UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ______ to ______
Commission File Number 1-7707
MEDTRONIC, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0793183
(State of incorporation) (I.R.S. Employer
Identification No.)
Central Avenue N.E.
Minneapolis, Minnesota 55432
(Address of principal executive offices)
Telephone number: (612) 574-4000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Shares of common stock, $.10 par value, outstanding on August 31, 1995:
115,579,619
PART I--FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
MEDTRONIC, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three months ended
July 28, July 29,
1995 1994
(in thousands, except
per share data)
Net sales $523,757 $403,795
Costs and expenses:
Cost of products sold 150,337 126,396
Research and development
expense 51,840 44,134
Selling, general, and
administrative expense 173,897 135,021
Interest expense 1,754 2,657
Interest income (6,360) (2,279)
Total costs and expenses 371,468 305,929
Earnings before income taxes 152,289 97,866
Provision for income taxes 52,540 32,785
Net earnings $ 99,749 $ 65,081
Weighted average shares
outstanding 115,523 115,442
Net earnings per share $ 0.86 $ 0.56
See accompanying notes to condensed consolidated financial statements.
MEDTRONIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
July 28, April 30,
1995 1995
ASSETS (in thousands)
Current assets:
Cash and cash equivalents $ 141,580 $ 98,292
Short-term investments 306,004 225,357
Accounts receivable, less allowance for
doubtful accounts of $22,269 and $22,416 422,068 413,942
Inventories:
Finished goods 87,242 97,048
Work in process 56,027 59,311
Raw materials 69,136 65,573
Total inventories 212,405 221,932
Prepaid expenses and other current assets 143,044 144,386
Total current assets 1,225,101 1,103,909
Property, plant, and equipment 746,455 715,476
Accumulated depreciation (401,723) (384,415)
Net property, plant, and equipment 344,732 331,061
Goodwill and other intangible assets, net 328,561 363,346
Other assets 129,460 148,416
Total assets $ 2,027,854 $ 1,946,732
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 41,953 $ 33,474
Accounts payable 70,009 123,012
Accrued liabilities 320,474 299,643
Total current liabilities 432,436 456,129
Long-term liabilities 130,100 119,734
Deferred income taxes 38,998 35,856
Shareholders' equity:
Common stock--par value $.10 11,554 11,551
Retained earnings 1,421,698 1,329,594
Cumulative translation adjustment 23,048 23,848
1,456,300 1,364,993
Receivable from Employee Stock Ownership Plan (29,980) (29,980)
Total shareholders' equity 1,426,320 1,335,013
Total liabilities and shareholders' equity $ 2,027,854 $ 1,946,732
See accompanying notes to condensed consolidated financial statements.
MEDTRONIC, INC.
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
Three months ended
July 28, July 29,
1995 1994
(in thousands)
OPERATING ACTIVITIES:
Net earnings $ 99,749 $ 65,081
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 36,149 30,168
Change in assets and liabilities:
Decrease (increase) in accounts receivable (8,027) 5,857
Decrease in inventories 9,494 1,960
Decrease in accounts payable and
accrued liabilities (31,540) (23,636)
Changes in other operating assets and
liabilities 160 (11,451)
Net cash provided by operating activities 105,985 67,979
INVESTING ACTIVITIES:
Additions to property, plant, and equipment (33,465) (27,929)
Purchases of marketable securities (64,094) (10,079)
Sales of marketable securities 29,549 9,755
Other investing activities (net) 12,555 4,755
Net cash used in investing activities (55,455) (23,498)
FINANCING ACTIVITIES:
Increase in short-term borrowings (net) 10,644 37,212
Reductions to long-term debt (net) (357) (5,237)
Decrease in acquisition price payable -- (39,130)
Dividends to shareholders (15,015) (11,831)
Repurchase of common stock (3,674) (59,079)
Issuance of common stock 1,887 1,366
Net cash used in financing activities (6,515) (76,699)
Effect of exchange rate changes on cash and
cash equivalents (727) 465
Net Change in Cash and Cash Equivalents 43,288 (31,753)
Cash and cash equivalents at beginning of period 98,292 108,720
Cash and cash equivalents at end of period $ 141,580 $ 76,967
See accompanying notes to condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The unaudited condensed consolidated financial statements include the accounts
of Medtronic, Inc. and all of its subsidiaries, after elimination of all
significant intercompany transactions and accounts. In the opinion of
management, all adjustments necessary for a fair presentation of operating
results have been made. All such adjustments are of a normal recurring nature.
