Diversified Business Portfolio Helps Medtronic Report Strong First Quarter Earnings Per Share

-- Reported earnings of $599 million and diluted EPS of $0.51 grew 87% and 96%, respectively over the prior year's quarter.

-- Diluted EPS of $0.55 grew 15% after adjusting for certain charges and including stock option expense in both years.

-- Revenue of $2.897 billion grew 8%.

-- Double digit revenue growth in the Spinal, Vascular, Neurological and Diabetes businesses helped offset weakness in the U.S. implantable cardioverter defibrillator (ICD) market.

Medtronic, Inc. (NYSE:MDT) today announced financial results forits first quarter of fiscal year 2007 ended July 28, 2006.

Medtronic recorded first quarter fiscal year 2007 revenue of$2.897 billion, an 8 percent increase over the $2.690 billion in thefirst quarter of fiscal year 2006. Foreign currency translation had apositive impact of $6 million this quarter. As reported, first quarterfiscal year 2007 net earnings were $599 million, or $0.51 per dilutedshare, as compared to net earnings of $321 million, or $0.26 perdiluted share for the same period last year, representing growth of 87percent and 96 percent, respectively. Adjusted first quarter 2007 netearnings were $639 million, or $0.55 per diluted share, as compared toadjusted net earnings of $584 million, or $0.48 per diluted share forthe same period last year, representing an increase of 9 percent and15 percent, respectively. As detailed in the attached table, adjustednet earnings for these periods (1) excludes the impact of a certainlitigation charge of $40 million in first quarter 2007, (2) excludesthe impact of purchased in-process research and development (IPR&D)charges of $295 million in the first quarter 2006 and (3) includesincremental SFAS No. 123(R) stock-based compensation expense of $32million in first quarter 2006.

"Strong performances in Medtronic's Spinal, Vascular, Neurologicaland Diabetes businesses helped offset weakness in the U.S. implantabledefibrillator market during the quarter," said Art Collins, Medtronicchairman and chief executive officer. "We are encouraged by thestrength of our new product pipeline, and we continue to makeinvestments in R&D, market development and operating infrastructure tosupport future growth."

Cardiac Rhythm Disease Management Business

Cardiac Rhythm Disease Management (CRDM) reported first quarterrevenue of $1.250 billion, representing a decrease of 1 percent overthe same period last fiscal year.

ICD revenue of $673 million was down 6 percent, driven principallyby a decline in the growth of the U.S. ICD market. The Companybelieves the ICD market remains significantly under penetrated andthat several factors contributed to last quarter's unanticipateddecline. Medtronic expects the ICD market to reaccelerate as a resultof a number of initiatives it is undertaking to both increase marketshare and spur market growth in the U.S. ICD market.

ICD revenue outside the United States was strong, growing 21percent over the prior year quarter and Medtronic's worldwide marketshare for ICDs was flat over the same period last fiscal year.Worldwide pacing revenue of $460 million grew 3 percent. Worldwidemarket share for pacemakers was up over 2 percentage points.Medtronic's Emergency Response Systems business reported revenue of$101 million, a 16 percent revenue increase over the same period lastfiscal year.

CRDM quarterly highlights include:

-- The Concerto(TM) and Virtuoso(TM) line of ICDs were commercially launched in Europe and in the U.S. These are Medtronic's first devices with wireless telemetry, enabling remote communication between the implanted device and programmers in a clinician's office and at implant, or between the device and a patient home monitor.

-- The company launched a multi-center clinical trial to determine the safety, efficacy and functionality of the Chronicle(R) ICD when used in heart failure patients indicated for ICD therapy. The trial involves approximately 850 patients with mild-to-moderate heart failure at up to 75 sites in the U.S.

-- The Medtronic Carelink(R) Network, available on both pacing and ICD platforms, continued to expand to nearly 1,000 clinics monitoring over 80,000 patients in the U.S.

-- Adapta(TM), Versa(TM) and Sensia(TM) pacemakers all received FDA approval this fiscal quarter and were launched in August. These pacemakers provide physiologic pacing adapted to the needs of individual patients and include an exclusive Managed Ventricular Pacing (MVP) mode. MVP enables the device to be programmed to deliver pacing pulses to the heart's lower right chamber only when necessary, which recent studies indicate may reduce a patient's risk of developing heart failure and atrial fibrillation.

