EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(mark one)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended April 30, 2000
Or
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Nos.: 33-37529 and 33-44230
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
MEDTRONIC, INC. AND PARTICIPATING EMPLOYERS
SUPPLEMENTAL RETIREMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Medtronic, Inc.
7000 Central Avenue N.E.
Minneapolis, MN 55432
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
MEDTRONIC, INC. AND PARTICIPATING
EMPLOYERS SUPPLEMENTAL RETIREMENT
PLAN
Dated: October 26, 2000 By: /s/ Janet S. Fiola
----------------------------------
Janet S. Fiola
Senior Vice President,
Human Resources
<PAGE>
MEDTRONIC, INC. AND PARTICIPATING EMPLOYERS
SUPPLEMENTAL RETIREMENT PLAN
FINANCIAL STATEMENTS
AND ADDITIONAL INFORMATION
APRIL 30, 2000 AND 1999
<PAGE>
MEDTRONIC, INC. AND PARTICIPATING EMPLOYERS
SUPPLEMENTAL RETIREMENT PLAN
FINANCIAL STATEMENTS
AND ADDITIONAL INFORMATION
APRIL 30, 2000 AND 1999
TABLE OF CONTENTS TO FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
--------------------------------------------------------------------
PAGE
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Financial Statements:
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-8
Additional Information:*
Schedule 1 - Form 5500, Item 27a - Schedule of Assets Held
for Investment Purposes 9
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been omitted
because they are not applicable.
<PAGE>
Report of Independent Accountants
---------------------------------
To the Participants and Administrator
of the Medtronic, Inc. and Participating
Employers Supplemental Retirement Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Medtronic, Inc. and Participating Employers Supplemental Retirement Plan
(the "Plan") at April 30, 2000 and 1999, and the changes in net assets available
for benefits for the years then ended in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets Held
For Investment Purposes is presented for the purpose of additional analysis and
is not a part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 22, 2000
1
<PAGE>
MEDTRONIC, INC. AND PARTICIPATING EMPLOYERS
SUPPLEMENTAL RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
----------------------------------------------
(IN 000'S)
----------
<TABLE>
<CAPTION>
April 30,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Assets:
-------
Investments at Fair Value:
Medtronic Common Stock Fund $ 741,949 $ 529,778
Vanguard 500 Index Fund 152,479 117,602
Vanguard PRIMECAP Fund 127,626 62,110
Vanguard Wellington Fund 88,723 98,627
Vanguard Windsor II Fund 43,901 62,045
Vanguard Explorer Fund 33,775 13,344
Vanguard International Growth Fund 31,680 21,906
Vanguard U.S. Growth Fund 27,047 11,210
Vanguard Extended Market Index Fund 10,053 2,433
Vanguard Total Bond Market Index Fund 9,117 7,550
Vanguard Wellesley Income Fund -- 16
Participant Loans 14,993 12,318
------------ ------------
1,281,343 938,939
Medtronic Interest Income Fund, at contract value 132,140 118,529
------------ ------------
Total Investments 1,413,483 1,057,468
Contributions Receivable:
Employee 4,532 4,020
------------ ------------
Net Assets Available for Benefits $ 1,418,015 $ 1,061,488
============ ============
</TABLE>
2
<PAGE>
MEDTRONIC, INC. AND PARTICIPATING EMPLOYERS
SUPPLEMENTAL RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
---------------------------------------------------------
(IN 000'S)
----------
<TABLE>
<CAPTION>
Years ended April 30,
-----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Additions:
----------
Contributions:
Employee $ 68,354 $ 45,224
Investment Activity:
Interest and Dividend Income 41,953 30,748
Net Appreciation in Fair Value of Investments 257,736 162,365
------------ ------------
Total Investment Income 299,689 193,113
Net Assets Transferred from Other Plans 57,977 45,168
------------ ------------
Total Additions 426,020 283,505
Deductions:
-----------
Benefit Payments (69,444) (45,138)
Administrative Fees (49) --
------------ ------------
(69,493) (45,138)
Increase in Net Assets 356,527 238,367
Net Assets Available for Benefits:
----------------------------------
Beginning of Year 1,061,488 823,121
------------ ------------
End of Year $ 1,418,015 $ 1,061,488
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
MEDTRONIC, INC. AND PARTICIPATING EMPLOYERS
SUPPLEMENTAL RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1--DESCRIPTION OF THE PLAN
-------------------------------
The Medtronic, Inc. and Participating Employers Supplemental Retirement Plan
(the Plan) is a defined contribution plan created by Medtronic, Inc. (the
Company). It is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA). The Plan provides for a regular savings program
whereby participants may contribute between 2% and 12% of their monthly salary.
