Medtronic Inc · S-4 · On 7/23/98

Filed On 7/23/98   ·   SEC File 333-59725   ·   Accession Number 914190-98-268

Registration of Securities Issued in a Business-Combination Transaction   ·   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4         Registration of Securities Issued in a               118    645K 
                          Business-Combination Transaction                       
 2: EX-2        Agreement and Plan of Merger                          25±   117K 
 3: EX-5        Opinion and Consent of Fredrikson & Byron, P.A.        2±    11K 
 4: EX-8        Opinion and Consent of Preston Gates                   3±    17K 
 5: EX-23.3     Consent of Price Waterhouse                            1      6K 
 6: EX-23.4     Consent of Price Waterhouse                            1      6K 
 7: EX-23.5     Consent of Morgan Stanley                              1      6K 
 8: EX-24       Power of Attorney                                      1     10K 
 9: EX-99.1     Form of Proxy                                          1      8K 

S-4   ·   Registration of Securities Issued in a Business-Combination Transaction
Document Table of Contents

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As Filed with the Securities and Exchange Commission on July 23, 1998 
                                                 Registration No: 333-__________

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

 MEDTRONIC, INC.
(Exact name of registrant as specified in its charter)

     Minnesota                      3845                      41-0793183
(State or other jurisdiction        (Primary Standard         (I.R.S. Employer  
 of incorporation or          Industrial Classification   Identification Number)
organization)                     Code Number)                            

7000 Central Avenue N.E.
Minneapolis, Minnesota 55432
(612) 514-4000

 (Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
----------------------

Carol E. Malkinson
Senior Legal Counsel and Assistant Secretary
 Medtronic, Inc.
7000 Central Avenue N.E.
Minneapolis, Minnesota 55432
(612) 514-4000

 (Name, address, including zip code, and telephone number, including
area code, of agent for service)

Copies to:
David C. Grorud, Esq.                           C. Kent Carlson, Esq.         
Mary E. Strand, Esq.                            Mark R. Beatty, Esq.          
Fredrikson & Byron, P.A.                        Preston Gates & Ellis LLP     
900 Second Avenue South, Suite 1100             701 Fifth Avenue, Suite 5000  
Minneapolis, Minnesota 55402-3397               Seattle, Washington 98104-7078
(612) 347-7000                                  (206) 623-7580                
----------------------

Approximate  date of  commencement  of proposed  sale of the  securities  to the
public:  Upon  consummation  of the Merger,  as described  in this  Registration
Statement.                                                                      

If the securities  being registered on this Form are being offered in connection
with the  formation of a holding  company and there is  compliance  with General
Instruction G, check the following box. [ ]                                     

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the  Securities  Act  registration  statement  number of the  earlier  effective
registration statement for the same offering. [ ]                               

If this Form is a  post-effective  amendment filed pursuant to Rule 462(d) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ]                                                      

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                         CALCULATION OF REGISTRATION FEE                                                         
---------------------------- ------------------- ----------------------- ------------------------ ---------------
Title of each class                              Proposed maximum        Proposed maximum         Amount of      
of securities                Amount to be        offering price          aggregate offering       registration   
to be registered             registered(1)       per share               price                    fee(2)         
---------------------------  ------------------- ----------------------- ------------------------ ---------------

                                                                                                                 
Common Stock, par            8,738,828                                                                           
value $.10 per share(3)      shares              Not Applicable          Not Applicable           $156,903.13    

---------------------------- ------------------- ----------------------- ------------------------ ---------------

     (1)    Represents the  approximate  maximum number of shares  issuable upon
            consummation  of  the  Merger  as  described  in  the   Registration
            Statement,  based upon the anticipated maximum number of outstanding
            shares of Physio-Control  International  Corporation Common Stock at
            the Merger's  Effective Time  (20,000,000) and assuming for purposes
            of this calculation that the Average Stock Price for Medtronic, Inc.
            Common Stock is equal to $62.9375 (the  reported  closing sale price
            of  Medtronic,  Inc.  Common Stock as reported by the New York Stock
            Exchange  on  June  26,  1998,   the  last  trading  day   preceding
            announcement  of the  Merger),  thereby  resulting  in a  Conversion
            Fraction  of  0.43694 of a  Medtronic,  Inc.  share  issued for each
Physio-Control International Corporation share.         

     (2)    The  registration  fee was  calculated  pursuant to Section 6 of the
            Securities Act of 1933 (the  "Securities  Act") and Rules  457(f)(1)
            and 457(c) thereunder,  as 0.000295 multiplied by the product of (A)
            20,000,000,   the  anticipated   maximum  number  of  Physio-Control
            International  Corporation  shares that may be exchanged pursuant to
            the Merger, multiplied by (B) $26.59375, the average of the high and
            low sale prices of Physio-Control  International  Corporation Common
            Stock as reported by the Nasdaq  National  Market on July 20,  1998,
            which date was within five  business  days prior to the date of this
filing.                                                 

     (3)    Each share of  Medtronic  Common  Stock  includes a Preferred  Stock
       Purchase Right pursuant to Medtronic's Shareholder Rights Plan.

     The registrant  hereby amends this  Registration  Statement on such date or
     dates as may be necessary to delay its effective  date until the registrant
     shall  file  a  further  amendment  which  specifically  states  that  this
     Registration Statement shall thereafter become effective in accordance with
     Section  8(a) of the  Securities  Act or until the  Registration  Statement
     shall become  effective on such date as the Commission,  acting pursuant to
said Section 8(a), may determine.                                     

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 [Physio-Control letterhead]
                                                             _____________, 1998
Dear Physio-Control Shareholder:                                                

         I  am  pleased  to  invite  you  to  attend  the  Special   Meeting  of
Shareholders of  Physio-Control  International  Corporation  ("Physio-Control"),
which  will  be  held  on  ___________,  1998,  at 9:00  a.m.,  local  time,  at
Physio-Control's  corporate  headquarters,  located  at 11811  Willows  Road NE,
Redmond,  Washington. At the meeting you will be asked to consider and vote upon
a Plan of Merger and an  Agreement  and Plan of Merger dated as of June 27, 1998
(the  "Merger  Agreement")  that  provide  for  the  merger  of  a  wholly-owned
subsidiary of Medtronic, Inc. into Physio-Control.                              

         Under  the  terms  of the  Plan of  Merger  and the  Merger  Agreement,
Physio-Control  shareholders  will receive $27.50 in shares of Medtronic  Common
Stock in exchange for each of their shares of Physio-Control Common Stock.      

