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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934. FOR THE FISCAL YEAR ENDED APRIL 30, 1995
( ) 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
[LOGO]
MEDTRONIC, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
MINNESOTA 41-0793183
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
7000 CENTRAL AVENUE N.E.
MINNEAPOLIS, MINNESOTA 55432
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
TELEPHONE NUMBER: (612) 574-4000
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 $.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 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 ___
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. ( )
AGGREGATE MARKET VALUE OF VOTING STOCK OF MEDTRONIC, INC. HELD BY NONAFFILIATES
OF THE REGISTRANT AS OF JULY 7, 1995, BASED ON THE CLOSING PRICE OF $77.00 AS
REPORTED ON THE NEW YORK STOCK EXCHANGE: $8.76 BILLION.
SHARES OF COMMON STOCK OUTSTANDING ON JULY 7, 1995: 115,513,007
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF REGISTRANT'S 1995 ANNUAL SHAREHOLDER REPORT ARE INCORPORATED BY
REFERENCE INTO PARTS I, II AND IV; PORTIONS OF REGISTRANT'S PROXY STATEMENT FOR
ITS 1995 ANNUAL MEETING ARE INCORPORATED BY REFERENCE INTO PART III.
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS. Medtronic, Inc. (together with its
subsidiaries, "Medtronic" or the "company") was incorporated as a Minnesota
corporation in 1957. Medtronic is the world's leading therapeutic medical
technology company, developing, manufacturing and marketing therapies for
improved cardiovascular and neurological health. Primary products include
implantable pacemaker systems used for treatment of bradycardia, implantable
tachyarrhythmia management systems, mechanical and tissue heart valves, balloon
and guiding catheters and stents used in angioplasty, implantable
neurostimulation and drug delivery systems, and perfusion systems including
blood oxygenators, centrifugal blood pumps, cannula products, and
autotransfusion and blood monitoring systems.
Medtronic operates in a single industry segment, that of providing products
for medical applications. Its revenues, operating profits and assets for the
past three fiscal years (1993-1995) have been attributable to this single
industry segment. The Company does business in more than 120 countries and
reports on three business units -- Pacing, Other Cardiovascular, and
Neurological and Other -- and three geographic areas -- the Americas,
Europe/Middle East/Africa, and Asia/Pacific.
BUSINESS NARRATIVE. Medtronic's Pacing business unit is the company's
largest operating unit, consisting of Bradycardia Pacing, which produces
products for treating patients with slow or irregular heartbeats, and
Tachyarrhythmia Management, which develops products for hearts with abnormally
fast rhythms. The bradycardia pacing systems include pacemakers, leads and
accessories. The pacemakers can be noninvasively programmed by the physician to
adjust sensing, electrical pulse intensity, rate, duration and other
characteristics, and can produce impulses to cause contractions in either the
upper or lower heart chamber, or both, in appropriate relation to heart
activity. In January 1995, the company commercially released the Thera(R) line
of pacemakers in the U.S. Thera(R) is a flexible, technically advanced family of
five new pacemakers for virtually every pacing application, a new specialized
lead and the new Model 9790 programmer. This versatile programmer can be used
interchangeably with all of the company's bradycardia pacemakers as well as with
its Jewel(R) line of tachyarrhythmia management devices.
More than half of Medtronic's revenues are generated from the sale of
implantable cardiac pacemaker systems for treatment of bradycardia. In addition
to the "Medtronic" line of pacing products, the company also produces a separate
line under the brand name "Vitatron."
The Tachyarrhythmia Management business produces implantable devices and
transvenous lead systems for treating ventricular tachyarrhythmias, which are
abnormally fast, and sometimes fatal, heartbeats. The systems offer tiered
therapy of pacing, cardioversion and defibrillation, and may be implanted
without a thoracotomy, which reduces patient trauma, and hospitalization time
and costs. The company's Jewel(R) line of devices, which were released in the
U.S. in March 1995, are the smallest currently commercially available and are
programmed with the Model 9790 pacing programmer. In fiscal 1995 the company
also commercially released the Jewel(R) Active Can(tm) outside the United
States. This system makes implantation possible with a single lead, resulting in
faster, less costly implantation and quicker patient recovery. The Active
Can(tm) device continues in clinical trials in the U.S. The company also
produces the Atakr(R) radio frequency ablation system to neutralize heart muscle
cells that cause tachyarrhythmias through a nonsurgical procedure. The Atakr(R)
system consists of a closed-loop, temperature-controlled radio frequency
generator with an array of steerable and non-steerable catheters.
