Table of Contents





UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,
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
 April 24, 2009.                  
|  |                                                                                                                                                   
|o | Transition report pursuant to Section
 13 or 15(d) of the Securities Exchange Act of 1934.For the transition period
 from __________ to __________

Commission File No. 1-7707

---

|                                                  
|--------------------------------------------------
|(MEDTRONIC LOGO)                                  
|                                                  
|Medtronic, Inc.                                   
|(Exact
name of registrant as specified in charter)

|                          |  |                                     
|------------------------- |  | ------------------------------------
|Minnesota                 |  | 41-0793183                          
|(State of
 incorporation) |  | (I.R.S. Employer Identification No.)

710 Medtronic Parkway
Minneapolis, Minnesota 55432
(Address of principal executive offices) (Zip Code)
Telephone Number, including area code: (763) 514-4000
Securities registered pursuant to section 12(b) of the Act:

|                                         |                                           
|---------------------------------------- | ------------------------------------------
|Title of
 each class                     | Name of
 each exchange on which registered
|Common
 stock, par value $0.10 per share | New York
 Stock Exchange, Inc.            
|                                         |                                           
|Preferred
 stock purchase rights         | New York
 Stock Exchange, Inc.            

Securities registered pursuant to section 12(g) of the
Act:
None

---

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. YesxNoo

Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or 15(d) of the Exchange Act. YesoNox

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. YesxNoo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter)
during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). YesoNoo

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 the 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.o

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filerxAccelerated
fileroNon-accelerated fileroSmaller reporting companyo

Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). YesoNox

Aggregate market value of voting stock of Medtronic, Inc.
held by nonaffiliates of the registrant as of October 24, 2008, based on the
closing price of $37.81, as reported on the New York Stock Exchange:
approximately $42.4 billion. Shares of Common Stock outstanding on June 18,
2009: 1,112,348,250

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrants 2009 Annual Report filed as
Exhibit 13 hereto are incorporated by reference into Parts I and II hereto and
portions of Registrants Proxy Statement for its 2009 Annual Meeting are
incorporated by reference into Part III hereto.





---

TABLE OF CONTENTS

|     |  |                                                                                                               |             |    |  |     
|---- |  | ------------------------------------------------------------------------------------------------------------- | ----------- | -- |  | ----
|Item |  |                                                                                                               | Description |    |  | Page
|     |  |                                                                                                               |             |   
|     |  | PART I                                                                                                        |             |   
|     |  |                                                                                                               |             |   
|1.   |  | Business                                                                                                      |             | 1 
|1A.  |  | Risk
 Factors                                                                                                 |             | 30
|1B.  |  | Unresolved
 Staff Comments                                                                                    |             | 35
|2.   |  | Properties                                                                                                    |             | 35
|3.   |  | Legal
 Proceedings                                                                                            |             | 36
|4.   |  | Submission
 of Matters to a Vote of Security Holders                                                          |             | 37
|     |  |                                                                                                               |             |   
|     |  | PART II                                                                                                       |             |   
|     |  |                                                                                                               |             |   
|5.   |  | Market for
 Medtronics Common Equity, Related Shareholder Matters and Issuer Purchases
 of Equity Securities |             | 37
|6.   |  | Selected
 Financial Data                                                                                      |             | 38
|7.   |  | Managements
 Discussion and Analysis of Financial Condition and Results of Operation                         |             | 38
|7A.  |  | Quantitative
 and Qualitative Disclosures About Market Risk                                                   |             | 38
|8.   |  | Financial
 Statements and Supplementary Data                                                                  |             | 38
|9.   |  | Changes in
 and Disagreements with Accountants on Accounting and Financial Disclosure                         |             | 38
|9A.  |  | Controls
 and Procedures                                                                                      |             | 38
|9B.  |  | Other
 Information                                                                                            |             | 39
|     |  |                                                                                                               |             |   
|     |  | PART III                                                                                                      |             |   
|     |  |                                                                                                               |             |   
|10.  |  | Directors,
 Executive Officers and Corporate Governance                                                       |             | 39
|11.  |  | Executive
 Compensation                                                                                       |             | 39
|12.  |  | Security
 Ownership of Certain Beneficial Owners and Management and Related Shareholder
 Matters              |             | 39
|13.  |  | Certain
 Relationships and Related Transactions, and Director Independence                                    |             | 39
|14.  |  | Principal
 Accounting Fees and Services                                                                       |             | 40
|     |  |                                                                                                               |             |   
|     |  | PART IV                                                                                                       |             |   
|     |  |                                                                                                               |             |   
|15.  |  | Exhibits,
 Financial Statement Schedules                                                                      |             | 40

---

Table of Contents

Annual Meeting and Record Dates

Medtronic,
Inc.s (Medtronic or the Company) Annual Meeting of Shareholders will be held
on Thursday, August 27, 2009 at 10:30 a.m., Central Daylight Time at the
Companys World Headquarters, 710 Medtronic Parkway, Minneapolis (Fridley),
Minnesota. The record date for the Annual Meeting is June 29, 2009 and all
shareholders of record at the close of business on that day will be entitled to
vote at the Annual Meeting.

Medtronic Website

Our
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 are available through our
website (www.medtronic.com under the Investors caption) free of charge as
soon as reasonably practicable after we electronically file such material with,
or furnish it to, the Securities and Exchange Commission (SEC).

Information
relating to corporate governance at Medtronic, including our Principles of
Corporate Governance, Code of Conduct (including our Code of Ethics for Senior
Financial Officers), Code of Business Conduct and Ethics for Board Members and
information concerning our executive officers, directors and Board committees
(including committee charters), and transactions in Medtronic securities by
directors and officers, is available on or through our website at
www.medtronic.com under the Investors caption.

We
are not including the information on our website as a part of, or incorporating
it by reference into, our Form 10-K.

Available Information

The
SEC maintains a website that contains reports, proxy and information
statements, and other information regarding issuers, including the Company,
that file electronically with the SEC. The public can obtain any documents that
the Company files with the SEC at http://www.sec.gov. The Company files annual
reports, quarterly reports, proxy statements and other documents with the SEC
under the Securities Exchange Act of 1934 (Exchange Act). The public may read
and copy any materials that the Company files with the SEC at the SECs Public
Reference Room at 100 F Street, N.E., Room 1580 Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330.

---

Table of Contents

PART I

Item 1. Business

Overview

Medtronic
is the global leader in medical technology  alleviating pain, restoring
health, and extending life for millions of people around the world. We are
committed to offering market-leading therapies to restore patients to fuller,
healthier lives. With beginnings in the treatment of heart disease, we have
expanded well beyond our historical core business and today provide a wide
range of products and therapies that help solve many challenging, life-limiting
medical conditions. We hold market-leading positions in almost all of the major
markets in which we operate.

Medtronic
was founded in 1949, incorporated as a Minnesota corporation in 1957, and today
serves physicians, clinicians and patients in more than 120 countries
worldwide. Beginning with the development of the heart pacemaker in the 1950s,
we have assembled a broad and diverse portfolio of progressive technology
expertise both through internal development of core technologies as well as
acquisitions. We remain committed to a mission written by our founder more than
40 years ago that directs us to contribute to human welfare by application of
biomedical engineering in the research, design, manufacture and sale of
products that alleviate pain, restore health and extend life.

With
approximately 41,000 dedicated employees worldwide (including full-time
equivalent employees) personally invested in supporting our mission, our
success in leading global advances in medical technology is the result of
several key strengths:

| |   |                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Broad and deep
 technological knowledge of microelectronics, implantable devices and
 techniques, power sources, coatings, materials, programmable devices and
 related areas, as well as a tradition of technological pioneering and
 breakthrough products that not only yield better medical outcomes, but more
 cost-effective therapies.
| |   |                                                                                                                                                                                                                                                                                                                                              
| |  | Strong intellectual
 property portfolio that underlies our key products.                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                              
| |  | High product quality
 standards, backed with stringent systems to help ensure consistent
 performance that meet or surpass customers expectations.                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                              
| |  | Strong and appropriate
 professional collaboration with customers, extensive medical educational
 programs, and thorough clinical research.                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                              
| |  | Full commitment to
 superior patient and customer service.                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                              
| |  | Extensive experience with
 the regulatory process and sound working relationships with regulators and
 reimbursement agencies, including leadership roles in helping shape
 regulatory policy in the major markets in which we operate.                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                              
| |  | A proven financial record
 of sustained revenue and earnings growth and continual introduction of new
 products.                                                                                                                                                                                                                             

1

---

Table of Contents

We
currently function in seven operating segments that manufacture and sell
device-based medical therapies. Our operating segments are:

| |   |                                    |            
| | - | ---------------------------------- | -----------
| |  | Cardiac
 Rhythm Disease Management | (PIE CHART)
| |   |                                   
| |  | Spinal                            
| |   |                                   
| |  | CardioVascular                    
| |   |                                   
| |  | Neuromodulation                   
| |   |                                   
| |  | Diabetes                          
| |   |                                   
| |  | Surgical
 Technologies            
| |   |                                   
| |  | Physio-Control                    

The
chart above shows the net sales and percentage of total net sales contributed
by each of our operating segments for the fiscal year ended April 24, 2009
(fiscal year 2009).

With
innovation and market leadership, we have pioneered advances in medical
technology in all of our businesses and enjoyed steady growth. Over the last
five years, our net sales on a compound annual growth basis have increased more
than 9 percent, from $9.087 billion in fiscal year 2004 to $14.599 billion in
fiscal year 2009. We attribute this growth to our commitment to develop or
acquire new products to treat an expanding array of medical conditions.

We
will accomplish this commitment by operating as ONE Medtronic, reaching within
and across our operating segments to make the whole of Medtronic greater than
the sum of its parts. The main tenets of this approach are:

| |   |                                                                       
| | - | ----------------------------------------------------------------------
| |  | Driving
 sustainable long-term growth through innovation              
| |   |                                                                       
| |  | Strong focus
 on improving operating margins                          
| |   |                                                                       
| |  | Delivering
 EPS growth and disciplined capital allocation             
| |   |                                                                       
| |  | Aligning the
 organization for market-leading and consistent execution

Our
primary customers include hospitals, clinics, third party healthcare providers,
distributors, and other institutions, including governmental healthcare
programs and group purchasing organizations.

Cardiac Rhythm Disease Management (CRDM)

CRDM
is the worlds leading supplier of medical devices for cardiac rhythm disease
management. We pioneered the modern medical device industry by developing the
first wearable external cardiac pacemaker in 1957, and manufactured the first
reliable long-term implantable pacing system in 1960. Since then, we have been
the worlds leading producer of cardiac rhythm technology, and from these
beginnings, a $10 billion industry has emerged. Today, our products and
technologies treat and monitor a wide variety of heart rhythm diseases and
conditions.

2

---

Table of Contents

Conditions
Treated

Natural
electrical impulses stimulate the atria and ventricles, the hearts chambers,
to rhythmically contract and relax with each heartbeat. Irregularities in the
hearts normal electrical signals can result in debilitating and
life-threatening conditions, including sudden cardiac arrest, one of the
leading causes of death. Physicians rely on our CRDM products to monitor and
correct these irregularities and restore the heart to its normal rhythm. Our
CRDM products are designed to treat and monitor a broad range of heart
conditions, including those described below.

| |   |                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Bradycardia
  abnormally slow or unsteady heart rhythms, usually less than 60 beats per
 minute, or unsteady heart rhythms that cause symptoms such as dizziness,
 fainting, fatigue, and shortness of breath.                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Tachyarrhythmia
  heart rates that are dangerously fast or irregular. In the lower chambers
 of the heart, called ventricles, this is called ventricular tachycardia or
 fibrillation and can lead to sudden cardiac arrest. In the upper chambers,
 called the atria, this is called atrial arrhythmia which can affect blood
 flow to the body and increase the risk of stroke.
| |   |                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Heart
 Failure  impaired heart function resulting in the inability to pump enough
 blood to meet the bodys needs, characterized by difficulty breathing,
 chronic fatigue and fluid retention.                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Sudden
 Cardiac Arrest  condition when the hearts ventricles suddenly develop a
 rapid, irregular rhythm (ventricular fibrillation) and the quivering
 ventricles cannot pump blood to the body, which, without immediate treatment,
 will almost always lead to death.                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Atrial
 Fibrillation  condition when the atria quiver instead of pumping blood
 effectively. Blood in the atria may pool and clot. If a clot breaks loose and
 advances to the brain, a stroke can result.                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Syncope  a
 sudden loss of consciousness, which occurs when the blood pressure drops and
 not enough oxygen reaches the brain. Causes vary and include heart-related
 conditions, exhaustion, stress, overheating, illness and certain medications.                                                                                                                              

The
charts below set forth net sales of our CRDM products as a percentage of our
total net sales for each of the last three fiscal years:

(PIE CHART)

We
offer the broadest array of products in the industry for the diagnosis and
treatment of heart rhythm disorders and heart failure. Because many patients
exhibit multiple heart rhythm problems, we have developed implantable devices
that specifically address complex combinations of arrhythmias. In addition to
implantable devices, we also provide leads, ablation products,
electrophysiology catheters, and information systems for the management of
patients with our devices. Our CRDM devices are currently implanted in more
than 2.5 million patients worldwide.

Implantable
Cardiac Pacemakers (Pacemakers).Bradycardia is a
common condition, with hundreds of thousands of patients diagnosed each year,
and millions of people worldwide suffering from its effects. The only known treatment
for this condition is a cardiac pacemaker, a battery-powered device implanted
in the chest that delivers electrical impulses to stimulate the heart to beat
at an appropriate rate. Pacemaker technology has extended the lives of millions
of patients with heart rhythm conditions, and each year nearly one million
pacemakers are implanted in patients worldwide. Medtronics Adapta family of
fully automatic pacemakers, which includes the Adapta, Versa, and Sensia
models, incorporates an array of automatic features to help physicians improve
pacing therapy and streamline the patient follow-up process, potentially
minimizing the amount of time spent in a physicians office. An example is
Atrial Capture Management, which is intended to automatically adjust impulses
for optimal stimulation of the hearts upper right chamber. Adapta offers a
pacing mode called Managed Ventricular Pacing (MVP), which enables the device
to be programmed to minimize unnecessary pacing pulses to the right ventricle.
The Adapta family leads our portfolio of pacemakers, which also includes the
EnRhythm and EnPulse families.

3

---

Table of Contents

In
November 2008, we received CE Mark approval for the EnRhythm MRI SureScan
pacing system, the first-ever MRI-Conditional pacemaker system. The EnRhythm
MRI SureScan pacing system consists of the dual-chamber EnRhythm MRI SureScan
pacemaker and CapSureFix MRI SureScan pacing leads.

Implantable
Cardioverter-Defibrillators (ICDs).Approximately
seven million people worldwide have tachyarrhythmia. Tachyarrhythmia is a
potentially fatal condition that can lead to sudden cardiac arrest, the sudden
and complete cessation of heart activity. Sudden cardiac arrest is one of the
leading causes of death in the U.S. responsible for more than 300,000 deaths
annually, with most due to ventricular fibrillation. ICDs are stopwatch-sized
devices that continually monitor the heart and deliver appropriate therapy when
an abnormal heart rhythm is detected.

Our
family of dual and single chamber ICDs offer exclusive features including
Anti-tachyarrhythmia Pacing (ATP) During Charging, OptiVol Fluid Status
Monitoring (OptiVol), our pacing mode MVP, and Conexus Wireless Telemetry
with SmartRadio. ATP During Charging is a feature that automatically uses pacing
pulses to stop fast, dangerous heartbeats, while concurrently preparing to
deliver a shock, if needed, with no delay.

OptiVol
automatically monitors fluid status in the thoracic cavity, the chest area
encompassing the lungs and heart. The accumulation of thoracic fluid is a
primary indicator of worsening heart failure and will often result in patient
hospitalization. The OptiVol diagnostic feature allows physicians earlier
access to warning signs of deteriorating heart failure, which can then be used
for early treatment of the patients heart failure.

In
May 2008, we announced U.S. Food and Drug Administration (FDA) approval of the
first wave of cardiac rhythm disease management therapies under the new Vision
3D portfolio, which is comprised of a full line of ICDs, pacemakers and implantable
cardiac resynchronization therapy devices to address the needs of patients with
arrhythmias, heart failure and those at risk of sudden cardiac arrest. In
addition to other Medtronic proprietary features, Vision 3D introduces
automaticity with Complete Capture Management which continuously and
automatically adjusts to changing patient needs. Complete automaticity provides
physicians flexibility during in-office device checks and may also reduce battery
drain.

Implantable
Cardiac Resynchronization Therapy (CRTs).Heart
failure is a large and growing health problem. It is typically a late
manifestation of one or more other cardiovascular diseases, including coronary
artery disease, hypertension, cardiomyopathy, and valvular disease. Chronic
heart failure occurs when the heart is unable to pump enough blood to sustain
adequate circulation in the bodys tissues. Approximately 22 million patients
suffer from heart failure globally. Approximately 5.7 million Americans suffer
from heart failure and more than 670,000 new cases are estimated to develop
each year.

Since
1997, we have supported more than 20 randomized, controlled clinical studies
evaluating device therapy in more than 8,000 heart failure and post-myocardial
infarction patients. This research has resulted in several medical firsts,
among them the first FDA approved resynchronization device for the treatment of
heart failure, which was based on results from the groundbreaking MIRACLE
trial; the first study of the risk of sudden cardiac death in a heart failure
patient population with SCD-HeFT; and the landmark CARE-HF trial, which
demonstrated that patients with moderate and severe heart failure who received
a Medtronic CRT device experienced a significant reduction in risk in mortality
and morbidity, and that long-term treatment with a CRT-pacing (CRT-P) device or
CRT-D device is a cost-effective way to improve survival in patients with heart
failure.

Medtronic
continues to offer the industrys broadest selection of devices and features
for the growing number of patients with heart failure who are also considered
at high risk of sudden cardiac arrest. With the launch of our Vision 3D
portfolio of products in May 2008, we introduced the Consulta CRT-D device
which includes existing Medtronic proprietary features like MVP, ATP During
Charging, and OptiVol along with Complete Capture Management. Complete Capture
Management provides confidence in patients safety by continuously and
automatically adjusting to changing patient needs. Complete automaticity
provides physicians flexibility during in-office device checks and may also
reduce battery drain.

4

---

Table of Contents

Along
with our existing Concerto CRT-D device, which is commercially available
throughout the world, Consulta CRT-D also utilizes our proprietary Conexus
wireless telemetry, enabling communication remotely between the implanted
device and programmers at the time of implant, during follow-up in a
clinicians office, or remotely using a patient home monitor. These CRT-D
devices also offer Left Ventricular Capture Management (LVCM), a feature
intended to automatically sense and adjust impulses for stimulation of the
hearts left ventricle, and sequential biventricular pacing, or V-to-V
(ventricle to ventricle) timing, a feature that allows physicians to separately
adjust the timing of electrical therapy delivered to the heart failure
patients two ventricles, which can optimize the beating of the heart and
enhance the flow of blood throughout the body.

In
June 2008, we announced the FDA approval of the Attain StarFix OTW
(over-the-wire) lead. As the first-ever active fixation left-heart lead for
CRT, the Attain StarFix lead has demonstrated a zero percent chronic
dislodgement rate. The Attain StarFix lead provides physicians with a new
solution for achieving successful placement and stability of the left-heart
lead in heart failure patients receiving a CRT device. A patients vein size or
configuration can make it difficult to secure a left-heart lead in the optimal
location. Therefore, stable fixation of the left-heart lead is critical to a
successful CRT implantation. Dislodgement of the left heart lead may require
additional surgeries, which could increase the risk of infection.

In
May 2009, we launched the Attain family of products in the U.S., including
Attain Ability and Attain Command. Attain Ability is the first commercially
available 4 French bipolar left-heart lead. It is also the first Medtronic
left-heart lead with 3 pacing vectors for chronic electronic repositioning
around extracardiac stimulation. Attain Ability is designed for reliability
with new inner insulation to help protect from breaches. Attain Command is the
first catheter family to feature a hydrophilic coating for deep seating.

Atrial
Fibrillation (AF).AF is an irregular quivering or
rapid heart rhythm in the upper chambers (atria) of the heart. AF is the most
common cardiac rhythm condition, found in approximately two million Americans
and seven million people worldwide. Treatment of AF can be difficult as
episodes may show no symptoms and therefore go unnoticed by patients. AF is
associated with a five-fold increase in a patients risk of stroke and an
increased risk of heart failure with its attendant risk of sudden cardiac
arrest.

In
October 2008, we formed an AF solutions business whose goal is to be the
physician partner of choice for AF ablation by bringing breakthrough AF
therapies to the patients and physicians that are simpler, safer, effective,
and offer more predictable procedure times than current treatment methods.
Medtronic will offer physicians a choice of ablation therapies and tools to
best meet the needs of their AF patients, as well as the needs of their
practices. To that end, in November 2008, we announced our successful
acquisition of CryoCath Technologies Inc. (CryoCath), a publicly traded
Canadian medical technology company that has developed cryotherapy products to
treat cardiac arrhythmias. CryoCaths flagship product, Arctic Front, is a
minimally invasive cryo-balloon catheter designed specifically to treat
paroxysmal Atrial Fibrillation or Pulmonary Vein Isolation. Marketed in Europe
and the subject of a pivotal study in the U.S. and Canada, Arctic Front has
been used to treat nearly 5,000 patients. Additionally, in February 2009, we
acquired Ablation Frontiers, Inc. (Ablation Frontiers), a privately held
company. In 2006, Ablation Frontiers received CE Mark to begin marketing its portfolio
of ablation catheters and its unique radio frequency (RF) energy system in
Europe. Ablation Frontiers is conducting a clinical trial under a FDA approved
investigational device exemption (IDE) in order to gain U.S. approval to market
its products for the treatment of permanent and persistent AF.