         The  materials  accompanying  this  letter  include a Notice of Special
Meeting of Shareholders,  a Proxy Statement/Prospectus  relating to the proposal
to be voted upon at the Special  Meeting,  and a proxy card.  The attached Proxy
Statement/Prospectus  is intended to provide you with the  information  that you
will need to make an  informed  decision  regarding  how you should  vote on the
proposed  merger.  It also serves as a Prospectus for Medtronic,  describing the
investment  in  Medtronic  that you will be making if the merger is approved and
you exchange your Physio-Control Common Stock for Medtronic Common Stock. Copies
of the Plan of  Merger  and the  Merger  Agreement  are  attached  to the  Proxy
Statement/Prospectus  as Appendices A and B. I urge you to read this information
carefully before voting on the proposed merger.                                 

         The Board of Directors  believes that the proposed  transaction is fair
and in the best interests of Physio-Control and its shareholders and unanimously
recommends  approval of the Plan of Merger and the Merger  Agreement.  The Board
believes  that the  merger  will,  among  other  things,  permit  Physio-Control
shareholders  to continue  their equity  participation  on a tax-free basis in a
larger, more diversified medical products enterprise.                           

         The  Board of  Directors  of  Physio-Control  retained  the  investment
banking firm of Morgan Stanley & Co.  Incorporated  to advise it with respect to
the  consideration  to be received in the merger.  Such firm  provided a written
opinion to the  Physio-Control  Board that,  as of the date of such  opinion and
subject to the  assumptions  made,  matters  considered,  and limitations on the
review  undertaken,   the  consideration  to  be  received  by  the  holders  of
Physio-Control  Common  Stock  pursuant to the Merger  Agreement  is fair from a
financial  point of view to such  holders.  A copy of its opinion is attached to
the Proxy Statement/Prospectus as Appendix D.                                   

         The Plan of Merger and the Merger  Agreement  must be  approved  by the
holders of two-thirds of the outstanding shares of Physio-Control  Common Stock.
Your vote on this matter is very important.  We urge you to carefully review the
enclosed material and to return your proxy promptly.                            

         Whether or not you plan to attend the meeting, please sign and promptly
return your proxy card in the enclosed postage-paid  envelope. If you attend the
meeting,  you may vote in person if you wish,  even  though you have  previously
returned your proxy.                                                            

              Sincerely,

                     Richard O. Martin
                                        Chairman and Chief Executive Officer

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PHYSIO-CONTROL INTERNATIONAL CORPORATION
 11811 Willows Road NE
Redmond, Washington 98073-9706

 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held ___________, 1998

To the Shareholders of Physio-Control International Corporation:                

         A Special Meeting of the Shareholders of  Physio-Control  International
Corporation  ("Physio-Control")  will  be  held  at  Physio-Control's  corporate
headquarters,  located  at  11811  Willows  Road  NE,  Redmond,  Washington,  on
___________, 1998, at 9:00 a.m., local time, to consider and act upon a proposal
to approve a Plan of Merger and an  Agreement  and Plan of Merger  (the  "Merger
Agreement"),  copies of which are  included as  Appendices  A and B to the Proxy
Statement/Prospectus  accompanying  this Notice.  Pursuant to the Plan of Merger
and the Merger  Agreement,  (a) PC Merger Corp.  ("Merger  Subsidiary")  will be
merged into Physio-Control,  with Physio-Control to be the surviving corporation
and to become a wholly-owned subsidiary of Medtronic,  Inc.  ("Medtronic"),  and
(b)  holders  of   Physio-Control   common  stock,  par  value  $.01  per  share
("Physio-Control  Common Stock"), will receive shares of Medtronic common stock,
par value $.10 per share  ("Medtronic  Common  Stock"),  based upon a conversion
fraction described in the Proxy Statement/Prospectus accompanying this Notice.  

         With  respect to the  proposal  to  approve  the Plan of Merger and the
Merger Agreement, Physio-Control shareholders have a right to dissent and obtain
payment in cash for their shares by complying  with the terms and  procedures of
Chapter 23B.13 of the Washington  Business  Corporation  Act, a copy of which is
included  as  Appendix  C to the Proxy  Statement/Prospectus  accompanying  this
Notice.                                                                         

         Only  shareholders of record as shown on the books of Physio-Control at
the close of business on ___________, 1998 are entitled to notice of and to vote
at the Special Meeting or any adjournments thereof.                             

         Information relating to the above proposal is set forth in the attached
Proxy  Statement/Prospectus.  Approval  of the  Plan of  Merger  and the  Merger
Agreement will require the affirmative  vote of the holders of two-thirds of the
shares of  Physio-Control  Common  Stock  outstanding  on the record  date.  All
shareholders are cordially invited to attend the Special Meeting in person.     

                  BY ORDER OF THE BOARD OF DIRECTORS

V. Marc Droppert
____________, 1998              Secretary                                       

 WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE
COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY CARD AND MAIL IT
PROMPTLY IN THE ENCLOSED PROXY RETURN ENVELOPE, WHICH REQUIRES
 NO POSTAGE IF MAILED IN THE UNITED STATES

DO NOT SEND ANY STOCK CERTIFICATES WITH THE PROXY CARD

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PROXY STATEMENT/PROSPECTUS

Physio-Control International Corporation                         Medtronic, Inc.
11811 Willows Road NE                                   7000 Central Avenue N.E.
Redmond, Washington  98073-9706                    Minneapolis, Minnesota  55432
Telephone:  (425) 867-4000                            Telephone:  (612) 514-4000

SPECIAL MEETING OF SHAREHOLDERS OF
PHYSIO-CONTROL INTERNATIONAL CORPORATION
 TO BE HELD ON ___________, 1998

         This Proxy  Statement/Prospectus is being furnished to the shareholders
of Physio-Control  International  Corporation  ("Physio-Control")  in connection
with the special meeting of shareholders (the "Meeting") of Physio-Control to be
held at Physio-Control's  corporate headquarters,  located at 11811 Willows Road
NE,  Redmond,  Washington,  on  ___________,  1998, at 9:00 a.m. At the Meeting,
Physio-Control shareholders will be asked to consider and act upon a proposal to
approve the Plan of Merger  attached  hereto as Appendix A and the Agreement and
Plan of Merger  attached  hereto as Appendix B,  pursuant to which (a) PC Merger
Corp.  ("Merger  Subsidiary"),  a  wholly-owned  subsidiary of  Medtronic,  Inc.
("Medtronic"), will be merged (the "Merger") into Physio-Control,  which will be
the surviving corporation in the Merger and become a wholly-owned  subsidiary of
Medtronic, and (b) each share of Physio-Control common stock, par value $.01 per
share  ("Physio-Control  Common  Stock"),  will be converted into a portion of a
share of Medtronic  common stock,  par value $.10 per share  ("Medtronic  Common
Stock"), as described in this Proxy Statement/Prospectus.                       

