Medtronic fiscal year 2010 revenue up 8% to $15.817 billion

Medtronic, Inc. (NYSE: MDT):

“We have the most robust portfolio of products and compelling therapies in the industry, and we remain focused on providing innovative, cost-effective solutions to the global challenge of chronic diseases affecting more people worldwide than ever before.”

• First $4 Billion Sales Quarter in Company History
• Full Year Revenue of $15.8 Billion Increased 8 Percent
• Full Year Non-GAAP Diluted EPS of $3.22 Grew 10%; GAAP Diluted EPS of $2.79 Grew 52%
• Fourth Quarter GAAP Cash Flow from Operations of $1.237 Billion

Medtronic, Inc. (NYSE: MDT) today announced financial results for its fourth quarter and fiscal year ended April 30, 2010.

Medtronic recorded fiscal year 2010 revenue of $15.817 billion, an 8 percent increase over fiscal year 2009 revenue on both an as reported and constant currency basis. As reported, fiscal year 2010 net earnings were $3.099 billion, or $2.79 per diluted share, an increase of 50 percent and 52 percent, respectively. As detailed in the attached table, non-GAAP net earnings and diluted earnings per share for fiscal year 2010 were $3.577 billion and $3.22, an increase of 9 percent and 10 percent, respectively.

For the first time in Medtronic's 61-year history, the company delivered revenue exceeding $4 billion in a quarter. The company reported fourth quarter revenue of $4.196 billion, a 10 percent increase over reported fourth quarter revenue a year ago, or a 6 percent increase on a constant currency basis. As reported, fourth quarter net earnings were $954 million, or $0.86 per diluted share, an increase of 826 percent and 856 percent, respectively. As detailed in the attached table, fourth quarter net earnings and diluted earnings per share on a non-GAAP basis were $986 million and $0.89, an increase of 8 percent and 9 percent, respectively. Fourth quarter net earnings and diluted earnings per share reflect a negative impact from U.S. healthcare reform legislation related to the elimination of a federal tax deduction for government subsidies of retiree prescription drug benefits by $14.8 million, or $0.01 per diluted share, respectively.

For the year, international revenue grew to $6.451 billion, up 15 percent over the prior fiscal year and 13 percent on a constant currency basis. In fiscal year 2010, international revenue represented 41 percent of total company revenues. Medtronic generated $1.754 billion in fourth quarter international revenue, an increase of 20 percent over the same period last year and 11 percent on a constant currency basis.

"Across businesses and geographies, we have been executing against our strategy, resulting in a record $4 billion quarter," said William A. Hawkins, chairman and chief executive officer. "We continue to strengthen our core businesses and have launched new therapies that today address a growing number of unmet chronic medical needs. We have a number of exciting new therapies we are preparing to launch in fiscal 2011, which will further solidify our leadership position in the markets we serve."

Cardiac Rhythm Disease Management
Cardiac Rhythm Disease Management annual revenue of $5.268 billion increased 5 percent as reported and 4 percent on a constant currency basis. Fourth quarter revenue of $1.409 billion increased 8 percent as reported and 5 percent on a constant currency basis. Fourth quarter implantable cardioverter defibrillator (ICD) revenue of $881 million grew 10 percent on a constant currency basis, and pacing revenue of $495 million declined 4 percent on a constant currency basis. Fourth quarter CRDM growth was driven by ICD sales in the United States, due in part to a competitor's suspension of sales, and the growing success of the AF Solutions business outside the United States.

CardioVascular
CardioVascular annual revenue of $2.864 billion increased 18 percent as reported and 16 percent on a constant currency basis. Fourth quarter revenue of $757 million increased 18 percent as reported and 12 percent on a constant currency basis. The Coronary, Structural Heart, and Endovascular businesses grew revenue 9 percent, 17 percent, and 12 percent, respectively, all on a constant currency basis. Strong international growth across the entire CardioVascular segment contributed to the quarterly performance.

Spinal
Spinal annual revenue of $3.500 billion increased 3 percent as reported and 2 percent on a constant currency basis. Fourth quarter Spinal revenue of $880 million was flat as reported and declined 2 percent on a constant currency basis. Outside the United States, Spinal grew 6 percent on a constant currency basis in the quarter, driven by the return to growth of balloon kyphoplasty in Western Europe.

Neuromodulation
Neuromodulation annual revenue of $1.560 billion increased 9 percent as reported and 8 percent on a constant currency basis. Fourth quarter revenue of $411 million increased 6 percent as reported and 4 percent on a constant currency basis. Neuromodulation growth was driven by sales of Activa® PC and RC Deep Brain Stimulation for movement disorders, and InterStim® Therapy for overactive bladder and urinary retention, as well as bowel control outside the United States.

Diabetes
Diabetes annual revenue of $1.237 billion increased 11 percent as reported and 10 percent on a constant currency basis. Fourth quarter revenue of $332 million increased 12 percent as reported and 8 percent on a constant currency basis. Growth in the quarter was driven by a strong international performance and growth in continuous glucose monitoring sales.

Surgical Technologies
Surgical Technologies annual revenue of $963 million increased 12 percent as reported and 11 percent on a constant currency basis. Fourth quarter revenue of $273 million increased 16 percent as reported and 13 percent on a constant currency basis. The segment experienced broad-based growth across geographies and platforms including strong results from Navigation on sales of its O-Arm® Imaging System in the United States and continued growth in the Ear, Nose and Throat business on capital equipment sales of nerve monitoring, image guided surgery, and power equipment.

Physio-Control
Physio-Control annual revenue of $425 million increased 24 percent as reported and 22 percent on a constant currency basis. Fourth quarter revenue of $134 million increased 60 percent as reported and 52 percent on a constant currency basis. Growth was driven by strong sales of the LIFEPAK 15 monitor/defibrillator and the resumption of unrestricted global shipments early in the quarter following the lifting of United States Food and Drug Administration distribution restrictions.

Guidance
The company today provided its revenue outlook and diluted earnings per share (EPS) guidance for fiscal year 2011.

For fiscal year 2011, the company expects revenue growth in the range of 5 to 8 percent on a constant currency basis. The company expects diluted EPS in the range of $3.45 to $3.55, which includes approximately $0.05 of dilution from the acquisition of Invatec and the pending ATS Medical acquisition. Excluding the impact of acquisition dilution and the benefit of the extra week in fiscal year 2010, fiscal year 2011 EPS growth is expected to be in the range of 10 percent to 13 percent.

Earnings per share guidance excludes any unusual charges or gains that might occur during the fiscal year and the impact of the non-cash charge to interest expense due to the change in accounting rules governing convertible debt. The guidance provided only reflects information available to the company at this time.

In closing, Hawkins said, "We have the most robust portfolio of products and compelling therapies in the industry, and we remain focused on providing innovative, cost-effective solutions to the global challenge of chronic diseases affecting more people worldwide than ever before."