In
February 2009, we announced the commercial availability of our Reveal XT
Insertable Cardiac Monitor in the U.S. Launched in Europe in July 2007, the
Reveal XT monitors AF patients 24-hours a day, every day for up to three years.
There are a variety of ways to treat AF, but prior to the launch of Reveal XT,
physicians had no means of gathering detailed data over an extended period on
the progression of AF and the effect of treatment. Reveal XT gives new insight
into patients heart rhythms, which may help physicians to evaluate stroke risk
and determine appropriate treatment options for their patients. The Reveal XT
will be marketed as part of our AF Solutions business.

5

---

Table of Contents

Diagnostics
and Monitoring.Approximately 1.5 million people
worldwide suffer from unexplained syncope. In almost 10 percent of patients,
syncope has a cardiac cause; in 50 percent of patients, a non-cardiac cause;
and in 40 percent of patients, the cause of syncope is unknown. It is a leading
cause of emergency room visits. Syncope is difficult to diagnose as syncopal
episodes are often too infrequent and unpredictable for detection with
conventional monitoring techniques. Our Reveal DX, which launched in Europe in July
2007 and the U.S. in December 2007, is a device that is placed under the skin
and continuously monitors the hearts electrical activity before, during, and
after a syncopal event. With the information obtained from the Reveal DX, the
physician can understand if the cause of syncope is cardiac related, which may
help to appropriately manage the patients arrhythmia. In July 2008, we
announced that Reveal DX received Japanese regulatory approval and was
designated by the Japanese government as a high-priority medical device. Reveal
DX is the first insertable cardiac monitor to be introduced in Japan.

Patient
Management Tools.We have three different patient
management tools, CareLink, Paceart, and CardioSight Service. The Medtronic
CareLink Network, monitor, and software (CareLink) help physicians and patients
better manage chronic cardiovascular disease which is being treated by
implantable device therapy. CareLink enables patients to transmit data from
their pacemaker, ICD, or CRT using a portable monitor that is connected to a
standard telephone line. Within minutes, the patients physician and nurses can
view the data on a secure Internet website. The information, which is
comparable to that provided during an in-clinic device follow-up visit, provides
the physician with a view of how the device and patients heart are operating.
The system provides an efficient, safe and convenient way for specialty
physicians to remotely monitor the condition of their patients and, if needed,
make adjustments to medication or prescribe additional therapy. It also saves
patients time by potentially eliminating some in-office visits. For patients
implanted with devices featuring Conexus Wireless Telemetry, clinicians can
schedule routine follow-ups to occur automatically while the patient sleeps,
and program the device to send a CareAlert notification to physicians
wirelessly and automatically, providing the potential for treatment decisions
before the condition worsens. Today, the Medtronic CareLink Network is being
utilized in more than 3,000 clinics and hospitals, and more than 360,000
patients are being monitored. In June 2007, CareLink was launched in Europe,
and is now currently available in the U.S., Canada, and Western Europe, and is
being piloted in other parts of the world including Japan and Australia.

In
September 2008, we announced both FDA and CE Mark approval for our Lead
Integrity Alert (LIA) software. LIA was designed to provide patients with
certain Medtronic defibrillators and defibrillator leads with more advance
notice  via an audible sound  of a potential lead fracture that could result
in an unnecessary shock. In November 2008, the journal Circulationpublished results from a study
of about 16,000 patients that showed our LIA significantly improves early
identification of potential implantable ICD lead fractures. LIA offers added
protection for ICD patients through more frequent audible alarms and is the
first continuous ICD monitoring technology that triggers real-time device changes
to reduce unnecessary shocks that could result from potential lead fractures.

For
more than 20 years, the Paceart System has led in the development of
information solutions for device clinic management, including activities such
as automating patient scheduling, correspondence and reporting. Paceart
supports a common workflow by organizing and archiving data for cardiac devices
from all major device manufacturers, serving as the central hub for patients
device data. In addition to automatically downloading data from the Medtronic
CareLink Network, Paceart can automatically receive data from the Medtronic
2090 Programmer, using SessionSync technology. Paceart acts as the gateway for
managing clinics device data, receiving registration and scheduling data from,
and sending patient and device data to more than 15 of the leading electronic
health record and practice management systems. Paceart can interface with any
HL7-compatible system and is actively sharing data with such industry leaders
as athenahealth, EPIC, GEMMS, and NextGen Healthcare, among others. Today, more
than 1,100 clinics are using the Paceart System to streamline clinicians daily
activities and better serve 1.5 million patients.

The
third patient management tool we offer is the Medtronic CardioSight Service,
which is an in-clinic data access tool available to physicians treating heart
failure patients who have one of several Medtronic CRT-D or ICD devices.
CardioSight provides clinically valuable, device-derived information to help
specialty physicians discern the status of the heart failure patients
symptoms. The CardioSight Reader gives insight into a patients condition
without using a device programmer. Within minutes of downloading device
information using the reader, a Heart Failure Management Report or Cardiac
Compass Trends Report is available to the clinic and can be added to the
patient chart before the physician consults with the patient.

6

---

Table of Contents

Customers
and Competitors

The
primary medical specialists who use our implanted cardiac rhythm devices
include electrophysiologists, implanting cardiologists, heart failure
specialists, and cardiovascular surgeons. We hold the leading market position
among implantable cardiac rhythm device manufacturers. Our primary competitors
in the CRDM business are Boston Scientific Corporation, St. Jude Medical, Inc.,
Biotronik, Inc., and Sorin Group.

Spinal

Our
Spinal business is a leading supplier for innovative medical devices and
implants used in the treatment of the spine. Today we offer a wide range of
products and therapies to treat a variety of conditions of the spine.

Conditions
Treated

Our
Spinal business offers products for treatment of many spinal conditions,
including those listed below.

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Herniated
 Disc  A disc herniation occurs when the inner core of the intervertebral
 disc bulges out through the outer layer of ligaments that surround the disc.
 This tear in the outer layer of ligaments causes pain in the back at the
 point of herniation. If the protruding disc presses on a spinal nerve, the
 pain may spread to the area of the body that is served by that nerve. The
 terms ruptured, slipped, and bulging are also commonly used to describe
 this condition.                                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Degenerative
 Disc Disease  As part of the natural aging process, intervertebral discs
 lose their flexibility and shock absorbing characteristics. The ligaments
 that surround the discs become brittle and easier to tear. At the same time,
 the inner core of the disc starts to dry out and shrink. Over time, these
 changes can cause the discs to lose their normal structure and/or function.                                                                                                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Spinal
 Deformity  When viewed from behind, the human spine appears straight and
 symmetrical. When viewed from the side, however, the spine is curved. Some
 curvature in the neck, upper trunk, and lower trunk is normal. These curves
 help the upper body maintain proper balance and alignment over the pelvis.
 The term deformity is used to describe any variation in this natural shape. One
 form of spinal deformity, scoliosis, involves a lateral, or side-to-side,
 curvature of the spine. The vertebrae rotate along with the spine as a
 consequence of a scoliotic curve. Depending on the severity of the curve, a
 scoliotic spine may create asymmetries in the shoulders, thoracic spine, and
 pelvis, leading to an imbalance of the trunk and significant disfigurement.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Spinal
 Tumors  Tumors or cancers of the spine and spinal cord are relatively rare.
 Three types of tumors affect the spine and spinal cord: primary benign
 tumors, primary malignant tumors, and metastatic tumors. The term primary is
 used to designate a tumor originating from actual spine cells. Secondary
 spinal tumors, or cancers, which are more commonly called metastases, spread from
 other organs in the body.                                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Trauma/Fracture
  Trauma to the spine refers to injury that has occurred to bony elements,
 soft tissues, and/or neurological structures. Stability to the spinal column
 can be compromised when bony elements are injured or there is disruption to
 soft tissues such as ligaments. Instability causes the back to become unable
 to successfully carry normal loads, which can lead to permanent deformity,
 severe pain, and, in some cases, catastrophic neurological injuries. Most often
 the instability comes from a fracture in one of the bony parts of the
 vertebra. Osteoporosis, a condition characterized by loss of bone mass and
 structural deterioration of bone tissue, can lead to bone fragility and an
 increased susceptibility to fracture.                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | Stenosis  A
 condition caused by a gradual narrowing of the spinal canal, stenosis results
 from degeneration of both the facet joints and the intervertebral discs. Bone
 spurs, called osteophytes, which develop because of the excessive load on the
 intervertebral disc, grow into the spinal canal. The facet joints also
 enlarge as they become arthritic, which contributes to a decrease in the
 space available for the nerve roots.                                                                                                                                                                                                                                                                                                                                                 

7

---

Table of Contents

The
charts below set forth net sales of our Spinal products as a percentage of our
total net sales for each of the last three fiscal years:

(PIE CHART)

Our
Spinal products include thoracolumbar, cervical and interbody devices that are
employed utilizing the most modern surgical techniques, including the latest Minimal
Access Spinal Technologies (MAST) along with bone growth substitutes, and
devices for vertebral compression fractures and spinal stenosis.

Spinal
Instrumentation.Each year approximately 25
million Americans experience back pain that is severe enough to visit a
healthcare professional. Of the approximately 25 million Americans, 14 million
endure a significant impairment of activity. We are committed to providing
spinal surgeons with the most advanced options for treating low back pain and other
spinal conditions.

Today
we offer one of the industrys broadest lines of devices, including a wide
range of sophisticated internal spinal stabilization devices, instruments, and
biomaterials used in the treatment of spinal conditions. Spinal fusions, which
are currently one of the most common types of spine surgery, join two or more
vertebrae to eliminate pain caused by movement of the unstable vertebrae. Our
Spinal products are used in spinal fusion of both the thoracolumbar region,
referring to the mid to lower vertebrae, as well as of the cervical region, or
upper spine and neck vertebrae. Products used to treat spinal conditions
include rods, pedicle screws, hooks, plates, and interbody devices, such as
cages, as well as biologic products, which include bone growth substitutes,
dowels and wedges.

Minimal
Access Spinal Technologies (MAST).We have
developed a series of MAST products that facilitate safe, reproducible access
to the spine with minimal disruption of vital muscles and complementary
structures. These techniques involve the use of advanced navigation and
instrumentation to allow surgeons to operate with smaller incisions and less
tissue damage than traditional surgeries, thus reducing pain and blood loss and
improving recovery periods.

Our
expanding portfolio of minimally invasive spinal technologies includes the CD
HORIZON SEXTANT II System, a next-generation METRx System, to treat herniated
discs and allow minimally invasive access for fusion procedures and the MAST
QUADRANT Retractor System a retractor that allows access to complex
degenerative pathology. These products are also part of our complete minimally
invasive solution for Direct Lateral Interbody Fusions (DLIF). Our NIM-ECLIPSE
Spinal System adds advanced neuromonitoring capabilities, an intuitive display,
and an easy-to-use interface to this suite of products.

Biologics.Our INFUSE Bone Graft, used in lumbar spinal
fusion, contains a recombinant human bone morphogenetic protein, or rhBMP-2,
that induces the body to grow its own bone, eliminating the need for a painful
second surgery to harvest bone from elsewhere in the body. In Europe, INFUSE
Bone Graft is marketed as InductOs Bone Graft for spinal fusion. We also offer
INFUSE Bone Graft for the treatment of certain types of acute, open fractures
of the tibial shaft, a long bone in the lower leg, as well as certain oral
maxillofacial indications.

In
April 2007, we began to market INFUSE Bone Graft for certain oral maxillofacial
and dental regenerative bone grafting procedures. It is estimated that more
than 350,000 bone grafting procedures of this type are performed in the U.S.
each year. Medtronic has also submitted a PMA with the FDA for a posterolateral
spinal indication for Amplify rhBMP-2 Matrix.

8

---

Table of Contents

Aging Spine. During the third quarter of fiscal year 2008,
we acquired Kyphon Inc. (Kyphon), a public company, and it became our
wholly owned subsidiary. Kyphon develops and markets medical devices designed to
restore and preserve spinal function in aging patients using minimally invasive
technology. Kyphons primary products are balloon kyphoplasty devices for the
treatment of vertebral compression fractures caused by osteoporosis, trauma or
cancer, and interspinous process devices (IPD) for treating the symptoms of
lumbar spinal stenosis (LSS).

In
the U.S., Kyphons X-STOP IPD device provides us with the first FDA-approved
minimally invasive device for the treatment of mild to moderate LSS patients.
In Europe, both the X-STOP and the next generation Aperius PercLID device are
available for the treatment of LSS. This degenerative condition can cause
compression of the spinal cord and nerves in the lower back, leading to back
and leg pain or numbness that can affect mobility. An estimated 875,000
Americans are diagnosed with LSS each year, and more than two million Americans
currently suffer from this disease. In October 2008, we announced the U.S.
launch of the X-STOP PEEK IPD System, the first IPD device approved by the FDA
that offers a PEEK-Bone interface for treating the symptoms of LSS. PEEK, or
polyetheretherketone polymer, is a biomaterial widely accepted for spinal
applications.

Customers
and Competitors

The
primary medical specialists who use our Spinal products are spinal surgeons,
orthopedic surgeons, neurosurgeons, and interventional radiologists. Our
competitors in the Spinal business include Johnson & Johnson,
Synthes-Stratec, Inc., Stryker Corporation, Zimmer, Inc., NuVasive Inc., and
over 200 small and physician owned companies.

CardioVascular

Our
CardioVascular business offers a comprehensive line of minimally invasive
products and therapies to treat coronary artery disease, abdominal and thoracic
aortic aneurysms, peripheral vascular disease, and heart valve disorders.

Conditions
Treated

Our
CardioVascular business offers minimally invasive products for the treatment of
the following conditions.

| |   |                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Coronary
 artery disease  deposits of cholesterol and other fatty materials (plaque)
 on the walls of the hearts arteries, causing narrowing or blockage of the
 vessel and reducing the blood supply to the heart. Blockage in a coronary
 artery can prevent the heart from receiving sufficient oxygen, which can
 impair heart function, potentially resulting in a heart attack.
| |   |                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Peripheral
 vascular disease  narrowing or blockage of arteries outside the heart,
 impeding blood supply to the brain, legs, and other vital organs.                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Abdominal
 and Thoracic aortic aneurysm (AAA/TAA)  an aneurysm is a dangerous bulge or
 weakening of the bodys main artery that can rupture with fatal consequences
 if left untreated.                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Heart valve
 disorders  diseased or damaged heart valves can restrict blood flow or leak,
 which limits the hearts ability to pump blood, causing the heart to work
 harder to meet the needs of the circulatory system.                                                                                                                                                             

The charts
below set forth net sales of our CardioVascular business as a percentage of our
total net sales for each of the last three fiscal years:

(PIE CHART)

9

---

Table of Contents

Our
CardioVascular products include coronary and peripheral stents and related
delivery systems, endovascular stent graft systems, distal embolic protection
systems, perfusion systems which oxygenate and circulate a patients blood
during arrested heart revascularization surgery, positioning and stabilization
systems for beating heart revascularization surgery, products for the repair
and replacement of heart valves, surgical ablation products, and a broad line
of balloon angioplasty catheters, guide catheters, guidewires, diagnostic
catheters and accessories.

Percutaneous
Coronary Intervention (PCI).If a blockage in a
coronary artery prevents the heart from receiving sufficient oxygen, the heart
cannot function properly and a heart attack may result. Coronary artery disease
is commonly treated with balloon angioplasty, a procedure in which a special
balloon is threaded through the coronary arteries to the site of the blockage,
where it is inflated, pressing the obstructive plaque against the wall of the
vessel to improve blood flow.

Following
balloon angioplasty, physicians often place coronary stents at the blockage
site to prop open diseased arteries to maintain blood flow to the heart. Stents
are cylindrical, wire-mesh devices small enough to be inserted into coronary
arteries. Our Driver and Micro-Driver bare metal stent systems are composed of
an advanced cobalt-based alloy, which surpasses the limitations of stainless
steel by creating very strong, ultra-thin struts that offer excellent
flexibility and vessel support. In February 2009, Driver Sprint received CE
Mark approval and is currently being introduced in international markets.
Driver Sprint features advanced balloon technology that builds on our exiting
Driver platform.

Drug-eluting
stents (DES) are designed to inhibit the re-narrowing or re-clogging of
arteries, known as restenosis, that can occur after PCI. In February 2008 we
announced FDA approval and the initiation of the U.S. launch of the Endeavor
DES (Endeavor) drug-eluting coronary stent system. Endeavor combines our
advanced Driver cobalt alloy stent, zotarolimus (a sirolimus analogue), and a
biomimetic polymer coating that controls the release of the drug into the
vessel wall. Endeavor received Shonin approval in March 2009 and was launched
in Japan in May 2009.

In
May 2002, we entered into an agreement with Abbott Laboratories (Abbott)
granting us co-exclusive use of Abbotts proprietary immunosuppressant drug
zotarolimus, as well as the phosphorylcholine coating Abbott has licensed from
Biocompatibles International PLC for use in conjunction with zotarolimus. The
term of the agreement covers the life of the patents necessary to use the drug
alone or in conjunction with the coating. Clinical and preclinical studies have
shown that this proprietary biocompatible polymer, which mimics the outer
membrane of a red blood cell, is safe and thrombo-resistant.

In
November 2007, we received CE Mark approval for the Sprinter Legend
Semicompliant Rapid Exchange Balloon Dilatation Catheter for use in coronary
angioplasty procedures. The Sprinter Legend provides the latest innovations in
balloon technology, including the unique 1.25 mm Zerofold balloon, and is
designed to address the most technically difficult lesions in coronary
angioplasty procedures.

In
November 2008, we launched our portfolio of angioplasty products in the U.S. on
the rapid exchange (RX) delivery system, including the Endeavor, the Driver and
MicroDriver bare-metal stents, and the Sprinter Legend and NC (non-compliant)
Sprinter balloon catheter systems. Used in angioplasty procedures to treat
coronary artery disease, RX is a short-, single-wire delivery system that can
be used by one operator.

Worldwide,
Medtronic has approximately 16,000 Endeavor patients enrolled in its multiple
clinical trials, and the growing volume of positive data and number of patients
with long-term follow-up continues to reinforce the stents favorable safety
and efficacy profile. Ultimately, the ENDEAVOR clinical program will enroll
more than 22,500 patients followed to five years; approximately 16,630 of these
patients will receive an Endeavor stent.

Endeavor
Resolute DES (Endeavor Resolute) is a next-generation DES featuring BioLinx,
the first polymer designed specifically for use on a DES. The BioLinx polymer
is designed to extend the duration of drug exposure in the vessel - an elution
profile of potential relevance to patients that physicians consider to be at
high risk of needing a repeat procedure - without trading off polymer
biocompatibility. In October 2007 we announced the CE Mark approval and the
international launch of Endeavor Resolute. Endeavor Resolute is now
commercially available in more than 100 countries across Europe, Asia, the
Middle East and Africa  making Medtronic the first company to offer two
internally developed DES options for the treatment of coronary artery disease.

10

---

Table of Contents

The
Endeavor Resolute clinical program will enroll more than 6,000 patients
worldwide across a series of single-arm and randomized controlled trials.

Peripheral
Stents.According to the Peripheral Arterial
Disease Coalition, Peripheral Arterial Disease (PAD) of the lower extremities
affects approximately eight million people in the United States, although many
patients are unaware of their condition or the seriousness of it. PAD patients
have a two- to six-fold increase in cardiovascular mortality and a
significantly increased risk of amputation, disability and diminished quality
of life, the PAD Coalition reports.

In
2008 we commenced enrollment in two PAD studies to evaluate the treatment of
iliac artery lesions with our stents. The Complete SE stent is currently being
evaluated in an IDE-approved clinical trial for use in the treatment of iliac
artery lesions in subjects with symptomatic and asymptomatic PAD. The Complete
SE Iliac Registry is a non-randomized, prospective study designed to enroll 60
subjects. The primary study endpoints are major adverse events (MAEs) at 30
days and nine months. With 12 U.S. sites participating, enrollment is complete.
Additionally, the balloon-expandable Assurant Cobalt stent is currently being
evaluated in an IDE-approved clinical trial as a treatment for iliac artery
lesions in subjects with symptomatic PAD. Initiated in October 2008, this study
is a non-randomized, prospective, single-arm trial with an enrollment target of
123 subjects at 20 U.S. sites. The primary endpoint of the study is MAEs at
nine months.

In
January 2009, we announced the first enrollment in the FDA-approved clinical
trial of our self-expanding (SE) Complete SE stent for the treatment of PAD in
the superficial femoral artery (SFA). The SFA study is a prospective,
multicenter, single-arm trial planned to enroll 178 subjects at up to 30 sites
globally. Enrolling patients with symptomatic PAD in the SFA, the study has
primary endpoints of MAEs and patency of the stent at 12 months.

Endovascular
Stent Grafts.Our CardioVascular product line also
includes a range of endovascular stent grafts including the market-leading
Talent and Endurant Stent Grafts for minimally invasive AAA repair and the
Talent Thoracic and Valiant Thoracic Stent Grafts for TAA repair. Present in an
estimated 20 million people worldwide and 1.3 million people in the U.S., an
AAA is a dangerous bulge or weakening of the bodys main artery that can
rupture with fatal consequences if left untreated. This is compared to over
1.25 million people worldwide and 150,000 people in the U.S. with a TAA.
Medtronic now has more than 10 years of clinical experience with its endograft
implants, by far the most clinical experience in the endovascular industry.
More than 160,000 patients have been treated worldwide with Medtronic stent
grafts for AAA or TAA.