The company's Pacing business unit accounted for 65.5% of Medtronic's net
sales during the fiscal year ended April 30, 1995 ("fiscal 1995"), 67.2% of net
sales in fiscal 1994 and 65.7% of net sales in fiscal 1993.
The company's Other Cardiovascular business unit consists of
Cardiopulmonary, Blood Management, DLP, Heart Valves, and Interventional
Vascular. Through a series of strategic acquisitions over the past decade,
Medtronic now markets a complete line of blood-handling products. These include
the Bio-Medicus Bio-Pump(R), the Maxima(R) oxygenator, Electromedics'
autotransfusion equipment, a broad line of cannulae and hemostasis management
equipment. These devices form a life-saving circuit by maintaining blood
circulation, oxygen supply and body temperature while the patient is undergoing
emergency treatment or open-heart surgery.
The company's Heart Valve business produces tissue and mechanical valve
replacements for damaged or diseased heart valves. Two new tissue valves, the
Mosaic(tm) stented valve and the Freestyle(R) non-stented aortic root, have
improved antimineralization and durability and are currently in clinical trials
outside the U.S. The company's Interventional Vascular business produces balloon
and guiding catheters, stents and accessories used by physicians to open
arteries obstructed by deposits of fatty plaque. In fiscal 1995, the company
commercially released worldwide the Ascent(tm) guiding catheter, which provides
the conduit and support of balloon catheters to reach the obstructed coronary
artery, and two new balloon catheters, the Evergreen(tm) over-the-wire and the
Falcon(tm). The Falcon(tm) is a "rapid exchange" style catheter which makes it
possible for a single operator to perform the procedure, reducing the time
required for an angioplasty procedure and minimizing the need for additional
staff to assist the interventional cardiologist.
The company's Other Cardiovascular business unit accounted for 26.1% of net
sales in fiscal 1995, and 23.6% and 22.9% of net sales, respectively, for fiscal
1994 and 1993.
The Neurological and Other business unit produces implantable systems for
spinal cord stimulation and programmable drug delivery that are used in treating
chronic intractable pain, tremor and spasticity. These include the SynchroMed(R)
pump and the Itrel(R) II spinal cord stimulation system. The Mattrix(R)
stimulator, which was commercially released in the U.S. in June 1995, is the
first neurostimulation system that offers a dual stimulation mode for more
effective pain management. The company is also collaborating with several
biotechnology companies to develop therapies for neurodegenerative disorders
such as Alzheimer's disease, Parkinson's disease, and amyotrophic lateral
sclerosis or Lou Gehrig's disease. Compounds for treating these diseases, called
neurotrophic factors, are still in development by these companies. Once they are
proven to be safe and effective, Medtronic believes its drug delivery technology
could be effective in administering these agents directly to their site of
action in precise doses. The Neurological and Other business unit accounted for
8.4% of net sales for fiscal 1995, and 9.2% and 11.4% of net sales,
respectively, for fiscal 1994 and 1993. The decrease in percentage of revenue is
due to divested product lines during fiscal 1994 and 1995.
GOVERNMENT REGULATION. The industry segment in which Medtronic competes
involves development, production and sales of medical devices. In the United
States, the Food and Drug Administration (the "FDA"), among other governmental
agencies, is responsible for regulating the introduction of new medical devices,
laboratory and manufacturing practices, and labeling and recordkeeping for
medical devices, as well as for reviewing manufacturers' required reports of
adverse experience to identify potential problems with marketed medical devices.
The FDA can ban certain medical devices, detain or seize adulterated or
misbranded medical devices, order repair, replacement, or refund of such
devices, and require notification of health professionals and others with regard
to medical devices that present unreasonable risks of substantial harm to the
public health. The FDA may also enjoin and restrain certain violations of the
Food, Drug and Cosmetic Act and the Safe Medical Devices Act pertaining to
medical devices, or initiate action for criminal prosecution of such violations.
Many of the devices that Medtronic develops and markets are in a category for
which the FDA has implemented stringent clinical investigation and premarket
clearance requirements. Moreover, the FDA administers certain controls over the
export of such devices from the United States.
The number of medical devices approved by the FDA for commercial release
has decreased significantly in recent years due to more rigorous clinical
evaluation requirements, increased enforcement actions and more stringent
product regulation by the FDA. Rigorous regulatory action may be taken in
response to deficiencies noted in inspections or to product performance
problems. The risks in the United States of lengthened introduction times for
new products and additional expense have increased substantially. In addition,
the requirements for post-market surveillance and device tracking under the Safe
Medical Devices Act will continue to increase the expense of the regulatory
process.
