Medtronic Reports Second Quarter Revenue Growth of 15% and 23% Growth in Diluted EPS Before Special Items; After Special Items, as Reported Diluted EPS of $0.67 Increased 52%

-- Implantable Cardioverter Defibrillator (ICD) Revenues Grew 34%; Worldwide Market Share Continued to Increase

-- Spinal Continued Track Record of Strong Growth with Revenues Up 20%

-- Diabetes Revenues Grew 17%

-- Quarterly Vascular Revenues Reflect Positive Acceptance of the Endeavor Drug Eluting Coronary Stent in Europe

-- Favorable Resolution of Internal Revenue Service (IRS) Tax Audit Resulted in $225 million Tax Reversal and Tax Rate Reduction

Medtronic, Inc. (NYSE:MDT) today announced record revenues for thequarter ended October 28, 2005 of $2.765 billion, a 15 percentincrease over the $2.400 billion recorded in the second quarter offiscal year 2005. As reported, second quarter actual earnings were$816.5 million or $0.67 per diluted share, an increase of 52 percentover the prior year second quarter. Before special items, secondquarter net earnings of $657.1 million, or $0.54 per diluted share,increased 23 percent over net earnings of $535.7 million and $0.44 perdiluted share recorded in the same period last year.

"Balanced growth across the corporation was again led byimplantable defibrillators and spinal products", said Art Collins,chairman and chief executive officer of Medtronic. "Very solid growthmomentum has continued throughout the year and reflects the impact ofthe investments which have been made and that are continuing. As aresult, the corporation is well positioned to maintain strongfinancial performance going forward."

Factors to Consider When Reviewing Financial Performance

During the second quarter, Medtronic recorded net after-tax,special items of $159.4 million of benefit, which included a pre-tax$100.0 million donation ($65.6 million after-tax) to the MedtronicFoundation and a $225.0 million tax benefit associated with favorableresolution of field audits with the Internal Revenue Service (IRS)involving fiscal years 1997 through 2002. As a result of thesefinalized field audits with the IRS, Medtronic's effective tax ratefor the full fiscal year 2006, before special and IPR&D charges, isexpected to be reduced to 26 percent from 28 percent. The effectiverate reflected in the second quarter has been adjusted to annualizethis new effective tax rate. Reflecting the strengthening dollar,foreign currency translation had a negative effect on second quarterrevenues of $3.3 million compared to the prior year second quarter.

Cardiac Rhythm Management Business

Cardiac Rhythm Management (CRM) quarterly revenues were $1.289billion, representing growth of 17 percent over the same period lastfiscal year. ICD revenues were $733 million in the quarter, a 34percent increase over the same period last fiscal year. ICD revenuegains underscore the strength of Medtronic's ICD product line andsales and support teams. Market share gains in the quarter alsoreflect, in part, the changing competitive dynamics in themarketplace. Quarterly pacing revenues were $459 million in thequarter, up five percent over the same period last year. This reflectsa return to growth in pacing driven by new products released in theprevious two quarters. Medtronic's Emergency Response Systems businessreported revenues of $81 million, a decrease of 21 percent, which wasthe result of vendor supply issues. CRM highlights included:

-- Medtronic's InSync Sentry(TM) CRT-D system, with OptiVol(TM) Fluid Status Monitoring, continued to be well received by physicians and now represents the majority of Medtronic CRT-D units sold worldwide. These products, combined with the recently released EnRhythm ICD and Intrinsic families, helped drive worldwide and U.S. ICD market share.

-- The introduction of the EnRhythm(R) pacemaker with the unique Managed Ventricular Pacing (MVP) feature has contributed to improved U.S. pacing market. In addition, global pacing revenue growth benefited from Japanese regulatory approval of the Kappa(R) 900 family during the quarter.

-- Medtronic's Pre-Market Approval (PMA) submission for the Chronicle(R) implantable hemodynamic monitor has been accepted and granted "expedited review" status by the U.S. Food and Drug Administration (FDA). The PMA will also support Chronicle(TM) ICD - a Chronicle device with ICD therapy.

