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CORRESP
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corresp

December
23, 2005

Mr. Jay Webb

Mail Stop 6010

Securities and Exchange Commission

450 — 5th Street NW

Washington, D. C. 20549

    Re:

    Medtronic, Inc.

    Form 10-K for the year ended April 29, 2005

    Filed June 29, 2005

    File No. 001-7707

Dear Mr. Webb:

     Please find below Medtronic Inc.’s responses to your comments as noted in your letter to
Medtronic, Inc. (the “Company”) dated December 14, 2005:

Consolidated Financial Statements, Note 3, Special and IPR&D Charges, page 52

    1.

    We noted that you classified certain litigation costs as “special charges” in your income
statement. In addition, we noted that you state that these “charges result from unique facts
and circumstances that likely will not recur with similar materiality or impact on income from
continuing operations.” Please tell us why you believe litigation costs incurred in the
ordinary course of your business are considered “special charges.” Litigation costs are
normally considered an ordinary cost of business and are not considered to be special charges.
Please also tell us why you refer to these charges as non-recurring, when it appears you have
recorded special charges in each of the last three years. We may have further comments after
reviewing your response. Revise your descriptions of these costs in future filings as
necessary based on our comment.

Response:

As noted in the disclosures to our Form 10-K, we believe that certain litigation costs, such
as certain legal settlements/judgments, should be classified as special charges as they
result from unique facts and circumstances that likely will not recur with similar
materiality or impact on continuing operations. The outcome of certain litigation is
neither predictable nor routine in nature, and therefore when discrete settlements or
judgments occur, we classify the financial impact as special charges and transparently
disclose the nature of the charges in the MD&A and the notes to the financial statements.
In particular, each matter which we have disclosed as a special charge relates to a
significant dispute with a third party, often with regard to unique intellectual property
rights that individually likely would not recur. Although we have recorded special charges
related to litigation in previous fiscal periods, we believe that it is important for

Mr. Jay
Webb

December 23, 2005

Page 2 of 5

the reader of our financial statements to understand that each charge is the result of a
discrete legal matter with unique facts and circumstances and presentation of this
information is useful to understanding our financial trends and provides the reader with the
requisite information to assess the comparability of our financial results between fiscal
periods. For example, in the fourth quarter of fiscal year 2005 we recorded $654.4 million
of litigation related costs in special charges. If recorded within selling, general, and
administrative expense (SG&A) as part of our normal course of business, the inclusion of
this item would have resulted in a 38% increase in SG&A over the prior fiscal year compared
to 15% without this item. We believe that this is not indicative of our typical financial
trends and would limit the comparability between periods, thus resulting in less meaningful
financial reporting to the reader. Although litigation is prevalent in our industry, the
nature of each individual settlement/judgment is neither predictable nor routine and
therefore best disclosed to the reader separately.

We respectively note your concerns with regard to our disclosure using the words “will not
recur with similar materiality or impact,” which could lead a reader to conclude that we
believe litigation charges of this nature will not recur in subsequent periods. We will
revise our description of special charges in future filings to state that “charges result
from unique facts and circumstances that may or may not recur with similar
materiality or impact on income from continuing operations.”

Note 14. Commitments and Contingencies, page 71

    2.

    We see your statement that “negative outcomes for the balance of the litigation matters
generally are not considered probable or cannot be reasonably estimated.” Please revise your
contingency disclosures in future filings to be more specific. For each contingency
discussed, revise your disclosure to comply with paragraphs 9-12 of SFAS 5. This would
include disclosing ranges of possible losses (or stating no ranges can be estimated) for all
contingencies that have a reasonable possibility of causing a material negative impact to your
financial statements.

Response:

We will revise our contingency disclosures to specifically conclude on each contingency and
delete the reference to “generally” in future filings.

Form 8-K dated November 16, 2005

    3.

