Medtronic Third Quarter EPS Up 11 Percent on Revenue Growth of 10 Percent.

Growth Driven by Diversified Portfolio as Operating Leverage Improves;

* Diluted EPS of $0.61 grew 11% compared to prior year's quarter; up 17% after reflecting stock option expense in both periods (non-GAAP for prior year);

* Revenue of $3.048 billion grew 10% over the prior year's quarter;

* Revenue outside the U.S. grew 25% over the prior year's quarter, led by strong ICD growth;

* Five of seven business segments reported double digit revenue growth

MINNEAPOLIS -- Medtronic, Inc. (NYSE:MDT) today announced financial results for its third quarter of fiscal year 2007, which ended January 26, 2007.

Medtronic recorded third quarter revenue of $3.048 billion, a 10 percent increase over the $2.770 billion reported in the third quarter of the prior fiscal year. Currency translation had a positive impact of $55 million in the quarter. As reported, third quarter fiscal year 2007 net earnings were $710 million, or $0.61 per diluted share, representing an increase of 11 percent over the same quarter last year. However, EPS grew 17 percent after reflecting stock option expense in both periods, applying a non-GAAP measure for 2006 that makes the figures more comparable.

"Third quarter financial results reflect the strength of Medtronic's business portfolio, which is diversified by product line and geography, as well as improved operating leverage," said Art Collins, Medtronic chairman and chief executive officer.

Non-U.S. revenue of $1.091 billion grew 25 percent driven by double digit revenue growth in all major geographic areas. For the quarter, 36 percent of Medtronic's revenue was from outside the U.S.

Unless otherwise noted, all comparisons made in this news release are on an "as reported basis," not on a constant currency basis, and references to quarterly figures increasing or decreasing are in comparison to the third quarter of fiscal year 2006.

Cardiac Rhythm Disease Management

Cardiac Rhythm Disease Management (CRDM) revenue of $1.291 billion grew 2 percent. Revenue from implantable cardiac defibrillators (ICDs) was $711 million, down 2 percent from the same quarter last year. Worldwide pacing revenue of $458 million in the quarter increased 8 percent. Outside the U.S., CRDM revenue continued to grow at a double digit rate, driven by the success of the ICD and CRT-D product lines. Increased market development efforts are underway in the U.S., including the Sudden Cardiac Arrest awareness campaign and Partners Prevention Program, as well as the IMPROVE-HF clinical study. Physio-Control third quarter revenue of $105 million increased by 6 percent.

Spinal and Navigation

Spinal and Navigation revenue of $629 million grew 12 percent. Spinal revenue increased 12 percent and Navigation revenue increased 7 percent. Worldwide Spinal revenue was driven by the Biologics product line and the CD HORIZON[R] LEGACY[TM] family of products, which includes the new PEEK ROD. The CRESCENT[TM] Vertebral Body Spacer and the VENTURE[TM] Cervical System were also strong contributors to the growth.

Vascular

Vascular revenue of $304 million grew 29 percent. Coronary Vascular revenue grew 31 percent to $235 million, and Endovascular and Peripheral Vascular revenue grew 21 percent. Growth was driven by increased utilization of the Endeavor[R] drug-eluting stent, the Driver[R] and Micro-Driver[R] bare metal stents and the Valiant[TM] Thoracic and AneuRx AAAdvantage[TM] Abdominal stent graft systems.

Neurological

Neurological revenue of $290 million grew 17 percent. The segment's largest business, which includes implantable neurostimulation and drug-delivery systems used in the treatment of chronic pain, movement disorders and spasticity, generated third quarter revenue of $233 million, increasing 15 percent. Revenue in the gastroenterology and urology business grew 27 percent, driven by the strong market acceptance of the InterStim[R] II neurostimulator for the treatment of overactive bladder.

Diabetes

Diabetes revenue of $226 million grew 24 percent. Third quarter results were driven by strong sales of insulin pumps, with solid double digit growth reported in all geographies.

Cardiac Surgery

Cardiac Surgery revenue of $174 million grew 13 percent with solid performance in its heart valve business.

Ear, Nose and Throat (ENT)

ENT revenue of $134 million grew 7 percent. Growth was driven by increasing physician adoption of power systems, including powered drills and endoscopic shavers, and by further global penetration of the Nerve Integrity Monitor.

Outlook

"As we move through the remainder of this fiscal year and enter fiscal year 2008, we expect to see good operating momentum and positive contributions from a number of new product launches inside and outside the United States," said Collins. "I also expect to see continued progress on market development activities and tangible benefits from a broad range of productivity and supply chain management initiatives."

Webcast Information

Medtronic will host a webcast today, Feb. 20 at 4:30 p.m. EST (3:30 CST), to provide information about its businesses for the public, analyst and news media. This quarterly webcast can be accessed by clicking on the Investor Relations link on the Medtronic home page at www.medtronic.com. and this earnings release will be archived at www.medtronic.com/newsroom. Within 24 hours, a replay of the webcast and a transcript of the company's prepared remarks will be available in the "Presentations & Transcripts" section of the Investor Relations homepage.

About Medtronic

Medtronic, Inc., headquartered in Minneapolis, is the world's leading medical technology company, alleviating pain, restoring health and extending life for people with chronic disease. Its Internet address is www.medtronic.com.

This press release contains forward-looking statements regarding our operating momentum, new products and other developments, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation, general economic conditions and other risk and uncertainties described in Medtronic's Annual Report on Form 10-K for the year ended April 28, 2006. Actual results may differ materially from anticipated results. Medtronic does not undertake to update its forward-looking statements.

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