In
June 2008, we initiated the U.S. launch of the Talent Abdominal Stent Graft
System (Talent AAA). Talent AAA is a leading stent graft with more than 45,000
worldwide implants to date. The stent graft is specifically indicated for
endovascular repair (EVAR) of abdominal aortic and aorto-iliac aneurysms. It
expands the indication for EVAR with a proximal aortic neck length requirement
of 10 mm or greater and a proximal aortic neck angulation of 60 degrees or
less. Talent AAA is available in diameters of up to 36 mm, as well as flared
and tapered iliac limbs of 8 mm to 24 mm. This indication enables physicians to
treat a broader range of patients than with other abdominal stent graft systems
available in the U.S. In November 2008, we announced the U.S. market launch of
the Talent AAA on the Xcelerant Hydro Delivery System. Now available globally,
the Xcelerant Hydro Delivery System features a hydrophilic coating which
attracts and holds water at the device surface to reduce friction and ease
implantation.

In
June 2008, we announced the FDA approval and commercial launch of our Talent
Thoracic Stent Graft with the CoilTrac Delivery System in the U.S. The Talent
Thoracic Stent Graft (Talent TAA) received Shonin approval in April and will
launch in Japan in May, 2009. Talent TAA expands the indication for thoracic
stent grafting by as much as 25 percent due to the introduction of smaller and
larger diameter stent grafts. In October 2008, we announced the U.S. market
launch of the Talent TAA on the Xcelerant Delivery System, which makes
minimally-invasive treatment of thoracic aortic aneurysms easier to perform.

In
July 2008, we announced the international market launch of the Endurant
Abdominal Stent Graft System (Endurant) and the first implants of this
next-generation medical device in the U.S. clinical trial. Endurants precise
deployment, flexibility, and low delivery profile are designed for patients
whose aortas are highly angulated or whose aneurysms have short necks. Patients
with these complex anatomies would previously have had no choice but watchful
waiting or open surgical repair, in which the abdomen is opened and major
organs temporarily moved in order to access the aorta. The U.S. clinical trial
of Endurant is designed to evaluate the devices safety and effectiveness in
the endovascular treatment of abdominal aortic aneurysms. As the pivotal trial
for Endurant, it will be used to seek FDA approval of the device. The study
will enroll 150 patients at up to 30 U.S. sites. Enrollment in the study is now
complete.

11

---

Table of Contents

Coronary
Artery Bypass Surgery.When physicians determine
that they cannot effectively treat a blockage in a coronary artery using
balloon angioplasty or a stent, they often turn to cardiac surgery to address
the problem. The most common surgical procedure used to treat blockage in a
coronary artery is a Coronary Artery Bypass Graft (CABG). In a CABG procedure,
surgeons re-route the blood flow around the blockage by attaching a graft,
usually from an artery or vein from another part of the patients body, as an
alternative pathway to the heart. There are two primary techniques, arrested
heart surgery and beating heart surgery.

Arrested
Heart Surgery.In a conventional coronary artery
bypass procedures and heart valve surgery the patients heart is temporarily
stopped, or arrested. The patient is placed on a circulatory support system
that temporarily functions as the patients heart and lungs and provides blood
flow to the body. We offer a complete line of blood-handling products that form
this circulatory support system and maintain and monitor blood circulation and
coagulation status, oxygen supply, and body temperature during arrested heart
surgery.

Beating
Heart Surgery.As an alternative to conventional
arrested heart coronary artery bypass surgery, physicians are performing CABG
on the beating heart to avoid the complexity and potential risks of arresting
the heart. To assist physicians performing beating heart surgery, we offer
positioning and stabilization technologies. These technologies include our
Starfish 2 and Urchin heart positioners, which use suction technology to gently
lift and position the beating heart to expose arteries on any of its surfaces.
These heart positioners are designed to work in concert with our Octopus tissue
stabilizer, which holds a small area of the cardiac surface tissue nearly
stationary while the surgeon is suturing the bypass grafts to the arteries. In
June 2006, we introduced the Octopus Evolution tissue stabilizer, the latest in
a 10-year series of innovative cardiac surgery instruments. It is currently
estimated that beating heart surgeries make up approximately 20 percent of the
estimated 270,000 coronary artery bypass surgeries that are performed in the
U.S. each year.

Surgical
Ablation.Our Cardioblate surgical ablation
systems (CSAS), which includes the Cardioblate LP Surgical Ablation System and
Cardioblate Navigator Tissue Dissector, allow cardiac surgeons to create
ablation lines during cardiac surgery. In November 2006, we announced FDA
approval to initiate the Feasibility of the Lone Atrial Fibrillation Clinical
Trial to evaluate the use of the CSAS thorascopically in paroxysmal atrial
fibrillation (AF) patients.

Surgical
Heart Valves.We offer a complete line of surgical
valve replacement and repair products for damaged or diseased heart valves. Our
replacement products include both tissue and mechanical valves. The valve
market continues to shift from mechanical to tissue valves, which is beneficial
to us due to our broad selection of tissue valve products. Our Mosaic
bioprosthetic heart valve is a reduced-profile valve engineered from porcine
tissue incorporating a proven flexible stent. The low profile and flexibility
of the stent offer benefits to the surgeon when implanting the valve. Other
tissue product offerings include the Freestyle stentless and Hancock II stented
valves. Our mechanical heart valve offerings include the Medtronic Hall, the
ADVANTAGE and the ADVANTAGE Supra bileaflet valves. Our valve repair products
include the Duran Flexible and CG Future Band and CG Composite Annuloplasty
Systems. In May 2008, we announced the U.S. launch of the Profile 3D
Annuloplasty Ring used by heart surgeons to repair  rather than replace  a
failing mitral valve. To promote natural function, the Profile 3D ring design
is based on the geometry of the saddle-shaped human mitral annulus. Data
suggest that nature conserves the saddle-shaped annulus for a mechanical
benefit. Specifically, leaflet stress can be related to saddle height, which
could affect long-term durability of the repair.

Transcatheter
Heart Valves.Transcatheter valve technology
represents a less invasive means to treat heart valve disease and is designed
to allow physicians to deliver replacement valves via a catheter through the
bodys cardiovascular system, thus eliminating the need to open the chest.
Traditionally, open heart surgery has been required to correct the problem and
it is not unusual for a patient to undergo multiple, open-heart surgeries
during their lifetime.

12

---

Table of Contents

In
October 2006, our Melody Transcatheter Pulmonary Valve and Ensemble
Transcatheter Delivery System (Melody TCV) received European CE Mark making it
the first transcatheter valve in the world to receive such an approval. The
system is the first of its kind to treat patients with congenital structural
heart disease requiring pulmonary heart valve replacement. According to the
American Heart Association, congenital heart defects are the No. 1 birth defect
worldwide. In the U.S. alone, more than 36,000 babies are born each year with a
congenital heart defect. Approximately 22 percent of these babies have defects
disrupting the blood flow from the right ventricle to the pulmonary artery. In
November 2008, the first U.S. clinical trial data on the Melody TCV were
presented at the American Heart Association Meeting. The results involved 66
patients and showed a high acute procedural success rate of 98 percent. At
six-months follow up, maintenance of excellent valve competence was
demonstrated as was a corresponding, clinically-significant, reduction of more
than 18 percent in right ventricular volume.

In
February 2009, we acquired Ventor Technologies, Ltd. (Ventor) and in April
2009, we acquired CoreValve, Inc. (CoreValve), both privately held companies.
CoreValve and Ventor have developed transcatheter, aortic valve replacement
technologies. CoreValves ReValving System, which received CE Mark approval in
2007, utilizes a transfemoral approach and is comprised of a porcine
pericardial tissue valve, mounted on a self-expanding frame and implanted via a
low profile (18F) delivery catheter. Ventor has developed a transapical
product, the Ventor Embracer, which is under clinical investigation in Europe.
Ventor is also developing a next generation percutaneous transfemoral
technology. These complementary technologies offer compelling clinical benefit
to distinctly different subsets of patients with aortic stenosis who are at
high or prohibitive risk for surgery.

Customers
and Competitors

The
primary medical specialists who use our catheter-based products for treating
coronary artery disease are interventional cardiologists, while products
treating peripheral vascular disease and aortic aneurysms may be used by
interventional radiologists, vascular surgeons, cardiac surgeons and
interventional cardiologists. Our primary competitors in the coronary and
peripheral vascular business are Boston Scientific Corporation, Johnson &
Johnson, and Abbott Laboratories. Our primary competitors in the
endovascular business are Cook, Inc. and W. L. Gore & Associates, Inc. The
principal medical specialists who use our cardiac surgery products are cardiac
surgeons. Our primary competitors in the structural heart disease business are
Edwards LifeSciences Corporation, Boston Scientific Corporation, Johnson &
Johnson, St. Jude Medical, Inc., Terumo Medical Corporation, and Sorin S.p.A.

Neuromodulation

Our
Neuromodulation business develops, manufactures, and markets devices for the
treatment of neurological, urological, and gastroenterological disorders. We
pioneered the use of site-specific neurostimulation and targeted drug delivery
to modulate nervous system function. Through collaborative efforts with our
customers we have developed a unique portfolio of therapeutic technologies for
the treatment of debilitating chronic diseases that represent large, unmet
medical needs.

Conditions
Treated

Our
Neuromodulation business offers products for the treatment or diagnosis of the
conditions described below.

| |   |                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Pain
 Management  including neurostimulation and implantable drug delivery systems
 for chronic pain.                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                       
| |  | Movement
 Disorders  including deep brain stimulation for Parkinsons disease,
 essential tremor, dystonia and intrathecal baclofen (ITB) therapy for
 spasticity.                                                                                                   
| |   |                                                                                                                                                                                                                                                                       
| |  | Urological
 and gastroenterological disorders  including neurostimulation for overactive
 bladder and urinary and fecal incontinence, radio frequency ablation for
 benign prostatic hyperplasia (BPH or enlarged prostate), and neurostimulation
 for gastroparesis.
| |   |                                                                                                                                                                                                                                                                       
| |  | Psychological
 Disorders  including deep brain stimulation for obsessive compulsive
 disorder (OCD).                                                                                                                                                                 

13

---

Table of Contents

The
charts below set forth net sales of our Neuromodulation products as a
percentage of our total net sales for each of the last three fiscal years:

(PIE CHART)

Neuromodulation
products consist of therapeutic devices, including implantable spinal cord
stimulation systems used to treat intractable chronic pain; deep brain
stimulation systems to treat movement disorders like Parkinsons disease, as
well as OCD; implantable intrathecal drug delivery systems for intractable
spasticity and intractable chronic pain; sacral nerve stimulation systems to
treat overactive bladder and urinary incontinence; a product for the treatment
of BPH, or enlarged prostate; and a gastric stimulator for gastroparesis.

Neurostimulators
for Chronic Pain.We offer the largest portfolio
of neurostimulation systems, including rechargeable and non-rechargeable
devices, along with the largest selection of leads. In February 2008, we
announced the worldwide launch of the RestoreULTRA neurostimulation systems for
the treatment of chronic pain. Chronic pain affects an estimated 75 million
people in the U.S. alone. This rechargeable neurostimulator, the most advanced
device in our market-leading family of RESTORE devices, is the smallest and
thinnest 16-electrode rechargeable neurostimulator available from Medtronic.
Furthermore, for the first time with any neurostimulator, the patient
programmer includes an innovative new feature called TARGETmyStim. This feature
allows patients to make appropriate and immediate adjustments in their
stimulation in order to best address normal fluctuations in pain, including
changing pain patterns. By using the remote control programmer, patients can
fine-tune their stimulation to specific sites up and down the spinal cord and
increase/decrease the intensity of the electrical impulses. These adjustments
allow the patient to customize their pain therapy in a way that was previously
only possible with a physician programmer during an office visit.

Our
portfolio of neurostimulators also includes RestoreADVANCED (rechargeable) and
PrimeADVANCED (non-rechargeable) neurostimulation systems. All of the
neurostimulation systems are implanted under the skin and have up to two leads
with eight electrodes each that deliver electrical pulses to the spinal cord.
Based on individual patient need, the positioning of the electrodes can be
customized to deliver stimulation directly to the target area on the spinal
cord, and in doing so, block pain signals from reaching the brain.

A
continuing major initiative in fiscal year 2009 was the establishment of higher
levels of evidence for our therapies efficacy and cost-effectiveness. In
November 2008, the scientific journal Neurosurgerypublished 24-month data from a study known as PROCESS showing that
spinal cord stimulation provides sustained, significant improvement in
otherwise intractable, chronic leg pain, quality of life and functional
capacity out to 24 months of therapy.

Implantable
Drug Delivery Systems.Our portfolio of
intrathecal drug delivery systems consist of the only programmable, implantable
drug pump available in the U.S. and a catheter that deliver small quantities of
drug directly into the intrathecal space in the spine. These devices are used
to treat chronic, intractable pain and severe spasticity of cerebral or spinal
origin.

Medtronic
ITB Therapy is indicated for the management of severe spasticity of cerebral
and spinal origin, including stroke, cerebral palsy, brain injury, spinal cord
injury, and multiple sclerosis. It uses our SynchroMed II Implantable Infusion
System, which consists of a programmable, implanted drug pump connected to a
thin tube, or catheter, to deliver precise amounts of a muscle relaxant
manufactured by Novartis
Corporation under the trade name Lioresal® Intrathecal (baclofen injection)
directly to the intrathecal space  the fluid-filled area surrounding the
spinal cord, the drugs site of action. By targeting the spinal cord, ITB
therapy reduces spasticity with smaller amounts of medication than would be
required if taken orally. Intrathecal infusion, which bypasses the bodys
blood-brain barrier, also minimizes systemic side-effects.

14

---

Table of Contents

Deep
Brain Stimulation (DBS) Systems.Deep brain
stimulation is approved for treating the symptoms of movement disorders like
Parkinsons disease or psychological disorders like treatment resistant OCD. DBS
therapy uses an implantable medical device akin to a cardiac pacemaker to
deliver carefully controlled electrical pulses to precisely targeted areas of
the brain. Continuous stimulation of these areas blocks the signals that cause
the disabling motor symptoms. In the case of OCD, DBS is believed to influence
the circuit of the brain involved in moods.

In
December 2008, data from a prospective, randomized, double-blind pivotal study
designed to evaluate the use of Medtronic DBS for epilepsy was presented at the
American Epilepsy Society Annual Meeting. The study, known as SANTE
(Stimulation of the Anterior Nucleus of the Thalamus in Epilepsy), included 110
patients at 17 U.S. centers and showed DBS significantly reduced seizure
frequency among patients with medically refractory epilepsy with partial-onset
seizures, a form of the neurological condition that does not respond well to
antiepileptic drugs. According to the Epilepsy Foundation, epilepsy and
seizures affect more than three million Americans of all ages, at an estimated
annual cost of $12.5 billion in direct and indirect costs. Despite trying a
range of treatment options, about one-third of people with epilepsy cannot
adequately control their seizures or tolerate other available therapies. The
unpredictability of seizures affects daily activities and disrupts school days,
work responsibilities and social functioning. Based on the results of this
study, we plan to submit a PMA application to the FDA seeking approval for
Medtronic DBS Therapy for epilepsy in early fiscal year 2010.

In
February 2009, we announced the FDA approval for a humanitarian device
exemption (HDE) for our Reclaim DBS therapy for chronic, severe OCD. Reclaim
DBS is the first medical device to receive U.S. FDA approval for the treatment
of OCD and is also the first psychiatric indication to be approved for DBS.
While OCD is estimated to affect one in 50 adults in the U.S., it is
anticipated that DBS therapy will be appropriate for a small subset of the
patient population, below the threshold of 4,000 patients per year allowed
under an HDE. Medtronic plans to make Reclaim DBS therapy for OCD available in
the U.S. by mid-2009 under the HDE.

Urology
and Gastroenterology Devices.Our therapeutic
products for urology and gastroenterology include the InterStim Therapy for the
treatment of overactive bladder and urinary incontinence; Prostiva RF Therapy,
which uses low-level radio frequency energy to treat BPH, or enlarged prostate;
and Enterra Therapy for the treatment of gastroparesis.

In
October 2008, we submitted our PMA application with the FDA for InterStim
Therapy for the treatment of fecal incontinence. InterStim Therapy is a
reversible treatment for patients with fecal incontinence after conservative
treatments have failed. This therapy has been available in markets outside of
the U.S. since 2000 where it has been used by more than 6,000 patients. Fecal
incontinence is the inability to control your bowels and is a debilitating
condition that is often underreported and stigmatized. According to the
National Institutes of Health, more than 5.5 million Americans have fecal
incontinence.

Customers
and Competitors

The
primary medical specialists who use our Pain Management and Movement Disorders
products are neurosurgeons, neurologists, pain management specialists,
psychiatrists, and orthopedic spine surgeons. The primary medical specialists
who use our urology and gastroenterology products are urologists,
urogynecologists, and gastroenterologists. Our primary competitors for pain
management and movement disorders are Boston Scientific Corporation and St.
Jude Medical, Inc. Our primary competitors for urology and gastroenterology
products are Boston Scientific Corporation, Urologix, Inc., and American
Medical Systems, Inc.

15

---

Table of Contents

Diabetes

Our
Diabetes business develops advanced diabetes management solutions. We are the
world leader in integrated diabetes management systems, insulin pump therapy,
continuous glucose monitoring systems and therapy management software, and are
committed to providing improved tools and technologies to help people with
diabetes live longer, healthier lives.

Conditions
Treated

Our
Diabetes business offers solutions for the treatment of diabetes  the
inability to control glucose (blood sugar) levels resulting from the bodys
failure to produce or properly use insulin.

The
charts below set forth net sales of our Diabetes business as a percentage of
our total net sales for each of the last three fiscal years:

(PIE CHART)

Our
Diabetes products help patients control their glucose levels. Diabetes afflicts
roughly 250 million people worldwide, and almost 24 million people in the U.S.
Currently, our products serve the insulin-dependent population, approximately
six million people in the U.S. The key to managing diabetes is to maintain
tight control of glucose levels. If not well-managed, diabetes can lead to
blindness, kidney failure, amputation, impotence and heart failure. More than
$174 billion is spent annually on diabetes and its complications, including
$116 billion in direct medical costs.

Integrated
Diabetes Management Systems.The MiniMed Paradigm
REAL-Time System (Paradigm REAL-Time System) is the first and only integrated
insulin pump and continuous glucose monitoring system. The Paradigm REAL-Time
System is made up of two components, a REAL-Time Continuous Glucose Monitor
(CGM), and a Paradigm insulin pump. The system receives glucose readings every
five minutes from a glucose sensor worn on the body. This REAL-Time glucose
information is displayed on the insulin pump, allowing patients to take
immediate action to improve their glucose control after taking a confirmatory
fingerstick. The Paradigm REAL-Time System is indicated for any patient seven
years of age or older.

Integrating
an insulin pump with REAL-Time CGM is a major step toward the development of a
closed-loop insulin delivery system that may one day mimic some functions of
the human pancreas. We are testing future systems that employ advanced
scientific algorithms to proactively recommend insulin dosages to patients.
Through this process, we anticipate developing an external, closed-loop system
designed to simplify and improve patient diabetes management.

External
Insulin Pumps.Our insulin pumps are primarily
used by patients with type 1 diabetes, which occurs when the pancreas stops
producing insulin. In order to survive, people with type 1 diabetes must
administer insulin on a daily basis. Our therapies are also helpful in managing
insulin-dependent type 2 diabetes, which results from the bodys inability to
produce enough insulin or properly use the insulin.

Our
MiniMed Paradigm insulin pumps are currently the leading choice in insulin pump
therapy in the U.S. About the size of a cell phone, and worn in a pocket or on
your belt like a phone or MP3 player, insulin pumps calculate complex diabetes
math and recommend precise insulin dosages to help patients manage their
disease without daily insulin injections. Because insulin pump therapy delivers
precise micro-doses of insulin to the body, it helps diabetes patients control
their glucose, offering both short- and long-term health benefits. MiniMed
Paradigm insulin pumps are indicated for all patients requiring insulin.

16

---

Table of Contents

Continuous
Glucose Monitors (CGM).Medtronics Personal CGM
is patient owned and automatically displays the patients latest glucose level
every five minutes, indicates when glucose is changing rapidly, graphically
shows glucose variability and sounds alerts based on predicted glucose levels,
rate-of-change and/or glucose thresholds. Personal CGM is intended to help
diabetes patients avoid dangerous high and low glucose levels and learn to maintain
tighter glucose control 24 hours a day. Medtronic offers two Personal CGM
product categories. Our Guardian REAL-Time System is a stand-alone Personal CGM
device that monitors glucose levels for patients to better manage their
diabetes. The MiniMed Paradigm REAL-Time System combines Personal CGM with
insulin pump therapy to make the worlds only integrated diabetes management
system. Both systems are supported by the Medtronic CareLink Therapy Management
Software.

Medtronic
also offers physicians a Professional CGM product, the iPro CGM. Physicians
send patients home wearing a tiny iPro recorder, which silently collects
glucose data blinded to the patient. The data is uploaded in a physicians
office to reveal glucose patterns and potential problems that often go
undetected with todays standard glucose measurements like finger stick meters
and A1c tests. The new iPro is smaller, simpler to use, lighter weight and less
time consuming than previous Medtronic Professional CGM devices. There is no
display or user interface for the patient and improved ergonomics give patients
added freedom when wearing the device. Physician services associated with the
iPro are reimbursed by Medicare in all 50 states, and have broad private
insurance reimbursement.

CareLink
Therapy Management Software.We also offer therapy
management software solutions to help patients and their healthcare providers
optimize their diabetes control and quality of life. These Web-based platforms
consist of CareLink Personal software for patients and CareLink Pro software
for healthcare providers. It allows patients to quickly and easily upload data
from their diabetes management devices to a secure online database. Because the
platform is totally integrated, healthcare providers can quickly and easily
download patient data remotely in advance of the office visit. Both the patient
and healthcare provider can save time to focus on optimizing therapy.