Medical device laws are also in effect in many of the countries in which
Medtronic does business outside the United States. These range from
comprehensive device approval requirements for some or all of Medtronic's
medical device products to requests for product data or certifications. The
number and scope of these requirements is increasing. This trend toward
increasing product regulation is evident in the European Economic Community,
where efforts are underway to harmonize the regulatory systems.
The U.S. Health Care Financing Administration, which determines Medicare
reimbursement policy and practice, has changed its practice of reimbursing
hospitals for procedures involving medical devices in clinical evaluation. This
change in practice is causing hospitals to treat Medicare patients only with
medical devices that have been cleared for commercial release by the FDA. This
action has further limited the scope of clinical trials in the U.S., is forcing
more clinical research to non-U.S. markets, and is increasing the cost and time
required to complete clinical evaluations in the U.S.
Government and private sector initiatives to limit the growth of health
care costs, including price regulation and competitive pricing, are continuing
in several countries in which the company does business, including the United
States. These changes are causing the marketplace to put increased emphasis on
the delivery of more cost-effective medical therapies. Although the company
believes it is well positioned to respond to changes resulting from this
worldwide trend toward cost containment, the uncertainty as to the outcome of
any proposed legislation or changes in the marketplace preclude the company from
predicting the impact these changes may have on future operating results.
Medtronic is also subject to various environmental laws and regulations
both in the United States and abroad. The operations of the company, like those
of other medical device companies, involve the use of substances regulated under
environmental laws, primarily in manufacturing and sterilization processes.
While it is difficult to quantify the potential impact of compliance with
environmental protection laws, management believes that such compliance will not
have a material impact on the company's financial position.
The Company operates in an industry susceptible to significant product
liability claims. Product liability claims may be asserted against the company
in the future relative to events not known to management at the present time.
Management believes that the company's risk management practices, including
insurance coverage, are reasonably adequate to protect against potential product
liability losses.
SALES, MARKETS AND DISTRIBUTION METHODS. The primary markets for
Medtronic's products are hospitals, other medical institutions and physicians,
both in the United States and abroad. No one customer individually accounts for
a material amount of Medtronic's total sales.
Medtronic sells most of its products and services directly through its
staff of trained, full-time sales representatives. Sales by these
representatives accounted for approximately 93.6% of Medtronic's U.S. sales and
approximately 64.8% of its sales from other countries in fiscal 1995. The
remaining sales were made through independent distributors.
RAW MATERIALS AND PRODUCTION. Medtronic generally has vertically integrated
manufacturing operations, and makes its own lithium batteries, feedthroughs,
integrated and hybrid circuits, microprocessors, and certain other components.
Medtronic purchases many of the parts and materials used in manufacturing its
components and products from external suppliers. Medtronic's single- and
sole-sourced materials include biomaterials such as adhesives, polymers,
elastomers and resins; certain integrated circuits and other
electrical/electronic components; power sources, battery anodes, pyrolytic
carbon discs, pharmaceutical preparations such as Lioresal(R) (baclofen, USP)
Intrathecal (registered trademark of CIBA-GEIGY Corporation), and computer and
other peripheral equipment.
Certain of the raw materials and components (e.g., silicone adhesives and
polyurethanes) used in Medtronic products are available only from a sole U.S.
supplier. Materials are purchased from single sources for reasons of quality
assurance and cost effectiveness. Medtronic works closely with its suppliers to
assure continuity of supply while maintaining high quality and reliability.
However, in an effort to reduce potential product liability exposure, certain
suppliers have terminated or are planning to terminate sales of certain
materials and parts to companies that manufacture implantable medical devices.
Medtronic believes that various design, material or supplier alternatives can be
found for these materials and components without a significant interruption in
production.
PATENTS AND LICENSES. Medtronic owns patents on certain of its inventions,
and obtains licenses from others as it deems necessary to its business.
Medtronic's policy is to obtain patents on its inventions whenever practical.
Technological advancement characteristically has been rapid in the medical
device industry, and Medtronic does not consider its business to be materially
dependent upon any individual patent.
COMPETITION AND INDUSTRY. Medtronic sells therapeutic medical devices in
the United States and throughout the world. In the businesses in which Medtronic
competes, the company faces a mixture of competitors ranging from large
multi-national industrial manufacturers to diversified pharmaceutical companies,
as well as regional or national manufacturers that offer a limited number of
products. Important factors to Medtronic's customers include product reliability
and performance, product technology that provides for improved patient benefits,
product price, and related product services provided by the manufacturer. Major
shifts in industry market shares have occurred in connection with product
problems, physician advisories and safety alerts, reflecting the importance and
risks of product quality in the medical device industry.