Operating results for interim periods are not necessarily indicative of results
which may be expected for the year as a whole.
Note 2 - Subsequent Event - Stock Split
On August 30, 1995, the Board of Directors approved a two-for-one common stock
split in the form of a 100 percent stock dividend. This stock split will be
effective for shareholders of record at the close of business on September 14,
1995 and distribution is expected to be made on September 29, 1995.
Earnings per share adjusted for the pro forma effect of the stock split will be
$0.43 and $0.28 for the three-month periods ended July 28, 1995 and July 29,
1994, respectively. The effect of the stock split on shareholders' equity will
be to double shares issued and outstanding to 231,089,300 and 231,018,850 at
July 28, 1995 and April 30, 1995, respectively, and reclass $11,554 and $11,551
from retained earnings to common stock at July 28, 1995 and April 30, 1995,
respectively.
Note 3 - Subsequent Event - Authorized Shares
On August 30, 1995, shareholders approved an amendment to Medtronic's Restated
Articles of Incorporation to increase the number of authorized shares of Common
Stock from 200,000,000 to 800,000,000.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Net Earnings
Net earnings for the first quarter ended July 28, 1995, were $99.7 million, an
increase of 53.3 percent over the $65.1 million of the same quarter a year ago.
Earnings per share were $0.86, representing a 53.6 percent increase over the
$0.56 per share of the first quarter last year.
Sales
Exclusive of the effects of foreign currency translation, sales for the quarter
ended July 28, 1995 increased 24.3 percent over last year. Sales growth in the
quarter was positively impacted by $21.9 million of favorable exchange rate
movements caused primarily by the weakening of the U.S. dollar versus major
European currencies and the Japanese yen.
The growth over last year was led by strong contributions from the Pacing
business, which includes bradycardia pacing and tachyarrhythmia management.
Removing the impact of foreign exchange rate fluctuations, worldwide sales of
the Pacing business grew 33.3 percent over the same quarter a year ago.
Bradycardia sales continued to surpass the market rate of growth, led by rapid
acceptance of the Thera(TM) pacemaker system throughout the world.
Tachyarrthymia management sales more than doubled as the company's Jewel(TM)
PCD(R) implantable cardioverter-defibrillator won increasing market share.
Sales of the other cardiovascular business, consisting of interventional
vascular and cardiac surgery (heart valves, cardiopulmonary, DLP and blood
management) increased 7.5 percent on a comparable operations basis in the
quarter ended July 28, 1995. This was primarily attributable to the
interventional vascular business which experienced strong sales growth over the
prior year led by sales of the Falcon(TM) single-operator balloon catheter for
coronary angioplasty, while the Medtronic Wiktor(TM) coronary stent made
significant gains in Europe. Growth in both balloon and guiding catheters
continues to result from significant unit sales growth partially offset by
declining average selling prices. Quarter-to-quarter growth in the cardiac
surgery businesses reflect continued progress by the cannulae and surgical
accessories of Medtronic DLP and a solid performance by tissue heart valves.
Growth in the cardiopulmonary and blood management businesses has been impacted
by delays in new products.
Sales increases of the neurological and other business for the quarter ended
July 28, 1995 increased 9.8 percent over comparable operations a year ago, led
by growth in implantable drug infusion systems. Two new products - the
Mattrix(R), introduced in worldwide markets, and the Itrel(R)3, launched in
Europe - are expected to improve future sales of spinal cord stimulation
systems.
Cost of Products Sold
Cost of products sold as a percent of sales was 28.7 percent for the quarter
compared to 31.3 percent for the same quarter a year ago. The decrease in cost
of products sold as a percent of sales results from increased productivity, the
impact of favorable product and geographic mix combined with substantially
increased volumes, and the favorable impact of foreign exchange rate
fluctuations.
