe that the ATS heart valve is
         quieter than our competitors' valves and below the threshold of hearing
         of most patients. We believe that the reduced noise level of our
         product further improves the quality of life of the patient.

In 1997, we introduced an aortic valved graft. The aortic valved graft consists
of an ATS heart valve connected to a collagen-impregnated vascular graft. It is
used in cases where the aortic valve and a portion of the ascending aorta must
be replaced.

CLINICAL RESULTS AND REGULATORY STATUS

On October 13, 2000, the FDA approved our PMA application to sell the ATS heart
valve in the United States

In May 1992, we began to sell the ATS heart valve in Switzerland, Germany,
Belgium and the United Kingdom. We received ISO 9001 certification in April 1994
and European Regulatory Approval ("CE") for the ATS heart valve in March 1995.
The ISO 9001 certification signifies that our procedures and manufacturing
facilities comply with international standards for quality assurance. The CE
mark denotes conformity with European standards for safety and allows certified
devices to be sold in all European Union countries. By the end of 1995, the ATS
heart valve was available in most European countries. We received approval to
begin commercial sales in Japan in June 1996 and in Australia in September 1998.
We have obtained regulatory approvals in other countries where required. As of
December 31, 2000, the ATS heart valve was available for sale in 40 countries
worldwide.

Research, development and engineering expenses totaled $1,911,815, $1,306,531
and $1,484,989 for the years ended 2000, 1999 and 1998, respectively.

MARKETING, SALES AND DISTRIBUTION

Our international marketing strategy combines the substantial cardiovascular
sales experience of our senior officers with a network of experienced
independent distributors to sell the ATS heart valve internationally. We believe
that our independent distributor network has provided a rapid and cost efficient
means of increasing market penetration and commercial acceptance of the ATS
heart valve in key international markets. The use of an independent distributor
does not involve


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<PAGE>


significant expense to us. We have been able to attract experienced mechanical
valve sales organizations familiar with local markets and customs to act as
independent distributors.

Now that we have received FDA approval, we intend to market the ATS heart valve
in the United States through a direct sales force. We plan to focus our
marketing efforts on the top 20 to 30% of the approximately 880 open heart
centers and on leading cardiac surgeons at those institutions. We believe that
we can effectively market and sell to these surgeons through a 25 to 30 person
direct sales force divided into three to four regions. The cardiac surgeons at
these centers perform a significant portion of the heart valve implant
procedures in the United States and tend to adopt new technologies and devices
more readily. We also believe that acceptance of our product by leading U.S.
cardiac surgeons will help to generate greater demand.

At December 31, 2000, we had contracts with 24 independent distributors covering
40 countries outside the United States. Sales to our top three distributors
represented over 42% of our total sales for each of the past three years. The
table below sets forth the sales to our top three independent distributors. See
Note 11 under the Notes to Consolidated Financial Statements in Item 8 herein.

                                          SALES AS A PERCENTAGE OF TOTAL REVENUE
                                          --------------------------------------
                                            1998           1999           2000
                                            ----           ----           ----
Century Medical, Inc.                       19.2%          18.6%          19.2%
Gemetron GmbH & Co. KG                      15.1           16.2           12.9
Advanced Biomedical Pty. Ltd.                 --             --           11.9
Medi-Service                                16.0           14.7             --

Each of our independent distributors has the exclusive right to sell the ATS
heart valve within a defined territory. These distributors also market other
medical products, although they have agreed not to sell other mechanical heart
valves. Most of our distributor agreements establish quotas for sales of the ATS
heart valve in the distributor's territory. Under most of the distributor
agreements, we may, at our option, terminate the agreement upon the departure of
certain key employees of the distributor or if our company experiences a change
in control. We sell the ATS heart valve to each distributor F.O.B. Minneapolis,
Minnesota. Sales to international distributors are denominated in U.S. dollars.
We allow the return of unused valves as long as the valve packaging has not been
opened and the sterilization date has not expired. Returns are insignificant
(less than 1% sales).

Our sales, marketing and customer service personnel provide support to our
independent distributors. Our marketing efforts include displaying the ATS heart
valve at major international, national and regional medical meetings attended by
cardiovascular surgeons and cardiologists. We also distribute product brochures
and product information bulletins and conduct product training sessions.

RELATIONSHIP WITH SULZER CARBOMEDICS

Sulzer Carbomedics ("Carbomedics") developed the basic design from which the ATS
heart valve evolved. Carbomedics is the largest and most experienced
manufacturer of pyrolytic carbon components used in mechanical heart valves.
Carbomedics has also designed and patented numerous mechanical valves.
Carbomedics offered to license a patented and partially developed valve to us if
we would complete the development of the valve and agree to purchase carbon
components from Carbomedics. Since 1990, Carbomedics has been our sole source of
the carbon components used in our valve and the licensor of certain technology
upon which our product is based. In December 1999 we restructured our
contractual relationships with Carbomedics to lower our cost of carbon
components and to begin the technology transfer which will enable us to
manufacture those components ourselves.

We have three agreements with Carbomedics: a license agreement and a long-term
carbon supply agreement entered into in September 1990, and a carbon technology
agreement entered into in December 1999. Under the terms of the license
agreement with Carbomedics, we hold an exclusive, royalty-free, worldwide
license to an open pivot, bileaflet mechanical heart valve from which the ATS
heart valve was developed. The license agreement does not include the right to
manufacture the pyrolytic carbon components of the ATS heart valve, except that
if Carbomedics were unable to produce the components, we would have the right
and license to make the components or have them made for us. We have a paid-up,
exclusive, royalty-free, worldwide license. After making certain design changes
in the valve, we finalized the design of the ATS heart


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valve and filed and received an additional U.S. patent covering the design
modifications. The design improvements and the U.S. patent covering the
modifications are the exclusive property of ATS.

The supply agreement, as amended in December 1999, runs through the end of 2007
and requires us to purchase a minimum number of valve components each year. We
have currently satisfied all of our purchase obligations under the supply
agreement. We are obligated to purchase $12.0 million heart valve components
from Carbomedics in 2001. After 2001, the number of valve components and the
price of each set of components that we are obligated to purchase under the
supply agreement will decrease substantially as compared to prior years under
the agreement, subject to a yearly price adjustment for changes in the U.S.
Department of Labor Employment Cost Index.