-- The LIFEPAK(R) 1000 external defibrillator launched last quarter, received strong market acceptance this quarter as it was introduced into accounts in the U.S. The LIFEPAK 1000 is designed for professional emergency responders and includes novel technology to improve response times in treating Sudden Cardiac Arrest.

Spinal and Navigation Business

Spinal and Navigation reported first quarter revenue of $599million, representing 14 percent growth over the same period lastfiscal year.

Spinal and Navigation quarterly highlights include:

-- The launch of the CD HORIZON(R) SEXTANT(R) II system has been a major factor as more surgeons adopt this revolutionary method of minimally invasive pedicle screw implantation.

-- INFUSE(R) Bone Graft, a recombinant version of a naturally occurring protein capable of stimulating bone growth for both spinal and acute tibial fracture indications, had revenue growth of more than 25 percent over the same period last year.

-- The DIAM(TM) Spinal Stabilization System received FDA approval for an investigational device exemption for use in a clinical study, allowing the first of three planned clinical trials in the U.S. to begin. The study will compare the DIAM implant to a traditional posterior fusion system and approach. The DIAM System is designed to alleviate pain in degenerative stenosis patients who suffer predominantly from radiating leg discomfort and moderate low back pain.

-- Medtronic artificial discs continue to gain momentum outside the U.S., led by particularly strong performance of the MAVERICK(TM) Artificial Lumbar Disc family and the PRESTIGE(R) LP Cervical Disc.

Vascular Business

Vascular reported first quarter revenue of $280 million,representing 37 percent growth over the same period of the last fiscalyear. Vascular experienced solid growth across all of its majorbusinesses and geographies.

Vascular quarterly highlights include:

-- The Endeavor(R) drug-eluting coronary stent is now commercially available in over 100 countries outside the U.S. Medtronic received Endeavor regulatory approval in China and reimbursement approval in France. Endeavor drug-eluting stent market share exceeds 20 percent in markets with full commercial release.

-- Long-term clinical results from ENDEAVOR I and ENDEAVOR II trials were presented at the Paris Course on Revascularization meeting in May. This data demonstrated Endeavor's significant and sustained efficacy and safety performance over time, with low rates of repeat procedures and no observations of late stent thrombosis. Enrollment was completed in the ENDEAVOR IV Clinical Trial in the U.S., and the launch of Endeavor in the U.S. is still anticipated in calendar year 2007.

-- The Micro-Driver coronary stent, a bare metal system designed specifically to perform in small vessels, received FDA approval and has been positively accepted in the U.S. market.

Neurological Business

Neurological reported first quarter revenue of $276 million,representing 17 percent growth over the same quarter one year ago.Growth was driven by new products and strong performance across alltherapies, in particular, neurostimulation for chronic pain, movementdisorders and overactive bladder.

Neurological quarterly highlights include:

-- RestorePRIME(TM), a non-rechargeable neurostimulator for the treatment of chronic pain which affects an estimated 75 million people in the U.S., was launched in several countries, including the U.S. RestorePRIME offers the broadest number of programming options and the largest stimulation coverage area of any non-rechargeable neurostimulator.

-- InterStim(R) II neurostimulation system for the treatment of overactive bladder and urinary retention was launched worldwide. The InterStim therapy uses sacral nerve stimulation to improve bladder function. InterStim II's enhancements include greater flexibility to accommodate more patients, a streamlined implant procedure and simplified programming. The improved patient programmer also provides patients more control of their therapy.

-- Prostiva(TM) RF (radio-frequency) therapy for the treatment of symptomatic benign prostatic hyperplasia (BPH), or enlarged prostate, was launched in the U.S. Prostiva RF therapy delivers low-level radio frequency energy to a precisely targeted area of an enlarged prostate.

Diabetes Business

Diabetes reported first quarter revenue of $196 million,representing 13 percent growth over the same period last fiscal year,supported by worldwide insulin pump growth of more than 20 percent.

Diabetes quarterly highlights include:

-- The Guardian(R) Real-Time Continuous Glucose Monitoring System received FDA approval and is expected to be available nationwide by the end of the calendar year. This stand-alone glucose monitoring system provides patients with real-time glucose trend graphs and predictive alarms informing them when their glucose levels become too high or too low, enabling better management of diabetes.