Selling, General, and Administrative Expense (SG&A)
SG&A expense for the quarter ended July 28, 1995 was $173.9 million compared to
$135.0 million for the comparable period last year. Included in current quarter
spending was a one-time adjustment to accelerate the amortization of certain
intangibles related to a previous acquisition in the Heart Valve business.
Despite this adjustment, SG&A as a percent of sales decreased from 33.4 percent
a year ago to 33.2 percent for the current quarter. The decrease in SG&A as a
percent of sales is attributable to strong sales growth and effective spending
controls.
Income Taxes
The estimated effective tax rate for the company's current fiscal year is 34.5
percent compared to an effective rate of 33.5 percent for the fiscal year ended
April 30, 1995. The company continues to experience upward pressure on the tax
rate, resulting from tax legislation passed in 1993 which increased the U.S.
corporate income tax rate and reduced U.S. tax benefits derived from operations
in Puerto Rico. The impact of this federal tax legislation on the effective tax
rate in future years will be primarily dependent upon the level of operating
activity in Puerto Rico. Accordingly, the company cannot determine the impact
the tax legislation will have on future operating results.
Liquidity and Capital Resources
Operating activities provided $106.0 million of cash and cash equivalents for
the first quarter ended July 28, 1995 compared to $68.0 million in the same
period a year ago. Working capital was $792.7 million at July 28, 1995, compared
to $647.8 million at April 30, 1995. The current ratio was 2.8:1 and 2.4:1 at
July 28, 1995 and April 30, 1995, respectively. Cash and cash equivalents
increased $43.3 million during the three months ended July 28, 1995. The
increase is primarily attributable to earnings growth in the quarter ended July
28, 1995. Significant uses of cash during the quarter included the reduction of
trade accounts payable, purchases of property, plant and equipment and dividends
to shareholders.
PART II -- OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the company's 1995 Annual Meeting of Shareholders held on August 30, 1995,
the shareholders approved the following:
(a) The election of five class III directors of the company to serve for
three-year terms ending in 1998, as follows:
Director Votes For Votes Withheld
F. Caleb Blodgett 96,461,652 594,780
Arthur D. Collins, Jr. 96,456,075 600,357
Antonio M. Gotto, Jr., M.D. 96,481,210 575,222
Thomas E. Holloran 96,435,331 621,101
Winston R. Wallin 96,486,218 570,214
There were no broker non-votes.
(b) A proposal to approve an amendment to Medtronic's Restated Articles
of Incorporation to increase the number of authorized shares of Common Stock
from 200,000,000 to 800,000,000. The proposal received 72,067,511 votes for, and
24,588,042 against, ratification. There were 430,879 abstentions and no broker
non-votes.
(c) A proposal to approve the adoption of the 1995 Employees Stock
Purchase Plan. The proposal received 92,173,587 votes for, and 4,462,531
against, ratification. There were 420,314 abstentions and no broker non-votes.
(d) A proposal to ratify the appointment of Price Waterhouse to serve
as independent auditors of the company for the fiscal year ending April 30,
1996. The proposal received 96,710,974 votes for, and 127,144 against,
ratification. There were 218,314 abstentions and no broker non-votes.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 - Medtronic Restated Articles of Incorporation, as
amended to date.
11 - Statement on computation of per share earnings
27 - Financial Data Schedule (For SEC use only)
(b) Reports on Form 8-K
No report on Form 8-K was filed by the company during the
quarter ended July 28, 1995.
SIGNATURES
Pursuant to the requirements 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.
(Registrant)
Date: September 8, 1995 /s/ WILLIAM W. GEORGE
William W. George
President
and Chief Executive Officer
Date: September 8, 1995 /s/ ROBERT L. RYAN
Robert L. Ryan
Senior Vice President
and Chief Financial Officer
EXHIBIT 3.1
RESTATED
ARTICLES OF INCORPORATION
OF
MEDTRONIC, INC.
(AS AMENDED THROUGH AUGUST 30, 1995)
ARTICLE 1 - NAME
1.1 The name of the corporation shall be Medtronic, Inc.
ARTICLE 2 - REGISTERED OFFICE
2.1 The registered office of the corporation shall be located at 7000
Central Avenue, N.E., Minneapolis, Minnesota.