In December 1999, we entered into a carbon technology agreement with Carbomedics
under which we obtained an exclusive, worldwide right and license to use
Carbomedics' pyrolytic carbon technology to manufacture components for the ATS
heart valve, and a non-exclusive worldwide right and license to use the
technology to produce pyrolytic carbon components for other devices and
manufacturers, including, after 2008, for other heart valve manufacturers. Under
the agreement Carbomedics has also agreed to assist us in designing, building,
equipping, qualifying and commencing operations in a pyrolytic carbon component
production facility in Minneapolis, Minnesota. In return, we have agreed to pay
Carbomedics a license fee totaling $41 million in eight installments over seven
years, contingent on attainment of specific milestones.

We are obligated under the carbon technology agreement to pay all of the costs
of establishing the new carbon production facility, including hourly fees and
out-of-pocket expenses of the Carbomedics employees assigned to assist us in
setting up the facility. We and Carbomedics have also mutually agreed not to
solicit or hire each other's employees (other than sales and marketing
employees) for two years after completion of the milestone payments or
termination of the agreement.

The carbon technology agreement may be terminated by either party upon a
material breach of the agreement by the other party, subject to certain waiting
periods during which the breaching party will have an opportunity to cure the
default. In addition, Carbomedics may terminate the agreement if we cease
business, make an assignment for the benefit of creditors, or enter into certain
insolvency, receivership or bankruptcy proceedings. We can terminate the
agreement at any time after the third anniversary if we determine to exit the
mechanical heart valve business.

MANUFACTURING

We assemble the ATS heart valve in a controlled clean room environment at our
facility in a suburb of Minneapolis, Minnesota. Our manufacturing operation
currently consists of fabricating the sewing cuff, assembling, inspecting,
testing and packaging all of the components into a finished valve, and then
sterilizing the valve prior to shipment to distributors.

We have established a facility for manufacturing pyrolytic carbon components
under the Carbomedics technology agreement. We are currently in the process of
installing production equipment in this facility. We have leased a 22,900
square-foot building with facilities capable of producing 10,000 valve sets per
year. The manufacturing operations will include substrate machining and
preparation, carbon coating, coated part machining and final polishing and
finishing activities. We expect to hire 7 to 10 technical and production
personnel over the next twelve months. We anticipate that the facility will not
be operational until 2003. The key steps required to complete the facility
include:

     o    outfitting the building;

     o    purchasing and installing manufacturing equipment;

     o    training technical and production personnel;

     o    conducting pilot production runs;

     o    demonstrating compliance with FDA and international good manufacturing
          practices and quality system regulations; and

     o    scaling up production.

Under the terms of our agreement with Carbomedics, we may also elect to have
Carbomedics train our personnel how to machine graphite and pyrolytic carbon
parts, and teach us how to fabricate our own tooling. We have not yet determined
whether we will develop these capabilities internally or contract these steps
out to third party vendors. We currently have in


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inventory enough carbon components to satisfy our projected requirements for
pyrolytic carbon components for over two years. In addition, we are obligated to
continue to buy some valve components from Carbomedics under the supply
agreement through 2006.

COMPETITION

The prosthetic heart valve market is highly competitive with one dominant
company, St. Jude Medical, Inc. In 2000, according to industry estimates, St.
Jude Medical supplied approximately 60% of the mechanical heart valves sold
worldwide. Other companies that sell mechanical valves include Medtronic, Inc.,
Carbomedics, Edwards Lifesciences, Sorin Biomedica sPa and Medical Carbon
Research, Inc. St. Jude Medical, Medtronic, Edward Lifesciences, Sorin Biomedica
and CryoLife also sell tissue valves. Many of our competitors have greater
financial, manufacturing, and marketing resources than we have.

We are aware of several companies that are developing new prosthetic heart
valves. Several companies are developing and testing new autologous (created
from the patient's own tissue) valves, potentially more durable tissue valves
and new bileaflet and trileaflet mechanical designs. Advancements also are being
made in surgical procedures such as mitral valve reconstruction, whereby the
natural mitral valve is repaired, delaying the need for a replacement valve.
Other companies are pursuing biocompatible coatings to be applied to mechanical
valves in an effort to reduce the incidence of thromboembolic events and to
treat tissue valves to forestall or eliminate calcific degeneration in these
valves.

Competition within the prosthetic heart valve market is based on, among other
things, clinical performance record, minimalization of complications, ease of
use for the surgeon, patient comfort and cost effectiveness. We believe that the
most important factors in a heart surgeon's selection of a particular prosthetic
valve are the perceived benefits of the valve and the heart surgeon's confidence
in the valve design. As a result, valves that have developed a favorable
clinical performance record have a significant marketing advantage over new
valves. In addition, negative publicity resulting from isolated incidents can
have a significant negative effect on a valve's overall acceptance. Our success
is dependent upon the surgeon's willingness to use a new prosthetic heart valve
as well as the future clinical performance of the ATS heart valve compared with
the more established competition.

We believe that mechanical heart valves are currently being marketed to
hospitals at prices that vary significantly from country to country due to
market conditions, currency valuations, distributor mark-ups and government
regulations. We believe that, after distributor mark-up, the ATS heart valve
sells at or above the current price of other valves in most markets. In many
markets, government agencies are imposing or proposing price controls or
restrictions on medical products. We work with our independent distributors to
price the ATS heart valve in each market to meet these limitations. In addition,
our primary competitors have the ability, due to their internal carbon
manufacturing facilities and economies of scale, to manufacture their valves at
a lower cost than we can currently manufacture the ATS heart valve. The market
leader has recently been using price as a method to compete in several markets.