-- The three-phase STAR clinical trial program comparing outcomes on continuous glucose monitoring and insulin pump therapy to multiple daily injections continues. The STAR I trial enrollment is complete and results are expected in the fall. Focus groups with STAR II participants are underway and STAR III is scheduled to begin enrollment in the fall.

-- The results of a series of clinical trials demonstrating the benefit of Guardian Real-Time Continuous Glucose Monitoring System compared to traditional blood glucose meters will be published later this year, and are expected to provide further clinical support for reimbursement of continuous glucose monitoring products.

Cardiac Surgery Business

Cardiac Surgery reported first quarter revenue of $168 million,representing 2 percent growth over the same period last year.

Cardiac Surgery quarterly highlights include:

-- The Octopus(R) Evolution Tissue Stabilizer was launched in the U.S. Used in beating heart surgery to hold cardiac tissue in place while the surgeon repairs the heart, the Octopus helps speed procedure times and provides improved stability and targeting for the surgeon.

-- The EDGE Physician Training Program continues to be expanded to cardiac surgeons in an effort to provide leading-edge training on new vascular and cardiac-related techniques and therapies.

Ear Nose and Throat Business

Ear, Nose and Throat (ENT), which also includes neurologictechnology products, reported first quarter revenue of $128 million,representing 7 percent growth over the same period last year.

ENT quarterly highlights include:

-- Powered drills and endoscopic shavers revenue grew 15 percent with sinus and otologic systems growing at twice the estimated market growth rate. Nerve integrity monitors grew over 20 percent in the quarter.

-- Revenue for the Strata(TM) valve, a programmable device for the treatment of hydrocephalus, grew over 50 percent over the same period last year.

In reviewing the quarter, Collins concluded, "While this pastquarter presented some challenging market dynamics, we remainoptimistic about the underlying strength of our diversified businessbase and our future growth prospects."

Webcast Information

Medtronic will host a webcast today, Aug. 22 at 4:30 pm EDT (3:30CDT), to provide information about its businesses for the public,analyst and news media. This quarterly webcast can be accessed byclicking on the Investor Relations link on the Medtronic home page atwww.medtronic.com., and this earnings release will be archived atwww.medtronic.com/newsroom. Within 24 hours, a replay of the webcastand a transcript of the company's prepared remarks will be availablein the "Presentations & Transcripts" section of the Investor Relationshomepage.

Medtronic, Inc., headquartered in Minneapolis, is the world'sleading medical technology company, alleviating pain, restoring healthand extending life for people with chronic disease. Its Internetaddress is www.medtronic.com.

This press release contains forward-looking statements, includingstatements regarding clinical trials, new products, market growth andmarket acceptance and other developments, which are subject to risksand uncertainties, such as competitive factors, difficulties anddelays inherent in the development, manufacturing, marketing and saleof medical products, government regulation, general economicconditions and other risk and uncertainties described in Medtronic'sAnnual Report on Form 10-K for the year ended April 28, 2006. Actualresults may differ materially from anticipated results. Medtronic doesnot undertake to update its forward-looking statements.

MEDTRONIC, INC.
REVENUE BY OPERATING SEGMENT
(Unaudited)



($ millions)

----------------------------------------------------------------------
FY 06 FY 06 FY 06 FY 06 FY 06
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
----------------------------------------------------------------------
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE
MANAGEMENT $1,268 $1,289 $1,263 $1,385 $5,206
Low Power Pacing 446 459 426 464 1,795
High Power Defibrillation 718 733 723 758 2,932
Emergency Response
Systems 87 81 99 144 412
Other 17 16 15 19 67

SPINAL & NAVIGATION $524 $539 $563 $619 $2,244
Spinal Instrumentation 376 382 387 420 1,566
Spinal Biologics 128 134 147 163 570
Navigation 20 23 29 36 108

NEUROLOGICAL $235 $252 $247 $283 $1,016
Neuro Implantables 186 204 202 241 833
Gastroenterology &
Urology 49 48 45 42 183

VASCULAR $205 $225 $236 $274 $940
Stents 65 90 96 114 366
Other Coronary 81 78 83 92 334
Endovascular/Peripheral 59 57 57 68 240

DIABETES $173 $178 $182 $188 $722

CARDIAC SURGERY $165 $161 $154 $183 $663
Valves 58 56 52 63 229
Perfusion 79 78 75 89 321
Cardiac Surgery
Technologies 28 27 27 31 113