         This Proxy  Statement/Prospectus  also  constitutes  the  Prospectus of
Medtronic  with respect to the shares of Medtronic  Common Stock to be issued in
the Merger.  Medtronic has filed a  Registration  Statement on Form S-4 with the
Securities and Exchange  Commission  (the  "Commission")  covering the shares of
Medtronic  Common Stock that may be issued in connection with the Merger,  based
on the Conversion  Fraction  described in this Proxy  Statement/Prospectus.  The
Medtronic  Common Stock is listed on the New York Stock Exchange  ("NYSE") under
the symbol "MDT." This Proxy  Statement/Prospectus  and  accompanying  letter to
Physio-Control shareholders, Notice of Special Meeting of Shareholders, and form
of proxy  for use at the  Meeting  are  first  being  mailed  to  Physio-Control
shareholders on or about _________, 1998.                                       

         NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION  HAS  APPROVED OR  DISAPPROVED  THESE  SECURITIES  OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY  STATEMENT/PROSPECTUS.  ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.                                             

         Information  contained  or  incorporated  by  reference  in this  Proxy
Statement/Prospectus   regarding  Medtronic  has  been  supplied  by  Medtronic.
Information   contained   or   incorporated   by   reference   in   this   Proxy
Statement/Prospectus    regarding    Physio-Control   has   been   supplied   by
Physio-Control.                                                                 

         Additional copies of this Proxy Statement/Prospectus and the Proxy card
to be  returned  for the  Meeting can be  obtained  from  Physio-Control,  11811
Willows Road NE, Redmond, Washington 98073-9706, Attention: Corporate Secretary,
telephone (425) 867-4000. Questions or requests for assistance in completing and
submitting Proxy cards may also be directed to ________________________________.

 The date of this Proxy Statement/Prospectus is ___________, 1998.

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         No person has been  authorized to give any  information  or to make any
representations other than those contained in this Proxy Statement/Prospectus or
the  documents   incorporated  by  reference  herein,  and  any  information  or
representations not contained herein or therein may not be relied upon as having
been authorized. This Proxy Statement/Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy the Medtronic  Common Stock offered by
this  Proxy  Statement/Prospectus,  or  the  solicitation  of a  proxy,  in  any
circumstances  in which such offer or solicitation is unlawful.  The delivery of
this Proxy  Statement/Prospectus  does not imply that the information  herein is
correct as of any time subsequent to the date of such information.              

 AVAILABLE INFORMATION

         This Proxy  Statement/Prospectus is a prospectus of Medtronic delivered
in compliance with the Securities Act of 1933 (the "Securities Act"). This Proxy
Statement/Prospectus  constitutes  part of a Registration  Statement on Form S-4
(the "Registration  Statement") filed by Medtronic with the Commission under the
Securities  Act with  respect  to the  Medtronic  Common  Stock to be  issued in
connection with the Merger. This Proxy Statement/Prospectus does not contain all
of the information set forth in the Registration  Statement and the exhibits and
schedules   thereto.   For  further   information  with  respect  to  Medtronic,
Physio-Control, and the Medtronic Common Stock offered hereby, reference is made
to the Registration Statement, exhibits, and schedules.  Statements contained in
this Proxy  Statement/Prospectus as to the contents of any contract or any other
document  referred  to  are  not  necessarily  complete,  and in  each  instance
reference is made to the copy of such  contract or document  filed as an exhibit
to the Registration Statement or such other document,  each such statement being
qualified in all respects by such reference.                                    

         Medtronic  and   Physio-Control   are  subject  to  the   informational
requirements of the Securities  Exchange Act of 1934 (the "Exchange Act"),  and,
in accordance therewith,  each files reports, proxy and information  statements,
and other  information  with the  Commission.  The  public may read and copy the
Registration  Statement and the reports, proxy and information  statements,  and
other information filed by each of Medtronic and Physio-Control  pursuant to the
Exchange Act at the  Commission's  Public  Reference  Room at 450 Fifth  Street,
N.W.,  Washington,  D.C. 20549, or at one of the Commission's  regional offices:
500 West Madison Street,  Suite 1400,  Chicago,  Illinois 60661-2511 and 7 World
Trade Center,  13th Floor, New York, New York, 10048.  Copies of all or any part
of such  Medtronic  material are available for  inspection at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. Copies
of all or any part of such Physio-Control  material are available for inspection
at the offices of the  National  Association  of  Securities  Dealers,  Inc. The
public  may obtain  information  on the  operation  of the  Commission's  Public
Reference  Room by calling the  Commission  at  1-800-SEC-0330.  The  Commission
maintains an Internet site at "http://www.sec.gov" containing reports, proxy and
information  statements,  and  other  information  regarding  issuers  that file
electronically with the Commission, including Medtronic and Physio-Control.     

 INFORMATION INCORPORATED BY REFERENCE

         This  Proxy  Statement/Prospectus  incorporates  certain  documents  by
reference.  Medtronic and  Physio-Control  will provide  without  charge to each
person,   including  any  beneficial  owner,  to  whom  a  copy  of  this  Proxy
Statement/Prospectus is delivered, on written or oral request, copies of any and
all such documents  (other than the exhibits  thereto,  unless such exhibits are
specifically  incorporated  by reference  into the  information  that this Proxy
Statement/Prospectus  incorporates) of Medtronic or Physio-Control,  as the case

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may be,  that are  incorporated  by  reference.  Requests  should be directed to
Medtronic,  Inc.,  7000  Central  Avenue  N.E.,  Minneapolis,  Minnesota  55432,
Attention:  Investor Relations Department, M.S. 206, telephone (612) 514-3035 or
to  Physio-Control  International  Corporation,  11811 Willows Road NE, Redmond,
Washington 98073-9706, Attention: Corporate Secretary, telephone (425) 867-4000.
In order to ensure timely delivery of the documents,  any such request should be
made no later than [five business days prior to Meeting date], 1998.            