PATENTS AND PROPRIETARY TECHNOLOGY

Our policy is to protect our proprietary position by obtaining U.S. and foreign
patents to protect technology, inventions and improvements important to the
development of our business. Under our agreements with Carbomedics, we have
obtained a royalty-free license to the Carbomedics patent on the basic design of
an open pivot bileaflet mechanical heart valve and, in December 1999, the right
to manufacture pyrolytic carbon components, subject to the payment of license
fees. See "Business--Relationship with Sulzer Carbomedics." The Carbomedics
patent expires in 2004. We subsequently made modifications to the basic design.
We were issued a U.S. patent covering our design improvements to the ATS heart
valve in October 1994. We also have filed patent applications in Japan, Belgium,
France, Germany, Netherlands, Spain, Switzerland and the United Kingdom relating
to the design improvements. Patents have been granted in all of these countries.
We cannot be certain that any patents will not be challenged or circumvented by
competitors.

We also rely on trade secrets and technical know-how in the manufacture and
marketing of the ATS heart valve. We typically require our employees,
consultants and contractors to execute confidentiality agreements with respect
to our proprietary information.

We claim trademark protection on ATS Medical(TM) and ATS Open Pivot
Bileaflet(TM).


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<PAGE>


GOVERNMENT REGULATION

Our ATS heart valve is regulated in the United States as a medical device by the
FDA under the Federal Food, Drug and Cosmetic Act, or FDC Act. Under the FDC
Act, the FDA regulates the research, testing, manufacturing, safety, labeling,
storage, record keeping, advertising and distribution of medical devices. The
FDA classifies our ATS heart valve as a Class III device, which is subject to
the highest level of controls. Noncompliance with applicable regulations can
result in withdrawal of prior approvals, total or partial suspension of
production, fines, injunctions, recall of products, civil penalties and criminal
prosecution.

The FDA approved our PMA Application on October 13, 2000. The approval included
five mitral valve sizes (26,28,29,31, and 33mm) and ten aortic valve sizes (18,
20, 21, 23, 24, 25, 26, 27, 28, and 29mm). A PMA supplement for four additional
sizes (16 and 19mm aortic and 24 and 27mm mitral) is under FDA review. We plan
to submit a PMA supplement for our aortic valved graft in the second half of
2001.

We also are subject to FDA regulations concerning manufacturing processes and
reporting obligations. These regulations require that manufacturing steps be
performed according to FDA standards and in accordance with documentation,
control and testing standards. The FDA monitors compliance with its good
manufacturing practices regulations by conducting periodic inspections. We are
required to provide information to the FDA on adverse incidents as well as
maintain a detailed record keeping system in accordance with FDA guidelines. We
expect that our carbon fabrication processes and new manufacturing facility will
be subject to domestic and international regulatory inspection and review. We
will be required to perform testing and analysis on the components we
manufacture before we can sell the ATS heart valve in the United States and
international markets. We may be required to conduct clinical studies of the ATS
heart valve incorporating the components that we manufacture.

The advertising of our product also is subject to both FDA and Federal Trade
Commission regulations. In addition, we will be subject to the "fraud and abuse"
laws and regulations promulgated by the U.S. Department of Health and Human
Services and the U.S. Health Care Finance Administration if we sell the ATS
heart valve to Medicare or Medicaid patients.

Regulation of heart valves varies widely in foreign countries. Foreign countries
vary from having no regulations to having a pre-market notice or pre-market
approval process. The European Union has adopted rules which require that
medical products receive the right to affix the CE mark, an international symbol
that denotes conformity with European standards for safety and allows certified
devices to be marketed in all European Union countries. As part of the CE
compliance, manufacturers are required to comply with the ISO 9000 series of
standards for quality operations. We received ISO 9001 certification in 1994 and
CE mark approval in March 1995. We will continue to be subjected to various
audits and tests under the European Community directives. In June 1996, we
received approval to begin commercial sales in Japan through a Shonin regulatory
approval obtained by our distributor, Century Medical, Inc. In September 1998,
we received approval from the Therapeutic Goods Administration for commercial
sales in Australia. In June, 2000 we received regulatory approval to distribute
the ATS heart valve in Canada.

THIRD PARTY REIMBURSEMENT

In the United States, healthcare providers that purchase medical devices, such
as our product, generally rely on third-party payors, including Medicare,
Medicaid, private health insurance carriers and managed care organizations, to
reimburse all or part of the cost and fees associated with the procedures
performed using these devices. The commercial success of the ATS heart valve
will depend on the ability of health care providers to obtain adequate
reimbursement from third-party payors for the surgical procedures in which our
products are used. Third-party payors are increasingly challenging the pricing
of medical products and procedures. Even if a procedure is eligible for
reimbursement, the level of reimbursement may not be adequate. In addition,
third-party payors may deny reimbursement if they determine that the device used
in the treatment was not cost-effective or was used for a non-approved
indication.

In international markets, market acceptance of the ATS heart valve depends in
part upon the availability of reimbursement from healthcare payment systems.
Reimbursement and healthcare payment systems in international markets vary


                                       8
<PAGE>


significantly by country. The main types of healthcare payment systems in
international markets are government sponsored healthcare and private insurance.
Countries with governmental sponsored healthcare, such as the United Kingdom,
have a centralized, nationalized healthcare system. New devices are brought into
the system through negotiations between departments at individual hospitals at
the time of budgeting. In Japan, France and Germany, the government sets an
upper limit of reimbursement for various valve types. In most foreign countries,
there are also private insurance systems that may offer payments for alternative
devices.

We have pursued reimbursement for our ATS heart valve internationally through
our independent distributors. While the healthcare financing issues in these
countries are substantial, we have been able to sell the ATS heart valve to
private clinics and nationalized hospitals in each of the countries served by
our distributors.

PRODUCT LIABILITY AND INSURANCE

Cardiovascular device companies are subject to an inherent risk of product
liability and other liability claims in the event that the use of their products
results in personal injury. A mechanical heart valve is a life-sustaining
device, and the failure of any mechanical heart valve usually results in the
death of the patient. We have not received any reports of mechanical failure of
our valves implanted to date and have not experienced any product liability
claims. Any product liability claim could subject us to costly litigation,
damages and adverse publicity.