    With respect to the non-GAAP disclosures, please respond to the following:

    •

    We note that your reconciliation of the non-GAAP information as required by
Regulation G is in the form of a statement of operations. We do not believe that the
presentation of a non-GAAP statement of operations is appropriate unless all
disclosures required by Item 10(e)(1)(i) of Regulation S-K are included for
each separate non-GAAP measure. Please delete this presentation from all future
Forms 8-K. If you continue to present non-GAAP information, Item 2.02 of Form 8-K

Mr. Jay
Webb

December 23, 2005

Page 3 of 5

    requires that disclosures “furnished” include information that complies with the
disclosure requirements of Item 10(e)(1)(i) of Regulation S-K. Accordingly, in addition
to the reconciliation for each non-GAAP measure, you must also provide statements
disclosing the reasons why management believes presentation of each of the
individual non-GAAP measures provide useful information to investors regarding your
financial condition and results of operations. These disclosures should be
specific and substantive to each individual measure. Refer to SEC
Release 33-8176 and also Question 8 of the FAQ Regarding the Use of Non-GAAP Financial
Measures, dated June 13, 2003. Please confirm that you will revise your Forms 8-K in
future periods to provide all of the disclosures required by Item 10(e)(1)(i) for each
non-GAAP measure presented. Provide us with a full sample of your proposed disclosure.

Response:

We will revise our non-GAAP disclosure in future filings in accordance with your
comments. We also confirm that we will revise our Forms 8-K in the future to
provide all of the disclosures required by Item 10(e)(1)(i) for each non-GAAP
measure presented. A full sample of our proposed disclosure based upon our Form 8-K
dated November 16, 2005 is attached to this letter for your review.

    •

    Revise future filings to include a GAAP Statement of Operations prior to your
reconciliation to GAAP earnings in order to present the GAAP Statement of Operations
with greater prominence than the non-GAAP information.

Response:

We will revise future filings to include a GAAP Statement of Operations prior to our
reconciliation to GAAP earnings in order to present the GAAP Statement of Operations
with equal or greater prominence than the non-GAAP information.

    •

    Please tell us why you believe it is appropriate and compliant with Regulation G to
exclude “special charges” such as litigation, restructuring charges and certain tax
adjustments to your non-GAAP disclosures. We note it appears that many of those
adjustments are recurring since similar charges have been recorded in each of the
preceding two years.

Response:

We believe quantitative and qualitative disclosures of certain significant items
that result from unique facts and circumstances that may or may not recur with
similar materiality or impact on continuing operations are critical to assisting the
reader in understanding our typical financial trends, and useful in comparing our
financial results between fiscal periods. We have classified items such as
litigation (as discussed in our response to comment number 1 above) and certain tax
adjustments as “special charges” because they result from a set of unique facts and
circumstances, the presentation of which is useful to the reader of the

Mr. Jay
Webb

December 23, 2005

Page 4 of 5

financial statements in understanding financial trends. Furthermore, when presented
with appropriate GAAP information, we believe it is important that the quantitative
disclosure of these items include both the impact on earnings and the impact on
earnings per share.

For example, please consider our second quarter of fiscal year 2006 results filed
with the Commission on December 6, 2005. As reported diluted earnings per share
(EPS) for the three months ended October 28, 2005 was $0.67, or a 52% increase over
the same period of the prior year, which generated diluted EPS of $0.44. While our business
has grown, the 52% growth rate suggested by the as reported diluted EPS is
uncharacteristically high without consideration of the special items recorded during
the quarter. In this case, the growth in as reported diluted EPS is distorted, in
part, by a $225.0 million tax benefit associated with favorable agreements reached
with the IRS involving the review of fiscal years 1997 through 2002 domestic income
tax returns, partially offset by a $100.0 million pre-tax charitable donation ($65.6
million after-tax) to The Medtronic Foundation. Excluding the impact of these
special items, diluted EPS increased 23%. When an issuer describes the nature of
discrete items, such as the special items described above, and presents the
appropriate GAAP reconciliation, the reader is provided with useful data necessary
to make more informed inferences and assumptions about the Company’s future
financial trends.

Form 10-Q for the quarter ended October 28, 2005, Item 4, Controls and Procedures — page
36

    4.

    We note your statement that your chief executive officer and your chief financial officer
“have concluded that, as of the end of the period covered by this quarterly report, our
disclosure controls and procedures are adequately designed to ensure that information required
to be disclosed by us in the reports we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in applicable rules and
forms.” It does not appear that your certifying officers have reached a conclusion that your
disclosure controls and procedures are effective. Please revise this filing to address your
officers’ conclusions regarding the effectiveness of your disclosure controls and procedures.

Response:

We hereby confirm that our disclosure controls and procedures are effective as of October
28, 2005 and we will make such specific disclosure in future filings. A sample of the
proposed full disclosure of our Controls and Procedures is as follows:

Our management, with the participation of our Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of our disclosure controls and procedures and
changes in the Company’s internal control over financial reporting (as defined in Rule
13a-15(f) under the Securities Exchange Act of 1934 (the Exchange Act)) as of the end of the
period covered by this report. Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that, as of the end of the

Mr. Jay
Webb

December 23, 2005

Page 5 of 5

period covered by this quarterly report, our disclosure controls and procedures are
effective and are adequately designed to ensure that information required to be
disclosed by us in the reports we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in applicable rules
and forms.