Blood
Glucose Meters.Medtronic has an alliance with
LifeScan, Inc., a Johnson & Johnson company, to distribute and co-market
blood glucose meters developed by LifeScan for Medtronic patients in the U.S.
Concurrently, we announced an alliance with a division of Bayer HealthCare LLC,
a member of the Bayer Group, to distribute and co-market blood glucose meters
for Medtronic patients outside the U.S. These meters wirelessly transmit blood
glucose test results directly to our MiniMed Paradigm insulin pumps and
GuardianREAL-Time Systems. Wireless communications make data entry easier and
more convenient for patients.

Customers
and Competitors

The
primary medical specialists who use and/or prescribe our diabetes products are
endocrinologists, diabetologists, and internists. Our most significant
competitors for diabetes products are Abbott Laboratories, DexCom, Inc.,
Insulet Corporation, Johnson & Johnson, and Roche Ltd.

Surgical
Technologies

Our
Surgical Technologies business develops, manufactures, and markets products and
therapies to treat diseases and conditions of the ear, nose and throat (ENT),
and certain neurological disorders. In addition, the segment manufactures and
markets image guided surgery and intra-operative imaging systems that
facilitate surgical planning during precision cranial, spinal, sinus and
orthopedic surgeries. As a market leader in ENT and neurosurgery, we are
changing the way surgery is performed with innovative, minimally invasive
products and techniques that benefit both patients and surgeons.

17

---

Table of Contents

| |                                                                                                   |                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Conditions Treated                                                                               
| |                                                                                                   |                                                                                                                                                                   
| | Our Surgical
 Technologies products are used in the treatment of the conditions described
 below.
| |                                                                                                   |                                                                                                                                                                   
| |                                                                                                  | ENT diseases
 and disorders, such as chronic sinusitis, chronic otitis media, hearing loss,
 Ménières disease, thyroid diseases, and tumors of the head and neck.
| |                                                                                                   |                                                                                                                                                                   
| |                                                                                                  | Neurological
 diseases and disorders, including both pediatric and normal pressure
 hydrocephalus, traumatic brain injury, and spinal conditions.                 
| |                                                                                                   |                                                                                                                                                                   
| |                                                                                                  | A broad
 range of cranial, spinal, sinus, and orthopedic maladies through the use of
 computer-assisted navigation and imaging during surgery.                    

The
charts below set forth net sales of our Surgical Technologies business as a
percentage of our total net sales for each of the last three fiscal years:

(PIE CHART)

Our
primary Surgical Technologies products include powered tissue-removal systems,
high-speed powered surgical drill systems to facilitate surgical access in the
spine and cranium, fluid-control products including shunts for pediatric and
normal pressure hydrocephalus and systems for the treatment of traumatic brain
injury, a full line of cranial fixation devices that include both titanium and
resorbable plates and screws, nerve monitoring systems, image-guided surgery
systems, intra-operative imaging systems, a Ménières disease therapy device,
and a portfolio of products to treat benign snoring and obstructive sleep
apnea.

Chronic Rhinosinusitis (sinus
infections). For the surgical treatment of
chronic sinus infections, we offer powered and manual instruments with a
variety of blade configurations for removing soft tissue and bone. Our
bioresorbable nasal packing and dressings, such as MeroGel Dressing and the
recently introduced MeroPak CMC gel, aid in wound-healing and help reduce postoperative
complications following these procedures. We also offer image-guided surgery
and intra-operative imaging systems to improve safety and efficacy when
surgeons operate near critical structures such as the brain and eyes. The
FUSION EM system provides a robust, expandable system that may be used for
virtually any ENT image guidance procedure.

Chronic Otitis Media (ear
infections). For the treatment of chronic
otitis media, we provide a wide range of middle ear ventilation tubes to facilitate
middle ear ventilation and prevent fluid accumulation. We also offer powered
instruments and drills, such as the M4 and Integrated Power Console System, to
remove enlarged adenoid tissue, enable surgical access and remove diseased
bone. Untreated chronic otitis media is the most common cause of hearing loss
in children, which can impair learning and speech development. It can also
spread to other areas of the head and neck and lead to serious complications.

Hearing Loss.
To correct conductive hearing loss, we offer various types of implantable
middle ear prostheses that replace missing bone(s) in the ear necessary to
conduct sound. These products are malleable/trimmable and may be shaped by the
surgeon to fit each particular patients anatomy.

Thyroid Disease.
For surgery related to thyroid disease, we offer the NIM-Response 3.0 Nerve
Integrity Monitor, NIM-Neuro 3.0 Nerve Integrity Monitor, and NIM EMG Tubes.
These products assist surgeons in identifying and continuously monitoring the
recurrent laryngeal or vagus nerves during complicated, high-risk thyroid
surgery. Since the actual nerve damage during surgery is much higher than
perceived, using our nerve monitoring products in these procedures is a benefit
to both the patient and the surgeon, reducing the risk of patient injury and
enabling more precise, complete dissection.

18

---

Table of Contents

Ménières
Disease.
To alleviate debilitating vertigo associated with the inner ear condition known
as Ménières disease, we offer the portable, minimally invasive Meniett
Low-Pressure Pulse Generator. Severe vertigo, which can cause nausea and
vomiting, is considered by patients to be the most problematic and debilitating
symptom of Ménières disease, often affecting their ability to work or
participate in daily activities. Using Meniett therapy, patients can
self-administer their treatment at home or work for a few minutes each day by
delivering low-pressure air pulses through a tube connected to an earpiece
placed in the outer ear.

Surgical Access and Cranial
Fixation. To facilitate surgical access in
cranial, spinal and orthopedic procedures, we offer the Legend electric and
pneumatic high-speed powered surgical drill systems. The Stylus system, our
high-speed electric drill line, provides significant power in a small,
ergonomic design. We recently introduced a procedure specific microdebrider for
use in certain spine procedures. We also offer titanium and resorbable polymer
plates and screw systems designed to provide for rigid fixation of the skull.
In addition to plates and screws, our Durepair dura substitute is indicated for
use as both an on-lay and suturable graft for repair of the dura skin layer.

Hydrocephalus.   
The Strata valve is an adjustable shunt system for the treatment of
hydrocephalus, a condition characterized by an abnormal accumulation of
cerebral spinal fluid in the brain. There are two primary forms of
hydrocephalus; congenital or pediatric hydrocephalus, and normal pressure
hydrocephalus, which afflicts the elderly. The Strata valve allows surgeons to
non-invasively adjust the valves performance level settings with an external
magnetic adjustment device. This enables the surgeon to change the valves
performance characteristics over time without subjecting the patient to
additional surgery. The shunt line also includes a wide assortment of
nonadjustable valves.

Brain Injury.
We also provide a large selection of external drainage and monitoring systems
such as the Becker and Exacta and the newly introduced DUET systems as well as
catheters that are used for the treatment of traumatic brain injury. These
systems are designed to remove fluid from the brain in a controlled fashion to
alleviate the build-up of intracranial pressure, which can be life threatening.

Sleep Apnea.
Obstructive sleep apnea (OSA) is a disorder characterized by interruptions and
cessations in breathing during sleep, which can occur up to hundreds of times a
night. During fiscal year 2009, we greatly expanded our portfolio of treatments
for sleep-disordered breathing. In July 2008, we acquired Restore Medical, Inc.
(Restore Medical), a publicly traded company. Restore Medicals Pillar Palatal
Implant System (Pillar System) is an innovative, minimally invasive,
implantable medical device used to treat the soft palate component of sleep
breathing disorders, including mild to moderate OSA and snoring. Additionally,
in December 2008, we announced the acquisition of InfluENT Medicals Repose
product line for the treatment of OSA. The Repose surgical devices advance the
base of the tongue and the hyoid bone to prevent obstructions of the airway
during sleep.

Navigation.
We are one of the leaders in the field of computer-assisted surgery (CAS) and
have installed approximately 2,500 StealthStation Treatment Guidance Systems in
hospitals worldwide. In recent years, the pace of innovation in CAS has
quickened considerably. We have developed and delivered new and updated
hardware and software solutions to assist with varied surgeries including total
joint replacements, minimally invasive spinal surgery, cranial tumor resection,
biopsies, functional neurosurgery, and functional endoscopic sinus surgery. In
June 2007, we acquired the O-Arm Imaging System (O-Arm), an intraoperative
crossover technology enabling two-dimensional, multi-plane two-dimensional, and
three-dimensional volumetric imaging. We continue to expand into new procedures
leveraging navigation and imaging in existing cranial, spinal and ENT markets.
Seamless integration of O-Arm with navigation is driving market adoption of
navigation in minimally invasive spine procedures. New technologies such as
electromagnetic (EM) navigation, advanced visualization tools and enhanced user
interface design will enable new applications and drive adoption in existing
and new markets.

Customers and Competitors

Our
primary customers for products relating to our ENT diseases and disorders are
ENT surgeons and the hospitals and clinics where they perform surgery. The most
significant competitors in this part of our Surgical Technologies business are
Olympus Corporation and Stryker Corporation.

19

---

Table of Contents

Our
primary customers for our neurosurgical products are neurosurgeons, spinal
surgeons, and the hospitals and clinics where they perform surgery. Significant
competitors are Johnson & Johnson, Stryker Corporation and Integra
LifeSciences Holdings Corporation.

Our
primary customers for our computer assisted surgery products are hospitals and
clinics. The primary competitors of our computer assisted surgery products are
BrainLAB, Inc. and Stryker Corporation.

Physio-Control

We
develop, manufacture, market and service external defibrillators, including
manual defibrillator/monitors used by hospitals and emergency response
personnel and automated external defibrillators (AEDs) used in commercial and
public settings. In addition to the portfolio of external defibrillation and
emergency response systems, we offer related data management solutions and
support services.

Conditions
Treated

Our
Physio-Control products are used in the treatment of the condition described
below.

| |   |                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Sudden
 Cardiac Arrest (SCA)  is a condition in which the heartbeat stops suddenly
 and unexpectedly. SCA is caused by life-threatening arrhythmias or
 abnormalities in the hearts electrical system.

The
charts below set forth net sales of our Physio-Control business as a percentage
of our total net sales for each of the last three fiscal years:

(PIE CHART)

External
Defibrillators. Many victims of SCA could be
saved if they had quicker access to AEDs. In the U.S., the survival rate for
victims of sudden cardiac arrest is only about 5 percent because the average
response time to an emergency call for help is six to twelve minutes. Chances
of survival are reduced significantly if the victim is not treated within five
minutes. In August 2004, results from the largest-ever clinical trial studying
the outcomes of public access to defibrillation were published in the New
England Journal of Medicine. The data indicated that the use of portable AEDs
by trained volunteers can significantly improve the probability of saving lives
that otherwise might have been lost to sudden cardiac arrest. Hospitals,
emergency medical services (EMS) and targeted responders rely on LIEFPAK
products in the most urgent cardiac emergencies. Our LIFEPAK series of external
defibrillators are designed to adapt to the physical needs of the patient and
surrounding emergency conditions enabling fast, smooth transitions from the
care from EMS to the treatment at the hospital. Physio-Control offers a broad
range of life-saving tools for multiple user needs and our products have been
incorporated in environments ranging from hospitals to emergency medical units
to public places such as airports, sports arenas, schools, and workplaces.
Today there are more than 700,000 LIFEPAK devices distributed worldwide.

20

---

Table of Contents

On
January 15, 2007, we announced our voluntary suspension of U.S. shipments of
Physio-Control products manufactured at our facility in Redmond, Washington in
order to address quality system issues. In the months following the suspension
of U.S. shipments, we worked diligently with the FDA to address the quality
system issues and resumed limited shipments to critical need customers. As a
result of the work performed to date, in April 2008, we announced that we had
reached an agreement on a consent decree with the FDA regarding quality system
improvements for our external defibrillator products. The agreement was filed
on April 25, 2008 in the U.S. District Court for the Western District of
Washington and was approved by the court on May 9, 2008. The agreement
addresses issues raised by the FDA during inspections regarding
Physio-Controls quality system processes and outlines the actions
Physio-Control must take in order to resume unrestricted distribution of our
external defibrillators. We are continuing to work diligently on implementing
the required actions necessary to resolve the quality issues addressed by the
FDA.

In
October 2008, we announced clearance by the FDA to market the LIFEPAK 20e
defibrillator/monitor within the U.S. The 20e is an enhancement of the LIFEPAK
20 defibrillator/monitor, which has become the standard of care in many
hospitals worldwide since its introduction in 2002. It offers all the
capabilities of the LIFEPAK 20 device, along with a more powerful Lithium-ion
battery that doubles ECG monitoring time and the run time of other parameters
such as noninvasive pacing and pulse oximetry, a noninvasive way to monitor the
oxygenation of a patients hemoglobin. Additionally, a new on-screen fuel
gauge displays the real-time status of available battery capacity so clinicians
can monitor remaining use time. The 20e also was developed to be easily
transported, helping hospitals meet the Joint Commission for Accreditation of
Healthcare Organizations standard for having resuscitation services readily
available in all facility areas.

In
March 2009, we received 510(k) FDA market clearance for the LIFEPAK 15
Monitor/Defibrillator. The LIFEPAK 15 device builds on a 54-year Physio-Control
legacy of providing innovative, reliable and durable equipment to emergency
personnel so they can focus on the most important task at handsaving lives.
During the development of the LIFEPAK 15 monitor, Physio-Control partnered with
emergency services personnel to create an all-new monitoring platform housing
the fullest range of energy dosing, up to 360 joules, and the broadest range of
monitoring options available. The LIFEPAK 15 device also builds on
Physio-Controls legacy of industry firsts as it is the first
monitor/defibrillator available to integrate noninvasive monitoring for carbon
monoxide, the leading cause of poisoning death in industrialized countries. The
15 design focuses on several clinical and operational innovations, which
include the largest, dual mode screen on the market providing maximum viewing
capability from all angles, a one-touch button that flips the screen full-color
to high-contrast SunVue mode for easy viewing in sunlight; and CPR Metronome,
an audible prompt that actively guides users to a consistent compression rate
without the need for extra external hardware. Additionally, the 15 provides ten
times the speed and processing power of its predecessor, the LIFEPAK 12
defibrillator/monitor, and is powered by the latest lithium-ion and smart
battery technology allowing nearly six hour run time. The 15, and its predecessor
the LIFEPAK 12 monitor, are the only devices in the marketplace with ST-Segment
Trending feature, which can continuously monitor 12-lead ECGs and alert
emergency professionals to changes in a patients heart rhythm during critical
heart attack or other cardio-respiratory events. Minutes matter during cardiac
events, so when the 15 is used in conjunction with the Web-based LIFENET System
(available separately), customers can simultaneously transmit critical patient
data from the field to multiple locations in the hospital, such as the cardiac
cath lab and the emergency department. Physio-Control developed the LIFEPAK 15
device to be tougher and more durable than any other monitor/defibrillator on
the market.

Customers and Competitors

The
primary customers for our manual external defibrillators are EMS personnel,
emergency care doctors and highly-trained nurses. Our primary competitors in
the manual external defibrillator business are Zoll Medical Corporation and
Philips Medical Systems.

The
primary customers for our AED products are hospitals, schools, governments,
businesses, and any other public facility. Our primary competitors in the AED
business are Cardiac Science, Inc., Zoll Medical Corporation, Philips Medical
Systems, Defibtech, LLC, and Welch Allyn Inc.

Research and Development

The
markets in which we participate are subject to rapid technological advances.
Constant improvement of products and introduction of new products is necessary
to maintain market leadership. Our research and development efforts are
directed toward maintaining or achieving technological leadership in each of
the markets we serve in order to help ensure that patients using our devices
and therapies receive the most advanced and effective treatment possible. We
are committed to developing technological enhancements and new indications for
existing products, as well as less invasive and new technologies to address
unmet patient needs and to help reduce patient care costs and length of
hospital stays. We have not engaged in significant customer or
government-sponsored research.

21

---

Table of Contents

During
fiscal years 2009, 2008, and 2007, we spent $1.355 billion (9.3 percent of net
sales), $1.275 billion (9.4 percent of net sales) and $1.239 billion (10.1
percent of net sales) on research and development, respectively. Our research
and development activities include improving existing products and therapies,
expanding their indications and applications for use, and developing new
products. While we continue to make substantial investments for the expansion
of our existing product lines and for the search of new innovative products, we
have also focused heavily on carefully planned clinical trials, which lead to
market expansion and enable further penetration of our life changing devices.

Acquisitions and Investments

Our
strategy to provide a broad range of therapies to restore patients to fuller,
healthier lives requires a wide variety of technologies, products, and
capabilities. The rapid pace of technological development in the medical
industry and the specialized expertise required in different areas of medicine
make it difficult for one company alone to develop a broad portfolio of
technological solutions. In addition to internally generated growth through our
research and development efforts, historically we have relied, and expect to
continue to rely, upon acquisitions, investments, and alliances to provide
access to new technologies both in areas served by our existing businesses as
well as in new areas.

We
expect to make future investments or acquisitions where we believe that we can
stimulate the development of, or acquire new technologies and products to
further our strategic objectives and strengthen our existing businesses.
Mergers and acquisitions of medical technology companies are inherently risky
and no assurance can be given that any of our previous or future acquisitions
will be successful or will not materially adversely affect our consolidated
results of operations, financial condition, or cash flows.

During
April 2009, we acquired privately held CoreValve. Total consideration for the
transaction was approximately $700 million including payment of direct
acquisition costs. CoreValve develops percutaneous, catheter-based transfemoral
aortic valve replacement products.

During
February 2009, we acquired privately held Ventor, a development stage company
focused on transcatheter heart valve technologies for the treatment of aortic
valve disease. This acquisition adds two technologies to our transcatheter
valve portfolio: a minimally invasive, surgical transapical technology and a
next generation percutaneous, transfemoral technology. Total consideration for
the transaction, net of cash acquired, was approximately $308 million.

During
February 2009, we acquired privately held Ablation Frontiers. Under the terms
of the agreement, the transaction included an initial up-front payment of $225
million plus potential additional payments contingent upon achievement of
certain clinical milestones. Total consideration for the transaction was approximately $235 million including the assumption and
settlement of existing Ablation Frontiers debt and payment of direct acquisition
costs. Ablation Frontiers develops radiofrequency (RF) ablation solutions for
treatment of atrial fibrillation. Ablation Frontiers system of ablation
catheters and RF generator is currently approved in certain markets outside the
U.S.

During
November 2008, we acquired substantially all of the outstanding stock of
CryoCath. Under the terms of the agreement, CryoCath shareholders received
$8.75 Canadian dollars per share in cash for each share of CryoCath common
stock that they owned. Total consideration for the transaction, net of cash
acquired, was approximately $352 million U.S. dollars including the purchase of
outstanding CryoCath common stock, the assumption and settlement of existing
CryoCath debt and payment of direct acquisition costs. CryoCath develops
cryotherapy products to treat cardiac arrhythmias. CryoCaths Arctic Front
product is a minimally invasive cryo-balloon catheter designed specifically to
treat atrial fibrillation and is currently approved in certain markets outside
the U.S.

During
July 2008, we acquired all of the outstanding stock of Restore Medical. Restore
Medical shareholders received $1.60 per share in cash for each share of Restore
Medicals common stock they owned. Total consideration for the transaction, net
of cash acquired, was approximately $29 million.
Restore Medicals Pillar System will provide us with a minimally invasive,
implantable medical device used to treat the soft palate component of sleep
breathing disorders, including mild to moderate obstructive sleep apnea and
snoring.

22

---

Table of Contents

Patents and Licenses

We
rely on a combination of patents, trademarks, copyrights, trade secrets, and
nondisclosure and non-competition agreements to establish and protect our
proprietary technology. We have filed and obtained numerous patents in the U.S.
and abroad, and regularly file patent applications worldwide in our continuing
effort to establish and protect our proprietary technology. In addition, we
have entered into exclusive and non-exclusive licenses relating to a wide array
of third-party technologies. We have also obtained certain trademarks and trade
names for our products to distinguish our genuine products from our
competitors products, and we maintain certain details about our processes,
products and strategies as trade secrets. Our efforts to protect our
intellectual property and avoid disputes over proprietary rights have included
ongoing review of third-party patents and patent applications. See Item 1A.
Risk Factors and Note 16 to the consolidated financial statements set forth in
Exhibit 13 hereto for additional information.

Markets and Distribution Methods

We
sell most of our medical devices through direct sales representatives in the
U.S. and a combination of direct sales representatives and independent
distributors in international markets. The three largest markets for our
medical devices are the U.S., Western Europe, and Japan. Markets outside the
U.S. are an area of increasing focus and opportunity as we believe they remain
under penetrated.

In
December 2008, we announced the completion of our equity investment in Shandong
Weigao Group Medical Polymer Company Limited (Weigao). In connection with this
transaction, we initiated with Weigao a joint venture to market in China our
spinal products and Weigaos orthopedic products which include therapies for
the hip, shoulder, spine and trauma. The joint venture entity commenced
operations in September 2008, with an affiliate of Medtronic holding a 51
percent interest in the joint venture and Weigao holding the remaining 49
percent interest. These efforts enable us to further build on our product,
distribution and marketing platforms, improving our strategic position to take
advantage of existing and future opportunities in manufacturing and
distribution in the spinal, orthopedic and trauma sectors in China.

Our
marketing and sales strategy is focused on rapid, cost-effective delivery of
high-quality products to a diverse group of customers worldwide  including
physicians, hospitals, other medical institutions, and group purchasing
organizations. To achieve this objective, we organize our marketing and sales
teams around physician specialties. This focus enables us to develop highly
knowledgeable and dedicated sales representatives who are able to foster strong
relationships with physicians and other customers, and enhance our ability to
cross-sell complementary products. We believe that we maintain excellent
working relationships with physicians and others in the medical industry that
enable us to gain a detailed understanding of therapeutic and diagnostic
developments, trends and emerging opportunities, and respond quickly to the
changing needs of physicians and patients. We attempt to enhance our presence
in the medical community through active participation in medical meetings and
by conducting comprehensive training and educational activities. We believe
that these activities contribute to physician expertise.