We currently maintain product liability insurance policy with an annual coverage
limit of $25 million in the aggregate. A $5 million product liability insurance
policy is required by the supply agreement with Carbomedics. We are financially
responsible for any uninsured claims or claims which exceed the insurance policy
limits. Product liability insurance is expensive for mechanical valves. If
insurance becomes completely unavailable, we must either develop a
self-insurance program or sell without insurance, which would require the
consent of Carbomedics. The development of a self-insurance program would
require significant capital.

Carbomedics has made no warranty on our valve components. We have agreed to hold
Carbomedics harmless and indemnify Carbomedics in the event claims are made or
damages are assessed against Carbomedics as a result of our valve.

EMPLOYEES

As of January 1, 2001, we had 95 full-time and 9 part-time employees, of whom 16
were engaged in regulatory affairs and quality assurance, 37 in production and
39 in administrative, purchasing and marketing activities.

ITEM 2.  PROPERTIES

We lease approximately 56,000 square feet of space in two buildings in a suburb
of Minneapolis, Minnesota. The lease covering approximately 33,000 square feet
expires on December 31, 2003 and it is used for administrative, production and
engineering purposes. The lease on the other 23,000 square feet expires July 31,
2006 and is used for carbon manufacturing. We believe that these facilities are
adequate for our current needs.

ITEM 3.  LEGAL PROCEEDINGS

None.


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

None.

                      EXECUTIVE OFFICERS OF THE REGISTRANT

Our executive officers are as follows:


                                       9
<PAGE>


Name                    Age      Position
----                    ---      --------
Manuel A. Villafana      60      Chairman of the Board and Chief Executive
                                 Officer
Richard W. Kramp         55      President, Chief Operating Officer and Director
Russell W. Felkey        50      Executive Vice President of Regulatory Affairs
                                 and Secretary
John H. Jungbauer        51      Vice President, Treasurer and Chief Financial
                                 Officer
Frank R. Santiago        49      Vice President, Sales and Marketing

MANUEL A. VILLAFANA, a founder of our company, has served as Chief Executive
Officer and Chairman of the Board since our inception in 1987. From 1983 to
1987, Mr. Villafana served as Chairman of GV Medical, Inc., a company co-founded
by Mr. Villafana to develop, manufacture and market the LASTAC System, a laser
transluminal angioplasty catheter system. From 1976 to 1982, Mr. Villafana
served as President and Chairman of St. Jude Medical, Inc., a company founded by
Mr. Villafana to develop, manufacture and market a prosthetic bileaflet heart
valve manufactured from pyrolytic carbon. From 1972 to 1976, Mr. Villafana
served as President and Chairman of Cardiac Pacemakers, Inc., a company founded
by Mr. Villafana to develop, manufacture and market a new generation of lithium
powered pacemakers. Mr. Villafana is also a Director of Vicom, Inc., a company
providing a full range of voice, data and video communication systems.

RICHARD W. KRAMP has served as our President and Chief Operating Officer and a
Director since March 1988. Mr. Kramp also will be responsible for overseeing the
development of and managing the new pyrolytic carbon manufacturing facility.
Prior to joining us, Mr. Kramp was Vice President of Sales and Marketing for St.
Jude Medical, Inc., where Mr. Kramp served in a variety of sales and marketing
capacities from 1978 to 1988. From 1976 through 1978, Mr. Kramp served as
Illinois Sales Manager for Life Instruments, a distributor of cardiovascular
products. From 1972 to 1976, Mr. Kramp was the Senior Design Engineer and then
Supervisor of Electrical Design for Cardiac Pacemakers, Inc., where he designed
the first lithium powered demand pacemaker for which he received a U.S. patent

RUSSELL W. FELKEY has served as our Executive Vice President of Regulatory
Affairs since April 1991 and as Secretary since October 1995. From 1989 to 1991,
Mr. Felkey was Vice President of Regulatory Affairs and Quality Assurance at
Cardiovascular Imaging Systems, Inc., a company involved in the development of
peripheral and coronary ultrasound catheters. From 1984 to 1989, Mr. Felkey was
Vice President of Regulatory Affairs at GV Medical, Inc.

JOHN H. JUNGBAUER has served as Vice President since April 1995 and as Treasurer
and Chief Financial Officer since October 1990. From 1988 to 1990, Mr. Jungbauer
was Executive Vice President of Titan Medical, Inc., a medical products company.
During 1987, Mr. Jungbauer served as a consultant to Titan Medical, Inc. From
1981 to 1987, Mr. Jungbauer was Vice President of Finance at St. Jude Medical,
Inc.

FRANK R. SANTIAGO has served as our Vice President, Sales and Marketing since
June 1998 and as Director of Sales and Marketing since June 1997. From March
1985 to March 1997, Mr. Santiago owned and operated Hemotech Systems, a
cardiovascular products and services company providing services such as
ambulatory recording of electrocardiograms and blood pressure. Prior to 1987,
Mr. Santiago was a cardiovascular specialist at American Edwards/Baxter, a
regional training manager in various sales and marketing divisions of Johnson
and Johnson and a product specialist at Ayerst Laboratories/American Home
Products.

MEDICAL ADVISORY BOARD

The Company has a Medical Advisory Board that meets periodically to review and
guide the design and testing of the valve as well as to provide assessments of
potential new cardiovascular products. The members of the Medical Advisory Board
are as follows:

DR. DEMETRE M. NICOLOFF is a world-renowned cardiac surgeon practicing with
Cardiac Surgical Associates in association with the Minneapolis Heart Institute
and St. Paul Heart and Lung Center. Previously, Dr. Nicoloff was an Associate
Professor of Surgery at the University of Minnesota and taught in the Department
of Surgery at the University of Minnesota for over 15 years. Dr. Nicoloff
participated in the first human implant of the ATS Medical valve in May 1992.
Dr. Nicoloff also participated in the design of the first general of bileaflet
valves and performed the first human implant of the most frequently implanted
mechanical bileaflet valve. Dr. Nicoloff previously was a member of the
Scientific Advisory Board of St. Jude Medical, Inc. Dr. Nicoloff received his
medical degree from Ohio State University.