Beginning May 1, 2000, the Plan was amended to allow employees to contribute up
to 15% of their eligible compensation. The trustee of the Plan is Vanguard
Fiduciary Trust Company (Vanguard Trust), hereinafter referred to as the
"Trustee". In fiscal years 2000 and 1999, the company paid certain
administrative expenses of the Plan.
Employees receive a matching allocation of at least 50% of the employee
contribution, up to 6% of compensation. Employees may receive an additional
allocation of up to 150% of the amount contributed by the employee (up to 6% of
compensation), if certain performance goals are achieved. The Company match
totaled $32,046,000 and $21,537,000 for fiscal years 2000 and 1999, respectively
and was made in the form of an annual allocation of Medtronic stock to the
Employee Stock Ownership Plan account.
Participants are 20% vested in the Company contributions upon completing one
year of service. Additional vesting in the Company contributions accrues at the
rate of 20% per year thereafter and participants are fully vested on all
Company's contributions after five years. Participants are 100% vested in their
own contributions at all times. Participant forfeitures of nonvested amounts
reduce the Company contribution. During fiscal years 2000 and 1999, $529,000 and
$405,000 were forfeited by terminating employees before these amounts became
vested.
During the plan years ended April 30, 2000 and 1999, participants were able to
allocate their contributions among the following investment options:
MEDTRONIC COMMON STOCK FUND: Invests in Medtronic, Inc. common stock to provide
the possibility of long-term growth through increases in the value of the stock
and the reinvestment of its dividends. Among the factors affecting the stock's
potential growth are the company's ability to expand its commitment to new
technology and products and to enter new markets.
VANGUARD 500 INDEX FUND: Seeks to provide long-term growth of capital and income
from dividends by holding all of the 500 stocks that make up the unmanaged
Standard & Poor's 500 Composite Stock Price Index, a widely recognized benchmark
of U.S. stock market performance.
VANGUARD PRIMECAP FUND: Seeks long-term growth of capital by investing in stocks
of companies with above-average prospects for continued earnings growth, strong
industry positions, and skilled management teams.
VANGUARD WELLINGTON FUND: Seeks to provide income and long-term growth of
capital without undue risk to capital by investing about 65% of its assets in
stocks and the remaining 35% in bonds.
4
<PAGE>
VANGUARD WINDSOR II FUND: Seeks to provide income and long-term growth of
capital and income from dividends by investing in a diversified group of
out-of-favor stocks of large-capitalization companies. The stocks generally sell
at prices below the overall market average compared to their dividend income and
future return potential.
VANGUARD EXPLORER FUND: Seeks to provide long-term growth of capital by
investing in a diversified group of small-company stocks with prospects for
above-average growth.
VANGUARD INTERNATIONAL GROWTH FUND: Seeks to provide long-term growth of capital
by investing in stocks of high-quality, seasoned companies based outside the
United States. Stocks are selected from more than 15 countries.
VANGUARD U.S. GROWTH FUND: Seeks to provide long-term growth of capital by
investing in large, high-quality, seasoned U.S. companies with records of
exceptional growth and above-average prospects for future growth.
VANGUARD EXTENDED MARKET INDEX FUND: Seeks to provide long-term growth of
capital by attempting to match the performance of the Wilshire 4500 Equity
Index, an unmanaged index made up mostly of mid- and small-capitalization
companies.