In
keeping with the increased emphasis on cost-effectiveness in healthcare
delivery, the current trend among hospitals and other customers of medical
device manufacturers is to consolidate into larger purchasing groups to enhance
purchasing power. As a result, transactions with customers have become
increasingly significant, more complex, and tend to involve more long-term
contracts than in the past. This enhanced purchasing power may also lead to
pressure on pricing and increased use of preferred vendors. We are not dependent
on any single customer for more than 10 percent of our total net sales.

Competition and Industry

We
compete in both the therapeutic and diagnostic medical markets in more than 120
countries throughout the world. These markets are characterized by rapid change
resulting from technological advances and scientific discoveries. In the
product lines in which we compete, we face a mixture of competitors ranging
from large manufacturers with multiple business lines to small manufacturers
that offer a limited selection of products. In addition, we face competition
from providers of alternative medical therapies such as pharmaceutical
companies.

23

---

Table of Contents

Major
shifts in industry market share have occurred in connection with product
problems, physician advisories and safety alerts, reflecting the importance of
product quality in the medical device industry. In the current environment of
managed care, economically motivated buyers, consolidation among healthcare
providers, increased competition, and declining reimbursement rates, we have
been increasingly required to compete on the basis of price. In order to
continue to compete effectively, we must continue to create or acquire advanced
technology, incorporate this technology into proprietary products, obtain
regulatory approvals in a timely manner, and manufacture and successfully
market these products.

Worldwide Operations

For
financial reporting purposes, net sales and long-lived assets attributable to
significant geographic areas are presented in Note 18 to the consolidated
financial statements set forth in Exhibit 13 hereto and will be included in our
2009 Annual Report.

(PIE CHART)

Impact of Business Outside of the U.S.

Our
operations in countries outside the U.S. are accompanied by certain financial
and other risks. Relationships with customers and effective terms of sale vary
by country, often with longer-term receivables than are typical in the U.S.
Inventory management is an important business concern due to the potential for
obsolescence, long lead times from sole source providers and currency exposure.
Currency exchange rate fluctuations can affect net sales from, and
profitability of, operations outside the U.S. We attempt to hedge these
exposures to reduce the effects of foreign currency fluctuations on net
earnings. See the Market Risk section of Managements Discussion and Analysis
of Financial Condition and Results of Operations and Note 9 to the consolidated
financial statements set forth in Exhibit 13 hereto and will be included in our
2009 Annual Report. In addition, the repatriation of certain earnings of our
foreign subsidiaries may result in substantial U.S. tax cost.

Production and Availability of Raw Materials

We
manufacture most of our products at 22 manufacturing facilities located in
various countries throughout the world. The largest of these manufacturing
facilities are located in Arizona, California, Florida, Indiana, Ireland,
Massachusetts, Mexico, Minnesota, Puerto Rico, Switzerland, Texas, and Washington.
We purchase many of the components and raw materials used in manufacturing
these products from numerous suppliers in various countries. For reasons of
quality assurance, sole source availability, or cost effectiveness, certain
components and raw materials are available only from a sole supplier. We work
closely with our suppliers to help ensure continuity of supply while
maintaining high quality and reliability. Due to the FDAs requirements
regarding manufacture of our products, we may not be able to quickly establish
additional or replacement sources for certain components or materials.
Generally, we have been able to obtain adequate supplies of such raw materials
and components. However, the reduction or interruption in supply, and an
inability to develop alternative sources for such supply, could adversely
affect our operations.

24

---

Table of Contents

Employees

On
April 24, 2009, we employed approximately 41,000 employees (including full-time
equivalent employees). Our employees are vital to our success. We believe we
have been successful in attracting and retaining qualified personnel in a
highly competitive labor market due to our competitive compensation and
benefits, and our rewarding work environment. We believe our employee relations
are excellent.

Seasonality

Worldwide
sales do not reflect any significant degree of seasonality.

Government Regulation and Other
Considerations

Our
medical devices are subject to regulation by numerous government agencies,
including the FDA and comparable foreign agencies. To varying degrees, each of
these agencies requires us to comply with laws and regulations governing the
development, testing, manufacturing, labeling, marketing, and distribution of
our medical devices.

Authorization
to commercially distribute a new medical device in the U.S. is generally
received in one of two ways. The first, known as pre-market notification or the
510(k) process, requires us to demonstrate that our new medical device is
substantially equivalent to a legally marketed medical device. In this process,
we must submit data that supports our equivalence claim. If human clinical data
is required, it must be gathered in compliance with FDA investigational device
exemption regulations. We must receive an order from the FDA finding
substantial equivalence to another legally marketed medical device before we
can commercially distribute the new medical device. Modifications to cleared
medical devices can be made without using the 510(k) process if the changes do
not significantly affect safety or effectiveness. A very small number of our
devices are exempt from pre-market review.

The
second, more rigorous process, known as pre-market approval (PMA), requires us
to independently demonstrate that the new medical device is safe and effective.
We do this by collecting data regarding design, materials, bench and animal
testing, and human clinical data for the medical device. The FDA will authorize
commercial release if it determines there is reasonable assurance that the
medical device is safe and effective. This determination is based on benefit
outweighing risk for the population intended to be treated with the device.
This process is much more detailed, time-consuming and expensive than the
510(k) process. A third process for approval exists for products intended for
orphan populations, which is less than 4,000 patients per year in the U.S. This
exemption is similar to the PMA process, however, a full showing of product
effectiveness from large clinical trials is not required. The threshold for
these products is probable benefit and safety.

Both
before and after a product is commercially released, we have ongoing
responsibilities under FDA regulations. The FDA reviews design and
manufacturing practices, labeling and record keeping, and manufacturers
required reports of adverse experiences and other information to identify
potential problems with marketed medical devices. We are also subject to
periodic inspection by the FDA for compliance with the FDAs quality system
regulations among other FDA requirements, such as restrictions on advertising
and promotion. The quality system regulations govern the methods used in, and
the facilities and controls used for, the design, manufacture, packaging and
servicing of all finished medical devices intended for human use. If the FDA
were to conclude that we are not in compliance with applicable laws or
regulations, or that any of our medical devices are ineffective or pose an
unreasonable health risk, the FDA could require us to notify health
professionals and others that the devices present unreasonable risks of
substantial harm to the public health, order a recall, repair, replacement, or
refund of such devices, detain or seize adulterated or misbranded medical
devices, or ban such medical devices. The FDA may also impose operating
restrictions, enjoin and restrain certain violations of applicable law
pertaining to medical devices, and assess civil or criminal penalties against
our officers, employees, or us. The FDA may also recommend prosecution to the
Department of Justice.

25

---

Table of Contents

The
FDA, in cooperation with U.S. Customs and Border Protection (CBP), administers
controls over the import of medical devices into the U.S. The CBP imposes its
own regulatory requirements on the import of our products, including inspection
and possible sanctions for noncompliance. The FDA also administers certain
controls over the export of medical devices from the U.S. International sales
of our medical devices that have not received FDA approval are subject to FDA
export requirements. Many foreign countries to which we export medical devices
also subject such medical devices to their own regulatory requirements.
Frequently, we obtain regulatory approval for medical devices in foreign countries
first because their regulatory approval is faster or simpler than that of the
FDA. However, as a general matter, foreign regulatory requirements are becoming
increasingly common and more stringent.

In
the European Union, a single regulatory approval process has been created, and
approval is represented by the CE Mark. To obtain a CE Mark in the European
Union, defined products must meet minimum standards of performance, safety and
quality (i.e., the essential requirements) and then comply with one or more of
a selection of conformity routes. A notified body assesses the quality
management systems of the manufacturer and the product conformity to the
essential and other requirements within the medical device directive. Medtronic
is subject to inspection by notified bodies for compliance. The competent
authorities of the European Union countries, generally in the form of their
departments of health, oversee the clinical research for medical devices and
are responsible for the products once they are in commercial distribution. We
are required to report device failures and injuries potentially related to
product use to these authorities in a timely manner. Various penalties exist
for non-compliance with the medical device directives.

To
be sold in Japan, most medical devices must undergo thorough safety
examinations and demonstrate medical efficacy before they are granted approval,
or shonin. The Japanese government, through the Ministry of Health, Labour,
and Welfare (MHLW), regulates medical devices under the Pharmaceutical Affairs
Law (PAL). Oversight for medical devices is conducted with participation by the
Pharmaceutical and Medical Devices Agency (PMDA), a quasi government
organization performing many of the review functions for MHLW. Penalties for a
companys noncompliance with PAL could be severe, including revocation or
suspension of a companys business license and criminal sanctions. MHLW and
PMDA also assess the quality management systems of the manufacturer and the
product conformity to the requirements of the Pharmaceutical Affairs Law.
Medtronic is subject to inspection for compliance by these agencies.

The
process of obtaining approval to distribute medical products is costly and
time-consuming in virtually all of the major markets where we sell medical
devices. We cannot assure that any new medical devices we develop will be
approved in a timely or cost-effective manner or approved at all.

Federal
and state laws protect the confidentiality of certain patient health
information, including patient medical records, and restrict the use and
disclosure of patient health information by healthcare providers. In
particular, in April 2003, the U.S. Department of Health and Human Services
(HHS) published patient privacy rules under the Health Insurance Portability
and Accountability Act of 1996 (HIPAA privacy rule) and, in April 2005,
published security rules for protected health information. The HIPAA privacy
and security rules govern the use, disclosure and security of protected health
information by Covered Entities, which are healthcare providers that submit
electronic claims, health plans and healthcare clearinghouses. In 2009,
Congress passed the HITECH Act, which modified certain provisions of the HIPAA privacy
and security rules for Covered Entities and their Business Associates (which is
anyone that performs a service on behalf of a Covered Entity involving the use
or disclosure of protected health information and is not a member of the
covered entitys workforce). These included directing HHS to publish more
specific security standards, and increasing breach notification requirements,
as well as tightening certain aspects of the privacy rules. In addition, the
HITECH Act provided that Business Associates will now be subject to the same
security requirements as Covered Entities, and that with regard to both the
security and privacy rule, Business Associates will be subject to direct
enforcement by HHS, including civil and criminal liability, just as Covered
Entities are. In the past, HIPAA has generally affected us indirectly.
Medtronic is generally not a Covered Entity, except for a few units such as our
Diabetes operating segment and our health insurance plans. Medtronic only
operates as a Business Associate to Covered Entities in a limited number of
instances. In those cases, the patient data that we receive and analyze may
include protected health information. We are committed to maintaining the
security and privacy of patients health information and believe that we meet
the expectations of the HIPAA rules. Some modifications to our systems and
policies may be necessary, but the framework is already in place. However, the
potential for enforcement action against us is now greater, as HHS can take
action directly against Business Associates. Thus, while we believe we are and
will be in compliance with all HIPAA standards, there is no guarantee that the
government will not disagree. Enforcement actions can be costly and interrupt
regular operations of our business. Nonetheless, these new requirements affect
only a small portion of our business. We believe the ongoing costs and impacts
of assuring compliance with the HIPAA privacy and security rules are not
material to our business.

26

---

Table of Contents

Government
and private sector initiatives to limit the growth of healthcare costs,
including price regulation, competitive pricing, coverage and payment policies,
comparative effectiveness of therapies, technology assessments, and
managed-care arrangements, are continuing in many countries where we do
business, including the U.S. These changes are causing the marketplace to put
increased emphasis on the delivery of more cost-effective medical devices.
Government programs, including Medicare and Medicaid, private healthcare
insurance, and managed-care plans have attempted to control costs by limiting
the amount of reimbursement they will pay for particular procedures or
treatments, and other mechanisms designed to constrain utilization and contain
costs, including, for example, gainsharing, where a hospital agrees with
physicians to share any realized cost savings resulting from the physicians
collective change in practice patterns such as standardization of devices where
medically appropriate. This has created an increasing level of price
sensitivity among customers for our products. Some third-party payors must also
approve coverage for new or innovative devices or therapies before they will
reimburse healthcare providers who use the medical devices or therapies. Even
though a new medical device may have been cleared for commercial distribution,
we may find limited demand for the device until reimbursement approval has been
obtained from governmental and private third-party payors. In addition, some
private third-party payors require that certain procedures or that the use of
certain products be authorized in advance as a condition of reimbursement. As a
result of our manufacturing efficiencies and cost controls, we believe we are
well-positioned to respond to changes resulting from the worldwide trend toward
cost-containment; however, uncertainty remains as to the nature of any future
legislation, making it difficult for us to predict the potential impact of
cost-containment trends on future operating results.

The
delivery of our devices is subject to regulation by HHS and comparable state
and foreign agencies responsible for reimbursement and regulation of healthcare
items and services. U.S. laws and regulations are imposed primarily in
connection with the Medicare and Medicaid programs, as well as the governments
interest in regulating the quality and cost of healthcare. Foreign governments
also impose regulations in connection with their healthcare reimbursement
programs and the delivery of healthcare items and services.

Federal
healthcare laws apply when we or customers submit claims for items or services
that are reimbursed under Medicare, Medicaid or other federally-funded
healthcare programs. The principal federal laws include: (1) the False Claims
Act which prohibits the submission of false or otherwise improper claims for
payment to a federally-funded health care program; (2) the Anti-Kickback
Statute which prohibits offers to pay or receive remuneration of any kind for
the purpose of inducing or rewarding referrals of items or services
reimbursable by a Federal healthcare program; and (3) the Stark law which
prohibits physicians from referring Medicare or Medicaid patients to a provider
that bills these programs for the provision of certain designated health
services if the physician (or a member of the physicians immediate family) has
a financial relationship with that provider; and (4) healthcare fraud statutes
that prohibit false statements and improper claims with any third-party payor.
There are often similar state false claims, anti-kickback, and anti-self
referral and insurance laws that apply to state-funded Medicaid and other
healthcare programs and private third-party payors. In addition, the U.S.
Federal Corrupt Practices Act can be used to prosecute companies in the U.S.
for arrangements with physicians, or other parties outside the U.S. if the
physician or party is a government official of another country and the
arrangement violates the law of that country.

The
laws applicable to us are subject to change, and to evolving interpretations.
If a governmental authority were to conclude that we are not in compliance with
applicable laws and regulations, Medtronic and its officers and employees could
be subject to severe criminal and civil penalties including substantial
penalties, fines and damages, and exclusion from participation as a supplier of
product to beneficiaries covered by Medicare or Medicaid.

We
operate in an industry characterized by extensive patent litigation. Patent
litigation can result in significant damage awards and injunctions that could
prevent the manufacture and sale of affected products or result in significant
royalty payments in order to continue selling the products. At any given time,
we are involved as both a plaintiff and a defendant in a number of patent
infringement actions. While it is not possible to predict the outcome of patent
litigation incident to our business, we believe the costs associated with this
type of litigation could have a material adverse impact on our consolidated
results of operations, financial position or cash flows. See Note 16 to the
consolidated financial statements set forth in Exhibit 13 hereto as well as our
2009 Annual Report for additional information.

27

---

Table of Contents

We
operate in an industry susceptible to significant product liability claims.
These claims may be brought by individuals seeking relief on their own behalf
or purporting to represent a class. In addition, product liability claims may
be asserted against us in the future based on events we are not aware of at the
present time.

We
are also subject to various environmental laws and regulations both within and
outside the U.S. Like other medical device companies, our operations involve
the use of substances regulated under environmental laws, primarily
manufacturing and sterilization processes. To the best of our knowledge at this
time, we do not expect that compliance with environmental protection laws will
have a material impact on our consolidated results of operations, financial
position, or cash flows.

We
have elected to self-insure most of our insurable risks, including medical and
dental costs, disability coverage, physical loss to property, business
interruptions, workers compensation, comprehensive general, director and
officer, and product liability. Decisions to self-insure are based on
comparisons between the price of insurance and the economic value of insurance
coverage. Currently, external insurance is not considered to be an economically
sound means of financing losses for the Company. We continue to monitor the
insurance marketplace to evaluate the value to us of obtaining insurance
coverage in the future. Based on historical loss trends, we believe that our
self-insurance program accruals will be adequate to cover future losses.
Historical trends, however, may not be indicative of future losses. These
losses could have a material adverse impact on our consolidated results of
operations, financial position, or cash flows.

Executive Officers of Medtronic

Set
forth below are the names and ages of current executive officers of Medtronic,
Inc., as well as information regarding their positions with Medtronic, their
periods of service in these capacities, and their business experiences. There
are no family relationships among any of the officers named, nor is there any
arrangement or understanding pursuant to which any person was selected as an
officer.

William
A. Hawkins,age 55, has been a Director of Medtronic
since March 2007 and Chairman and Chief Executive Officer since August 2008. He
served as President and Chief Executive Officer of Medtronic since from August
2007 to August 2008 and as President and Chief Operating Officer from May 2004
to August 2007. He served as Senior Vice President and President, Medtronic
Vascular, from January 2002 to May 2004. He served as President and Chief
Executive Officer of Novoste Corporation from 1998 to 2002. He is also a member
of the board of visitors of the Engineering School of Duke University and the
Guthrie Theatre board.

Susan
Alpert, Ph.D., M.D.,age 63, has been Senior Vice
President, Chief Regulatory Officer since May 2008. Prior to that, she was
Senior Vice President, Chief Quality and Regulatory Officer from November 2005
to May 2008, and prior to that, Vice President, Chief Quality and Regulatory
Officer from May 2004 to November 2005, and Vice President, Regulatory Affairs
and Compliance from July 2003 to May 2004. Prior to that, she was Vice President
of Regulatory Sciences at C.R. Bard, Inc. from October 2000 to July 2003. She
held a variety of positions at the FDA from June 1987 to August 2000.

Martha
Goldberg Aronson,age 41, has been Senior Vice
President and Chief Talent Officer since March 2008. Prior to that, she was
Vice President, Investor Relations from May 2006 to March 2008, Vice President
of the Neurological, Gastroenterology/Urology, Obesity Management,
ENT/Neurologic Technology and Diabetes businesses in Western Europe from May
2003 to May 2006 and Vice President and General Manager of Medtronic
Gastroenterology/Urology from 2001 to May 2003. She joined Medtronic in April
1991, from Bain & Company, a global management consulting firm.

Robert
H. Blankemeyer,age 62, has been Senior Vice
President and President of Surgical Technologies since June 2008. Prior to
that, he was President of the Ear, Nose & Throat and Neurologic
Technologies business unit from April 2000 until its merger into Surgical
Technologies in 2008. Prior to joining Medtronic, he was President of Storz
Ophthalmics Inc., where he held several business leadership positions.

Jean-Luc
Butel,age 52, has been Senior Vice President and
President, International since May 2008. Prior to that, he was Senior Vice
President and President, Asia Pacific from August 2003 to May 2008 and
President of Independence Technology, a Johnson & Johnson company, from
1999 to 2003. From 1991 to 1999, he worked for Becton Dickinson and Company, initially as
General Manager of its Microbiology business in Japan and then as President of
Nippon Becton Dickinson. His last assignment at Becton, Dickinson and Company
was President, Worldwide Consumer Healthcare.

28

---

Table of Contents

H.
James Dallas,age 50, has been Senior Vice
President, Quality and Operations since April 2008. Prior to that he was Senior
Vice President and Chief Information Officer of Medtronic from April 2006 to
April 2008. He was Vice President and Chief Information Officer of Georgia
Pacific Corporation from December 2002 to December 2005; General Manager of the
Transportation Division and President of the Lumber Division of Georgia
Pacific Corporation from October 2001
to December 2002; and Vice President, Building Products Distribution Sales and
Logistics, Georgia Pacific Corporation from October 2000 to October 2001.

Gary
L. Ellis,age 52, has been Senior Vice President
and Chief Financial Officer since May 2005. Prior to that, he was Vice
President, Corporate Controller and Treasurer since October 1999 and Vice
President Corporate Controller from August 1994. Mr. Ellis joined Medtronic in
1989 as Assistant Corporate Controller and was promoted to Vice President of
Finance for Medtronic Europe in 1992, until being named as Corporate Controller
in 1994. Mr. Ellis is a member of the board of directors of The Toro Company
and past chairman of the American Heart Association.

Richard
Kuntz, M.D.,age 52, has been Senior Vice
President and President, Neuromodulation since October 2005. Prior to that, he
was an interventional cardiologist and Chief of the Division of Clinical
Biometrics at Brigham and Womens Hospital, Associate Professor of Medicine and
Chief Scientific Officer of the Harvard Clinical Research Institute.

Steve
La Neve,age 50, has been Senior Vice President
and President Spinal and Biologics since April 2008. Prior to that, he was
President of Medtronic Japan from April 2004 to April 2008. He was Senior Vice
President of Business Development and Supplier Integration and Executive Vice
President of Relationship Management at Premier, Inc. from September 2000 to
March 2004. He was Vice President and General Manager and Director of Sales and
Marketing at Becton, Dickinson and Company from March 1990 to August 2000, and
prior to that, he held other healthcare management roles with Hoffmann-La Roche
and EM Diagnostic Systems.

James
P. Mackin,age 42, has been Senior Vice President
and President Cardiac Rhythm Disease Management (CRDM) since August 2007. Prior
to that, he was Vice President, CRDM Commercial Operations from November 2006
to August 2007 and Vice President, Vascular, Western Europe, from July 2004 to
November 2006. He was Vice President and General Manager of Medtronic
Vasculars Endovascular business from October 2002 to July 2004. Prior to
joining Medtronic, he served in a number of sales and executive positions at
Genzyme Corporation from 1996 to 2004.

Stephen
H. Mahle,age 63, has been Executive Vice
President Healthcare Policy and Regulatory since April 2008. Prior to that he
was Executive Vice President and Senior Healthcare Policy Advisor from August
2007 to April 2008, and prior to that was Executive Vice President and
President, Cardiac Rhythm Disease Management since May 2004. He was Senior Vice
President and President, Cardiac Rhythm Management, since January 1998. Prior
to that, he was President, Brady Pacing, from 1995 to 1997 and Vice President
and General Manager, Brady Pacing, from 1990 to 1995. Mr. Mahle has been with
the Company for 36 years and served in various general management positions
prior to 1990. Mr. Mahle serves on the board of directors of ATMI, Inc.