-- The company announced the approval of its CardioSight(TM) Service, an in-clinic data access tool available to physicians treating heart failure patients.

-- The Medtronic CareLink(R) Network continued to expand, surpassing the milestone of 50,000 patients who are now being monitored by over 600 clinics.

Spinal, ENT and Navigation Businesses

Spinal / Ear, Nose and Throat (ENT) / Navigation revenues for thequarter were $603 million, representing 19 percent growth over thesame period last fiscal year. Spinal revenues of $516 millionincreased 20 percent over the same period last fiscal year maintaininga track record of strong growth and market share improvement.Highlights included:

-- Medtronic filed a PMA for AMPLIFY(TM) rhBMP-2, which has a different formulation and carrier of rhBMP-2 designed specifically for posterolateral applications. Spinal biologics revenues increased in excess of 30% over the same period last fiscal year.

-- In markets outside the United States, Medtronic's portfolio of dynamic stabilization products, which includes the DIAM(TM) System, the MAVERICK(TM) and O-MAV(TM) Artificial Lumbar Discs and the PRESTIGE(R) LP and BRYAN(R) Cervical Discs, continued to gain momentum and collectively hold the number one market position in Europe.

-- During the quarter, several innovative new products were introduced, including the CD HORIZON Sextant(R) II, a percutaneous thoracolumbar stabilization system; METRX(TM) II, a streamlined microdiscectomy set; and TSRH Silo(R), a side-loading thoracolumbar stabilization system.

Neurological and Diabetes Businesses

Neurological and Diabetes quarterly revenues of $487 millionincreased 13 percent over the same quarter one year ago. TotalNeurological revenues were $309 million in the quarter, an 11 percentgrowth over the same quarter last year. Diabetes revenues were $178million, a 17 percent increase over the same quarter last fiscal year.Highlights from the quarter included:

-- Revenues from the RESTORE(TM) Rechargeable Neurostimulation System benefited from the September introduction of a flexible extender, which allows for easier device replacement. RESTORE is estimated to hold the leading market share position in the rapidly growing rechargeable segment of the market.

-- In August, Medtronic acquired Image-Guided Neurologics Inc. (IGN), a privately held company specializing in precision navigation and delivery technologies for brain surgery.

-- The company initiated a controlled market release of the Guardian(R) RT Continuous Glucose Monitoring System in the U.S., Canada and Europe. The system displays real-time glucose readings every five minutes and alarms when glucose levels become too high or low. Diabetes patients can now intervene earlier to maintain healthy glucose control, and print records for follow-up discussions with their healthcare providers.

Vascular Business

Vascular revenues of $225 million for the quarter represented 12percent growth over the same period last fiscal year. Vascularhighlights included:

-- The Endeavor(TM) Drug Eluting Coronary Stent was commercially released in over 85 countries outside the U.S. Market share increased as revenues of $36 million were recorded.

-- U.S. ENDEAVOR clinical trials were reported upon and enrollment gained momentum over the course of the quarter. Clinical results presented at the European Society of Cardiology (ESC) and the Transcatheter Cardiovascular Therapeutics (TCT) conference further expanded the medical evidence supporting the clinical performance of the Endeavor Drug Eluting Coronary Stent. In addition, the company filed its first PMA module for Endeavor with the U.S. FDA in early October and enrollment in the ENDEAVOR IV clinical trial is progressing as planned. The company remains on track for targeted U.S. approval in calendar year 2007.

-- Endovascular product lines, including the AneuRx(R) and Talent(TM) Stent Grafts for the treatment of abdominal and thoracic aortic aneurysms (AAA/TAA), grew 11% worldwide and maintained market leadership positions.

Cardiac Surgery Business

Cardiac Surgery revenues of $161 million in the quarter grew onepercent over the same period last fiscal year. Highlights from thequarter included:

-- The Mosaic(R) and Mosaic(R) Ultra Heart Tissue Valves continued to drive growth in Medtronic's tissue heart valve product line.

-- Cardiac Surgery Technologies (CST) revenues were led by market acceptance of the Cardioblate(R) BP Surgical Ablation Systems, which continues to be enhanced by the new Cardioblate(R) BP2 system.