         The following  Physio-Control  documents are  incorporated by reference
herein:                                                                         

         1.  Physio-Control's  Annual  Report on Form 10-K for the  fiscal  year
ended December 31, 1997.                                                        

         2.  Physio-Control's  Quarterly  Report  on Form  10-Q  for the  fiscal
quarter ended March 31, 1998.                                                   

     3. Physio-Control's Current Report on Form 8-K filed July 10, 1998.

         4. The  description  of  Physio-Control's  Common  Stock  contained  in
Physio-Control's  Registration  Statement on Form 8-A filed under  Section 12 of
the Exchange Act.                                                               

         All documents filed by Physio-Control  with the Commission  pursuant to
Sections  13(a),  13(c),  14 and 15(d) of the Exchange Act after the date hereof
and  prior to the date of the  Meeting  shall be deemed  to be  incorporated  by
reference  herein  and  shall be a part  hereof  from the date of filing of such
documents.                                                                      

         The following Medtronic documents are incorporated by reference herein:

         1.  Medtronic's  Annual  Report on Form 10-K for the fiscal  year ended
April 30, 1998.                                                                 

         2. Medtronic's  Current Reports on Form 8-K filed July 8, 1998 and July
16, 1998.                                                                       

         3. The description of Medtronic's Common Stock contained in Medtronic's
Registration Statement on Form 8-A filed under Section 12 of the Exchange Act.  

         4. The  description of  Medtronic's  Preferred  Stock  Purchase  Rights
attached to its Common Stock contained in Medtronic's  Registration Statement on
Form 8-A filed under Section 12 of the Exchange Act.                            

         All  documents  filed by  Medtronic  with the  Commission  pursuant  to
Sections  13(a),  13(c),  14 and 15(d) of the Exchange Act after the date hereof
and  prior to the date of the  Meeting  shall be deemed  to be  incorporated  by
reference  herein  and  shall be a part  hereof  from the date of filing of such
documents.                                                                      

         Any statements contained in a document incorporated by reference herein
shall be deemed to be modified or superseded  for purposes  hereof to the extent
that a statement  contained herein (or in any other  subsequently filed document
that also is  incorporated  by reference  herein)  modifies or  supersedes  such
statement.  Any  statement  so  modified  or  superseded  shall not be deemed to
constitute a part hereof except as so modified or superseded.                   

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 CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

         Certain  statements   contained  in  this  Proxy   Statement/Prospectus
(including  information  included or incorporated by reference herein) and other
written  and  oral   statements   made  from  time  to  time  by  Medtronic  and
Physio-Control  do not relate  strictly to historical or current facts. As such,
they  are  considered   "forward-looking   statements"   which  provide  current
expectations or forecasts of future events. Such statements can be identified by
the use of terminology such as "anticipate,"  "believe,"  "estimate,"  "expect,"
"intend," "may," "could,"  "possible," "plan," "project," "will," "forecast" and
similar  words  or  expressions.  Medtronic's  and  Physio-Control's  respective
forward-looking   statements   generally  relate  to  their  respective   growth
strategies,  financial  results,  product  development  and regulatory  approval
programs,  and  sales  efforts.  One  must  carefully  consider  forward-looking
statements and understand  that such  statements  involve a variety of risks and
uncertainties, known and unknown, and may be affected by inaccurate assumptions.
Consequently,  no forward-looking statement can be guaranteed and actual results
may vary  materially.  It is not  possible  to foresee or  identify  all factors
affecting Medtronic's or Physio-Control's respective forward-looking statements,
and  investors  therefore  should not  consider  any list of  factors  affecting
Medtronic's or Physio-Control's  respective  forward-looking statements to be an
exhaustive  statement of all risks,  uncertainties,  or  potentially  inaccurate
assumptions.  Neither Medtronic nor Physio-Control  undertakes any obligation to
update any forward-looking statement.                                           

         Although  it is not  possible  to  create a  comprehensive  list of all
factors  that  may  cause  actual   results  to  differ  from   Medtronic's   or
Physio-Control's forward-looking statements, such factors include, among others,
(i) trends toward managed care, health care cost containment,  and other changes
in government  and private  sector  initiatives,  in the United States and other
countries in which Medtronic or   Physio-Control  do business,  that are placing
increased  emphasis on the delivery of more  cost-effective  medical  therapies;
(ii) the trend of  consolidation in the medical device industry as well as among
customers  of  medical  device  manufacturers,  resulting  in more  significant,
complex,  and  long-term  contracts  than in the  past and  potentially  greater
pricing pressures;  (iii) the difficulties and uncertainties associated with the
lengthy and costly new product  development and regulatory  approval  processes,
which  may   result  in  lost   market   opportunities   or   preclude   product
commercialization;  (iv)  efficacy or safety  concerns  with respect to marketed
products,  whether  scientifically  justified  or not,  that may lead to product
recalls,  withdrawals,  or declining  sales;  (v) changes in governmental  laws,
regulations,  and accounting  standards and the enforcement  thereof that may be
adverse to Medtronic or Physio-Control; (vi) increased public interest in recent
years in product  liability  claims for  implanted  medical  devices,  including
pacemakers and leads; (vii) other legal factors including environmental concerns
and patent  disputes with  competitors;  (viii) agency or government  actions or
investigations  affecting the industry in general or Medtronic or Physio-Control
in  particular;  (ix)  the  development  of  new  products  or  technologies  by
competitors,  technological  obsolescence,  and  other  changes  in  competitive
factors;  (x) risks  associated  with  maintaining  and expanding  international
operations;  (xi)  business  acquisitions,  dispositions,   discontinuations  or
restructurings  by  Medtronic  or  Physio-Control;   (xii)  the  integration  of
businesses acquired by Medtronic or Physio-Control;  and (xiii) economic factors
over which  Medtronic or  Physio-Control  has no control,  including  changes in
inflation,   foreign   currency  rates,   and  interest  rates.   Medtronic  and
Physio-Control  note  these  factors  as  permitted  by the  Private  Securities
Litigation Reform Act of 1995.                                                  

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 TABLE OF CONTENTS

                                                                        Page

 SUMMARY...................................................................  7
 GENERAL INFORMATION....................................................... 19