VANGUARD TOTAL BOND MARKET INDEX FUND: Seeks to provide a high level of interest
income by attempting to match the performance of the unmanaged Lehman Brothers
Aggregate Bond Index, which is a widely recognized measure of the entire taxable
U.S. bond market.
VANGUARD WELLESLEY INCOME FUND: Seeks to provide a high level of income,
long-term growth of income, and moderate long-term growth of capital by
investing 60% to 65% of its assets in high-quality long-term and
intermediate-term bonds and the remainder in dividend-paying stocks.
MEDTRONIC INTEREST INCOME FUND: Seeks to preserve the value of capital and
provide an attractive level of interest by investing primarily in investment
contracts issued by insurance companies and banks. It is designed to maintain a
constant $1.00 share value.
Effective April 1, 1998, the Vanguard Wellesley Income Fund was no longer
available for participant contributions.
Termination or retirement benefits are paid by the Trustee in accordance with
the provisions of the Plan and the instructions of Medtronic, Inc., acting as
plan administrator. In the event the Plan were terminated, participants become
fully vested and the Company would cause all amounts in the hands of the Trustee
to be allocated and distributed to the participants based upon their investment
balance.
NOTE 2--SUMMARY OF ACCOUNTING PRINCIPLES
----------------------------------------
Basis of Presentation
---------------------
The financial statements of the Plan are prepared on the accrual basis of
accounting.
5
<PAGE>
Investment Valuation and Income Recognition
-------------------------------------------
As determined by the Trustee, investments are stated at fair value based upon
quoted market prices, except deposits with insurance companies guaranteed
investment contracts which are valued at contract value, which approximates fair
market value. Contract value represents contributions made under the contract,
plus earnings, less plan withdrawals, and administrative expenses.
Purchases and sales of investments are recorded on a trade-date basis. Interest
income is accrued when earned. Dividend income is recorded on the day after the
date of record. Capital gain distributions are included in dividend income.
Valuation of Participant Loans
------------------------------
Participant loans are valued at cost which approximates fair value. Participants
can have only one loan outstanding at a time and can borrow up to 50% of their
vested balance not to exceed the maximum loan amount of $50,000. The minimum
loan amount is $1,000. Loans are repaid through payroll deduction in equal
amounts over a 1 to 5 year period. The interest rate is calculated as one
percentage point over the prime rate in effect at US Bank, St. Paul, N.A., on
the first work day of the month in which the loan is made and remains fixed for
the duration for the loan.
Use of Estimates
----------------
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
New Accounting Standards
------------------------
In September 1999, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 99-3
("SOP 99-3"), "Accounting for and Reporting of Certain Defined Contribution
Benefit Plan Investments and Other Disclosure Matters." SOP 99-3 simplifies the
disclosure of certain investment information of defined contribution plans and
is effective for financial statements of plan years ending after December 15,
1999, with earlier application encouraged. The Plan adopted the provisions of
this SOP for its plan year ended April 30, 2000. The primary impact on these
financial statements is the elimination of certain disclosures regarding changes
in net assets available for benefits by investment fund option.
NOTE 3--TRUSTEE
---------------
Vanguard Trust maintains all assets and is the recordkeeper of the Plan.
Vanguard Trust maintains a separate account in the name of each participant in
the Plan to record the assets allocated to the participant and the earnings,
losses, disbursements and expenses credited thereto.
NOTE 4--RELATED PARTY TRANSACTIONS
----------------------------------
The Plan invests in shares of mutual funds managed by an affiliate of Vanguard
Trust. Vanguard Trust acts as trustee for only those investments as defined by
the Plan. Transactions in such investments qualify as party-in-interest
transactions which are exempt from the prohibited transaction rules. Total
6
<PAGE>
purchases and sales for the years ended April 30, 2000 and April 30, 1999 were
$507,369,000 and $404,879,000 and $426,765,000 and $345,980,000, respectively.