Medtronic is the leading manufacturer and supplier of pacemakers in both
the U.S. and non-U.S. markets. Worldwide, approximately ten manufacturers
compete in the pacemaker industry. In the U.S., Medtronic and four other
manufacturers account for a significant portion of pacemaker sales. Medtronic
and five other manufacturers account for most of the non-U.S. pacemaker sales.
In the tachyarrhythmia management device market, Medtronic and two other
manufacturers based in the U.S. account for most sales of implantable
defibrillators within and outside the U.S. Medtronic and one of these other
manufacturers have transvenous lead systems cleared for commercial sale in the
U.S. Medtronic's Jewel(R) PCD(R) devices are commercially available with the
company's Transvene(tm) leads in U.S. and non-U.S. markets. Approximately three
other companies have devices in various stages of development and clinical
evaluation.
In the coronary angioplasty market, which includes balloon and guiding
catheters and implantable stents, there are numerous competitors worldwide.
Medtronic believes that it is the leading manufacturer and supplier of guiding
catheters worldwide. Medtronic and three other manufacturers account for most
combined balloon and guiding catheter sales. In stents, Medtronic and two
competitors account for most sales worldwide, with one competitor holding a
dominant market position and numerous new competitors emerging.
Medtronic is the second largest manufacturer and supplier of tissue heart
valves and also of mechanical heart valves within and outside the U.S. A large
manufacturer and distributor of hospital products and services is the major
competitor in tissue heart valves and another company is the major competitor in
mechanical heart valves. These two companies and Medtronic are the primary
manufacturers and suppliers of heart valves within the U.S. These three
companies plus a few competitors outside the U.S. account for most of the
non-U.S. heart valve sales.
In the blood oxygenator market, there are approximately seven companies
that account for a significant portion of the U. S. and non-U.S. markets.
Medtronic is the leading manufacturer and supplier of blood oxygenators and
centrifugal blood pumps worldwide.
Medtronic is the market leader in cannula products. Medtronic and four
competitors account for a significant portion of cannulae sales in the U.S.
Medtronic and three competitors account for a significant portion of
autotransfusion sales in both U.S. and non-U.S. markets.
In neurological devices, Medtronic is the leading manufacturer and supplier
of implantable neurostimulation and drug delivery systems. Medtronic and two
competitors account for most sales worldwide.
Market complexity has been intensifying in the medical device industry in
recent years. Factors such as relative patent portfolios, government regulation
(including the regulatory approval process for medical devices), a more rigorous
enforcement climate at the FDA, anticipated health care reform, government
reimbursement systems for health care costs, product liability litigation and
the rapid rate of technological change are increasingly important considerations
for existing medical device manufacturers and any potential entrants to the
industry.
RESEARCH AND DEVELOPMENT. Medtronic spent $191.4 million on research and
development (11.0% of net sales) in fiscal 1995, $156.3 million (11.2% of net
sales) in fiscal 1994 and $133.0 million (10.0%of net sales) in fiscal 1993.
Such amounts have been applied toward improving existing products, expanding
their applications, and developing new products. Medtronic's research and
development projects span such areas as sensing and treatment of cardiovascular
disorders (including bradycardia and tachyarrhythmia, fibrillation, and sinus
node abnormalities); improved heart valves, membrane oxygenators and centrifugal
blood pump systems; implantable drug delivery systems for pain, spasticity and
other neurological applications; muscle and neurological stimulators;
therapeutic catheters; coronary stents and treatments for restenosis;
implantable physiologic sensors; cardiac assist systems (cardiomyoplasty) and
other applications of transformed muscle; and materials and coatings to enhance
the blood/device interface.
Medtronic has not engaged in significant customer or government sponsored
research.
EMPLOYEES. On April 30, 1995, Medtronic and its subsidiaries employed 8,896
people on a regular, full-time basis and, including temporary and part-time
employees, a total of 10,313 employees on a full-time equivalent basis.
U.S. AND NON-U.S. OPERATIONS AND EXPORT SALES. Medtronic sells products in
more than 120 countries in three geographic areas: the Americas, Europe/Middle
East/Africa, and Asia/Pacific. For financial reporting purposes, revenues,
profitability, and identifiable assets attributable to significant geographic
areas are presented in Note 14 to the consolidated financial statements,
incorporated herein by reference to Medtronic's 1995 Annual Shareholder Report
on page 49. U.S. export sales to unaffiliated customers comprised less than two
percent of Medtronic's consolidated sales in each of fiscal 1995, 1994 and 1993.