Pursuant to your request the Company acknowledges that

    --

    the Company is responsible for the adequacy and accuracy of the disclosure in
the filings;

    --

    staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and

    --

    the Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws of the
United States.

     If you have any questions regarding these matters, please contact me (763-505-2770) or, in my
absence, Thomas Tefft, Vice President and Corporate Controller (763-505-1510).

Sincerely,

/s/ Gary
L.
Ellis

Gary L. Ellis

Senior Vice President and Chief Financial Officer

Medtronic, Inc.

World Headquarters

710 Medtronic Parkway

Minneapolis, MN 55432-5604

Phone: (763) 505-2770

Fax: (763) 572-5474

E-Mail: gary.l.ellis@medtronic.com

cc: Julie Sherman

MEDTRONIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(in millions, except per share data)

    Three months ended

    Six months ended

    October 28, 2005

    October 29, 2004

    October 28, 2005

    October 29, 2004

    Net sales

    $
    2,765.4

    $
    2,399.8

    $
    5,455.8

    $
    4,745.9

    Costs and expenses:

    Cost of products sold

    694.8

    584.8

    1,348.6

    1,135.1

    Research and development expense

    275.4

    232.7

    538.6

    462.4

    Selling, general, and administrative expense

    903.2

    772.0

    1,785.6

    1,541.7

    Special charges

    100.0

    —

    100.0

    —

    Purchased in-process research and development (IPR&D)

    —

    —

    363.8

    —

    Other expense, net

    40.5

    62.9

    91.5

    117.5

    Interest income

    (13.4
    )

    (7.1
    )

    (28.8
    )

    (11.4
    )

    Total costs and expenses

    2,000.5

    1,645.3

    4,199.3

    3,245.3

    Earnings (loss) before income taxes

    764.9

    754.5

    1,256.5

    1,500.6

    Provision for income taxes

    (51.6
    )

    218.8

    119.4

    435.2

    Net earnings

    $
    816.5

    $
    535.7

    $
    1,137.1

    $
    1,065.4

    Earnings (loss) per share:

    Basic

    $
    0.68

    $
    0.44

    $
    0.94

    $
    0.88

    Diluted

    $
    0.67

    $
    0.44

    $
    0.93

    $
    0.87

    Weighted average shares outstanding:

    Basic

    1,208.6

    1,209.5

    1,209.6

    1,209.3

    Diluted

    1,222.5

    1,221.4

    1,222.4

    1,221.2

SAMPLE

MEDTRONIC, INC.

RECONCILIATION OF CONSOLIDATED GAAP EARNINGS

TO CONSOLIDATED ADJUSTED EARNINGS

(Unaudited)

(in millions, except per share data)

    Three months ended

    Three months ended

    October 28, 2005

    October 29, 2004

    U.S. GAAP

    Adjusted

    U.S. GAAP

    As Reported

    Adjustments

    Earnings

    As Reported

    Net sales

    $
    2,765.4

    $
    —

    $
    2,765.4

    $
    2,399.8

    Costs and expenses:

    Cost of products sold

    694.8

    —

    694.8

    584.8

    Research and development expense

    275.4

    —

    275.4

    232.7

    Selling, general, and administrative expense

    903.2

    —

    903.2

    772.0

    Special charges (1)

    100.0

    100.0

    —

    —

    Other expense, net

    40.5

    —

    40.5

    62.9

    Interest income

    (13.4
    )

    —

    (13.4
    )

    (7.1
    )

    Total costs and expenses

    2,000.5

    100.0

    1,900.5

    1,645.3

    Earnings (loss) before income taxes

    764.9

    (100.0
    )

    864.9

    754.5

    Provision for income taxes (2)

    (51.6
    )

    (259.4
    )

    207.8

    218.8

    Net earnings

    $
    816.5

    $
    159.4

    $
    657.1

    $
    535.7

    Earnings (loss) per share:

    Basic

    $
    0.68

    $
    0.13

    $
    0.54

    $
    0.44

    Diluted

    $
    0.67

    $
    0.13

    $
    0.54

    $
    0.44

    Weighted average shares outstanding:

    Basic

    1,208.6

    1,208.6

    1,209.5

    Diluted

    1,22