 THE MERGER................................................................ 20
        General............................................................ 21
        Effective Time of the Merger....................................... 21
        Background of the Merger........................................... 21
Physio-Control's Reasons for the Merger; Recommendation       
          of the Physio-Control Board of Directors......................... 24
        Medtronic's Reasons for the Merger................................. 26
        Opinion of Physio-Control's Financial Advisor...................... 26
        Vote Required...................................................... 30
        Conversion of Physio-Control Common Stock in the Merger............ 30
        Shareholder Rights Plan............................................ 32
        Treatment of Stock Options......................................... 32
        Conduct of Business of Physio-Control Pending the Merger........... 32
        Interests of Certain Persons in the Merger......................... 33
        Voting Agreements.................................................. 34
        Stock Option Agreement............................................. 35
        Conditions; Waiver................................................. 35
        Amendment and Termination of the Merger Agreement.................. 36
        Expenses and Fees.................................................. 37
        Restrictions on Resale of Medtronic Common Stock................... 37
        Deregistration of Physio-Control Common Stock...................... 38
        Accounting Treatment of the Merger................................. 38
        Certain Federal Income Tax Consequences............................ 39
        Indemnification.................................................... 41
        Regulatory Requirements............................................ 41
        Rights of Dissenting Physio-Control Shareholders................... 42

COMPARATIVE STOCK PRICES AND DIVIDENDS...................................... 44 

RECENT DEVELOPMENTS......................................................... 45 

COMPARATIVE RIGHTS OF MEDTRONIC SHAREHOLDERS AND  PHYSIO-CONTROL                
SHAREHOLDERS................................................................ 45 
        Classification, Removal and Election of Directors.................. 46
        Preferred Stock.................................................... 47
        Special Meetings of Shareholders................................... 48
        Voting Rights; Shareholder Approvals............................... 48
        Cumulative Voting.................................................. 49
        Preemptive Rights.................................................. 49
        Amendment of the Articles of Incorporation......................... 49
        Business Combinations and Control Share Acquisitions............... 50
        Shareholder Rights Plan............................................ 50
        Related Person Business Transactions............................... 51

CERTAIN TRANSACTIONS AND RELATIONSHIPS BETWEEN PHYSIO-CONTROL AND MEDTRONIC. 52 

LEGAL MATTERS............................................................... 52 

EXPERTS..................................................................... 52 

APPENDIX A -- Plan of Merger................................................ A-1

APPENDIX B -- Agreement and Plan of Merger.................................. B-1

APPENDIX C -- Chapter 23B.13 of Washington Business Corporation Act......... C-1

APPENDIX D -- Opinion of Morgan Stanley & Co. Incorporated.................. D-1

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 SUMMARY

         The  following  is a brief  summary  of certain  information  contained
elsewhere in this Proxy  Statement/Prospectus  and in the documents incorporated
herein by reference.  Certain capitalized terms used in this Summary are defined
elsewhere  in this Proxy  Statement/Prospectus.  Reference  is made to, and this
Summary is qualified in its entirety by, the more detailed information contained
in this Proxy  Statement/Prospectus,  the Appendices  hereto,  and the documents
incorporated in this Proxy Statement/Prospectus by reference.                   

 Parties to the Merger

Physio-Control:   Physio-Control International Corporation ("Physio-Control"), a
                  Washington corporation, was founded in 1955 and reincorporated
                  in Washington in 1997.  Physio-Control designs,  manufactures,
                  markets  and  services  an  integrated   line  of  noninvasive
                  emergency  cardiac  defibrillator  and vital  sign  assessment
                  devices,  disposable  electrodes and data management software.
                  Physio-Control's products are used in both out-of-hospital and
                  hospital   settings  for  the   detection   and  treatment  of
                  life-threatening events including trauma, heart attack and the
                  acute heart rhythm  disturbances of ventricular  fibrillation,
tachycardia and bradycardia.                

                  Physio-Control's  principal offices and corporate headquarters
                  are  located at 11811  Willows  Road NE,  Redmond,  Washington
                  98073-9706,   telephone:   (425)  867-4000.  See  "Information
Incorporated   by  Reference."              

Medtronic:        Medtronic,  Inc. ("Medtronic"),  a Minnesota corporation,  was
                  incorporated in 1957. Medtronic is the world's leading medical
                  technology    company    specializing   in   implantable   and
                  interventional  therapies.  Its primary products include those
                  for bradycardia  pacing,  tachyarrhythmia  management,  atrial
                  fibrillation  management,  heart failure management,  coronary
                  and  peripheral  vascular  disease,  heart valve  replacement,
                  extracorporeal  cardiac  support,  minimally  invasive cardiac
                  surgery, malignant and non-malignant pain, movement disorders,
                  neurosurgery and neurodegenerative disorders. Medtronic serves
      customers and patients in more than 120 countries.

                  Medtronic's  principal offices and corporate  headquarters are
                  located at 7000 Central  Avenue N.E.,  Minneapolis,  Minnesota
                  55432,    telephone:    (612)   514-4000.   See   "Information
Incorporated by Reference."                 

PC Merger Corp.:  PC  Merger   Corp.   ("Merger   Subsidiary"),   a   Washington
                  corporation,  is a corporation recently organized by Medtronic
                  for the purpose of  effecting  the Merger.  It has no material
                  assets  and  has  not  engaged  in any  activities  except  in
connection with the proposed Merger.        

Physio-Control Shareholders' Meeting

Time, Date, and                                                                 
Place of  Meeting:A special meeting of shareholders  of  Physio-Control  will be
                  held on  ___________,  1998,  at 9:00  a.m.,  local  time,  at
                  Physio-Control's  corporate  headquarters,  located  at  11811
         Willows Road NE, Redmond, Washington (the "Meeting").

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Purpose of the                                                                  
 Meeting:         The  purpose  of the  Meeting is to  consider  and vote upon a
                  proposal  to  approve  the Plan of Merger  attached  hereto as
                  Appendix A and the  Agreement  and Plan of Merger  dated as of
                  June 27,  1998  (the  "Merger  Agreement"),  among  Medtronic,
                  Physio-Control,  and  Merger  Subsidiary,  which  is  attached
                  hereto as Appendix B,  providing for the merger (the "Merger")
                  of Merger Subsidiary into Physio-Control, as a result of which
                  Physio-Control  will  become  a  wholly-owned   subsidiary  of
                  Medtronic.  Other terms and  provisions  related to the Merger
                  are set forth in the Merger Agreement,  which is summarized in
this Proxy Statement/Prospectus.            

Record Date:      Only holders of record of  Physio-Control  Common Stock at the
                  close of business on  ___________,  1998,  will be entitled to
                  notice of and to vote at the  Meeting  or any  adjournment  or
adjournments thereof.                       