Operation in countries outside the U.S. is accompanied by certain financial
and other risks. Relationships with customers and effective terms of sale
frequently 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 rapidly changing business conditions and currency exposure.
Currency exchange rate fluctuations can affect income from, and profitability
of, non-U.S. operations. Medtronic attempts to hedge these exposures to reduce
the effects of foreign currency fluctuations on net earnings. Certain countries
also limit or regulate the repatriation of earnings to the United States.
Non-U.S. operations in general present complex tax and money management
questions requiring sophisticated analysis and precise execution of strategy to
meet the company's financial objectives.
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, Inc., their periods of service in these capacities, and their
business experience for the past five or more years. Executive officers
generally serve terms of office of approximately one year. There are no family
relationships between any of the officers named, nor is there any arrangement or
understanding pursuant to which any person was selected as an officer.
WILLIAM W. GEORGE, age 52, has been President and Chief Executive Officer
since May 1991, was President and Chief Operating Officer from March 1989 to
April 1991, and has been a director since March 1989. Prior to joining the
company, Mr. George was President, Space and Aviation Systems Business, at
Honeywell Inc. from December 1987 to March 1989. During his 11 years with
Honeywell, Mr. George served in several other executive positions including
President, Industrial Automation and Control, from May 1987 to December 1987;
and Executive Vice President of that business from January 1983 to May 1987.
GLEN D. NELSON, M.D., age 58, has been Vice Chairman since July 1988, and
has been a director since 1980. From September 1986 to July 1988, he was
Executive Vice President of the company. Dr. Nelson was Chairman and Chief
Executive Officer of American MedCenters, Inc., an HMO management corporation,
from July 1984 to August 1986.
ARTHUR D. COLLINS, JR., age 47, has been Chief Operating Officer since
January 1994 and has been a director since August 1994. From June 1992 to
January 1994, Mr. Collins was Executive Vice President and President of
Medtronic International. Prior to joining the company, Mr. Collins was Corporate
Vice President, Diagnostic Products, at Abbott Laboratories from October 1989 to
May 1992 and Divisional Vice President, Diagnostic Products, from May 1984 to
October 1989. During his 14 years with Abbott, Mr. Collins served in various
general management positions both in the United States and Europe.
BOBBY I. GRIFFIN, age 58, has been Executive Vice President since July
1988, and President, Pacing, since March 1991. From September 1985 to July 1988,
Mr. Griffin was Vice President of the Pacing Business Unit.
BILL K. ERICKSON, age 51, has been Senior Vice President and President,
Americas, since January 1994. From May 1992 to January 1994, Mr. Erickson was
Senior Vice President and President, U.S. Cardiovascular Sales and Marketing
Division. Mr. Erickson was Senior Vice President, U.S. Cardiovascular Division,
from January 1990 to May 1992 and was Vice President, U.S. Cardiovascular
Distribution, from January 1982 to December 1989.
JANET S. FIOLA, age 53, has been Senior Vice President, Human Resources
since March 1994. She was Vice President, Human Resources, from February 1993 to
March 1994, and was Vice President, Human Resources Development, from February
1988 to February 1993.
PHILIP M. LAUGHLIN, age 47, joined the company as Senior Vice President and
President, Cardiac Surgery, in July 1995. Prior to that he served with Clintec
Nutrition Company (worldwide joint venture of Baxter International and Nestle
Company in the field of clinical nutrition), as President, North America, from
1994 through July 1995 and as President, United States, from 1989 to 1993. From
1976 to 1989, he held numerous management positions at Baxter International,
most recently as Vice President, Operations, Global Business Group.
RONALD E. LUND, age 60, has been Senior Vice President and General Counsel
since November 1990, and Secretary since July 1992, and was Vice President and
General Counsel from February 1989 to November 1990. Prior to joining the
company, Mr. Lund served as Vice President and Associate General Counsel of The
Pillsbury Company from 1984 to February 1989.
JOHN A. MESLOW, age 56, has been Senior Vice President and President,
Neurological Business, since March 1994. He was Vice President and President,
Neurological Business, from March 1991 to March 1994, and was Vice President,
Neurological Division, from March 1985 to March 1991.
ROBERT L. RYAN, age 52, has been Senior Vice President and Chief Financial
Officer since April 1993. Prior to joining the company, Mr. Ryan was Vice
President, Finance, and Chief Financial Officer of Union Texas Petroleum Corp.
from May 1984 to April 1993, Controller from May 1983 to May 1984, and Treasurer
from March 1982 to May 1983.