ARTICLE 3 - STOCK
3.1 Authorized Shares; Establishment of Classes and Series. The aggregate
number of shares the corporation has authority to issue shall be
802,500,000 shares, which shall consist of 800,000,000 shares of Common
Stock with a par value of $.10 per share, and 2,500,000 shares of
Preferred Stock with a par value of $1.00 per share. The Board of
Directors is authorized to establish from the shares of Preferred
Stock, by resolution adopted and filed in the manner provided by law,
one or more classes or series of Preferred Stock, and to set forth the
designation of each such class or series and fix the relative rights
and preferences of each such class or series of Preferred Stock,
including, but not limited to, fixing the relative voting rights, if
any, of each class or series of Preferred Stock to the full extent
permitted by law. Holders of Common Stock shall be entitled to one vote
for each share of Common Stock held of record.
3.2 Issuance of Shares to Holders of Another Class or Series. The Board of
Directors is authorized to issue shares of the corporation of one class
or series to holders of that class or series or to holders of another
class or series to effectuate share dividends or splits.
ARTICLE 4 - RIGHTS OF SHAREHOLDERS
4.1 No Preemptive Rights. No holder of any class of stock of the
corporation shall be entitled to subscribe for or purchase such
holder's proportionate share of stock of any class of the corporation,
now or hereafter authorized or issued.
4.2 No Cumulative Voting Rights. No shareholder shall be entitled to
cumulate votes for the election of directors and there shall be no
cumulative voting for any purpose whatsoever.
ARTICLE 5 - DIRECTORS
5.1 Written Action by Directors. Any action required or permitted to be
taken at a Board meeting may be taken by written action signed by all
of the directors or, in cases where the action need not be approved by
the shareholders, by written action signed by the number of directors
that would be required to take the same action at a meeting of the
Board at which all directors were present.
5.2 Elimination of Director Liability in Certain Circumstances. No director
of the corporation shall be personally liable to the corporation or its
shareholders for monetary damages for breach of fiduciary duty as a
director, provided, however that this Article 5, Section 5.2 shall not
eliminate or limit the liability of a director to the extent provided
by applicable law (i) for any breach of the director's duty of loyalty
to the corporation or its shareholders, (ii) for acts or omissions not
in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) under section 302A.559 or 80A.23 of the
Minnesota Statutes, (iv) for any transaction from which the director
derived an improper personal benefit, or (v) for any act or omission
occurring prior to the effective date of this Article 5, Section 5.2.
No limiting amendment to or repeal of this Article 5, Section 5.2 shall
apply to or have any effect on the liability or alleged liability of
any director of the corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
5.3 Classification of the Board of Directors. The business and affairs of
the corporation shall be managed by or under the direction of a Board
of Directors consisting of not less than three nor more than fifteen
persons, who need not be shareholders. The number of directors may be
increased by the shareholders or Board of Directors or decreased by the
shareholders from the number of directors on the Board of Directors
immediately prior to the effective date of this Section 5.3 provided,
however, that any change in the number of directors on the Board of
Directors (including, without limitation, changes at annual meetings of
shareholders) shall be approved by the affirmative vote of not less
than seventy-five percent (75%) of the votes entitled to be cast by the
holders of all then outstanding voting shares (as defined in Section
6.2 of Article 6), voting together as a single class, unless such
change shall have been approved by a majority of the entire Board of
Directors. If such change shall not have been so approved, the number
of directors shall remain the same. The directors shall be divided into
three classes, designated Class I, Class II and Class III. Each class
shall consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors.