Vote Required:    The  affirmative  vote by the  holders  of  two-thirds  of the
                  outstanding shares of Physio-Control  Common Stock is required
                  to approve the Plan of Merger and the Merger Agreement.  As of
                  the record date,  17,727,891 shares of  Physio-Control  Common
                  Stock were  outstanding  and entitled to vote. Of such shares,
       136,979 shares (less than 1% of the shares entitled
                  to vote at the  Meeting) are  beneficially  owned by directors
                  and  executive  officers of  Physio-Control.  Physio-Control's
                  directors and executive  officers who hold stock or options to
                  purchase  stock  of   Physio-Control   have  executed   voting
                  agreements  under which such persons agreed to vote the shares
                  of Physio-Control  Common Stock  beneficially owned by them in
favor of the Merger.                        

                  Physio-Control  shareholders  have the power to revoke proxies
                  previously given by them before the shares  represented by any
                  such   proxies  are  voted  at  the   Meeting.   See  "General
Information."                               

                  Approval  of the Plan of Merger  and the Merger  Agreement  by
                  Medtronic  shareholders  is not required  under  Minnesota law
                  and,  accordingly,  will not be sought.  See "The Merger--Vote
Required."                                  

Dissenters' Rights:                                                             
                  Under Washington law, holders of  Physio-Control  Common Stock
                  who give proper notice to  Physio-Control  and who do not vote
                  in favor of the  Merger  have the right to receive in cash the
                  "fair  value"  of  their  Physio-Control  shares  in  lieu  of
                  Medtronic  Common  Stock  pursuant  to the  Merger.  See  "The
                  Merger--Rights of Dissenting Physio-Control  Shareholders" and
                  Chapter 23B.13 of the Washington Business Corporation Act (the
                  "WBCA"),  a copy of which is  attached  hereto as  Appendix C.
                  Holders  of  Medtronic  Common  Stock do not have  dissenters'
rights in connection with the Merger.       

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 Description of the Merger

General; Exchange:                                                              
                  Upon  consummation  of the Merger,  Merger  Subsidiary will be
                  merged into  Physio-Control and  Physio-Control  will become a
                  wholly-owned   subsidiary   of   Medtronic.   Each   share  of
                  Physio-Control  Common Stock outstanding  immediately prior to
                  the  Merger  (excluding  any  shares  as to which  dissenters'
                  rights have been properly  exercised)  will be converted  into
                  the  portion  of  a  share  (the  "Conversion   Fraction")  of
                  Medtronic  Common Stock equal to $27.50 divided by the average
                  of the daily closing sale prices of Medtronic  Common Stock as
                  reported  on the  NYSE  Composite  Tape  (the  "Average  Stock
                  Price") for the 19 consecutive NYSE trading days ending on the
                  first NYSE trading day  immediately  preceding  the  Effective
Time of the Merger.                         

                  The Conversion  Fraction is subject to appropriate  adjustment
                  in the event of a stock split, combination, stock dividend, or
                  other  distribution  of shares of the  Medtronic  Common Stock
                prior to the Effective Time of the Merger. See "The Merger."

                  Each share of Medtronic  Common  Stock  received in the Merger
                  will also  represent one Preferred  Stock Purchase Right under
                  Medtronic's     Shareholder     Rights    Plan.    See    "The
Merger--Shareholder Rights Plan."           

                  Persons  entitled to  fractional  shares of  Medtronic  Common
                  Stock upon such  conversion  shall  receive a cash  payment in
                  lieu thereof.  See "The  Merger--Conversion  of Physio-Control
   Common Stock in the Merger--Fractional Shares."

                  If the  Merger  is  approved  and  the  Merger  is  completed,
                  Physio-Control  shareholders  will be instructed to deliver to
                  Medtronic's   exchange  agent  for  the  Merger  a  letter  of
                  transmittal, which will be sent to such shareholders following
                  the  Merger,   together  with  certificates   evidencing  each
                  shareholder's Physio-Control Common Stock, in exchange for the
                  Medtronic Common Stock and, if applicable, cash in lieu of any
                  fractional  shares of Medtronic  Common Stock.  Physio-Control
                  shareholders  should not send in their certificates until they
                  receive a letter of transmittal.  See "The  Merger--Conversion
  of Physio-Control Common Stock in the Merger."

Effective Time of                                                               
 the  Merger:     It is expected that the Merger will become effective within 10
                  business days following approval of the Plan of Merger and the
                  Merger  Agreement by the requisite vote of the  Physio-Control
                  shareholders  and the  satisfaction  or  waiver  of the  other
                  conditions  to the  Merger,  upon the  filing of  articles  of
                  merger  with  the  Washington  Secretary  of  State.  See "The
                  Merger--Effective  Time  of  the  Merger"  and  "--Conditions;
Waiver."                                    

Background of the                                                               
 Merger:          The  terms  of  the  Merger   Agreement   are  the  result  of
                  arm's-length negotiations between representatives of Medtronic
                  and Physio-Control. The following is a brief discussion of the
                  background  of these  negotiations,  the  Merger  and  related
transactions.                               

                  In January 1998,  Physio-Control  engaged Morgan Stanley & Co.
                  Incorporated  ("Morgan  Stanley") to assist in a possible sale
                  of  Physio-Control.   On  February  3,  1998,  Morgan  Stanley
                  contacted Medtronic regarding whether it had any interest in a
                  transaction  with   Physio-Control.   Following  that  initial
                  contact, representatives of both companies and their financial
                  advisors  held  several  meetings  in  March  and  April  1998
regarding a possible transaction.           

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                  On April 16,  1998,  the  parties  executed a  confidentiality
                  agreement.  Medtronic presented certain nonfinancial terms for
                  discussion with Physio-Control on April 28, 1998 and presented
                  certain  financial  terms  for  discussion  on  May  5,  1998.
                  Following  further  discussions  of terms and  negotiation  of
                  definitive  agreements  among the parties and their  advisors,
                  and Medtronic's review of due diligence  information regarding
                  Physio-Control,   on  June  20,  1998,  the  parties   reached
                  tentative   agreement  on  possible   resolutions  of  certain
                  outstanding  issues,  subject  to  approval  of  the  parties'
respective Boards of Directors.             

                  On June 25, 1998, the Board of Directors of Medtronic approved
                  the   acquisition   of   Physio-Control,   subject   to  final
                  negotiations  of  outstanding  issues  by  senior  management.
                  Negotiations  continued  through  June 27,  1998.  On June 27,
                  1998,  the Board of  Directors of  Physio-Control  unanimously
                  approved  the terms of the  Merger  Agreement  and the Plan of
                  Merger.   The  Merger   Agreement  was  signed  following  the
                  conclusion  of  the  meeting  of the  Board  of  Directors  of
                  Physio-Control.  See "The  Merger--Background  of the Merger,"
                  "--Physio-Control's Reasons for the Merger;  Recommendation of
                  the Physio-Control Board of Directors," "--Medtronic's Reasons
                  for the Merger," and "--Opinion of Physio-Control's  Financial
Advisor."                                   