ITEM 2. PROPERTIES
Medtronic's principal offices are owned by the company and located in the
Minneapolis, Minnesota metropolitan area. Manufacturing or research facilities
are located in Arizona, California, Colorado, Massachusetts, Michigan,
Minnesota, Texas, Puerto Rico, Canada, France, Germany, Italy, the Netherlands
and Japan. The company's total manufacturing and research space is approximately
1,653,000 square feet, of which 80% is owned by the company and the balance is
leased.
Medtronic also maintains sales and administrative offices inside the United
States at 47 locations in 27 states and outside the United States at 96
locations in 24 countries. Most of these locations are leased. Medtronic is
utilizing substantially all of its currently available productive space to
develop, manufacture and market its products. The company's facilities are in
good operating condition, suitable for their respective uses and adequate for
current needs.
ITEM 3. LEGAL PROCEEDINGS
Notes 11 and 12 to the consolidated financial statements appearing on pages
48 and 49 of Medtronic's 1995 Annual Shareholder Report are incorporated herein
by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR MEDTRONIC'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The information in the sections entitled "Price Range of Medtronic Stock"
and "Investor Information" on page 51 of Medtronic's 1995 Annual Shareholder
Report is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information for the years 1985 through 1995 on page 50 of Medtronic's
1995 Annual Shareholder Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information on pages 33 through 37 of Medtronic's 1995 Annual
Shareholder Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report thereon of
independent accountants dated May 22, 1995, appearing on pages 38 through 49 of
Medtronic's 1995 Annual Shareholder Report are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF MEDTRONIC
The information on pages 1 through 6 of Medtronic's Proxy Statement for its
1995 Annual Shareholders' Meeting and on page 9 of such Proxy Statement
regarding Section 16(a) reporting is incorporated herein by reference. See also
"Executive Officers of Medtronic" on pages 5 and 6 hereof.
ITEM 11. EXECUTIVE COMPENSATION
The sections entitled "Election of Directors -- Director Compensation" and
"Executive Compensation" on pages 7 and 8, and 14 through 20, respectively, of
Medtronic's Proxy Statement for its 1995 Annual Shareholders' Meeting are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
"Shareholdings of Certain Owners and Management" on page 9 of Medtronic's
Proxy Statement for its 1995 Annual Shareholders' Meeting is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information on page 8 of Medtronic's Proxy Statement for its 1995
Annual Shareholders' Meeting, concerning services provided to the company by the
Chairman of the Board and the Founder of the company in fiscal 1995, is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
Report of Independent Accountants (incorporated herein by reference to page
38 of Medtronic's 1995 Annual Shareholder Report)
Statement of Consolidated Earnings -- years ended April 30, 1995, 1994, and
1993 (incorporated herein by reference to page 39 of Medtronic's 1995
Annual Shareholder Report)
Consolidated Balance Sheet -- April 30, 1995 and 1994 (incorporated herein
by reference to page 40 of Medtronic's 1995 Annual Shareholder Report)
Statement of Consolidated Cash Flow -- years ended April 30, 1995, 1994,
and 1993 (incorporated herein by reference to page 41 of Medtronic's 1995
Annual Shareholder Report)
Notes to Consolidated Financial Statements (incorporated herein by
reference to pages 42 through 49 of Medtronic's 1995 Annual Shareholder
Report)
2. FINANCIAL STATEMENT SCHEDULES
II Valuation and Qualifying Accounts -- years ended April 30, 1995, 1994,
and 1993
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
3.1 Medtronic Restated Articles of Incorporation, as amended to date
(Exhibit 3.1).(g)
3.2 Medtronic Bylaws, as amended to date (Exhibit 3.2).(f)
4 Form of Rights Agreement dated as of June 27, 1991 between
Medtronic and Norwest Bank Minnesota, National Association,
including as Exhibit A thereto the form of Preferred Stock Purchase
Right Certificate, incorporated by reference to Exhibit (1) of
Medtronic's Form 8-A Registration Statement dated June 27, 1991 and
filed with the Securities and Exchange Commission on June 28, 1991.
*10.1 1994 Stock Award Plan (Appendix A).(b)
*10.2 Management Incentive Plan (Appendix B).(b)
*10.3 1979 Restricted Stock and Performance Share Award Plan, as amended
to date (Exhibit 10.1).(d)
*10.4 1979 Nonqualified Stock Option Plan, as amended (Exhibit A).(e)
*10.5 Form of Employment Agreement for Medtronic executive officers.