Medtronic, Inc., headquartered in Minneapolis, is the world'sleading medical technology company, alleviating pain, restoring healthand extending life for people with chronic disease. Its Internetaddress is www.medtronic.com.

Webcast Information

Medtronic will host a webcast today, November 16 at 4:30 pm EST(3:30 CST), to provide information about its businesses for thepublic, analyst and news media. This quarterly webcast can be accessedby clicking on the Investor Relations link on the Medtronic home pageat www.medtronic.com., and this earnings release will be archived atwww.medtronic.com/newsroom. Within 24 hours, a replay of the webcastand a transcript of the company's prepared remarks will be availablein the "Presentations & Transcripts" section of the Investor Relationshomepage.

This press release contains forward-looking statements, includingstatements regarding clinical trials, which are subject to risks anduncertainties, such as competitive factors, difficulties and delaysinherent in the development, manufacturing, marketing and sale ofmedical products, government regulation, general economic conditionsand others described in Medtronic's Annual Report on Form 10-K for theyear ended April 29, 2005. Actual results may differ materially fromanticipated results. Medtronic does not undertake to update itsforward-looking statement.

The BRYAN(R) Cervical Disc System incorporates technologydeveloped by Gary K. Michelson, M.D.

MEDTRONIC, INC.
RECONCILIATION OF CONSOLIDATED GAAP EARNINGS
TO CONSOLIDATED NON-GAAP EARNINGS
(Unaudited)
(in millions, except per share data)

Three months
ended
Three months ended October 29,
October 28, 2005 2004
-------------------------------------- ------------
Before
Special Special U.S. GAAP U.S. GAAP
Charges Charges (1) As Reported As Reported
------------ ------------ ------------ ------------

Net sales $2,765.4 $- $2,765.4 $2,399.8

Costs and
expenses:
Cost of products
sold 694.8 - 694.8 584.8
Research and
development
expense 275.4 - 275.4 232.7
Selling,
general, and
administrative
expense 903.2 - 903.2 772.0
Special charges - 100.0 100.0 -
Other expense,
net 40.5 - 40.5 62.9
Interest income (13.4) - (13.4) (7.1)
------------ ------------ ------------ ------------
Total costs and
expenses 1,900.5 100.0 2,000.5 1,645.3
------------ ------------ ------------ ------------

Earnings (loss)
before income
taxes 864.9 (100.0) 764.9 754.5

Provision for
income taxes 207.8 (259.4) (51.6) 218.8
------------ ------------ ------------ ------------

Net earnings $657.1 $159.4 $816.5 $535.7
============ ============ ============ ============


Earnings (loss)
per share:
Basic $0.54 $0.13 $0.68 $0.44
============ ============ ============ ============
Diluted $0.54 $0.13 $0.67 $0.44
============ ============ ============ ============


Weighted average
shares
outstanding:
Basic 1,208.6 1,208.6 1,209.5
Diluted 1,222.5 1,222.5 1,221.4



(1) - Medtronic management believes that in order to properly
understand Medtronic's short-term and long-term financial trends,
investors may wish to consider the impact of special (such as certain
litigation, restructuring charges, and certain tax adjustments) and
IPR&D charges. These charges result from facts and circumstances that
vary in frequency and/or impact on continuing operations. In
addition, Medtronic management uses results of operations before
special and IPR&D charges to evaluate the operational performance of
the Company and as a basis for strategic planning. Investors should
consider these non-GAAP measures in addition to, and not as a
substitute for, financial performance measures prepared in accordance
with GAAP.