At the 1989 annual meeting of shareholders, Class I directors shall be
elected for a one-year term, Class II directors for a two-year term and
Class III directors for a three-year term. At each succeeding annual
meeting of shareholders beginning in 1990, successors to the class of
directors whose term expires at that annual meeting shall be elected
for a three-year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as
possible, and any additional director of any class elected to fill a
vacancy resulting from an increase in such class shall hold office for
a term that shall coincide with the remaining term of that class. In no
case will a decrease in the number of directors shorten the term of any
incumbent director. A director shall hold office until the annual
meeting for the year in which the director's term expires and until a
successor shall be elected and qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from
office. Removal of a director from office (including a director named
by the Board of Directors to fill a vacancy or newly created
directorship), with or without cause, shall require the affirmative
vote of not less than seventy-five percent (75%) of the votes entitled
to be cast by the holders of all then outstanding voting shares, voting
together as a single class. Any vacancy on the Board of Directors that
results from an increase in the number of directors shall be filled by
a majority of the Board of Directors then in office, and any other
vacancy occurring in the Board of Directors shall be filled by a
majority of the directors then in office, although less than a quorum,
or by a sole remaining director. Any director elected to fill a vacancy
not resulting from an increase in the number of directors shall have
the same remaining term as that of such director's predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes of preferred or preference stock issued by the corporation
shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of shareholders, the
election, term of office, filling of vacancies and other features of
such directorships shall be governed by or pursuant to the applicable
terms of the certificate of designation or other instrument creating
such class or series of preferred stock, and such directors so elected
shall not be divided into classes pursuant to this Section 5.3 unless
expressly provided by such terms.
Only persons who are nominated in accordance with the procedures set
forth in this Section 5.3 shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the
corporation may be made at a meeting of shareholders (a) by or at the
direction of the Board of Directors or (b) by any shareholder of the
corporation entitled to vote for the election of directors at the
meeting who complies with the notice procedures set forth in this
Section 5.3. Nominations by shareholders shall be made pursuant to
timely notice in writing to the Secretary of the corporation. To be
timely, a shareholder's notice shall be delivered to or mailed and
received at the principal executive offices of the corporation not less
than 50 days nor more than 90 days prior to the meeting, provided,
however, that in the event that less than 60 days' notice or prior
public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be so
received not later than the close of business on the 10th day following
the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such shareholder's notice shall set
forth (a) as to each person whom the shareholder proposes to nominate
for election or re-election as a director, all information relating to
such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including such person's written consent to being
named in the proxy statement as a nominee and to serving as a director
if elected); and (b) as to the shareholder giving the notice (i) the
name and address, as they appear on the corporation's books, of such
shareholder and (ii) the class and number of shares of the corporation
which are beneficially owned by such shareholder. At the request of the
Board of Directors any person nominated by the Board of Directors for
election as a director shall furnish to the Secretary of the
corporation that information required to be set forth in a
shareholder's notice of nomination which pertains to the nominee. No
person shall be eligible for election as a Director of the corporation
unless nominated in accordance with the procedures set forth in this
Section 5.3. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed in this Section 5.3 and, if
he should so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded.
At any regular or special meeting of the shareholders, only such
business shall be conducted as shall have been brought before the
meeting (a) by or at the direction of the Board of Directors or (b) by
any shareholder of the corporation who complies with the notice
procedures set forth in this Section 5.3. For business to be properly
brought before any regular or special meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to the
Secretary of the corporation. To be timely, a shareholder's notice must
be delivered to or mailed and received at the principal executive
offices of the corporation not less than 50 days nor (except for
shareholder proposals subject to Rule 14a-8(a)(3)(i) of the Securities
Exchange Act of 1934, as amended) more than 90 days prior to the
meeting, provided, however, that in the event that less than 60 days'
notice or prior public disclosure of the date of the meeting is given
or made to the shareholders, notice by the shareholder to be timely
must be received not later than the close of business on the 10th day
following the day on which such notice of the date of the regular or
special meeting was mailed or such public disclosure was made. A
shareholder's notice to the Secretary shall set forth as to each matter
the shareholder proposes to bring before the regular or special meeting
(a) a brief description of the business desired to be brought before
the meeting and the reasons for conducting such business at the
meeting, (b) the name and address, as they appear on the corporation's
books, of the shareholder proposing such business, (c) the class and
number of shares of the corporation which are beneficially owned by the
shareholder and (d) any material interest of the shareholder in such
business. Notwithstanding anything in the corporation's Bylaws to the
contrary, no business shall be conducted at any regular or special
meeting except in accordance with the procedures set forth in this
Section 5.3. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly
brought before the meeting and in accordance with the provisions of
this Section 5.3 and, if he should so determine, he shall so declare to
the meeting and any such business not properly brought before the
meeting shall not be transacted.