*10.6 1991 Restricted Stock Plan for Non-Employee Directors
(Exhibit B).(e)
*10.7 Capital Accumulation Plan Deferral Program (Exhibit 10.6).(d)
*10.8 Postretirement Survivor Benefit Plan (Exhibit 10.7).(d)
*10.9 Amendment effective October 1, 1993 to the Directors' Retirement
Plan (Exhibit 10.9).(a)
*10.10 Nonqualified Supplemental Benefit Plan (Exhibit 10.9).(d)
*10.11 Management Incentive Plan Stock Option Replacement Program
11 Computation of Earnings Per Share.
13 Those portions of Medtronic's 1995 Annual Shareholder Report
expressly incorporated by reference herein, which shall be deemed
filed with the Commission.
21 List of Subsidiaries.
23 Consent and Report of Price Waterhouse (set forth on page 11 of
this report).
24 Powers of Attorney.
27 Financial Data Schedule
(a) Incorporated herein by reference to the cited exhibit in Medtronic's
Annual Report on Form 10-K for the year ended April 30, 1994, filed
with the Commission on July 27, 1994.
(b) Incorporated herein by reference to the cited Appendix in Medtronic's
Proxy Statement for its 1994 Annual Meeting of Shareholders filed with
the Commission on July 27, 1994.
(c) Incorporated herein by reference to the cited exhibit in Medtronic's
Annual Report on Form 10-K for the year ended April 30, 1993, filed
with the Commission on July 23, 1993.
(d) Incorporated herein by reference to the cited exhibit in Medtronic's
Annual Report on Form 10-K for the year ended April 30, 1992, filed
with the Commission under cover of Form SE dated July 24, 1992.
(e) Incorporated herein by reference to the cited exhibit in Medtronic's
Proxy Statement for its 1991 Annual Meeting of Shareholders, filed with
the Commission on July 24, 1991.
(f) Incorporated herein by reference to the cited exhibit in Medtronic's
Annual Report on Form 10-K for the year ended April 30, 1991, filed
with the Commission under cover of Form SE dated July 24, 1991.
(g) Incorporated herein by reference to the cited exhibit in Medtronic's
Annual Report on Form 10-K for the year ended April 30, 1990, filed
with the Commission under cover of Form SE dated July 20, 1990.
*Items that are management contracts or compensatory plans or arrangements
required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by Medtronic during the quarter ended
April 30, 1995.
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: July 25, 1995
BY: /S/ WILLIAM W. GEORGE
William W. George
President 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.
Dated: July 25, 1995
BY: /S/ WILLIAM W. GEORGE
William W. George
President and
Chief Executive Officer
Dated: July 25, 1995
BY: /S/ ROBERT L. RYAN
Robert L. Ryan
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
F. CALEB BLODGETT
ARTHUR D. COLLINS, JR.
WILLIAM W. GEORGE
ANTONIO M. GOTTO, JR., M.D.
BERNADINE P. HEALY, M.D.
VERNON H. HEATH
THOMAS E. HOLLORAN
EDITH W. MARTIN, PH.D. DIRECTORS
GLEN D. NELSON, M.D.
RICHARD L. SCHALL
JACK W. SCHULER
GERALD W. SIMONSON
GORDON M. SPRENGER
RICHARD W. SWALIN, PH.D.
WINSTON R. WALLIN
Ronald E. Lund, by signing his 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: July 25, 1995
BY: /S/ RONALD E. LUND
Ronald E. Lund
Attorney-in-Fact
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of Medtronic, Inc.
Our audits of the consolidated financial statements referred to in our
report dated May 22, 1995 appearing on page 38 of the 1995 Annual Shareholder
Report of Medtronic, Inc. (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the Financial Statement Schedule listed in Item 14(a) of this Form
10-K. In our opinion, this Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
May 22, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in each Prospectus
constituting part of the Registration Statements on Form S-8 (Registration Nos.
2-65157, 2-68408, 33-169, 33-36552, 2-65156, 33-24212, 33-37529, 33-44230 and
33-55329) and Form S-4 (Registration No. 33-52751) of Medtronic, Inc. of our
report dated May 22, 1995 appearing on page 38 of the 1995 Annual Shareholder
Report which is incorporated by reference in this Annual Report on Form 10-K. We
also consent to the incorporation by reference of our report on the Financial
Statement Schedule as shown above.