MEDTRONIC, INC.
RECONCILIATION OF CONSOLIDATED GAAP EARNINGS
TO CONSOLIDATED NON-GAAP EARNINGS
(Unaudited)
(in millions, except per share data)

Six months
ended
Six months ended October 29,
October 28, 2005 2004
-------------------------------------- ------------
Before
Special Special
and IPR&D and IPR&D U.S. GAAP U.S. GAAP
Charges Charges (1) As Reported As Reported
------------ ------------ ------------ ------------


Net sales $5,455.8 $- $5,455.8 $4,745.9

Costs and
expenses:
Cost of products
sold 1,348.6 - 1,348.6 1,135.1
Research and
development
expense 538.6 - 538.6 462.4
Selling, general,
and
administrative
expense 1,785.6 - 1,785.6 1,541.7
Special charges - 100.0 100.0 -
Purchased in-
process research
and development
(IPR&D) - 363.8 363.8 -
Other expense 91.5 - 91.5 117.5
Interest income (28.8) - (28.8) (11.4)
------------ ------------ ------------ ------------
Total costs and
expenses 3,735.5 463.8 4,199.3 3,245.3
------------ ------------ ------------ ------------

Earnings (loss)
before income
taxes 1,720.3 (463.8) 1,256.5 1,500.6

Provision for
income taxes 447.3 (327.9) 119.4 435.2
------------ ------------ ------------ ------------

Net earnings
(loss) $1,273.0 $(135.9) $1,137.1 $1,065.4
============ ============ ============ ============


Earnings (loss)
per share:
Basic $1.05 $(0.11) $0.94 $0.88
============ ============ ============ ============
Diluted $1.04 $(0.11) $0.93 $0.87
============ ============ ============ ============


Weighted average
shares
outstanding:
Basic 1,209.6 1,209.6 1,209.3
Diluted 1,222.4 1,222.4 1,221.2


(1) - Medtronic management believes that in order to properly
understand Medtronic's short-term and long-term financial trends,
investors may wish to consider the impact of special (such as certain
litigation, restructuring charges, and certain tax adjustments) and
IPR&D charges. These charges result from facts and circumstances that
vary in frequency and/or impact on continuing operations. In
addition, Medtronic management uses results of operations before
special and IPR&D charges to evaluate the operational performance of
the Company and as a basis for strategic planning. Investors should
consider these non-GAAP measures in addition to, and not as a
substitute for, financial performance measures prepared in accordance
with GAAP.


MEDTRONIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

October 28, April 29,
2005 2005
------------- -------------
(in millions of dollars,
except per share data)
ASSETS
------
Current assets:
Cash and cash equivalents............... $1,947.8 $2,232.2
Short-term investments.................. 2,229.5 1,159.4
Accounts receivable, less allowances of
$175.5 and $174.9, respectively........ 2,316.2 2,292.7
Inventories............................. 1,126.6 981.4
Deferred tax assets, net................ 81.5 385.6
Prepaid expenses and other current
assets................................. 417.4 370.2
------------- -------------
Total current assets................... 8,119.0 7,421.5

Property, plant and equipment............. 3,707.2 3,628.6
Accumulated depreciation.................. (1,825.0) (1,769.3)
------------- -------------
Net property, plant and equipment...... 1,882.2 1,859.3

Goodwill.................................. 4,331.1 4,281.2
Other intangible assets, net.............. 1,632.8 1,018.0
Long-term investments..................... 1,346.0 1,565.7
Other assets.............................. 456.4 471.7
------------- -------------

Total assets........................... $17,767.5 $16,617.4
============= =============

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Current liabilities:
Short-term borrowings................... $2,835.1 $478.6
Accounts payable........................ 340.7 371.8
Accrued compensation.................... 598.3 542.2
Accrued income taxes.................... 674.7 923.3
Other accrued expenses.................. 450.3 1,064.1
------------- -------------
Total current liabilities.............. 4,899.1 3,380.0

Long-term debt............................ 1,001.2 1,973.2
Deferred tax liabilities, net............. 370.9 478.1
Long-term accrued compensation............ 171.9 157.9
Other long-term liabilities............... 190.7 178.7
------------- -------------
Total liabilities...................... 6,633.8 6,167.9

Commitments and contingencies............. -- --

Shareholders' equity:
Preferred stock -- par value $1.00...... -- --
Common stock -- par value $0.10......... 120.7 121.0
Retained earnings....................... 10,843.8 10,178.5
Accumulated other non-owner changes in
equity................................. 169.2 150.0
------------- -------------
Total shareholders' equity............. 11,133.7 10,449.5
------------- -------------

Total liabilities and shareholders'
equity................................ $17,767.5 $16,617.4
============= =============