Ear, Nose & Throat (ENT) $120 $121 $125 $135 $501
ENT 65 64 65 72 266
Neurologic Technologies 55 57 60 63 235

TOTAL $2,690 $2,765 $2,770 $3,067 $11,292
========================================

ADJUSTMENTS :

CURRENCY (1) $26 $(3) $(72) $(69) $(118)

COMPARABLE OPERATIONS (1) $2,664 $2,768 $2,842 $3,136 $11,410
========================================

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

($ millions)

----------------------------------------------------------------------
FY 07 FY 07 FY 07 FY 07 FY 07
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
----------------------------------------------------------------------
REPORTED REVENUE :
CARDIAC RHYTHM DISEASE
MANAGEMENT $1,250 $- $- $- $1,250
Low Power Pacing 460 - - - 460
High Power Defibrillation 673 - - - 673
Emergency Response
Systems 101 - - - 101
Other 16 - - - 16

SPINAL & NAVIGATION $599 $- $- $- $599
Spinal Instrumentation 412 - - - 412
Spinal Biologics 163 - - - 163
Navigation 24 - - - 24

NEUROLOGICAL $276 $- $- $- $276
Neuro Implantables 226 - - - 226
Gastroenterology &
Urology 50 - - - 50

VASCULAR $280 $- $- $- $280
Stents 120 - - - 120
Other Coronary 92 - - - 92
Endovascular/Peripheral 68 - - - 68

DIABETES $196 $- $- $- $196

CARDIAC SURGERY $168 $- $- $- $168
Valves 59 - - - 59
Perfusion 80 - - - 80
Cardiac Surgery
Technologies 29 - - - 29

Ear, Nose & Throat (ENT) $128 $- $- $- $128
ENT 65 - - - 65
Neurologic Technologies 63 - - - 63

TOTAL $2,897 $- $- $- $2,897
========================================

ADJUSTMENTS :

CURRENCY (1) $6 $6

COMPARABLE OPERATIONS (1) $2,891 $(0) $- $- $2,891
========================================

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


(1) - Medtronic management believes that in order to properly
understand Medtronic's short-term and long-term financial trends,
investors may wish to consider the impact of foreign currency
translation on revenue. In addition, Medtronic management uses results
of operations before currency translation to evaluate the operational
performance of the Company and as a basis for strategic planning.
Investors should consider these non-GAAP measures in addition to, and
not as a substitute for, financial performance measures prepared in
accordance with GAAP.

Note: The data in this schedule has been intentionally rounded to the
nearest million and therefore the quarterly revenues may not sum to
the fiscal year to date revenues.


MEDTRONIC, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in millions, except per share data)


Three months ended
---------------------------
July 28, 2006 July 29, 2005
------------- -------------


Net sales $2,897 $2,690

Costs and expenses:
Cost of products sold 732 654
Research and development expense 299 263
Selling, general, and administrative
expense 984 882
Certain litigation charges 40 -
Purchased in-process research and
development (IPR&D) - 364
Other expense, net 66 51
Interest income (39) (16)
------------- -------------
Total costs and expenses 2,082 2,198
------------- -------------

Earnings before income taxes 815 492

Provision for income taxes 216 171
------------- -------------

Net earnings $599 $321
============= =============


Earnings per share:
Basic $0.52 $0.26
============= =============
Diluted $0.51 $0.26
============= =============


Weighted average shares outstanding:
Basic 1,153.8 1,210.5
Diluted 1,164.8 1,222.6



MEDTRONIC, INC.
RECONCILIATION OF CONSOLIDATED GAAP NET EARNINGS
TO CONSOLIDATED ADJUSTED NET EARNINGS
(Unaudited)
(in millions, except per share data)



Three months ended Three months ended
July 28, 2006 July 29, 2005
------------------ ------------------

Net earnings, as reported $599 $321
Certain litigation charges 40 (a) -
IPR&D charges - 295 (b)
Pro forma stock-based
compensation - (32)(c)
------------------ ------------------
Adjusted net earnings $639 $584
================== ==================


MEDTRONIC, INC.
RECONCILIATION OF CONSOLIDATED GAAP DILUTED EPS
TO CONSOLIDATED ADJUSTED DILUTED EPS
(Unaudited)


Three months ended Three months ended
July 28, 2006 July 29, 2005
------------------ ------------------