Christopher
J. OConnell,age 42, has been Senior Vice
President and President, Diabetes, since October 2006. Prior to that, he was
President of Medtronics Emergency Response Systems division from May 2005 to
October 2006, and prior to that, he was Vice President of Sales and Marketing
of Medtronics Cardiac Rhythm Disease Management division from November 2001 to
May 2005 and Vice President/General Manager of the Patient Management Business
from January 2000 to November 2001. Mr. OConnell has served in various
management positions since joining the Company in 1994.

Stephen
N. Oesterle, M.D.,age 58, has been Senior Vice
President, Medicine and Technology, since January 2002. Prior to that, he was
Associate Professor of Medicine at Harvard Medical School and Director of
Invasive Cardiology Services at Massachusetts General Hospital from 1998 to
2002, and was Associate Professor of Medicine at Stanford University and
Director of Cardiac Catheterization and Coronary Intervention Laboratories at
the Stanford University Medical Center from 1992 to 1998. Prior to that he held
other academic positions and directed interventional cardiology programs at
Georgetown University and in Los Angeles, CA.

29

---

Table of Contents

Catherine
Szyman,age 42, has been Senior Vice President,
Strategy and Innovation since April 2008. Prior to that, she was Vice President
and General Manager of Endovascular Innovations, part of the CardioVascular
business unit, from October 2004 to April 2008. From 1991 to 2004, she held
numerous management and leadership roles at Medtronic, including Vice President
of Corporate Strategy and Vice President of Finance for the Vascular business.

Scott
R. Ward,age 49, has been Senior Vice President
and President, CardioVascular since May 2007. Prior to that he was Senior Vice
President and President, Vascular from May 2004 to May 2007, Senior Vice
President and President, Neurological and Diabetes Business, from February 2002
to May 2004, and was President, Neurological, from January 2000 to January
2002. He was Vice President and General Manager of Medtronics Drug Delivery
Business from 1995 to 2000. Prior to that, Mr. Ward led the Companys
Neurological Ventures in the successful development of new therapies. Mr. Ward
also held various research, regulatory and business development positions since
joining Medtronic in 1981. He is also a board member of MAP Pharmaceuticals,
Inc.

Item 1A.
Risk Factors

Investing
in Medtronic involves a variety of risks and uncertainties, known and unknown,
including, among others, those discussed below.

The
medical device industry is highly competitive and we may be unable to compete
effectively.

We
compete in both the therapeutic and diagnostic medical markets in more than 120
countries throughout the world. These markets are characterized by rapid change
resulting from technological advances and scientific discoveries. In the
product lines in which we compete, we face a mixture of competitors ranging
from large manufacturers with multiple business lines to small manufacturers
that offer a limited selection of products. Development by other companies of
new or improved products, processes or technologies may make our products or
proposed products less competitive. In addition, we face competition from
providers of alternative medical therapies such as pharmaceutical companies.
Competitive factors include:

| |   |                                                             
| | - | ------------------------------------------------------------
| |  | product
 reliability,                                       
| |   |                                                             
| |  | product
 performance,                                       
| |   |                                                             
| |  | product
 technology,                                        
| |   |                                                             
| |  | product
 quality,                                           
| |   |                                                             
| |  | breadth of
 product lines,                                  
| |   |                                                             
| |  | product
 services,                                          
| |   |                                                             
| |  | customer
 support,                                          
| |   |                                                             
| |  | price, and                                                  
| |   |                                                             
| |  | reimbursement
 approval from healthcare insurance providers.

Major
shifts in industry market share have occurred in connection with product
problems, physician advisories and safety alerts, reflecting the importance of
product quality in the medical device industry. In the current environment of
managed care, consolidation among healthcare providers, increased competition,
and declining reimbursement rates, we have been increasingly required to
compete on the basis of price. In order to continue to compete effectively, we
must continue to create, invest in, or acquire advanced technology, incorporate
this technology into our proprietary products, obtain regulatory approvals in a
timely manner, and manufacture and successfully market our products. Given
these factors, we cannot guarantee that we will be able to continue our level
of success in the industry.

30

---

Table of Contents

Reduction
or interruption in supply and an inability to develop alternative sources for
supply may adversely affect our manufacturing operations and related product
sales.

We
manufacture most of our products at 22 manufacturing facilities located
throughout the world. We purchase many of the components and raw materials used
in manufacturing these products from numerous suppliers in various countries.
Generally we have been able to obtain adequate supplies of such raw materials
and components. However, for reasons of quality assurance, cost effectiveness,
or availability, we procure certain components and raw materials only from a
sole supplier. While we work closely with our suppliers to try to ensure
continuity of supply while maintaining high quality and reliability, we cannot
guarantee that these efforts will be successful. In addition, due to the
stringent regulations and requirements of the FDA regarding the manufacture of
our products, we may not be able to quickly establish additional or replacement
sources for certain components or materials. A reduction or interruption in
supply, and an inability to develop alternative sources for such supply, could
adversely affect our ability to manufacture our products in a timely or cost
effective manner and to make our related product sales.

Our
industry is experiencing greater scrutiny and regulation by governmental
authorities, which may lead to greater governmental regulation in the future.

Our
medical devices and our business activities are subject to rigorous regulation,
including by the FDA and numerous other federal, state and foreign governmental
authorities. These authorities and members of Congress have been increasing
their scrutiny of our industry. For example, we have received inquiries from
members of Congress and other government agencies regarding a variety of
matters. In addition, certain states have recently passed or are considering
legislation restricting our interactions with health care providers and
requiring disclosure of many payments to them. Also, while recent case law has
clarified that the FDAs authority over medical devices preempts state tort
laws, legislation has been introduced at the Federal level to allow state
intervention. We anticipate that the government will continue to scrutinize our
industry closely, and that additional regulation by governmental authorities
may increase compliance costs, exposure to litigation and other adverse effects
to our operations.

We
are subject to many laws and governmental regulations and any adverse
regulatory action may materially adversely affect our financial condition and
business operations.

Our
medical devices are subject to regulation by numerous government agencies,
including the FDA and comparable foreign agencies. To varying degrees, each of
these agencies requires us to comply with laws and regulations governing the
development, testing, manufacturing, labeling, marketing, and distribution of
our medical devices. We cannot guarantee that we will be able to obtain
marketing clearance for our new products, or enhancements or modifications to
existing products, and if we do, such approval may:

| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | take a
 significant amount of time,                                 
| |   |                                                                     
| |  | require the
 expenditure of substantial resources,                  
| |   |                                                                     
| |  | involve
 stringent clinical and pre-clinical testing,               
| |   |                                                                     
| |  | involve
 modifications, repairs or replacements of our products, and
| |   |                                                                     
| |  | result in
 limitations on the proposed uses of our products.        

Both
before and after a product is commercially released, we have ongoing
responsibilities under FDA regulations. If the FDA were to conclude that we are
not in compliance with applicable laws or regulations, or that any of our
medical devices are ineffective or pose an unreasonable health risk, the FDA
could ban such medical devices, detain or seize adulterated or misbranded
medical devices, order a recall, repair, replacement, or refund of such
devices, and require us to notify health professionals and others that the
devices present unreasonable risks of substantial harm to the public health.
The FDA may also impose operating restrictions, enjoin and restrain certain
violations of applicable law pertaining to medical devices, and assess civil or
criminal penalties against our officers, employees, or us. The FDA may also
recommend prosecution to the Department of Justice. Any adverse regulatory
action, depending on its magnitude, may restrict us from effectively marketing
and selling our products.

Foreign
governmental regulations have become increasingly stringent and more common,
and we may become subject to more rigorous regulation by foreign governmental
authorities in the future. Penalties for a companys noncompliance with foreign
governmental regulation could be severe, including revocation or suspension of
a companys business license and criminal sanctions. Any domestic or foreign
governmental law or regulation imposed in the future may have a material
adverse effect on us.

31

---

Table of Contents

We
are also subject to various environmental laws and regulations both within and
outside the U.S. Our operations involve the use of substances regulated under
environmental laws, primarily those used in manufacturing and sterilization
processes. We cannot guarantee that compliance with environmental protection
laws and regulations will not have a material impact on our consolidated
earnings, financial condition, or cash flows.

Our
failure to comply with strictures relating to reimbursement and regulation of
healthcare goods and services may subject us to penalties and adversely impact
our reputation and business operations.

Our
devices are subject to regulation regarding quality and cost by the HHS,
including the Centers for Medicare & Medicaid Services (CMS) as well as
comparable state and foreign agencies responsible for reimbursement and
regulation of healthcare goods and services. Foreign governments also impose
regulations in connection with their healthcare reimbursement programs and the
delivery of healthcare goods and services. U.S. federal government healthcare
laws apply when we submit a claim on behalf of a U.S. federal healthcare
program beneficiary, or when a customer submits a claim for an item or service
that is reimbursed under a U.S. federal government funded healthcare program,
such as Medicare or Medicaid. The principal U.S. federal laws implicated
include those that prohibit the filing of false or improper claims for federal
payment, those that prohibit unlawful inducements for the referral of business
reimbursable under federally-funded healthcare programs, known as the
anti-kickback laws, and those that prohibit healthcare service providers
seeking reimbursement for providing certain services to a patient who was
referred by a physician that has certain types of direct or indirect financial
relationships with the service provider, known as the Stark law.

The
laws applicable to us are subject to evolving interpretations. If a
governmental authority were to conclude that we are not in compliance with
applicable laws and regulations, we and our officers and employees could be
subject to severe criminal and civil penalties, including, for example,
exclusion from participation as a supplier of product to beneficiaries covered
by CMS. If we are excluded from participation based on such an interpretation
it could adversely affect our reputation and business operations.

Quality
problems with our processes, goods, and services could harm our reputation for
producing high quality products and erode our competitive advantage.

Quality
is extremely important to us and our customers due to the serious and costly
consequences of product failure. Our quality certifications are critical to the
marketing success of our goods and services. If we fail to meet these standards
our reputation could be damaged, we could lose customers and our revenue could
decline. Aside from specific customer standards, our success depends generally
on our ability to manufacture to exact tolerances precision engineered
components, subassemblies, and finished devices from multiple materials. If our
components fail to meet these standards or fail to adapt to evolving standards,
our reputation as a manufacturer of high quality components will be harmed, our
competitive advantage could be damaged, and we could lose customers and market
share.

We
are substantially dependent on patent and other proprietary rights and failing
to be successful in patent or other litigation may result in our payment of
significant money damages and/or royalty payments, negatively impact our
ability to sell current or future products, or prohibit us from enforcing our
patent and proprietary rights against others.

We
operate in an industry characterized by extensive patent litigation. Patent
litigation can result in significant damage awards and injunctions that could
prevent our manufacture and sale of affected products or require us to pay
significant royalties in order to continue to manufacture or sell affected
products. At any given time, we are generally involved as both a plaintiff and
a defendant in a number of patent infringement actions, the outcomes of which
may not be known for prolonged periods of time. While it is not possible to
predict the outcome of patent litigation incident to our business, we believe
the results associated with any litigation could result in our payment of
significant money damages and/or royalty payments, negatively impact our
ability to sell current or future products or prohibit us from enforcing our
patent and proprietary rights against others, which would generally have a
material adverse impact on our consolidated earnings, financial condition, or
cash flows.

32

---

Table of Contents

We
rely on a combination of patents, trade secrets and nondisclosure and
non-competition agreements to protect our proprietary intellectual property,
and will continue to do so. While we intend to defend against any threats to
our intellectual property, there can be no assurance that these patents, trade
secrets, or other agreements will adequately protect our intellectual property.
There can also be no assurance that pending patent applications owned by us
will result in patents issuing to us, that patents issued to or licensed by us
in the past or in the future will not be challenged or circumvented by
competitors or that such patents will be found to be valid or sufficiently
broad to protect our technology or to provide us with any competitive
advantage. Third parties could also obtain patents that may require us to
negotiate licenses to conduct our business, and there can be no assurance that
the required licenses would be available on reasonable terms or at all. We also
rely on nondisclosure and non-competition agreements with certain employees,
consultants and other parties to protect, in part, trade secrets and other
proprietary rights. There can be no assurance that these agreements will not be
breached, that we will have adequate remedies for any breach, that others will
not independently develop substantially equivalent proprietary information, or
that third parties will not otherwise gain access to our trade secrets or
proprietary knowledge.

Product
liability claims could adversely impact our financial condition and our
earnings and impair our reputation.

Our
business exposes us to potential product liability risks which are inherent in
the design, manufacture and marketing of medical devices. In addition, many of
the medical devices we manufacture and sell are designed to be implanted in the
human body for long periods of time. Component failures, manufacturing flaws,
design defects or inadequate disclosure of product-related risks or
product-related information with respect to these or other products we
manufacture or sell could result in an unsafe condition or injury to, or death
of, a patient. The occurrence of such a problem could result in product
liability claims or a recall of, or safety alert relating to, one or more of
our products which could ultimately result, in certain cases, in the removal
from the body of such products and claims regarding costs associated therewith.
We have elected to self-insure with respect to product liability risks. Product
liability claims or product recalls in the future, regardless of their ultimate
outcome, could have a material adverse effect on our business and reputation
and on our ability to attract and retain customers for our products.

Our
self-insurance program may not be adequate to cover future losses.

We
have elected to self-insure most of our insurable risks. We made this decision
based on conditions in the insurance marketplace that have led to increasingly
higher levels of self-insurance retentions, increasing numbers of coverage limitations
and dramatically higher insurance premium rates. We continue to monitor the
insurance marketplace to evaluate the value to us of obtaining insurance
coverage in the future. While based on historical loss trends we believe that
our self-insurance program accruals will be adequate to cover future losses, we
cannot guarantee that this will remain true. Historical trends may not be
indicative of future losses. These losses could have a material adverse impact
on our consolidated earnings, financial condition, or cash flows.

If
we experience decreasing prices for our goods and services and we are unable to
reduce our expenses, our results of operations will suffer.

We
may experience decreasing prices for the goods and services we offer due to
pricing pressure experienced by our customers from managed care organizations
and other third-party payors; increased market power of our customers as the
medical device industry consolidates; and increased competition among medical
engineering and manufacturing services providers. If the prices for our goods
and services decrease and we are unable to reduce our expenses, our results of
operations will be adversely affected.

We
are subject to a variety of risks due to our international operations that
could adversely affect those operations or our profitability and operating
results.

Our
operations in countries outside the U.S., which accounted for 38 percent of our
net sales for the year ended April 24, 2009, are accompanied by certain
financial and other risks. We intend to continue to pursue growth opportunities
in sales internationally, which could expose us to greater risks associated
with international sales and operations. Our profitability and international
operations are, and will continue to be, subject to a number of risks and
potential costs, including:

33

---

Table of Contents

| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | changes in
 foreign medical reimbursement programs and policies,                                                
| |   |                                                                                                                 
| |  | changes in
 foreign regulatory requirements,                                                                    
| |   |                                                                                                                 
| |  | local
 product preferences and product requirements,                                                            
| |   |                                                                                                                 
| |  | longer-term
 receivables than are typical in the U.S.,                                                          
| |   |                                                                                                                 
| |  | fluctuations
 in foreign currency exchange rates,                                                               
| |   |                                                                                                                 
| |  | less
 protection of intellectual property in some countries outside of the U.S.,                                
| |   |                                                                                                                 
| |  | trade
 protection measures and import and export licensing requirements,                                        
| |   |                                                                                                                 
| |  | work force
 instability,                                                                                        
| |   |                                                                                                                 
| |  | political
 and economic instability, and                                                                        
| |   |                                                                                                                 
| |  | the
 potential payment of U.S. income taxes on certain earnings of our foreign
 subsidiaries upon repatriation.

In particular, the Obama administration has announced potential
 legislative proposals to tax profits of U.S. companies earned abroad. While it is impossible for us to predict whether these and other proposals will be
 implemented, or how they will ultimately impact us, they may materially impact our results of operations if, for example, our profits
 earned abroad are subject to U.S. income tax or we are otherwise disallowed deductions as a result of these profits.

Consolidation
in the healthcare industry could have an adverse effect on our revenues and
results of operations.

Many
healthcare industry companies, including medical device companies, are
consolidating to create new companies with greater market power. As the
healthcare industry consolidates, competition to provide goods and services to
industry participants will become more intense. These industry participants may
try to use their market power to negotiate price concessions or reductions for
medical devices that incorporate components produced by us. If we are forced to
reduce our prices because of consolidation in the healthcare industry, our revenues
would decrease and our consolidated earnings, financial condition, or cash
flows would suffer.

Healthcare
policy changes, including pending proposals to reform the U.S. healthcare system, may have a material adverse effect on us.

Healthcare
costs have risen significantly over the past decade. There have been and
continue to be proposals by legislators, regulators, and third-party payors to
keep these costs down. Certain proposals, if passed, would impose limitations
on the prices we will be able to charge for our products, or the amounts of reimbursement
available for our products from governmental agencies or third-party payors.
These limitations could have a material adverse effect on our financial
position and results of operations.

Recently, President Obama and members of Congress have proposed significant
reforms to the U.S. healthcare system. Both the U.S. Senate and House of
Representatives have conducted hearings about U.S. healthcare reform. In the
Obama administration's fiscal year 2010 federal budget proposal, the
administration emphasized maintaining patient choice, reducing inefficiencies
and costs, increasing prevention programs, increasing coverage portability and
universality, improving quality of care and maintaining fiscal sustainability.
The Obama administration's fiscal year 2010 budget included proposals to limit
Medicare payments, reduce drug spending and increase taxes. In addition, members
of Congress have proposed a single-payer healthcare system, a government health
insurance option to compete with private plans and other expanded public
healthcare measures. Various healthcare reform proposals have also emerged at
the state level. We cannot predict what healthcare initiatives, if any, will be
implemented at the federal or state level, or the effect any future legislation
or regulation will have on us. However, an expansion in governments role
in the U.S. healthcare industry may lower reimbursements for our products,
reduce medical procedure volumes and adversely affect our business, possibly
materially.

Our
business is indirectly subject to healthcare industry cost containment measures
that could result in reduced sales of medical devices containing our
components.

Most
of our customers, and the healthcare providers to whom our customers supply
medical devices, rely on third-party payors, including government programs and
private health insurance plans, to reimburse some or all of the cost of the
procedures in which medical devices that incorporate components we manufacture
or assemble are used. The continuing efforts of government, insurance companies,
and other payors of healthcare costs to contain or reduce these costs could
lead to patients being unable to obtain approval for payment from these
third-party payors. If that were to occur, sales of finished medical devices
that include our components may decline significantly and our customers may
reduce or eliminate purchases of our components. The cost containment measures
that healthcare providers are instituting, both in the U.S. and
internationally, could harm our ability to operate profitably. For example,
managed care organizations have successfully negotiated volume discounts for
pharmaceuticals. While this type of discount pricing does not currently exist
for medical devices, if managed care or other organizations were able to affect
discount pricing for devices, it may result in lower prices to our customers
from their customers and, in turn, reduce the amounts we can charge our
customers for our medical devices.

Our
research and development efforts rely upon investments and alliances, and we
cannot guarantee that any previous or future investments or alliances will be
successful.

Our
strategy to provide a broad range of therapies to restore patients to fuller,
healthier lives requires a wide variety of technologies, products, and
capabilities. The rapid pace of technological development in the medical
industry and the specialized expertise required in different areas of medicine
make it difficult for one company alone to develop a broad portfolio of
technological solutions. In addition to internally generated growth through our
research and development efforts, historically we have relied, and expect to
continue to rely, upon investments and alliances to provide us access to new
technologies both in areas served by our existing businesses as well as in new
areas.

34

---

Table of Contents

We
expect to make future investments where we believe that we can stimulate the
development of, or acquire, new technologies and products to further our
strategic objectives and strengthen our existing businesses. Investments and
alliances in and with medical technology companies are inherently risky, and we
cannot guarantee that any of our previous or future investments or alliances
will be successful or will not materially adversely affect our consolidated
earnings, financial condition, or cash flows.

The
success of many of our products depends upon strong relationships with
physicians.

If
we fail to maintain our working relationships with physicians, many of our
products may not be developed and marketed in line with the needs and
expectations of the professionals who use and support our products, which could
cause a decline in earnings and profitability. The research, development,
marketing, and sales of many of our new and improved products is dependent upon
our maintaining working relationships with physicians. We rely on these
professionals to provide us with considerable knowledge and experience
regarding our products and the marketing of our products. Physicians assist us
as researchers, marketing and product consultants, inventors, and as public
speakers. If we are unable to maintain our strong relationships with these
professionals and continue to receive their advice and input, the development
and marketing of our products could suffer, which could have a material effect
on our consolidated earnings, financial condition, or cash flows.

Negative
conditions in the global credit market may impair our commercial paper program,
our auction rate securities and our other fixed income securities, which may
cause losses and cause us to face liquidity issues.

We
have investments in marketable debt securities which are classified and
accounted for as available-for-sale. Our debt securities include government securities,
commercial paper, corporate bonds, bank certificates of deposit, and mortgage
backed and other asset backed securities, including auction rate securities.
Recent market conditions indicate significant uncertainty on the part of
investors on the economic outlook for the U.S. and for financial institutions
that have potential exposure to the sub-prime housing market. This uncertainty
has created reduced liquidity across the fixed income investment market,
including the securities that we invest in. As a result, some of our
investments have experienced reduced liquidity. In the event we need to sell
these securities, we may not be able to do so in a timely manner or for a value
that is equal to the underlying principal. In addition, we may be required to
adjust the carrying value of the securities and record an impairment charge. If
we determine that the fair value of the securities is temporarily impaired, we
would record a temporary impairment within other comprehensive income, a
component of shareholders equity. If it is determined that the fair value of
these securities is other-than-temporarily impaired, we would record a loss in
our consolidated statements of earnings, which could materially adversely
impact our results of operations and financial condition.