DR. H. DAVID FRIEDBERG is a Clinical Professor of Medicine and Cardiology at the
University of South Florida. Dr. Friedberg is certified in cardiac pacing and
electrophysiology. He is a Fellow of the American College of Cardiology,


                                       10
<PAGE>


American College of Chest Physicians and the Council of Clinical Cardiology of
the American Heart Association. Dr. Friedberg participated in the first implant
of the ATS Medical valve in May 1992. Dr. Friedberg previously was a member of
the Scientific Advisory Board of St. Jude Medical, Inc. Dr. Friedberg obtained
his medical degree in South Africa and performed his internal medicine studies
and residencies in London, England.









                                       11
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The information contained under the heading "Common Stock Information" on page 9
of the Company's Annual Report to Shareholder's for the year ended December 31,
2000 (the "Annual Report to Shareholders") is incorporated herein by reference.

ITEM 6.  SELECTED FINANCIAL DATA

The information contained under the heading "Financial Highlights" on page 1 of
the Annual Report to Shareholders is incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The information contained under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 5 to 9 of
the Annual Report to Shareholders is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information contained under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources" on page 7 of the Annual Report to Shareholders is incorporated herein
by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information contained under the headings "Report of Independent Auditors,"
"Consolidated Statements of Financial Position," "Consolidated Statements of
Income," "Consolidated Statement of Changes in Shareholders' Equity,"
"Consolidated Statements of Cash Flows," and "Notes to Consolidated Financial
Statements" on pages 10 to 20 of the Annual Report to Shareholders is
incorporated herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.


                                       12
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

See Part I of this Report. Pursuant to General Instruction G(3), reference is
made to information contained under the heading "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's
definitive proxy statement for its 2001 Annual Meeting of Shareholders to be
filed with the Securities and Exchange Commission on or before April 30, 2001,
which information is incorporated herein.

ITEM 11. EXECUTIVE COMPENSATION

Pursuant to General Instruction G(3), reference is made to information contained
under the heading "Executive Compensation" and "Compensation of Directors" in
the Company's definitive proxy statement for its 2001 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission on or
before April 30, 2001, which information is incorporated herein, excluding the
"Report of the Compensation Committee Concerning Executive Compensation."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Pursuant to General Instruction G(3), reference is made to information contained
under the heading "Security Ownership of Certain Beneficial Owners and
Management" and "Election of Directors" in the Company's definitive proxy
statement for its 2001 Annual Meeting of Shareholders to be filed with the
Securities and Exchange Commission on or before April 30, 2001, which
information is incorporated herein.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.







                                       13
<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      1.       FINANCIAL STATEMENTS

Report of Independent Auditors.

Consolidated Statements of Financial Position at December 31, 2000 and 1999.

Consolidated Statements of Income for the years ended December 31, 2000, 1999
and 1998.

Consolidated Statement of Changes in Shareholders' Equity for the years ended
December 31, 2000, 1999 and 1998.

Consolidated Statements of Cash Flows for the years ended December 31, 2000,
1999 and 1998.

Notes to Consolidated Financial Statements.


(a)      2.       FINANCIAL STATEMENT SCHEDULES

Please see Schedule II - Valuation and Qualifying Accounts and Reserves on page
19.

All other schedules have been omitted because of absence of conditions under
which they are required or because the required information is included in the
financial statements or notes thereto.

(a)      3.       LISTING OF EXHIBITS

EXHIBIT
NUMBER                              DESCRIPTION

3.1            Restated Articles of Incorporation, as amended to date
               (Incorporated by reference to Exhibit 3.1 to the Company's Annual
               Report on Form 10-K for the year ended December 31, 1993 (the
               "1993 Form 10-K")).

3.2            Bylaws of the Company, as amended to date (Incorporated by
               reference to Exhibit 3.2 to the Company's Annual Report on Form
               10-K for the year ended December 31, 1996 (the "1996 Form
               10-K")).

4.1            Specimen certificate for shares of Common Stock of the Company
               (Incorporated by reference to Exhibit 4.1 to the Company's Annual
               Report on Form 10-K for the year ended December 31, 1997 (the
               "1997 Form 10-K")).

10.1**         1987 Stock Option and Stock Award Plan, as restated and amended
               to date (Incorporated by reference to Exhibit 10.1 to the
               Company's Quarterly Report on Form 10-Q for the quarter ended
               June 30, 1997).

10.2**         ATS Medical Inc. 2000 Stock Incentive Plan (Incorporated by
               reference to Exhibit 10.1 to the Company's Form 10-Q for the
               quarter ended September 30, 2000).

10.3**         Agreement between the Company and Manuel A. Villafana dated April
               20, 1998 (Incorporated by reference to Exhibit 10.1 to the
               Company's Form 10-Q for the quarter ended June 30, 1998).

10.4           Lease Agreement between the Company and Crow Plymouth Land
               Limited Partnership dated December 22, 1987 (Incorporated by
               reference to Exhibit 10(d) to the Company's Registration
               Statement on Form S-18, File No. 33-34785-C (the "Form S-18")).

10.5           Amendment No. 1 to Lease Agreement between the Company and Crow
               Plymouth Land Limited Partnership, dated January 5, 1989
               (Incorporated by reference to Exhibit 10(e) to the Form S-18).


                                       14
<PAGE>


10.6           Amendment No. 2 to Lease Agreement between the Company and Crow
               Plymouth Land Limited Partnership, dated January 1989
               (Incorporated by reference to Exhibit 10(f) to the Form S-18).

10.7           Amendment No. 3 to Lease Agreement between the Company and Crow
               Plymouth Land Limited Partnership, dated June 14, 1989
               (Incorporated by reference to Exhibit 10(g) to the Form S-18).

10.8           Amendment No. 4 to Lease Agreement between the Company and
               Plymouth Business Center Limited Partnership, dated February 10,
               1992 (Incorporated by reference to Exhibit 10.8 to the 1996 Form
               10-K).