Reasons for the                                                                 
Merger:           In reaching its  conclusions  to approve the Merger  Agreement
                  and to  recommend  the  approval of the Plan of Merger and the
                  Merger  Agreement  by  the  Physio-Control  shareholders,  the
                  Physio-Control  Board of Directors considered various factors,
                  including the opportunity for  Physio-Control  shareholders to
                  continue equity  participation  in a larger,  more diversified
                  medical device company at a premium over current market prices
                  for Physio-Control  Common Stock; the opportunity for enhanced
                  product development,  marketing,  and sales by Physio-Control;
                  Medtronic's reputation and resources; the terms and conditions
                  of the Merger  Agreement;  the  fairness  opinion  provided by
                  Morgan   Stanley;   the  price   offered   to   Physio-Control
                  shareholders and historical  trading prices for Physio-Control
                  Common Stock and  Medtronic  Common Stock;  the  likelihood of
                  consummation  of the  Merger;  and the  expectation  that  the
                  Merger   will   be   nontaxable   to   the   shareholders   of
                 Physio-Control for United States federal income tax purposes.

                  The  Board of  Directors  of  Physio-Control  has  unanimously
                  approved  the  Merger,  and  the  Board  recommends  that  the
                  shareholders  of  Physio-Control  vote in favor of the Plan of
Merger and the Merger Agreement.            

                  See  "The  Merger--Physio-Control's  Reasons  for the  Merger;
                  Recommendation  of the  Physio-Control  Board  of  Directors,"
                  "--Medtronic's   Reasons  for  the  Merger,"   "--Opinion   of
                  Physio-Control's  Financial  Advisor," and "Comparative  Stock
                  Prices and  Dividends."  For  information  on the interests of
                  certain persons in the Merger, see "The  Merger--Interests  of
Certain Persons in the Merger."             

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Physio-Control's                                                                
Financial Advisor:                                                            
                  Morgan Stanley was  retained  by  Physio-Control  to advise it
                  with   respect  to   proposals   for   the    acquisition   of
                  Physio-Control.  Morgan   Stanley   has  rendered  its written
                  opinion  that,   as   of   the  date  of  such  opinion,   the
                  consideration    to    be   received   by   the   holders   of
                  Physio-Control Common Stock  pursuant  to the Merger Agreement
                  is fair from a financial  point  of view to such holders.  The
                  full text of the opinion of  Morgan  Stanley,  which  contains
                  information  , among  other  things,  as  to  the  assumptions
                  made, matters  considered,  and  the  scope and limitations on
                  the review  undertaken,  is set  forth  as  Appendix D to this
                  Proxy  Statement/Prospectus,   and holders  of  Physio-Control
                  Common Stock  are  urged to read the opinion in its  entirety.
                  See  "The   Merger--Opinion  of   Physio-Control's   Financial
Advisor."                                   

Fluctuation in                                                                  
 Market Price:    The number of shares of Medtronic Common Stock received in the
                  Merger will  depend on the market  value of  Medtronic  Common
                  Stock,  which  is  subject  to  fluctuation.  There  can be no
                  assurance  that the recent market  prices of Medtronic  Common
                  Stock will be maintained  until or after the  consummation  of
                  the Merger.  See "Comparative  Stock Prices and Dividends" and
                  "The  Merger--Conversion of Physio-Control Common Stock in the
Merger."                                    

Certain Federal                                                                 
Income Tax                                                                  
  Consequences:   The   Merger  is   expected   to  be  treated  as  a  tax-free
                  reorganization within the meaning of Sections 368(a)(1)(A) and
                  368(a)(2)(E) of the Internal  Revenue Code of 1986, as amended
                  (the "Code"). Medtronic,  Physio-Control and Merger Subsidiary
                  will  each  be a  "party  to the  reorganization"  within  the
meaning of Section 368(b) of the Code.      

                  Physio-Control   has   received   an  opinion  of  counsel  to
                  Physio-Control  to the  effect  that,  assuming  the Merger is
                  consummated in accordance with the Merger  Agreement,  no gain
                  or  loss  will  be   recognized  by   Physio-Control   or  its
                  shareholders  upon their receipt of Medtronic  Common Stock in
                  exchange   for   their   Physio-Control    Common   Stock.   A
                  Physio-Control   shareholder   receiving   cash   in  lieu  of
                  fractional shares or exercising  dissenters' rights,  however,
                  will be required to recognize  gain,  if any,  realized in the
                  transaction  but not in  excess of the cash  received  by such
                  shareholder.   The  opinion  is  based  upon  and  subject  to
                  customary  representations  made to  such  counsel.  See  "The
     Merger--Certain Federal Income Tax Consequences."

Accounting                                                                      
  Treatment:      Medtronic  intends to account  for the Merger as a "pooling of
                  interests"  for accounting  and financial  reporting  purposes
                  under generally accepted accounting  principles.  Consummation
                  of  the  Merger  may  be   conditioned   upon   Medtronic  and
                  Physio-Control  receiving letters from  PricewaterhouseCoopers
                  LLP, Medtronic's and Physio-Control's independent accountants,
                  confirming  that  no  conditions  exist  that  would  preclude
                  Medtronic  from  accounting  for the  Merger as a  pooling  of
                  interests  transaction.  In  order to be  eligible  to use the
                  pooling  of  interests  method  to  account  for  the  Merger,
                  Medtronic  will sell prior to the Merger a number of shares of
                  Medtronic  Common  Stock equal to that number of shares  which
                  are tainted for  purposes of pooling of  interests  accounting
                  and were purchased by Medtronic in the open market pursuant to
                  its  share  repurchase  program.  See "The  Merger--Accounting
Treatment of the Merger."                   

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Treatment of Stock                                                              
 Options:         Pursuant to the terms of the  outstanding  options to purchase
                  Physio-Control   Common  Stock,  such  options  that  are  not
                  otherwise  vested will be  accelerated  and fully  vested as a
                  result of the Merger.  All options that are not  exercised and
                  remain  outstanding  at the Effective  Time will be assumed by
                  Medtronic and will thereafter be exercisable on the same terms
                  and conditions,  except for appropriate adjustments to reflect
                  the  Conversion   Fraction  and  conversion  into  options  to
                  purchase Medtronic Common Stock. See "The Merger--Treatment of
                  Stock  Options"  and  "--Interests  of Certain  Persons in the
Merger."                                    