Additionally,
if uncertainties in the credit and capital markets continue, these markets
deteriorate further or we experience any rating downgrades on any investments
in our portfolio, funds associated with these securities may not be liquid or
available to fund current operations, and/or we may incur further temporary or
other-than-temporary impairments in the carrying value of our investments,
which could negatively affect our financial condition, cash flow and reported
earnings. Negative market conditions may also impair our ability to access the
capital markets through the issuance of commercial paper or debt securities, or
may impact our ability to sell such securities at a reasonable price, and may
negatively impact our ability to borrow from financial institutions.

Item 1B.
Unresolved Staff Comments

None.

Item 2.
Properties

Our
principal offices are owned by us and located in the Minneapolis, Minnesota
metropolitan area. Manufacturing or research facilities are located in Arizona,
California, Colorado, Connecticut, Florida, Indiana, Massachusetts, Michigan,
Minnesota, Tennessee, Texas, Washington, Puerto Rico, China, France, Ireland,
Mexico, The Netherlands, and Switzerland. Our total manufacturing and research
space is approximately 3.0 million square feet, of which approximately 75
percent is owned by us and the balance is leased.

35

---

Table of Contents

We
also maintain sales and administrative offices in the U.S. at approximately 90
locations in 40 states or jurisdictions and outside the U.S. at approximately
130 locations in 38 countries. Most of these locations are leased. We are using
substantially all of our currently available productive space to develop,
manufacture, and market our products. Our facilities are in good operating
condition, suitable for their respective uses and adequate for current needs.

Item 3.
Legal Proceedings

A
discussion of the Companys policies with respect to legal proceedings is
discussed in the managements discussion and analysis and our legal proceedings
and other loss contingencies are described in Note 16 and a portion of Note 13
of the consolidated financial statements. The description of our legal
proceedings in Note 16 and a portion of Note 13 of the consolidated financial
statements to this filing is incorporated herein by reference.

On
October 24, 2005, the Company received a subpoena from the Office of the United
States Attorney for the District of Massachusetts issued under the Health
Insurance Portability & Accountability Act of 1996 requesting documents the
Company may have, if any, relating to pacemakers and defibrillators and related
components; monitoring equipment and services; a provision of benefits, if any,
to persons in a position to recommend purchases of such devices; and the
Companys training and compliance materials relating to the fraud and abuse and
federal Anti-Kickback statutes. In September 2008, the United States Attorneys
office for the District of Massachusetts informed Medtronic that it is no
longer pursuing its investigation of Medtronic, related to the October 24, 2005
subpoena. On September 5, 2008, Medtronic received a subpoena from the Office
of Inspector General for the Department of Health and Human Services in the
District of Minnesota, requesting production of substantially the same
materials covered in the 2005 Massachusetts subpoena. Medtronic is in the
process of responding to the subpoena and will comply as required with the
terms of the subpoena.

Beginning
on September 20, 2007, the Company has received letter requests from Senator
Grassley of the U.S. Senate Finance Committee requesting information on a
variety of subjects, including financial ties between the medical device
industry and practicing physicians; the Companys decision to suspend
distribution of its Sprint Fidelis family of defibrillation leads; financial
ties between the Company and physicians who use INFUSE Bone Graft; the Cardiac
Research Foundation and Columbia University; and certain communications
regarding INFUSE Bone Graft and the Companys clinical research projects with the U.S. military and compensation paid to physicians working for the U.S. military . The Company has cooperated, and will continue to
cooperate with, the Senators requests.

On
September 25, 2007, the Company received a letter from the SEC requesting
information relating to any potential violations of the U.S. Foreign Corrupt
Practices Act in connection with the sale of medical devices in an unspecified
number of foreign countries, including Greece, Poland and Germany. Turkey,
Italy and Malaysia have since been added to the inquiry. The letter notes that
the Company is a significant participant in the medical device industry, and
seeks any information concerning certain types of payments made directly or
indirectly to government-employed doctors. A number of competitors have
publicly disclosed receiving similar letters. On November 16, 2007, the Company
received a letter from the Department of Justice requesting any information
provided to the SEC. Since that time the SEC and Department of Justice have
made additional requests for information from the Company. The Company is
cooperating with the requests.

On
or about October 31, 2007, the Company received a letter from the United States
Attorneys Office for the Eastern District of Pennsylvania requesting documents
relating to the Companys relationship with one of its customers and any
payments or things of value provided by the Company to physicians, physician
groups, hospitals, medical practices or other entities relating to the purchase
of the Companys cardiac resynchronization therapy devices and cardiac stents.
The Company will comply as required with the terms of the letter.

In
late June 2008, the Company received a subpoena issued by the United States
Attorneys Office for the District of Massachusetts pursuant to the Health Insurance
Portability & Accountability Act of 1996, relating to the Companys
marketing of biliary stents. The Company will comply as required with the terms
of the subpoena.

36

---

Table of Contents

On
October 6, 2008, the Company received a subpoena from the United States
Attorneys Office for the District of Massachusetts pursuant to the Health
Insurance Portability & Accountability Act of 1996 requesting production of
documents relating to Medtronics INFUSE Bone Graft product. The Company will
comply as required with the terms of the subpoena.

On
December 18, 2008, the Company received a civil investigative demand from the
Massachusetts Attorney Generals Office, requesting production of documents
related to Medtronics INFUSE Bone Graft product. The Company is in the process
of responding to the demand and will comply as required with the terms of the
demand.

On
February 9, 2009, the Company received letter notice that the United States
Department of Justice in the Southern District of Texas is investigating
marketing practices, reimbursement advice of the Company and appropriateness of
therapy delivery relating to the Companys cardiac surgical ablation devices.
The Company is in the process of responding to the requests of the government,
and will comply as required with the investigation.

On
April 13, 2009, the Company received an administrative health care subpoena
from the United States Attorneys office for the Northern District of Indiana requesting documents relating to the
Companys relationship with customers, as well as documents relating to certain
employees. The Company will comply as required by the terms of the subpoena.

On
May 21, 2009, the Company received a subpoena from the United States Attorneys
Office for the District of Massachusetts pursuant to the Health Insurance
Portability & Accountability Act of 1996 seeking documents related to a
study published in the British volume of the Journal of Bone & Joint
Surgery, and contracts, research grants, speaking and education programs, and
payments for certain named physicians. The Company will comply, as required,
with the terms of the subpoena.

On
June 16, 2009, the Company received an administrative subpoena from the New
Jersey Attorney General, Division of Consumer Affairs, requesting production of
documents relating to the Companys clinical studies, its financial
arrangements with certain physicians and health care providers, and clinical
research done by certain physicians and health care providers. The Company will
comply as required with the terms of the subpoena.

Item 4.
Submission of Matters to a Vote of Security Holders

Not
applicable.

PART II

Item 5.
Market for Medtronics Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities

The
information in the section entitled Price Range of Medtronic Stock is incorporated by reference herein set forth in
Exhibit 13 hereto and will be included in our 2009 Annual Report. The Companys common stock is listed on the New York Stock Exchange
under the symbol MDT.

In
October 2005 and June 2007, the Companys Board of Directors authorized the
repurchase of 40 million and 50 million shares of the Companys stock,
respectively. In addition, in April 2006, the Board of Directors made a special
authorization for the repurchase of up to 50 million shares in connection with
the $4.400 billion Senior Convertible Note offering. As authorized by the Board
of Directors each program expires when its total number of authorized shares
has been repurchased. On June 18, 2009, the Board of Directors authorized the repurchase of an additional 60 million shares of the Companys
common stock.

The
following table provides information about the shares repurchased by Medtronic
during fourth quarter of fiscal year 2009:

|                     |  |                                   |           |                               |   |                                                                             |  |                                                                         |           |  |  |            | 
|-------------------- |  | --------------------------------- | --------- | ----------------------------- | - | --------------------------------------------------------------------------- |  | ----------------------------------------------------------------------- | --------- |  |  | ---------- | 
|Fiscal
 Period       |  | Total Number of
 Shares Purchased |           | Average Price
 Paid per Share |   | Total Number of
 Shares Purchased as a
 Part of Publicly
 Announced Program |  | Maximum Number
 of Shares that May
 Yet Be Purchased
 Under the Program |          
|01/24/09 
 02/20/09 |  |                                   |          |                               | $ |                                                                            |  |                                                                         |          |  |  | 18,838,084 | 
|02/21/09 
 03/27/09 |  |                                   | 358,500   |                               |   | 27.91                                                                       |  |                                                                         | 358,500   |  |  | 18,479,584 | 
|03/28/09 
 04/24/09 |  |                                   | 644,000   |                               |   | 31.07                                                                       |  |                                                                         | 644,000   |  |  | 17,835,584 | 
|                     |  |                                   |           |                               |   |                                                                             |  |                                                                         |           |  |  |            | 
|Total                |  |                                   | 1,002,500 |                               | $ | 29.94                                                                       |  |                                                                         | 1,002,500 |  |  | 17,835,584 | 

37

---

Table of Contents

On
June 22, 2009, there were approximately 53,600 shareholders of record of the
Companys common stock. Cash dividends declared and paid totaled 18.75 cents per
share for each quarter of fiscal year 2009 and 12.50 cents per share for each
quarter of fiscal year 2008. Stock price comparison follows:

|            |  |          |       |          |   |          |  |          |       |  |   |       | 
|----------- |  | -------- | ----- | -------- | - | -------- |  | -------- | ----- |  | - | ----- | 
|Fiscal Qtr. |  | 1st Qtr. |       | 2nd Qtr. |   | 3rd Qtr. |  | 4th Qtr. |      
|2009 High   |  | $        | 54.41 |          | $ | 56.55    |  | $        | 40.69 |  | $ | 34.56 | 
|2009 Low    |  |          | 46.98 |          |   | 37.81    |  |          | 28.67 |  |   | 24.38 | 
|2008 High   |  |          | 54.05 |          |   | 57.86    |  |          | 51.21 |  |   | 50.44 | 
|2008 Low    |  |          | 50.57 |          |   | 47.00    |  |          | 45.25 |  |   | 46.19 | 

Item 6.
Selected Financial Data

The
information for fiscal years 2005 through 2009 in the section entitled
Selected Financial Data is incorporated herein by reference to Exhibit 13
hereto and will be included in our 2009 Annual Report.

Item 7.
Managements Discussion and Analysis of Financial Condition and Results of
Operations

The
information in the section entitled Managements Discussion and Analysis of
Financial Condition and Results of Operations is incorporated herein by
reference to Exhibit 13 hereto and will be included in our 2009 Annual Report.

Item 7A.
Quantitative and Qualitative Disclosures About Market Risk

The
information in the sections entitled Managements Discussion and Analysis of
Financial Condition and Results of Operations and Market Risk as well as
Note 5 to the consolidated financial statements is incorporated herein by
reference to Exhibit 13 hereto and will be included in our 2009 Annual Report.

Item 8.
Financial Statements and Supplementary Data

The
Consolidated Financial Statements and Notes thereto, together with the report
of independent registered public accounting firm, are incorporated herein by
reference to Exhibit 13 hereto and will be included in our 2009 Annual Report.

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

Not
applicable.

Item 9A.
Controls and Procedures

Disclosure Controls and Procedures

Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the design and operation
of our disclosure controls and procedures (as defined in Rule 13a-15(e) under
the Securities Exchange Act of 1934 (the Exchange Act)) and changes in the
Companys internal control over financial reporting (as defined in Rule
13a-15(f) under the Exchange Act) as of the end of the period covered by this
report. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of the period covered by
this annual report, our disclosure controls and procedures (as defined in Rule
13a-15(e) of the Exchange Act) are effective and are adequately designed to
ensure that information required to be disclosed by us in the reports we file
or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified by the SECs applicable rules and forms.

Managements Annual Report on Internal Control
Over Financial Reporting

Management
is responsible for establishing and maintaining adequate internal control over
financial reporting for the Company. Management conducted an evaluation of the
effectiveness of internal control over financial reporting based on the
framework in Internal Control  Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on this evaluation, management concluded that
the Companys internal control over financial reporting was effective as of
April 24, 2009. Our internal control over financial reporting as of April 24,
2009, has been audited by PricewaterhouseCoopers LLP, an independent registered
public accounting firm who has also audited our consolidated financial
statements, as stated in their report in the section entitled Report of Independent Registered Public Accounting Firm, which is incorporated by reference
to Exhibit 13 hereto and will be included in our 2009 Annual Report.

38

---

Table of Contents

Changes in Internal Control over Financial
Reporting

There
have been no changes in the Companys internal control over financial reporting
during the period covered by this Annual Report on Form 10-K that have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.

Item 9B.
Other Information

None.

PART III

Item 10.
Directors, Executive Officers and Corporate Governance

The
sections entitled Proposal 1  Election of Directors  Directors and
Nominees, Governance of Medtronic  Committees of the Board and Meetings,
Governance of Medtronic  Audit Committee, Governance of Medtronic  Audit
Committee Independence and Financial Experts, Governance of Medtronic 
Corporate Governance Committee, and Share Ownership Information  Section
16(a) Beneficial Ownership Reporting Compliance of our Proxy Statement for our
2009 Annual Shareholders Meeting are incorporated herein by reference. See
also Executive Officers of Medtronic on page 28 herein.

We
have adopted a written Code of Ethics that applies to our Chief Executive
Officer, Chief Financial Officer, Corporate Treasurer, Corporate Controller and
other senior financial officers performing similar functions who are identified
from time to time by the Chief Executive Officer. We have also adopted a
written Code of Business Conduct and Ethics for Board members. The Code of Ethics
for senior financial officers, which is part of our broader Code of Conduct
applicable to all employees, and the Code of Business Conduct and Ethics for
Board members are posted on our website, www.medtronic.com under the Corporate
Governance caption. Any amendments to, or waivers for executive officers or
directors of, these ethics codes will be disclosed on our website promptly
following the date of such amendment or waiver.

Item 11.
Executive Compensation

The
sections entitled Governance of Medtronic  Director Compensation,
Governance of Medtronic  Compensation Committee  Compensation Committee
Interlocks and Insider Participation, Compensation Discussion and Analysis, Compensation Discussion and Analysis  Compensation Committee Report,
and Executive Compensation in our Proxy Statement for our 2009 Annual
Shareholders Meeting are incorporated herein by reference. The section
entitled Compensation Committee Report in our Proxy Statement for our 2009
Annual Shareholders Meeting is furnished herein by reference.

Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters

The
sections entitled Share Ownership Information and Executive Compensation 
Equity Compensation Plan Information in our Proxy Statement for our 2009
Annual Shareholders Meeting are incorporated herein by reference.

Item 13.
Certain Relationships and Related Transactions, and Director Independence

The sections
entitled Proposal 1  Election of Directors  Related Transactions and Other Matters and Proposal 1  Election of Directors  Director
Independence in our Proxy Statement for our 2009 Annual Shareholders Meeting
are incorporated herein by reference.

39

---

Table of Contents

Item 14.
Principal Accounting Fees and Services

The
sections entitled Governance of Medtronic  Audit Committee  Audit Committee
Pre-Approval Policies and Report of the Audit Committee  Audit and Non-Audit
Fees in our Proxy Statement for our 2009 Annual Shareholders Meeting are
incorporated herein by reference.

PART IV

Item 15.
Exhibits, Financial Statement Schedules

|       |                                                                                                                                                                                                                                                                                  
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) 1. | Financial Statements                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                  
|       | The
 following report and consolidated financial statements are incorporated
 herein by reference in Item 8.                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                  
|       | The sections
 entitled Report of Independent Registered Public Accounting Firm and
 Consolidated Statements of Earnings  years ended April 24, 2009, April 25,
 2008, and April 27, 2007 are set forth in Exhibit 13 hereto and will be
 included in our 2009 Annual Report.
|       |                                                                                                                                                                                                                                                                                  
|       | The section
 entitled Consolidated Balance Sheets  April 24, 2009 and April 25, 2008 is
 set forth in Exhibit 13 hereto and will be included in our 2009 Annual
 Report.                                                                                                      
|       |                                                                                                                                                                                                                                                                                  
|       | The section
 entitled Consolidated Statements of Shareholders Equity  years ended
 April 24, 2009, April 25, 2008, and April 27, 2007 is set forth in Exhibit 13
 hereto and will be included in our 2009 Annual Report.                                                     
|       |                                                                                                                                                                                                                                                                                  
|       | The section
 entitled Consolidated Statements of Cash Flows  years ended April 24,
 2009, April 25, 2008, and April 27, 2007 is set forth in Exhibit 13 hereto
 and will be included in our 2009 Annual Report.                                                               
|       |                                                                                                                                                                                                                                                                                  
|       | The section
 entitled Notes to Consolidated Financial Statements is set forth in Exhibit
 13 hereto and will be included in our 2009 Annual Report.                                                                                                                            
|       |                                                                                                                                                                                                                                                                                  
|2.     | Financial Statement Schedules                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                  
|       | Schedule II.
 Valuation and Qualifying Accounts  years ended April 24, 2009, April 25,
 2008, and April 27, 2007 (set forth on page 47 of this report).                                                                                                                         
|       |                                                                                                                                                                                                                                                                                  
|       | All other
 schedules are omitted because they are not applicable or the required
 information is shown in the financial statements or Notes thereto.                                                                                                                             

|   |          |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -------- | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | Exhibits |     | 
|   |          |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |          | 2.1 |  | Agreement
 and Plan of Merger Among Medtronic, Inc., Jets Acquisition Corporation and
 Kyphon Inc. (Dated as of July 26, 2007) (Exhibit 2.1). (u)                                                                                                                                                                                                                                                                                           
|   |          |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |          | 3.1 |  | Medtronic,
 Inc. Restated Articles of Incorporation, as amended (Exhibit 3.1).(v)                                                                                                                                                                                                                                                                                                                                                           
|   |          |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |          | 3.2 |  | Medtronic,
 Inc. Bylaws, as amended to date (Exhibit 3.2).(b)                                                                                                                                                                                                                                                                                                                                                                               
|   |          |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |          | 4.1 |  | Rights
 Agreement, dated as of October 26, 2000, between Medtronic, Inc. and Wells
 Fargo Bank Minnesota, N.A., including as: Exhibit A thereto the form of
 Certificate of Designations, Preferences and Rights of Series A Junior
 Participating Preferred Shares of Medtronic, Inc.; Exhibit B the form of
 Preferred Stock Purchase Right Certificate; and Exhibit C the Summary of Rights
 to Purchase Preferred Shares (Exhibit 4).(c)
|   |          |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |          | 4.2 |  | Indenture,
 dated as of September 11, 2001, between Medtronic, Inc. and Wells Fargo Bank
 Minnesota, National Association. (Exhibit 4.2).(d)                                                                                                                                                                                                                                                                                                
|   |          |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |          | 4.3 |  | Credit
 Agreement ($1,000,000,000 Five Year Revolving Credit Facility) dated as of
 January 20, 2005, among Medtronic, Inc. as Borrower, certain of its
 subsidiaries as Guarantors, Citicorp USA, Inc., as Administrative Agent and
 Bank of America, N.A. as Syndication Agent, and Citigroup Global Markets Inc.
 and Banc of America Securities LLC as Joint Lead Arrangers and Joint Book
 Managers (Exhibit 4.1).(e)                  