10.9*          Development Agreement dated September 24, 1990, with CarboMedics,
               Inc. (confidential treatment granted) (Incorporated by reference
               to Exhibit 10.9 to the 1996 Form 10-K).

10.10*         O.E.M. Supply Contract dated September 24, 1990, with
               CarboMedics, Inc. (confidential treatment granted) (Incorporated
               by reference to Exhibit 10.10 to the 1996 Form 10-K).

10.11*         License Agreement dated September 24, 1990, with CarboMedics,
               Inc. (confidential treatment granted) (Incorporated by reference
               to Exhibit 10.11 to the 1996 Form 10-K).

10.12*         Option Agreement dated September 24, 1990, with CarboMedics, Inc.
               (confidential treatment granted) (Incorporated by reference to
               Exhibit 10.12 to the 1996 Form 10-K).

10.13          Helix BioCore, Inc. Self-Insurance Trust Agreement dated February
               28, 1991 (Incorporated by reference to Exhibit 10.13 to the 1996
               Form 10-K).

10.14*         Amendment 1 to License Agreement dated December 16, 1993, with
               CarboMedics, Inc. (confidential treatment granted) (Incorporated
               by reference to Exhibit 10.17 to the 1993 Form 10-K).

10.15*         Amendment 4 to O.E.M. Supply Contract dated December 16, 1993,
               with CarboMedics, Inc. (confidential treatment granted)
               (Incorporated by reference to Exhibit 10.18 to the 1993 Form
               10-K).

10.16*         Amendment 5 to O.E.M. Supply Contract dated September 1, 1994,
               with CarboMedics, Inc. (confidential treatment granted)
               (Incorporated by reference to Exhibit 10.19 to the 1994 Form
               10-K).

10.17*         Amendment 1 to Option Agreement dated December 16, 1993, with
               CarboMedics, Inc. (confidential treatment granted) (Incorporated
               by reference to Exhibit 10.19 to the 1993 Form 10-K).

10.18          Line of Credit dated August 11, 1994, between the Company and
               First Bank National Association (Incorporated by reference to
               Exhibit 10.1 to the Company's Form 10-Q for the quarter ended
               September 30, 1994).

10.19          Form of Distributor Agreement. (Incorporated by reference to
               Exhibit 10.22 to the 1994 Form 10-K).

10.20**        Form of Agreement between ATS Medical, Inc. and each officer
               dated June 30, 1995, concerning severance benefits upon a change
               in control (Incorporated by reference to Exhibit 10.23 to the
               Company's Annual Report on Form 10-K for the year ended December
               31, 1995 (the "1995 Form 10-K")).

10.21          ATS Medical, Inc. Change in Control Severance Pay Plan
               (Incorporated by reference to Exhibit 10.24 to the 1995 Form
               10-K).

10.22          Amendment No. 5 to Lease Agreement between the Company and St.
               Paul Properties, Inc., dated May 30, 1996 (Incorporated by
               reference to Exhibit 10.22 to the 1996 Form 10-K).

10.23          Stock Purchase Agreement dated February 3, 1997 between ITOCHU
               Corporation and the Company (Incorporated by reference to Exhibit
               1 to Schedule 13D filed with respect to the Company by ITOCHU
               Corporation on February 18, 1997).


                                       15
<PAGE>


10.24          Amendment No. 6 to Lease Agreement between the Company and St.
               Paul Properties, Inc., dated November 25, 1997 (Incorporated by
               reference to Exhibit 10.23 to the 1997 Form 10-K).

10.25          1998 Employee Stock Purchase Plan (Incorporated by reference to
               Exhibit 4 to the Company's Registration Statement on Form S-8,
               File No. 333-57527).

10.26**        1998 Management Incentive Compensation Plan (Incorporated by
               reference to Exhibit 10.25 to the 1998 Form 10-K).

10.27*         Carbon Agreement by and between Sulzer Carbomedics, Inc. and ATS
               Medical, Inc., dated December 29, 1999 (Incorporated by reference
               to Exhibit 99.1 to the Company's Registration Statement on Form
               S-8, January 13, 2000, File No. 000-18602) (confidential
               treatment granted).

10.28*         Amendment 7 to OEM Supply Contract by and between Sulzer
               Carbomedics, Inc. and ATS Medical, Inc., dated December 29, 1999
               (confidential treatment granted) (Incorporated by reference to
               Exhibit 99.2 to the Company's Registration Statement on Form S-8,
               January 13, 2000, File No. 000-18602).

10.29*         Amendment 2 to License Agreement by and between Sulzer
               Carbomedics, Inc. and ATS Medical, Inc., dated December 29, 1999
               (confidential treatment granted) (Incorporated by reference to
               Exhibit 99.3 to the Company's Registration Statement on Form S-8,
               January 13, 2000, File No. 000-18602).

10.30          Amendment No. 7 to Lease Agreement between the Company and St.
               Paul Properties, Inc., dated May 18, 2000 (Incorporated by
               reference to Exhibit 10.2 to the Company's Form 10-Q for the
               quarter ended June 30, 2000).

10.31          Lease Agreement between the Company and St. Paul Properties,
               Inc., dated April 29, 2000 (Incorporated by reference to Exhibit
               10.1 to the Company's Form 10-Q for the quarter ended June 30,
               2000).

10.32          Amendment No. 8 to Lease Agreement between the Company and St.
               Paul Properties, Inc., dated December 14, 2000.

10.33*         Amendment 8 to OEM Supply Contract by and between Sulzer
               Carbomedics, Inc. and ATS Medical, Inc., dated November 3, 2000.

13             2000 Annual Report to Shareholders

23             Consent of Ernst & Young LLP.

24             Power of Attorney.

99.1           Cautionary Statements.



*Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended,
confidential portions of this exhibit have been redacted.

**Represents a management contract or compensatory plan or arrangement required
to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.

(b)            Reports on Form 8-K

None.

(c)            Exhibits

See Exhibit Index and Exhibits attached as a separate section of this report.


                                       16
<PAGE>


(d)            Financial Statement Schedule

See Financial Statement Schedule in the Annual Report to shareholders, Exhibit
13.