NOTE 5--BENEFIT OBLIGATIONS
---------------------------
At April 30, 2000 and 1999, the plan had benefit obligations totaling $6,579,000
and $2,869,000. Benefit obligations relate to amounts allocated to withdrawing
participants for benefit claims that have been processed and approved for
payment prior to April 30 but not yet paid as of that date.
NOTE 6--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
-----------------------------------------------------------
Differences exist between the financial statements and the Form 5500 as a result
of benefit obligations being excluded from the financial statements. The
following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500 ($ in 000's):
<TABLE>
<CAPTION>
April 30,
-----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Net assets available for benefits per the financial statements $ 1,418,015 $ 1,061,488
Amounts allocated to withdrawing participants (6,579) (2,869)
------------ ------------
Net assets available for benefits per the Form 5500 $ 1,411,436 $ 1,058,619
============ ============
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended April 30, 2000 ($ in
000's):
Benefits paid to participants per the financial
statements $ 69,444
Add: Amounts allocated to withdrawing
participants at April 30, 2000 6,579
Less: Amounts allocated to withdrawing
participants at April 30, 1999 (2,869)
------------
Benefits paid to participants per the Form 5500 $ 73,154
============
NOTE 7--TAX STATUS
------------------
The Plan has received a favorable determination letter of tax qualification from
the Internal Revenue Service. The Plan administrator believes the Plan continues
to qualify under the provision of Section 401(a) of the Internal Revenue Code,
and that the related trust is exempt from federal income tax.
7
<PAGE>
NOTE 8--NET ASSETS TRANSFERRED FROM OTHER PLANS
-----------------------------------------------
During fiscal years 2000 and 1999, the Company acquired or merged with various
companies, including Xomed Surgical Products, Inc., Physio-Control International
Corporation, Arterial Vascular Engineering, Inc., Sofamor Danek Group, Inc. and
AVECOR Cardiovascular, Inc. In connection with mergers and acquisitions, $58.0
million and $45.2 million of benefit plan assets were transferred in to the Plan
during fiscal years 2000 and 1999 respectively.
8
<PAGE>
MEDTRONIC, INC. AND PARTICIPATING EMPLOYERS
SUPPLEMENTAL RETIREMENT PLAN
SCHEDULE I-ITEM 27A FORM 5500
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
-----------------------------------------------
(IN 000'S EXCEPT FOR NUMBER OF PARTICIPANTS AND SHARES)
-------------------------------------------------------
APRIL 30, 2000
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Fund Investment Type Participants Shares Market Value
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Medtronic Common Stock Fund Company Stock Fund 11,003 8,752,493 $ 741,949
Vanguard 500 Index Fund Registered Investment Company 7,299 1,138,498 152,479
Vanguard PRIMECAP Fund Registered Investment Company 5,825 1,772,828 127,626
Vanguard Wellington Fund Registered Investment Company 5,101 3,222,771 88,723
Vanguard Windsor II Fund Registered Investment Company 3,890 1,745,571 43,901
Vanguard Explorer Fund Registered Investment Company 3,344 452,686 33,775
Vanguard International Growth Fund Registered Investment Company 3,425 1,411,164 31,680
Vanguard U.S. Growth Fund Registered Investment Company 4,343 609,853 27,047
Vanguard Extended Market Index Fund Registered Investment Company 1,363 287,964 10,053
Vanguard Total Bond Market Index Fund Registered Investment Company 1,875 956,666 9,117
Participant Loans Interest at 5.25% to 10% 2,060 -- 14,993
Medtronic Interest Income Fund Unallocated Insurance Contracts 5,762 132,140,426 132,140
----------------------------------------------------------------------------------------------------------------------------
Totals $ 1,413,483
============================================================================================================================
</TABLE>
The above data was prepared from information certified as complete and accurate
by Vanguard Fiduciary Trust Company, the Plan's Trustee.
9
<PAGE>
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-37529 and 33-44230) of Medtronic, Inc. of our
report dated September 22, 2000 relating to the financial statements of the
Medtronic, Inc. and Participating Employers Supplemental Retirement Plan which
appears on this Form 11-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
October 24, 2000