40

---

Table of Contents

| |  |        |  |                                                                                                                                                                                                                                                               
| |  | ------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 4.4    |  | Form of
 Indenture between Medtronic, Inc. and Wells Fargo Bank, National Association
 (Exhibit 4.1).(f)                                                                                                                                                      
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | 4.5    |  | Indenture dated
 as of September 15, 2005 between Medtronic, Inc. and Wells Fargo Bank, N. A.,
 as Trustee, with respect to the 4.375% Senior Notes due 2010 and 4.750%
 Senior Notes due 2015 (including the Forms of Notes thereof) (Exhibit
 4.1).(g)      
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | 4.6    |  | Form of 4.375%
 Senior Notes, Series B due September 15, 2010 (Exhibit 4.2).(g)                                                                                                                                                                               
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | 4.7    |  | Form of
 4.750% Senior Notes, Series B due September 15, 2015 (Exhibit 4.3).(g)                                                                                                                                                                               
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | 4.8    |  | Indenture by
 and between Medtronic, Inc. and Wells Fargo Bank, N.A., as trustee dated as
 of April 18, 2006 (including the Form of Convertible Senior Notes thereof)
 (Exhibit 4.1).(h)                                                                      
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | 4.9    |  | Credit
 Agreement dated as of December 20, 2006, among Medtronic, Inc., as Borrower,
 the Lenders party thereto, Bank of America N.A., as Issuing Bank, and
 Citicorp USA, Inc., as Administrative Agent, Issuing Bank and Swingline
 Lender (Exhibit 4.1).(i)
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | 4.10   |  | Form of
 Indenture between Medtronic, Inc. and Wells Fargo Bank, National Association
 (Exhibit 4.1).(aa)                                                                                                                                                     
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | 4.11   |  | First Supplemental
 Indenture Dated March 12, 2009 between Medtronic, Inc. and Wells Fargo Bank,
 National Association (Exhibit 4.1).(bb)                                                                                                                     
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.1  |  | 1994 Stock
 Award Plan (amended and restated as of January 1, 2008) (Exhibit 10.1).(t)                                                                                                                                                                        
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.2  |  | Medtronic Incentive
 Plan (amended and restated effective January 1, 2008) (Exhibit 10.2).(t)                                                                                                                                                                 
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.3  |  | Medtronic,
 Inc. Executive Incentive Plan (Appendix C).(l)                                                                                                                                                                                                    
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.4  |  | Form of
 Employment Agreement for Medtronic executive officers (Exhibit 10.5).(a)                                                                                                                                                                             
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.5  |  | Medtronic,
 Inc. Capital Accumulation Plan Deferral Program (as restated generally
 effective January 1, 2008)(Exhibit 10.5)(w)                                                                                                                               
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.6  |  | Stock Option
 Replacement Program (Exhibit 10.8).(a)                                                                                                                                                                                                          
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.7  |  | Medtronic,
 Inc. 1998 Outside Director Stock Compensation Plan (as amended and restated
 effective as of January 1, 2008) (Exhibit 10.3).(t)                                                                                                                  
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.8  |  | Amendment
 effective October 2001, regarding change in control provisions in the
 Management Incentive Plan (Exhibit 10.10).(j)                                                                                                                               
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | 10.9   |  | Indemnification
 Trust Agreement (Exhibit 10.11).(b)                                                                                                                                                                                                          
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | 10.10  |  | Asset
 Purchase and Settlement Agreement dated as of April 21, 2005 among Medtronic,
 Inc., Medtronic Sofamor Danek, Inc., SDGI Holdings, Inc., Gary K. Michelson,
 M.D. and Karlin Technology, Inc. (Exhibit 10.13).(o)                                      
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.11 |  | Form of
 Restricted Stock Award Agreement under 2003 Long-Term Incentive Plan (Exhibit
 10.3).(e)                                                                                                                                                             
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.12 |  | Form of
 Non-Qualified Stock Option Agreement under 2003 Long-Term Incentive Plan
 (four year vesting) (Exhibit 10.1).(e)                                                                                                                                     
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.13 |  | Form of
 Non-Qualified Stock Option Agreement under 2003 Long-Term Incentive Plan
 (immediate vesting) (Exhibit 10.2).(e)                                                                                                                                     
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.14 |  | Form of
 Initial Option Agreement under the Medtronic, Inc. 1998 Outside Director
 Stock Compensation Plan (Exhibit 10.17).(o)                                                                                                                                
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.15 |  | Form of
 Annual Option Agreement under the Medtronic, Inc. 1998 Outside Director Stock
 Compensation Plan (Exhibit 10.18).(o)                                                                                                                                 
| |  |        |  |                                                                                                                                                                                                                                                               
| |  | *10.16 |  | Form of
 Replacement Option Agreement under the Medtronic, Inc. 1998 Outside Director
 Stock Compensation Plan (Exhibit 10.19).(o)                                                                                                                            

41

---

Table of Contents

| |  |        |  |                                                                                                                                                                               
| |  | ------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | *10.17 |  | Form of
 Restricted Stock Units Award Agreement under 2003 Long-Term Incentive Plan
 (Exhibit 10.20).(o)                                                                      
| |  |        |  |                                                                                                                                                                               
| |  | *10.18 |  | Form of
 Performance Share Award Agreement under 2003 Long-Term Incentive Plan
 (Exhibit 10.21).(o)                                                                           
| |  |        |  |                                                                                                                                                                               
| |  | *10.19 |  | Medtronic,
 Inc. Supplemental Executive Retirement Plan (as restated generally effective
 January 1, 2008) (Exhibit 10.1).(s)                                                 
| |  |        |  |                                                                                                                                                                               
| |  | 10.20  |  | Purchase
 Agreement by and among Medtronic, Inc. and the Initial Purchasers named
 therein dated as of April 12, 2006 (Exhibit 10.1).(h)                                      
| |  |        |  |                                                                                                                                                                               
| |  | 10.21  |  | Registration
 Rights Agreement between Medtronic, Inc. and Banc of America Securities LLC
 and Morgan Stanley & Co. Incorporated dated as of April 18, 2006 (Exhibit
 4.2).(h)
| |  |        |  |                                                                                                                                                                               
| |  | *10.22 |  | 2003
 Long-Term Incentive Plan (as amended and restated effective January 1, 2008)
 (Exhibit 10.4).(t)                                                                        
| |  |        |  |                                                                                                                                                                               
| |  | *10.23 |  | Form of
 Non-Qualified Stock Option Agreement under 2003 Long-Term Incentive Plan
 effective June 22, 2006 (Exhibit 10.23).(q)                                                
| |  |        |  |                                                                                                                                                                               
| |  | *10.24 |  | Form of
 Restricted Stock Award Agreement under 2003 Long-Term Incentive Plan
 effective June 22, 2006 (Exhibit 10.24).(q)                                                    
| |  |        |  |                                                                                                                                                                               
| |  | *10.25 |  | Form of
 Restricted Stock Unit Award Agreement under 2003 Long-Term Incentive Plan
 effective June 22, 2006 (Exhibit 10.25).(q)                                               
| |  |        |  |                                                                                                                                                                               
| |  | *10.26 |  | Form of
 Performance Award Agreement under 2003 Long-Term Incentive Plan effective
 June 22, 2006 (Exhibit 10.26).(q)                                                         
| |  |        |  |                                                                                                                                                                               
| |  | 10.27 |  | Form of
 Confirmations of Convertible Note Hedge related to Convertible Senior
 Debentures issued on April 12, 2006, including Schedule thereto (Exhibit
 10.27).(q)          
| |  |        |  |                                                                                                                                                                               
| |  | 10.28 |  | Form of
 Warrants issued on April 12, 2006, including Schedule thereto (Exhibit
 10.28).(q)                                                                                   
| |  |        |  |                                                                                                                                                                               
| |  | 10.29 |  | Form of
 Amendment to Confirmation issued on April 13, 2006 to Form of Warrants issued
 on April 12, 2006, including Schedule thereto (Exhibit 10.29).(q)                     
| |  |        |  |                                                                                                                                                                               
| |  | 10.30  |  | Amendment
 No. 1 dated September 5, 2006, to Indemnification Trust Agreement (Exhibit
 10.1).(r)                                                                              
| |  |        |  |                                                                                                                                                                               
| |  | *10.31 |  | Amendment to
 Change of Control Agreement for Medtronic Executive Officers (Exhibit
 10.1).(z)                                                                                
| |  |        |  |                                                                                                                                                                               
| |  | *10.32 |  | Form of
 Restricted Stock Award Agreement under 2003 Long-Term Incentive Plan (Exhibit
 10.3).(s)                                                                             
| |  |        |  |                                                                                                                                                                               
| |  | *10.33 |  | Form of
 Restricted Stock Unit Award Agreement under 2003 Long-Term Incentive Plan
 (Exhibit 10.4).(s)                                                                        
| |  |        |  |                                                                                                                                                                               
| |  | *10.34 |  | Medtronic,
 Inc. Israeli Amendment to the 2003 Long-Term Incentive Plan (Exhibit
 10.5).(t)                                                                                   
| |  |        |  |                                                                                                                                                                               
| |  | *10.35 |  | Medtronic,
 Inc.  Kyphon Inc. 2002 Stock Plan (Amended and Restated July 26, 2007, as
 further amended on October 18, 2007) (Exhibit 10.6).(t)                               
| |  |        |  |                                                                                                                                                                               
| |  | *10.36 |  | Addendum:
 Medtronic, Inc.  Kyphon Inc. 2002 Stock Plan (dated December 13, 2007)
 (Exhibit 10.7).(t)                                                                        
| |  |        |  |                                                                                                                                                                               
| |  | *10.37 |  | Letter
 Agreement dated April 29, 2008 between Michael DeMane and Medtronic, Inc.
 (Exhibit 10.37).(w)                                                                        
| |  |        |  |                                                                                                                                                                               
| |  | *10.38 |  | Medtronic,
 Inc. 2008 Stock Award and Incentive Plan                                                                                                                          
| |  |        |  |                                                                                                                                                                               
| |  | *10.39 |  | Form of
 Non-Qualified Stock Option Agreement under 2003 Long-Term Incentive Plan
 (Exhibit 10.39).(w)                                                                        
| |  |        |  |                                                                                                                                                                               
| |  | *10.40 |  | Form of
 Restricted Stock Unit Award Agreement under 2003 Long-Term Incentive Plan
 (Exhibit 10.40).(w)                                                                       

42

---

Table of Contents

| |  |        |  |                                                                                                                                               
| |  | ------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | *10.41 |  | Form of
 Restricted Stock Unit Award Agreement under 2003 Long-Term Incentive Plan
 (Exhibit 10.41).(w)                                       
| |  |        |  |                                                                                                                                               
| |  | *10.42 |  | Form of
 Restricted Stock Unit Award Agreement under 2008 Stock Award and Incentive
 Plan (Exhibit 10.2).(x)                                  
| |  |        |  |                                                                                                                                               
| |  | *10.43 |  | Form of
 Restricted Stock Award Agreement Under 2008 Stock Award and Incentive Plan
 (Exhibit 10.3).(x)                                       
| |  |        |  |                                                                                                                                               
| |  | *10.44 |  | Form of
 Restricted Stock Award Agreement under 2008 Stock Award and Incentive Plan
 (Exhibit 10.4).(x)                                       
| |  |        |  |                                                                                                                                               
| |  | *10.45 |  | Form of
 Restricted Stock Unit Award Agreement under 2008 Stock Award and Incentive
 Plan (Exhibit 10.5).(x)                                  
| |  |        |  |                                                                                                                                               
| |  | *10.46 |  | Form of
 Non-Qualified Stock Option Agreement under 2008 Stock Award and Incentive
 Plan (Exhibit 10.6).(x)                                   
| |  |        |  |                                                                                                                                               
| |  | *10.47 |  | Terms of
 Non-Employee Director Compensation under the Medtronic, Inc. 2008 Stock Award
 and Incentive Plan (Exhibit 10.7).(x)                
| |  |        |  |                                                                                                                                               
| |  | *10.48 |  | Form of
 Non-Employee Director Initial Option Agreement under the Medtronic, Inc. 2008
 Stock Award and Incentive Plan (Exhibit 10.1).(y)     
| |  |        |  |                                                                                                                                               
| |  | *10.49 |  | Form of
 Non-Employee Director Annual Option Agreement under the Medtronic, Inc. 2008
 Stock Award and Incentive Plan (Exhibit 10.2).(y)      
| |  |        |  |                                                                                                                                               
| |  | *10.50 |  | Form of
 Non-Employee director Deferred Unit Award Agreement under the Medtronic, Inc.
 2008 Stock Award and Incentive Plan (Exhibit 10.3).(y)
| |  |        |  |                                                                                                                                               
| |  | *10.51 |  | Form of
 Change of Control Employment Agreement for Medtronic Executive Officers (Exhibit 10.38).(w)                                          
| |  |        |  |                                                                                                                                               
| |  | *10.52 |  | Summary of
 Compensation Arrangements for Named Executive Officers and Directors                                                              
| |  |        |  |                                                                                                                                               
| |  | *10.53 |  | Amendment
 No. 2 dated April 27, 2009, to Indemnification Trust Agreement                                                                     
| |  |        |  |                                                                                                                                               
| |  | 12.1   |  | Computation
 of ratio of earnings to fixed charges                                                                                            
| |  |        |  |                                                                                                                                               
| |  | 13     |  | This exhibit
 contains the information referenced under Part II, Items 5, 6, 7, 7A and 8                                                      
| |  |        |  |                                                                                                                                               
| |  | 21     |  | List of
 Subsidiaries                                                                                                                         
| |  |        |  |                                                                                                                                               
| |  | 23     |  | Consent of
 Independent Registered Public Accounting Firm                                                                                     
| |  |        |  |                                                                                                                                               
| |  | 24     |  | Powers of
 Attorney                                                                                                                           
| |  |        |  |                                                                                                                                               
| |  | 31.1   |  | Certification
 of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
 of 2002                                          
| |  |        |  |                                                                                                                                               
| |  | 31.2   |  | Certification
 of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
 of 2002                                          
| |  |        |  |                                                                                                                                               
| |  | 32.1   |  | Certification
 of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
 of 2002                                          
| |  |        |  |                                                                                                                                               
| |  | 32.2   |  | Certification
 of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
 of 2002                                          

|    |                                                                                                                                                                                    | 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|    |                                                                                                                                                                                   
|(a) | Incorporated
 herein by reference to the cited exhibit in our Annual Report on Form 10-K
 for the year ended April 27, 2001, filed with the Commission on July 26,
 2001.         
|    |                                                                                                                                                                                   
|(b) | Incorporated
 herein by reference to the cited exhibit in our Annual Report on Form 10-K
 for the year ended April 30, 2004, filed with the Commission on June 30,
 2004.         
|    |                                                                                                                                                                                   
|(c) | Incorporated
 herein by reference to the cited exhibit in our registration statement on
 Form 8-A, including the exhibits thereto, filed with the Commission on
 November 3, 2000.

43

---

Table of Contents

|    |                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | Incorporated
 herein by reference to the cited exhibit in our amended Current Report on
 Form 8-K/A, filed with the Commission on November 13, 2001.                                
|    |                                                                                                                                                                                     
|(e) | Incorporated
 herein by reference to the cited exhibit in our Quarterly Report on Form 10-Q
 for the quarter ended January 28, 2005, filed with the Commission on March 7,
 2005.   
|    |                                                                                                                                                                                     
|(f) | Incorporated
 herein by reference to the cited exhibit in our registration statement on
 Amendment No. 2 to Form S-4, filed with the Commission on January 10, 2005.                
|    |                                                                                                                                                                                     
|(g) | Incorporated
 herein by reference to the cited exhibit in our registration statement on
 Form S-4, filed with the Commission on December 6, 2005.                                   
|    |                                                                                                                                                                                     
|(h) | Incorporated
 herein by reference to the cited exhibit in our Current Report on Form 8-K,
 filed with the Commission on April 18, 2006.                                             
|    |                                                                                                                                                                                     
|(i) | Incorporated
 herein by reference to the cited exhibit in our Quarterly Report on Form 10-Q
 for the quarter ended January 26, 2007, filed with the Commission on March 6,
 2007.   
|    |                                                                                                                                                                                     
|(j) | Incorporated
 herein by reference to the cited exhibit in our Annual Report on Form 10-K
 for the year ended April 26, 2002, filed with the Commission on July 19,
 2002.           
|    |                                                                                                                                                                                     
|(k) | Incorporated
 herein by reference to the cited exhibit in our Annual Report on Form 10-K
 for the year ended April 25, 2003, filed with the Commission on July 14,
 2003.           
|    |                                                                                                                                                                                     
|(l) | Incorporated
 herein by reference to the cited appendix to our 2003 Proxy Statement, filed
 with the Commission on July 28, 2003.                                                   
|    |                                                                                                                                                                                     
|(m) | Incorporated
 herein by reference to the cited exhibit in our registration statement on
 Form S-8, filed with the Commission on November 21, 2005.                                  
|    |                                                                                                                                                                                     
|(n) | Incorporated
 herein by reference to the cited appendix to our 2005 Proxy Statement, filed
 with the Commission on July 21, 2005.                                                   
|    |                                                                                                                                                                                     
|(o) | Incorporated
 herein by reference to the cited exhibit in our Annual Report on Form 10-K
 for the year ended April 29, 2005, filed with the Commission on June 29,
 2005.           
|    |                                                                                                                                                                                     
|(p) | Incorporated
 herein by reference to the cited exhibit in our Quarterly Report on Form 10-Q
 for the quarter ended October 28, 2005, filed with the Commission on December
 6, 2005.
|    |                                                                                                                                                                                     
|(q) | Incorporated
 herein by reference to the cited exhibit in our Annual Report on Form 10-K
 for the year ended April 28, 2006, filed with the Commission on June 28,
 2006.           
|    |                                                                                                                                                                                     
|(r) | Incorporated
 herein by reference to the cited exhibit in our Quarterly Report on Form 10-Q
 for the quarter ended October 27, 2006, filed with the Commission on December
 5, 2006.
|    |                                                                                                                                                                                     
|(s) | Incorporated
 herein by reference to the cited exhibit in our Quarterly Report on Form 10-Q
 for the quarter ended October 26, 2007, filed with the Commission on December
 4, 2007.
|    |                                                                                                                                                                                     
|(t) | Incorporated
 herein by reference to the cited exhibit in our Quarterly Report on Form 10-Q
 for the quarter ended January 25, 2008, filed with the Commission on March 4,
 2008.   
|    |                                                                                                                                                                                     
|(u) | Incorporated
 herein by reference to the cited exhibit in our Current Report on Form 8-K,
 filed with the Commission on July 30, 2007.                                              
|    |                                                                                                                                                                                     
|(v) | Incorporated
 herein by reference to the cited exhibit in our Quarterly Report on Form 10-Q
 for the quarter ended July 27, 2007, filed with the Commission on September
 5, 2007.  
|    |                                                                                                                                                                                     
|(w) | Incorporated
 herein by reference to the cited exhibit in our Annual Report on Form 10-K
 for the year ended April 25, 2008, filed with the Commission on June 24,
 2008.           
|    |                                                                                                                                                                                     
|(x) | Incorporated
 herein by reference to the cited exhibit in our Quarterly Report on Form 10-Q
 for the quarter ended July 25, 2008, filed with the Commission on September
 3, 2008.  
|    |                                                                                                                                                                                     
|(y) | Incorporated
 herein by reference to the cited exhibit in our Quarterly Report on Form 10-Q
 for the quarter ended October 24, 2008, filed with the Commission on December
 3, 2008.

44

---

Table of Contents

|     |                                                                                                                                                                                  
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(z)  | Incorporated
 herein by reference to the cited exhibit in our Quarterly Report on Form 10-Q
 for the quarter ended January 23, 2009, filed with the Commission on March 4,
 2009.
|     |                                                                                                                                                                                  
|(aa) | Incorporated
 herein by reference to the cited exhibit in our registration statement on
 Form S-3, filed with the Commission on March 9, 2009.                                   
|     |                                                                                                                                                                                  
|(bb) | Incorporated
 herein by reference to the cited exhibit in our Current Report on Form 8-K,
 filed with the Commission on March 12, 2009.                                          

*Items that
are management contracts or compensatory plans or arrangements required to be
filed as an exhibit pursuant to Item 15(a)(3) of Form 10-K.

Confidential
treatment requested as to portions of the exhibit. Confidential portions
omitted and filed separately with the Securities and Exchange Commission.

45

---

Table of Contents

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.

|                      |                 |                        
|--------------------- | --------------- | -----------------------
|                      | MEDTRONIC, INC.
|                      |                 |                        
|Dated: June
 23, 2009 | By:             | /s/ William A. Hawkins 
|                      |                 | William A. Hawkins     
|                      |                 | Chairman and           
|                      |                 | Chief Executive Officer

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

|                      |                 |                              
|--------------------- | --------------- | -----------------------------
|                      | MEDTRONIC, INC.
|                      |                
|Dated: June
 23, 2009 | By:             | /s/ William A. Hawkins       
|                      |                 | William A. Hawkins           
|                      |                 | Chairman and                 
|                      |                 | Chief Executive Officer      
|                      |                 | (Principal Executive Officer)
|                      |                 |                              
|Dated: June
 23, 2009 | By:             | /s/ Gary L. Ellis            
|                      |                 | Gary L. Ellis                
|                      |                 | Senior Vice President and    
|                      |                 | Chief Financial Officer      
|                      |                 | (Principal Financial and     
|                      |                 | Accounting Officer)          
|                      |                 |                              
|                      | Directors      
|                      |                 |                              
|                      |                 | Richard H. Anderson          
|                      |                 | David L. Calhoun             
|                      |                 | Victor J. Dzau, M.D.         
|                      |                 | William A. Hawkins           
|                      |                 | Shirley Ann Jackson, Ph.D    
|                      |                 | James T. Lenehan             
|                      |                 | Denise M. OLeary            
|                      |                 | Kendall J. Powell            
|                      |                 | Robert C. Pozen              
|                      |                 | Jean-Pierre Rosso            
|                      |                 | Jack W. Schuler              

Keyna
P. Skeffington, by signing her name hereto, does hereby sign this document on
behalf of each of the above named directors of the registrant pursuant to
powers of attorney duly executed by such persons.

|                      |     |                         
|--------------------- | --- | ------------------------
|Dated: June
 23, 2009 | By: | /s/ Keyna P. Skeffington
|                      |     | Keyna P. Skeffington    

46

---

Table of Contents

MEDTRONIC,
INC. AND SUBSIDIARIES
SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

(dollars
in millions)

|                                  |  |                                       |     |                      |   |                                |  |                                 |      |      |   |     | 
|--------------------------------- |  | ------------------------------------- | --- | -------------------- | - | ------------------------------ |  | ------------------------------- | ---- | ---- | - | --- | 
|                                  |  | Balance at
 Beginning of
 Fiscal Year |     | Charges to
 Earnings |   | Other
 Changes
 (Debit) Credit |  | Balance
 at End of
 Fiscal Year |     
|Allowance
 for doubtful accounts: |  |                                       |     |                      |   |                                |  |                                 |      |      |   |     | 
|Year ended
 4/24/09               |  | $                                     | 99  |                      | $ | 39                             |  | $                               | (61  | )(a) | $ | 61  | 
|                                  |  |                                       |     |                      |   |                                |  | $                               | (16  | )(b) |   |     | 
|Year ended
 4/25/08               |  | $                                     | 160 |                      | $ | 31                             |  | $                               | (101 | )(a) | $ | 99  | 
|                                  |  |                                       |     |                      |   |                                |  | $                               | 9    | (b)  |   |     | 
|Year ended
 4/27/07               |  | $                                     | 184 |                      | $ | 31                             |  | $                               | (59  | )(a) | $ | 160 | 
|                                  |  |                                       |     |                      |   |                                |  | $                               | 4    | (b)  |   |     | 

|    |                                                                  
|--- | -----------------------------------------------------------------
|(a) | Uncollectible
 accounts written off, less recoveries.            
|    |                                                                  
|(b) | Reflects primarily
 the effects of foreign currency fluctuations.

47

---