Notwithstanding any other provisions of these Articles of Incorporation
(and notwithstanding the fact that a lesser percentage or separate
class vote may be specified by law or these Articles of Incorporation),
the affirmative vote of the holders of not less than seventy-five
percent (75%) of the votes entitled to be cast by the holders of all
then outstanding voting shares, voting together as a single class,
shall be required to amend or repeal, or adopt any provisions
inconsistent with, this Section 5.3.
ARTICLE 6 - RELATED PERSON BUSINESS TRANSACTIONS
6.1 Whether or not a vote of shareholders is otherwise required, the
affirmative vote of the holders of not less than two-thirds of the
voting power of the outstanding "voting shares" (as hereinafter
defined) of the corporation shall be required for the approval or
authorization of any "Related Person Business Transaction" (as
hereinafter defined) involving the corporation or the approval or
authorization by the corporation in its capacity as a shareholder of
any Related Person Business Transaction involving a "Subsidiary" (as
hereinafter defined) which requires the approval or authorization of
the shareholders of the Subsidiary, provided, however, that such
two-thirds voting requirement shall not be applicable if:
(a) The "Continuing Directors" (as hereinafter defined) by a
majority vote have expressly approved the Related Person
Business Transaction; or
(b) The Related Person Business Transaction is a merger,
consolidation, exchange of shares or sale of all or
substantially all of the assets of the corporation, and the
cash or fair market value of the property, securities or other
consideration to be received per share by holders of Common
Stock of the corporation other than the "Related Person" (as
hereinafter defined) in the Related Person Business
Transaction is an amount at least equal to the "Highest
Purchase Price" (as hereinafter defined).
6.2 For the purposes of this Article 6:
(a) The term "Related Person Business Transaction" shall mean (i)
any merger or consolidation of the corporation or a Subsidiary
with or into a Related Person, (ii) any exchange of shares of
the corporation or a Subsidiary for shares of a Related Person
which, in the absence of this Article, would have required the
affirmative vote of at least a majority of the voting power of
the outstanding shares of the corporation entitled to vote or
the affirmative vote of the corporation, in its capacity as a
shareholder of the Subsidiary, (iii) any sale, lease,
exchange, transfer or other disposition (in one transaction or
a series of transactions), including without limitation a
mortgage or any other security device, of all or any
"Substantial Part" (as hereinafter defined) of the assets
either of the corporation or of a Subsidiary to or with a
Related Person, (iv) any sale, lease, transfer or other
disposition (in one transaction or a series of transactions)
of all or any Substantial Part of the assets of a Related
Person to or with the corporation or a Subsidiary, (v) the
issuance, sale, transfer or other disposition to a Related
Person of any securities of the corporation (except pursuant
to stock dividends, stock splits, or similar transactions
which would not have the effect of increasing the
proportionate voting power of a Related Person) or of a
Subsidiary (except pursuant to a pro rata distribution to all
holders of Common Stock of the corporation), (vi) any
recapitalization or reclassification that would have the
effect of increasing the proportionate voting power of a
Related Person, and (vii) any agreement, contract, arrangement
or understanding providing for any of the transactions
described in this definition of Related Person Business
Transaction.
(b) The term "Related Person" shall mean and include (i) any
person or entity which, together with its "Affiliates" and
"Associates" (both as hereinafter defined), "beneficially
owns" (as hereinafter defined) in the aggregate 15 percent or
more of the outstanding voting shares of the corporation, and
(ii) any Affiliate or Associate (other than the corporation or
a wholly-owned Subsidiary of the corporation) of any such
person or entity. Two or more persons or entities acting as a
syndicate or group, or otherwise, for the purpose of
acquiring, holding or disposing of voting shares of the
corporation shall be deemed to be a "person" or "entity," as
the case may be.
(c) The term "Affiliate," used to indicate a relationship with a
specified person or entity, shall mean a person or entity that
directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with,
the person or entity specified.
(d) The term "Associate," used to indicate a relationship with a
specified person or entity, shall mean (i) any entity of which
such specified person or entity is an officer or partner or
is, directly or indirectly, the beneficial owner of 10 percent
or more of any class of equity securities, (ii) any trust or
other estate in which such specified person or entity has a
substantial beneficial interest or as to which such specified
person or entity serves as trustee or in a similar fiduciary
capacity, (iii) any relative or spouse of such specified
person, or any relative of such spouse, who has the same home
as such specified person or who is a director or officer of
the corporation or any Subsidiary, and (iv) any person who is
a director or officer of such specified entity or any of its
parents or subsidiaries (other than the corporation or a
wholly-owned Subsidiary of the corporation).