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
July 25, 1995
MEDTRONIC, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS OF DOLLARS)
OTHER
BALANCE AT CHANGES BALANCE
BEGINNING CHARGES TO (DEBIT) AT END OF
OF PERIOD EARNINGS CREDIT PERIOD
Allowance for doubtful accounts:
Year ended 4/30/95 $20,123 $ 2,501 $(1,464)(a) $22,416
1,256 (b)
Year ended 4/30/94 9,456 13,185 (2,902)(a) 20,123
384
Year ended 4/30/93 17,229 9,404 (5,050)(a) 9,456
(4,608)(c)
(7,015)(d)
(504)
Accrued warranty and product liability (e):
Year ended 4/30/95 $20,127 $16,062 $(5,956)(f) $30,233
Year ended 4/30/94 15,326 8,645 (3,844)(f) 20,127
Year ended 4/30/93 15,544 4,667 (4,885)(f) 15,326
(a) Uncollectible accounts written off, less recoveries.
(b) Reflects primarily the effects of foreign currency fluctuations.
(c) Reflects the sale of all assets of the CardioCare division.
(d) Reflects reclassification of assets retained in the sale of the Nortech
division.
(e) Includes both current and noncurrent amounts.
(f) Claims settled, less reimbursement by insurance carrier
Commission File Number 1-7707
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED APRIL 30, 1995
[LOGO]
Medtronic, Inc.
7000 Central Avenue N.E.
Minneapolis, Minnesota 55432
Telephone: 612/574-4000
EXHIBIT INDEX
3.1 Medtronic Restated Articles of Incorporation, as amended to date
(Exhibit 3.1).(g)
3.2 Medtronic Bylaws, as amended to date (Exhibit 3.2).(f)
4 Form of Rights Agreement dated as of June 27, 1991 between Medtronic
and Norwest Bank Minnesota, National Association, including as Exhibit
A thereto the form of Preferred Stock Purchase Right Certificate,
incorporated by reference to Exhibit (1) of Medtronic's Form 8-A
Registration Statement dated June 27, 1991 and filed with the
Securities and Exchange Commission on June 28, 1991.
10.1 1994 Stock Award Plan (Appendix A).(b)
10.2 Management Incentive Plan (Appendix B).(b)
10.3 1979 Restricted Stock and Performance Share Award Plan, as amended to
date (Exhibit 10.1).(d)
10.4 1979 Nonqualified Stock Option Plan, as amended (Exhibit A).(e)
10.5 Form of Employment Agreement for Medtronic executive officers.
10.6 1991 Restricted Stock Plan for Non-Employee Directors (Exhibit B).(e)
10.7 Capital Accumulation Plan Deferral Program (Exhibit 10.6).(d)
10.8 Postretirement Survivor Benefit Plan (Exhibit 10.7).(d)
10.9 Amendment effective October 1, 1993 to the Directors' Retirement Plan
(Exhibit 10.9).(a)
10.10 Nonqualified Supplemental Benefit Plan (Exhibit 10.9).(d)
10.11 Management Incentive Plan Stock Option Replacement Program
11 Computation of Earnings Per Share.
13 Those portions of Medtronic's 1995 Annual Shareholder Report expressly
incorporated by reference herein, which shall be deemed filed with the
Commission.
21 List of Subsidiaries.
23 Consent and Report of Price Waterhouse (set forth on page 11 of this
report).
24 Powers of Attorney.
27 Financial Data Schedule
_________________
(a) Incorporated herein by reference to the cited exhibit in
Medtronic's Annual Report on Form 10-K for the year ended April
30, 1994, filed with the Commission on July 27, 1994.
(b) Incorporated herein by reference to the cited Appendix in
Medtronic's Proxy Statement for its 1994 Annual Meeting of
Shareholders filed with the Commission on July 27, 1994.
(c) Incorporated herein by reference to the cited exhibit in
Medtronic's Annual Report on Form 10-K for the year ended April
30, 1993, filed with the Commission on July 23, 1993.
(d) Incorporated herein by reference to the cited exhibit in
Medtronic's Annual Report on Form 10-K for the year ended April
30, 1992, filed with the Commission under cover of Form SE dated
July 24, 1992.
(e) Incorporated herein by reference to the cited exhibit in
Medtronic's Proxy Statement for its 1991 Annual Meeting of
Shareholders, filed with the Commission on July 24, 1991.
(f) Incorporated herein by reference to the cited exhibit in
Medtronic's Annual Report on Form 10-K for the year ended April
30, 1991, filed with the Commission under cover of Form SE dated
July 24, 1991.
(g) Incorporated herein by reference to the cited exhibit in
Medtronic's Annual Report on Form 10-K for the year ended April
30, 1990, filed with the Commission under cover of Form SE dated
July 20, 1990.