Interests of                                                                    
Certain Persons                                                               
 in the Merger:   In considering the recommendation of the Board of Directors of
                  Physio-Control  with respect to the Plan of Merger, the Merger
                  Agreement,   and  the   transactions   contemplated   thereby,
                  shareholders  of  Physio-Control  should be aware that certain
                  executive  officers  and  directors  of  Physio-Control   have
                  certain  interests  in the Merger that are in addition to, and
                  may  conflict   with,   the  interests  of   shareholders   of
                  Physio-Control generally. These interests include, among other
                  things,  the interests of certain  executives and directors of
                  Physio-Control  in stock  options  that will  vest and  become
                  exercisable  as a result of the Merger,  and the obligation of
                  Medtronic  to cause  Physio-Control  to  continue  to  provide
                  certain   indemnification,   limited  liability,  and  related
                  insurance  coverage to  directors,  officers,  employees,  and
  agents of Physio-Control following the Merger.

                  Four executive  officers of Physio-Control  have also executed
                  separate noncompetition agreements with Medtronic, conditioned
                  upon the effectiveness of the Merger,  pursuant to which these
                  individuals  have agreed  that they will not be  employed  by,
                  associated  with,  or render  services to certain  competitive
                  businesses,  anywhere  in the world,  for 42 months  after the
                  Merger. In addition, those four executive officers are parties
                  to termination  agreements  with  Physio-Control  that provide
                  certain  payments and other benefits to these  individuals if,
                  during the two-year period  following a "change in control" of
                  Physio-Control  (such as the  Merger),  (i) such  individual's
                  employment  is  terminated  by  Physio-Control  other than for
                  death,  disability,  or "for cause" or (ii) the nature of such
                  individual's  employment with  Physio-Control  is changed in a
materially adverse manner.                  

                  The  Physio-Control  Board of  Directors  was aware of each of
                  these interests and considered them,  among other matters,  in
                  approving the Merger Agreement.  See "The Merger--Interests of
Certain Persons in the Merger."             

Regulatory Approval:                                                            
                  The only federal or state regulatory approval needed to effect
                  the Merger is the  expiration of the waiting  period under the
                  Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
                  Act"),  which period is expected to expire on August 12, 1998.
                  Medtronic  and  Physio-Control  do  not  expect  international
                  regulatory filings that may be required, if any, to affect the
                  expected  timing of the  Merger.  See "The  Merger--Regulatory
Requirements."                              

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No Solicitation:  Pursuant  to the  Merger  Agreement,  Physio-Control  and  its
                  representatives cannot, prior to the Effective Time or earlier
                  termination  of  the  Merger  Agreement,  encourage,  solicit,
                  discuss,  or negotiate with any person (other than  Medtronic)
                  concerning  any merger,  sale,  or license of any  significant
                  portion of the Physio-Control  assets or similar  transaction,
                  except to the extent required by the fiduciary  obligations of
                  the Physio-Control Board and in accordance with the provisions
                  of the Merger Agreement.  See "The Merger--Conduct of Business
of Physio-Control Pending the Merger."      

Conditions                                                                      
 to Merger:       The respective  obligations of Medtronic,  Merger  Subsidiary,
                  and  Physio-Control  to effect the  Merger are  subject to the
                  satisfaction  or waiver at or prior to the  Merger of  certain
     conditions. See "The Merger--Conditions; Waiver."

Termination:      The Merger  Agreement may be terminated prior to the Effective
                  Time,  whether  before or after  approval of the Merger by the
                  Physio-Control shareholders, in certain specified events. Upon
                  certain of such  terminations,  Physio-Control  is required to
                  pay to Medtronic a  termination  fee of $15 million.  See "The
               Merger--Amendment and Termination of the Merger Agreement."

Stock Option                                                                    
 Agreement:       In  connection  with the  execution  of the Merger  Agreement,
                  Medtronic  and  Physio-Control  entered  into a  Stock  Option
                  Agreement   pursuant  to  which   Physio-Control   granted  to
                  Medtronic  an option to  purchase  up to  3,526,683  shares of
                  Physio-Control  Common  Stock  (or  19.9%  of the  outstanding
                  shares of Physio-Control  Common Stock as of June 27, 1998) at
                  an  exercise  price  of  $27.50  per  share.   The  option  is
                  exercisable upon the occurrence of certain events and provides
                  Medtronic  with the right,  under  certain  circumstances,  to
                  require  Physio-Control  to  repurchase  the  option  for  its
                  in-the-money  value,  provided that the sum of any termination
                  fee and the amount paid to repurchase the option cannot exceed
                  $20  million.  The  option,  which  Medtronic  required  as  a
                  condition to Medtronic's  entering into the Merger  Agreement,
                  may increase the likelihood of consummation of the Merger. See
                  "The  Merger--Stock  Option  Agreement" and  "--Amendment  and
Termination of the Merger Agreement."       

Comparison of Rights of Medtronic Shareholders and Physio-Control Shareholders

         Medtronic and  Physio-Control  are  incorporated  under the laws of the
States of Minnesota and Washington,  respectively.  The rights of Physio-Control
shareholders are currently  governed by the Articles of Incorporation and Bylaws
of Physio-Control.  Upon consummation of the Merger, Physio-Control shareholders
will become  shareholders of Medtronic and their rights as such will be governed
by the Restated Articles of Incorporation and Bylaws, as amended,  of Medtronic.
See   Comparative   Rights  of   Medtronic   Shareholders   and   Physio-Control
Shareholders."                                                                  

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Recent Prices of Medtronic and Physio-Control Common Stock

         On June 26, 1998, the last trading day preceding public announcement of
the Merger Agreement,  the reported closing sale price of Medtronic Common Stock
on the NYSE was $62.9375 per share. On that day, the reported closing sale price
of  Physio-Control  Common  Stock on the Nasdaq  National  Market was $23.00 per
share.  On [July 21],  1998,  the latest  practicable  trading  day prior to the
printing of this Proxy Statement/Prospectus,  the reported closing sale price of
Medtronic  Common  Stock on the NYSE was  [$65.00]  per share.  On that day, the
reported  closing  sale  price of  Physio-Control  Common  Stock  on the  Nasdaq
National Market