(e) The term "Substantial Part" shall mean 30 percent or more of
the fair market value of the total assets of the person or
entity in question, as reflected on the most recent balance
sheet of such person or entity existing at the time the
shareholders of the corporation would be required to approve
or authorize the Related Person Business Transaction involving
the assets constituting any such Substantial Part.
(f) The term "Subsidiary" shall mean any corporation, a
majority of the equity securities of any class of which are
owned by the corporation, by another Subsidiary, or in the
aggregate by the corporation and one or more of its
Subsidiaries.
(g) The term "Continuing Director" shall mean (i) a director who
was a member of the Board of Directors of the corporation
either on June 22, 1983 or immediately prior to the time that
any Related Person involved in the Related Person Business
Transaction in question became a Related Person and (ii) any
person becoming a director whose election, or nomination for
election by the corporation's shareholders, was approved by a
vote of a majority of the Continuing Directors, provided,
however, that in no event shall a Related Person involved in
the Related Person Business Transaction in question be deemed
to be a Continuing Director.
(h) The term "voting shares" shall mean shares of capital stock of
a corporation entitled to vote generally in the election of
directors, considered for the purposes of this Article as one
class.
(i) The term "Highest Purchase Price" shall mean the highest
amount of cash or the fair market value of the property,
securities or other consideration paid by the Related Person
for a share of Common Stock of the corporation at any time
while such person or entity was a Related Person or in the
transaction which resulted in such person or entity becoming a
Related Person, provided, however, that the Highest Purchase
Price shall be appropriately adjusted to reflect the
occurrence of any reclassification, recapitalization, stock
split, reverse stock split or other readjustment in the number
of outstanding shares of Common Stock of the corporation, or
the declaration of a stock dividend thereon, between the last
date upon which the Related Person paid the Highest Purchase
Price and the effective date of the merger, consolidation or
exchange of shares or the date of distribution to shareholders
of the corporation of the proceeds from the sale of all or
substantially all of the assets of the corporation.
(j) (i) A person or entity "beneficially owns" voting
shares of the corporation if such person or entity,
directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise
has or shares (A) voting power which includes the
power to vote, or to direct the voting of, such
voting shares or (B) investment power which includes
the power to dispose, or to direct the disposition
of, such voting shares. Any person or entity which,
directly or indirectly, creates or uses a trust,
proxy, power of attorney, pooling arrangement or any
other contract, arrangement, or device with the
purpose or effect of divesting such person or entity
of beneficial ownership of voting shares of the
corporation or preventing the vesting of such
beneficial ownership as part of a plan or scheme to
avoid becoming a Related Person shall be deemed for
purposes of this Article 6 to be the beneficial owner
of such voting shares. All voting shares of the
corporation beneficially owned by a person or entity,
regardless of the form which such beneficial
ownership takes, shall be aggregated in calculating
the number of voting shares of the corporation
beneficially owned by such person or entity. Any
voting shares of the corporation that any person or
entity has the right to acquire pursuant to any
agreement, contract, arrangement or understanding, or
upon exercise of any conversion right, warrant, or
option, or pursuant to the automatic termination of a
trust, discretionary account or similar arrangement,
or otherwise shall be deemed beneficially owned by
such person or entity. Any voting shares of the
corporation not outstanding which any person or
entity has a right to acquire shall be deemed to be
outstanding for the purpose of computing the
percentage of outstanding voting shares of the
corporation beneficially owned by such person or
entity but shall not be deemed to be outstanding for
the purpose of computing the percentage of
outstanding voting shares of the corporation
beneficially owned by any other person or entity.