MEDTRONIC, INC.
REVENUE BY OPERATING SEGMENT
(Unaudited)

($ millions)
----------------------------------------------------------------------
FY 05 FY 05 FY 05 FY 05 FY 05
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
----------------------------------------------------------------------
REPORTED REVENUE :
CARDIAC RHYTHM
MANAGEMENT $1,097 $1,104 $1,150 $1,265 $4,616
Low Power Pacing 451 438 431 436 1,756
High Power
Defibrillation 551 546 598 684 2,379
Emergency
Response Systems 79 104 104 126 413
Other 16 16 17 19 68

SPINAL, ENT &
NAVIGATION $484 $506 $536 $599 $2,125
Spinal Constructs 317 332 343 380 1,372
Spinal Biologics 89 99 107 118 413
Ear, Nose & Throat
(ENT) 58 55 61 67 241
Navigation 20 20 25 34 99

NEUROLOGICAL and
DIABETES $408 $430 $460 $496 $1,794
Neurological 170 179 184 206 739
Gastroenterology &
Urology 42 45 49 52 188
Neurologic
Technologies 50 53 56 59 218
Diabetes 146 153 171 179 649

VASCULAR $196 $201 $221 $233 $851
Stents 71 78 86 82 317
Other Coronary 71 71 77 89 308
Endovascular/
Peripheral 54 52 58 62 226

CARDIAC SURGERY $161 $159 $164 $185 $669
Heart Valves 56 54 56 64 230
Perfusion 79 79 80 89 327
Cardiac Surgery
Technologies 26 26 28 32 112


TOTAL $2,346 $2,400 $2,531 $2,778 $10,055
=================================================

ADJUSTMENTS :

CURRENCY (1) 35 40 59 32 $166

COMPARABLE
OPERATIONS (1) $2,311 $2,360 $2,472 $2,746 $9,889
=================================================

----------------------------------------------------------------------
FY 06 FY 06 FY 06 FY 06 FY 06
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
----------------------------------------------------------------------
REPORTED REVENUE :
CARDIAC RHYTHM
MANAGEMENT $1,268 $1,289 $- $- $2,557
Low Power Pacing 446 459 - - 905
High Power
Defibrillation 718 733 - - 1,451
Emergency
Response Systems 87 81 - - 168
Other 17 16 - - 33

SPINAL, ENT &
NAVIGATION $589 $603 $- $- $1,192
Spinal Constructs 376 382 - - 759
Spinal Biologics 128 134 - - 261
Ear, Nose & Throat
(ENT) 65 64 - - 129
Navigation 20 23 - - 43

NEUROLOGICAL and
DIABETES $463 $487 $- $- $950
Neurological 186 204 - - 389
Gastroenterology &
Urology 49 48 - - 97
Neurologic
Technologies 55 57 - - 112
Diabetes 173 178 - - 352

VASCULAR $205 $225 $- $- $430
Stents 65 90 - - 155
Other Coronary 81 78 - - 160
Endovascular/
Peripheral 59 57 - - 115

CARDIAC SURGERY $165 $161 $- $- $327
Heart Valves 58 56 - - 114
Perfusion 79 78 - - 157
Cardiac Surgery
Technologies 28 27 - - 56


TOTAL $2,690 $2,765 $- $- $5,456
=================================================

ADJUSTMENTS :

CURRENCY (1) 26 (3) $23

COMPARABLE
OPERATIONS (1) $2,664 $2,768 $- $- $5,433
=================================================
----------------------------------------------------------------------

(1) - Medtronic management believes that in order to properly
understand Medtronic's short-term and long-term financial trends,
investors may wish to consider the impact of foreign currency
translation on revenue. In addition, Medtronic management uses
results of operations before currency translation to evaluate the
operational performance of the Company and as a basis for strategic
planning. Investors should consider these non-GAAP measures in
addition to, and not as a substitute for, financial performance
measures prepared in accordance with GAAP.

Note: The data in this schedule has been intentionally rounded to the
nearest million and therefore the quarterly revenues may not sum to
the fiscal year to date revenues.