                                       17
<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.

Dated:  March 22, 2001                                ATS MEDICAL, INC.


                                                      By /s/ John H. Jungbauer
                                                         ---------------------
                                                         John H. Jungbauer
                                                         Chief Financial 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 date indicated.
<TABLE>
<CAPTION>
SIGNATURE                            TITLE
<S>                          <C>
Manuel A. Villafana*         Chairman, Chief Executive          )
                             Officer, and Director              )
                             (principal executive officer)      )
                                                                )
Richard W. Kramp*            President, Chief Operating         )
                             Officer and Director               )        By:     /s/ John H. Jungbauer
                                                                )                ---------------------
                                                                )                John H. Jungbauer
John H. Jungbauer*           Vice President, Treasurer          )                Pro se and
                             and Chief Financial  Officer       )                Attorney-in-fact
                             (principal financial and           )
                             accounting officer)                )
                                                                )        Dated:  March 22, 2001
Charles F. Cuddihy, Jr.*     Director                           )
                                                                )
David L. Boehnen*            Director                           )
                                                                )
A. Jay Graf*                 Director                           )
</TABLE>

*By Power of Attorney filed with this report as Exhibit 24 hereto.






                                       18
<PAGE>
<TABLE>
<CAPTION>


                                ATS MEDICAL, INC.

                           SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

          COL. A                     COL. B                       COL. C                    COL. D             COL. E

                                                                Additions
                                                          (1)              (2)
                                     Balance at        Charged to       Charged to                             Balance at
                                     Beginning          Costs              Other          Deductions-            End of
         Description                  Of Year             and            Accounts-         Describe               Year
                                                        Expenses         Describe
Allowance for Doubtful Accounts
-------------------------------
<S>                                  <C>                <C>                <C>               <C>                       <C>

Year ended December 31, 2000:
 Deducted from asset accounts:
 Allowance for doubtful accounts     $205,000           $220,000                 --                 --           $425,000
                                     --------           --------           --------           --------           --------

 Totals                              $205,000           $220,000                 $0                 $0           $425,000

Year ended December 31, 1999:
 Deducted from asset accounts:
 Allowance for doubtful accounts     $185,000           $ 20,000                 --                 --           $205,000
                                     --------           --------           --------           --------           --------

 Totals                              $185,000           $ 20,000                 $0                 $0           $205,000

Year ended December 31, 1998:
 Deducted from asset accounts:
 Allowance for doubtful accounts     $260,000           $ 20,000                 --           $ 95,000(1)        $185,000
                                     --------           --------           --------           --------           --------

 Totals                              $260,000           $ 20,000                 $0           $ 95,000           $185,000

Reserve for Obsolete Inventory
------------------------------

Year ended December 31, 2000:
 Deducted from asset accounts:
 Reserve for Obsolete Inventory      $200,000                --                  --                 --          $200,000
                                     --------          --------            --------           --------           --------

 Totals                              $200,000                 $0                 $0                 $0           $200,000

Year ended December 31, 1999:
 Deducted from asset accounts:
 Reserve for Obsolete Inventory      $200,000           $ 38,045                 --           $ 38,045(2)        $200,000
                                    --------           ---------           --------           --------           --------

   Totals                            $200,000           $ 38,045                 $0           $ 38,045           $200,000

Year ended December 31, 1998:
 Deducted from asset accounts:
 Reserve for Obsolete Inventory            $0           $200,000                 --                 --           $200,000
                                    ---------           --------           --------           --------           --------
   Totals                                  $0           $200,000                 $0                 $0           $200,000
</TABLE>

(1) Uncollectible accounts written off due to a single customer going bankrupt.
(2) Obsolete part written off that is no longer in use.


                                       19
<PAGE>


                                  EXHIBIT INDEX

EXHIBIT NUMBER                     DESCRIPTION

3.1            Restated Articles of Incorporation, as amended to date
               (Incorporated by reference to Exhibit 3.1 to the Company's Annual
               Report on Form 10-K for the year ended December 31, 1993 (the
               "1993 Form 10-K")).

3.2            Bylaws of the Company, as amended to date (Incorporated by
               reference to Exhibit 3.2 to the Company's Annual Report on Form
               10-K for the year ended December 31, 1996 (the "1996 Form
               10-K")).

4.1            Specimen certificate for shares of Common Stock of the Company
               (Incorporated by reference to Exhibit 4.1 to the Company's Annual
               Report on Form 10-K for the year ended December 31, 1997 (the
               "1997 Form 10-K")).

10.1**         1987 Stock Option and Stock Award Plan, as restated and amended
               to date (Incorporated by reference to Exhibit 10.1 to the
               Company's Quarterly Report on Form 10-Q for the quarter ended
               June 30, 1997).

10.2**         ATS Medical Inc. 2000 Stock Incentive Plan (Incorporated by
               reference to Exhibit 10.1 to the Company's Form 10-Q for the
               quarter ended September 30, 2000).

10.3**         Agreement between the Company and Manuel A. Villafana dated April
               20, 1998 (Incorporated by reference to Exhibit 10.1 to the
               Company's Form 10-Q for the quarter ended June 30, 1998).

10.4           Lease Agreement between the Company and Crow Plymouth Land
               Limited Partnership dated December 22, 1987 (Incorporated by
               reference to Exhibit 10(d) to the Company's Registration
               Statement on Form S-18, File No. 33-34785-C (the "Form S-18")).

10.5           Amendment No. 1 to Lease Agreement between the Company and Crow
               Plymouth Land Limited Partnership, dated January 5, 1989
               (Incorporated by reference to Exhibit 10(e) to the Form S-18).

10.6           Amendment No. 2 to Lease Agreement between the Company and Crow
               Plymouth Land Limited Partnership, dated January 1989
               (Incorporated by reference to Exhibit 10(f) to the Form S-18).

10.7           Amendment No. 3 to Lease Agreement between the Company and Crow
               Plymouth Land Limited Partnership, dated June 14, 1989
               (Incorporated by reference to Exhibit 10(g) to the Form S-18).