(ii) Notwithstanding the foregoing provisions of
subparagraph 6.2(j)(i) hereof:
(A) A member of a national securities exchange
shall not be deemed to be a beneficial owner
of voting shares of the corporation held
directly or indirectly by it on behalf of
another person or entity solely because such
member is the record holder of such voting
shares and, pursuant to the rules of such
exchange, may direct the vote of such voting
shares, without instruction, on other than
contested matters or matters that may affect
substantially the rights or privileges of
the holders of the voting shares of the
corporation to be voted, but is otherwise
precluded by the rules of such exchange from
voting without instruction;
(B) A commercial bank, broker or dealer or
insurance company which in the ordinary
course of business is a pledgee of voting
shares of the corporation under a written
pledge agreement shall not be deemed to be
the beneficial owner of such pledged voting
shares until the pledgee has taken all
formal steps necessary to declare a default
and determines that the power to vote or to
direct the vote or to dispose or to direct
the disposition of such pledged securities
will be exercised, provided that the pledge
agreement is bona fide and was not entered
into with the purpose nor with the effect of
changing or influencing the control of the
corporation nor in connection with any
transaction having such purpose or effect
and, prior to default, does not grant to the
pledgee the power to vote or to direct the
vote of the pledged voting shares of the
corporation; and
(C) A person or entity engaged in business as an
underwriter of securities who acquires
voting shares of the corporation through its
participation in good faith in a firm
commitment underwriting registered under the
Securities Act of 1933, or comparable
successor law, rule or regulation, shall not
be deemed to be the beneficial owner of such
voting shares until the expiration of forty
days after the date of such acquisition.
6.3 For the purposes of this Article 6, the Continuing Directors by a
majority vote shall have the power to make a good faith determination,
on the basis of information known to them, of: (a) the number of voting
shares of the corporation that any person or entity "beneficially
owns," (b) whether a person or entity is an Affiliate or Associate of
another, (c) whether the assets subject to any Related Person Business
Transaction constitute a Substantial Part, (d) whether any business
transaction is one in which a Related Person has an interest, (e)
whether the cash or fair market value of the property, securities or
other consideration to be received per share by holders of Common Stock
of the corporation other than the Related Person in a Related Person
Business Transaction is an amount at least equal to the Highest
Purchase Price, and (f) such other matters with respect to which a
determination is required under this Article 6.
6.4 The provisions set forth in this Article 6, including this Section 6.4,
may not be repealed or amended in any respect unless such action is
approved by the affirmative vote of the holders of not less than
two-thirds of the voting power of the outstanding voting shares of the
corporation.
EXHIBIT 11
STATEMENT RE COMPUTATION OF
PER SHARE EARNINGS
MEDTRONIC, INC.
(Unaudited)
(in thousands)
Three months ended
July 28, July 29,
1995 1994
PRIMARY
Shares outstanding:
Weighted average outstanding 115,523 115,442
Share equivalents (1)(2) 2,037 1,110
Adjusted shares outstanding (2) 117,560 116,552
FULLY DILUTED
Shares outstanding:
Weighted average outstanding 115,523 115,442
Share equivalents (1)(2) 2,333 1,508
Adjusted shares outstanding (2) 117,856 116,950
(1) Share equivalents consist primarily of nonqualified stock options.
(2) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3 %.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF EARNINGS AND CONDENSED CONSOLIDATED BALANCE SHEET FOR
THE QUARTERLY PERIOD ENDED JULY 28, 1995 FILED WITH THE SEC ON FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> JUL-28-1995
<CASH> 141,580
<SECURITIES> 306,004
<RECEIVABLES> 444,337
<ALLOWANCES> 22,269
<INVENTORY> 212,405
<CURRENT-ASSETS> 1,225,101
<PP&E> 746,455
<DEPRECIATION> 401,723
<TOTAL-ASSETS> 2,027,854
<CURRENT-LIABILITIES> 432,436
<BONDS> 0
<COMMON> 11,554
0
0
<OTHER-SE> 1,414,766
<TOTAL-LIABILITY-AND-EQUITY> 2,027,854
<SALES> 523,757
<TOTAL-REVENUES> 523,757
<CGS> 150,337
<TOTAL-COSTS> 150,337
<OTHER-EXPENSES> 225,737
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,754
<INCOME-PRETAX> 152,289
<INCOME-TAX> 52,540
<INCOME-CONTINUING> 99,749
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 99,749
<EPS-PRIMARY> .86
<EPS-DILUTED> .85
</TABLE>