Diluted EPS, as reported $0.51 $0.26
Certain litigation charges 0.04 (a) -
IPR&D charges - 0.24 (b)
Stock-Based awards - (0.02)(c)
------------------ ------------------
Adjusted diluted EPS $0.55 $0.48
================== ==================


(a) The $40 million ($0.04 per share) after-tax certain litigation
charge is related to the settlement agreement reached with the United
States (U.S.) Department of Justice which requires the government to
seek dismissal of two qui tam civil suits pending against Medtronic.
In addition to disclosing certain litigation charges that are
determined in accordance with U.S. generally accepted accounting
principles (GAAP), Medtronic management believes that in order to
properly understand its short-term and long-term financial trends,
investors may find it useful to consider the impact of excluding these
litigation charges. Management believes that this non-GAAP financial
measure provides useful information to investors regarding the
underlying business trends and performance of the Company's ongoing
operations and is useful for period over period comparisons of such
operations. Medtronic management eliminates these litigation charges
when evaluating the operating performance of the Company. Investors
should consider this non-GAAP measure in addition to, and not as a
substitute for, financial performance measures prepared in accordance
with GAAP. In addition, this non-GAAP financial measure may not be the
same as similar measures presented by other companies.

(b) The $295 million ($0.24 per share) after-tax IPR&D charges ($364
million pre-tax) represents the cumulative impact of pre-tax charges
of $169 million related to a technology acquired through the purchase
of Transneuronix, Inc. that had not yet reached technological
feasibility and had no future alternative use, $175 million related to
the purchase of spinal technology based devices owned by Gary
Michelson and Karlin Technology, Inc. that had not yet reached
technological feasability and had no future alternative use, and $20
million related to a cross-licensing agreement with NeuroPace, Inc.
for patent and patent applications on products that had not yet
reached technological feasability and had no future alternative use,
collectively the IPR&D charges. In addition to disclosing IPR&D
charges that are determined in accordance with GAAP, Medtronic
management believes that in order to properly understand its
short-term and long-term financial trends, investors may find it
useful to consider the impact of excluding these IPR&D charges. These
IPR&D charges resulted from facts and circumstances that vary in
frequency and/or impact on continuing operations. Management believes
that this non-GAAP financial measure provides useful information to
investors regarding the underlying business trends and performance of
the Company's ongoing operations and is useful for period over period
comparisons of such operations. Medtronic management eliminates these
IPR&D charges when evaluating the operating performance of the
Company. Investors should consider this non-GAAP measure in addition
to, and not as a substitute for, financial performance measures
prepared in accordance with GAAP. In addition, this non-GAAP financial
measure may not be the same as similar measures presented by other
companies.

(c) The Company adopted SFAS No. 123(R) effective April 29, 2006 and
began to recognize compensation expense associated with all
stock-based awards. Prior to fiscal year 2007, the Company accounted
for stock-based awards under APB No. 25, and thus the Company only
recognized compensation expense related to restricted stock awards and
restricted stock units. Under SFAS No. 123(R) compensation expense is
recognized on all stock-based awards including stock options, employee
stock purchase plans and restricted stock awards/units. The $32
million ($0.02 per share), net of statutory tax, ($44 million
pre-statutory tax) represents the incremental expense that would have
been recorded had the Company accounted for stock-based awards in
accordance with SFAS 123(R) in fiscal year 2006. Total stock-based
compensation including stock options, restricted stock awards/units
and employee stock purchase plans was $49 million (pre-tax) in the
first quarter of fiscal year 2007 and pro-forma total stock-based
compensation including stock options, restricted stock awards/units
and employee stock purchase plans was $49 million in the first quarter
of fiscal year 2006. Below is a listing, by income statement line
item, of the pre-tax total stock-based compensation expense recognized
in first quarter fiscal 2007 and the pro forma stock-based
compensation for first quarter fiscal 2006.



Three months ended Three months ended
July 28, 2006 July 29, 2005
------------------ ------------------

Cost of products sold $6 $5
Research and development
expense 11 12
Selling, general, and
administrative expense 32 32
------------------ ------------------
$49 $49
================== ==================


Management believes that this non-GAAP financial measure provides
useful information to investors regarding the underlying business
trends and performance of the Company's ongoing operations and is
useful for period over period comparisons of such operations.
Medtronic management applies the provisions of SFAS 123(R) to fiscal
years 2006 and prior when evaluating the operating performance of the
Company. Investors should consider this non-GAAP measure in addition
to, and not as a substitute for, financial performance measures
prepared in accordance with GAAP. In addition, this non-GAAP financial
measure may not be the same as similar measures presented by other
companies.


MEDTRONIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)


July 28, April 28,
2006 2006
------------------------ -------------------
(dollars in millions, except per share data)
ASSETS
------

Current assets:
Cash and cash
equivalents $ 1,396 $ 2,994
Short-term investments 4,549 3,107
Accounts receivable,
less allowances of
$193 and $184,
respectively 2,444 2,429
Inventories 1,280 1,177
Deferred tax assets,
net 226 197
Prepaid expenses and
other current assets 536 473
------------------------ -------------------

Total current assets 10,431 10,377

Property, plant and
equipment 3,921 3,794
Accumulated depreciation (2,017) (1,913)
------------------------ -------------------

Net property, plant
and equipment 1,904 1,881

Goodwill 4,361 4,346
Other intangible assets,
net 1,559 1,592
Long-term investments 1,394 957
Non-current deferred tax
assets, net 25 -
Other assets 507 512
------------------------ -------------------


Total assets $ 20,181 $ 19,665
======================== ===================


LIABILITIES AND
SHAREHOLDERS' EQUITY
---------------------

Current liabilities:
Short-term borrowings $ 2,427 $ 2,437
Accounts payable 341 319
Accrued compensation 513 723
Accrued income taxes 590 461
Other accrued expenses 568 466
------------------------ -------------------

Total current
liabilities 4,439 4,406

Long-term debt 5,485 5,486
Deferred tax liabilities,
net - 22
Long-term accrued
compensation 199 189
Other long-term
liabilities 162 179
------------------------ -------------------

Total liabilities 10,285 10,282

Commitments and
contingencies -- --

Shareholders' equity:
Preferred stock -- par
value $1.00 -- --
Common stock -- par
value $0.10 115 116
Retained earnings 9,600 9,112
Accumulated other non-
owner changes in
equity 181 155
------------------------ -------------------

Total shareholders'
equity 9,896 9,383
------------------------ -------------------


Total liabilities
and shareholders'
equity $ 20,181 $ 19,665
======================== ===================



MEDTRONIC, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)


Three months ended
---------------------
July 28, July 29,
2006 2005
---------- ----------
(dollars in millions)
OPERATING ACTIVITIES:
Net earnings $ 599 $ 321
Adjustments to reconcile net earnings to net
cash (used in) provided by operating
activities:
Depreciation and amortization 140 128
Purchased in-process research and
development -- 364
Provision for doubtful accounts 10 6
Deferred income taxes (50) 167
Stock-based compensation 49 5
Excess tax benefit from exercise of stock-
based awards (7) --
Change in operating assets and
liabilities:
Accounts receivable (25) (28)
Inventories (103) (115)
Accounts payable and accrued
liabilities 25 (722)
Changes in other operating assets and
liabilities (58) (138)
---------- ----------

Net cash provided by (used in) operating
activities 580 (12)

INVESTING ACTIVITIES:
Acquisition, net of cash acquired (6) (227)
Purchases of intellectual property (8) (793)
Additions to property, plant and equipment (117) (103)
Purchases of marketable securities (4,197) (601)
Sales and maturities of marketable securities 2,315 237
Other investing activities, net (7) 9
---------- ----------

Net cash (used in) investing activities (2,020) (1,478)

FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings,
net (10) 982
Increase (decrease) in long-term debt, net (2) --
Dividends to shareholders (127) (117)
Issuance of common stock 58 123
Excess tax benefit from exercise of stock-
based awards 7 --
Repurchase of common stock (99) (229)
---------- ----------

Net cash (used in) provided by financing
activities (173) 759

Effect of exchange rate changes on cash and cash
equivalents 15 89
---------- ----------

Net change in cash and cash equivalents (1,598) (642)

Cash and cash equivalents at beginning of period 2,994 2,232
---------- ----------


Cash and cash equivalents at end of period $ 1,396 $ 1,590
========== ==========

Supplemental Cash Flow Information
Cash paid for:
Income taxes $ 162 $ 59
Interest 22 15
Supplemental Noncash Investing Activities
Deferred payments for purchases of
intellectual property $ -- $ 30