10.8           Amendment No. 4 to Lease Agreement between the Company and
               Plymouth Business Center Limited Partnership, dated February 10,
               1992 (Incorporated by reference to Exhibit 10.8 to the 1996 Form
               10-K).

10.9*          Development Agreement dated September 24, 1990, with CarboMedics,
               Inc. (confidential treatment granted) (Incorporated by reference
               to Exhibit 10.9 to the 1996 Form 10-K).

10.10*         O.E.M. Supply Contract dated September 24, 1990, with
               CarboMedics, Inc. (confidential treatment granted) (Incorporated
               by reference to Exhibit 10.10 to the 1996 Form 10-K).

10.11*         License Agreement dated September 24, 1990, with CarboMedics,
               Inc. (confidential treatment granted) (Incorporated by reference
               to Exhibit 10.11 to the 1996 Form 10-K).

10.12*         Option Agreement dated September 24, 1990, with CarboMedics, Inc.
               (confidential treatment granted) (Incorporated by reference to
               Exhibit 10.12 to the 1996 Form 10-K).

10.13          Helix BioCore, Inc. Self-Insurance Trust Agreement dated February
               28, 1991 (Incorporated by reference to Exhibit 10.13 to the 1996
               Form 10-K).


                                       20
<PAGE>


10.14*         Amendment 1 to License Agreement dated December 16, 1993, with
               CarboMedics, Inc. (confidential treatment granted) (Incorporated
               by reference to Exhibit 10.17 to the 1993 Form 10-K).

10.15*         Amendment 4 to O.E.M. Supply Contract dated December 16, 1993,
               with CarboMedics, Inc. (confidential treatment granted)
               (Incorporated by reference to Exhibit 10.18 to the 1993 Form
               10-K).

10.16*         Amendment 5 to O.E.M. Supply Contract dated September 1, 1994,
               with CarboMedics, Inc. (confidential treatment granted)
               (Incorporated by reference to Exhibit 10.19 to the 1994 Form
               10-K).

10.17*         Amendment 1 to Option Agreement dated December 16, 1993, with
               CarboMedics, Inc. (confidential treatment granted) (Incorporated
               by reference to Exhibit 10.19 to the 1993 Form 10-K).

10.18          Line of Credit dated August 11, 1994, between the Company and
               First Bank National Association (Incorporated by reference to
               Exhibit 10.1 to the Company's Form 10-Q for the quarter ended
               September 30, 1994).

10.19          Form of Distributor Agreement. (Incorporated by reference to
               Exhibit 10.22 to the 1994 Form 10-K).

10.20**        Form of Agreement between ATS Medical, Inc. and each officer
               dated June 30, 1995, concerning severance benefits upon a change
               in control (Incorporated by reference to Exhibit 10.23 to the
               Company's Annual Report on Form 10-K for the year ended December
               31, 1995 (the "1995 Form 10-K")).

10.21          ATS Medical, Inc. Change in Control Severance Pay Plan
               (Incorporated by reference to Exhibit 10.24 to the 1995 Form
               10-K).

10.22          Amendment No. 5 to Lease Agreement between the Company and St.
               Paul Properties, Inc., dated May 30, 1996 (Incorporated by
               reference to Exhibit 10.22 to the 1996 Form 10-K).

10.23          Stock Purchase Agreement dated February 3, 1997 between ITOCHU
               Corporation and the Company (Incorporated by reference to Exhibit
               1 to Schedule 13D filed with respect to the Company by ITOCHU
               Corporation on February 18, 1997).

10.24          Amendment No. 6 to Lease Agreement between the Company and St.
               Paul Properties, Inc., dated November 25, 1997 (Incorporated by
               reference to Exhibit 10.23 to the 1997 Form 10-K).

10.25          1998 Employee Stock Purchase Plan (Incorporated by reference to
               Exhibit 4 to the Company's Registration Statement on Form S-8,
               File No. 333-57527).

10.26**        1998 Management Incentive Compensation Plan (Incorporated by
               reference to Exhibit 10.25 to the 1998 Form 10-K).

10.27*         Carbon Agreement by and between Sulzer Carbomedics, Inc. and ATS
               Medical, Inc., dated December 29, 1999 (Incorporated by reference
               to Exhibit 99.1 to the Company's Registration Statement on Form
               S-8, January 13, 2000, File No. 000-18602) (confidential
               treatment granted).

10.28*         Amendment 7 to OEM Supply Contract by and between Sulzer
               Carbomedics, Inc. and ATS Medical, Inc., dated December 29, 1999
               (confidential treatment granted) (Incorporated by reference to
               Exhibit 99.2 to the Company's Registration Statement on Form S-8,
               January 13, 2000, File No. 000-18602).

10.29*         Amendment 2 to License Agreement by and between Sulzer
               Carbomedics, Inc. and ATS Medical, Inc., dated December 29, 1999
               (confidential treatment granted) (Incorporated by reference to
               Exhibit 99.3 to the Company's Registration Statement on Form S-8,
               January 13, 2000, File No. 000-18602).

10.30          Amendment No. 7 to Lease Agreement between the Company and St.
               Paul Properties, Inc., dated May 18, 2000 (Incorporated by
               reference to Exhibit 10.2 to the Company's Form 10-Q for the
               quarter ended June 30, 2000).


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<PAGE>


10.31          Lease Agreement between the Company and St. Paul Properties,
               Inc., dated April 29, 2000 (Incorporated by reference to Exhibit
               10.1 to the Company's Form 10-Q for the quarter ended June 30,
               2000).

10.32          Amendment No. 8 to Lease Agreement between the Company and St.
               Paul Properties, Inc., dated December 14, 2000.

10.33*         Amendment 8 to OEM Supply Contract by and between Sulzer
               Carbomedics, Inc. and ATS Medical, Inc., dated November 3, 2000.

13             2000 Annual Report to Shareholders

23             Consent of Ernst & Young LLP.

24             Power of Attorney.

99.1           Cautionary Statements.



*Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended,
confidential portions of this exhibit have been redacted.

**Represents a management contract or compensatory plan or arrangement required
to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.









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