Item 1. Business
LMR Land Company, Ltd. ("Registrant"), is a Tennessee limited partnership organized on December 22, 1986, pursuant to the provisions of the Tennessee Uniform Limited Partnership Act, Chapter 2, Title 61, Tennessee Code Annotated, as amended. The General Partner of Registrant is 222 LMR, Ltd.
Registrant's primary business is to acquire, own, and hold for investment certain undeveloped real properties located in Lebanon, Tennessee; Macon, Georgia; and Roanoke, Virginia (collectively, the "Property"). Registrant's investment objectives are preservation of investment capital and appreciation of the value of the Property due to development of the surrounding areas and the completion of improvements to the Properties prior to resale.
Financial Information About Segment
The Registrant's activity, investment in land, lies within the domestic United States and is within one industry segment. Therefore, financial data relating to the geographic area and industry segment is included in Item 6 - Selected Financial Data.
Narrative Description of Business
At December 31, 1995, the Registrant is holding for investment approximately 50 acres of land in Lebanon, Tennessee (the "Lebanon Property") and 114 acres of land in Macon, Georgia (the "Macon Property").
Lebanon
The Lebanon Property consists of a 48 acre tract of land zoned for medium density residential and professional offices. The property is served by all public utilities. This type of zoning permits a wide variety of uses. The Lebanon Property is included in the Castle Heights Development and is contiguous to Property owned by an affiliate sharing a related General Partner. In 1994, the City of Lebanon agreed to extend a road through the Registrant's property. The road is expected to be complete by mid-year 1996.
The Lebanon Property continues to have minimal competition in the city. There has been some residential development on the outer edges of the city, but there is no other mixed-use development in the city. The affiliated Partnership contiguous to the Lebanon Property owns building and the land immediately around the buildings and therefore does not compete with the Registrant for undeveloped land sales.
Macon
The Macon property consists of 114 acres at December 31, 1995. The property is located at the intersection of Eisenhower Parkway and Log Cabin Road southwest of downtown Macon. The property is zoned for retail, service center and service warehouse type uses. The property is served by municipal gas, electricity, water and sewer. No development has occurred on the Property. The Registrant has accepted a contract from a developer for all of the Macon property. The Registrant has received $100,000 in earnest money deposits as of December 31, 1995. The contract, for $50,000 an acre, is due to expire in March 1996 and the developer has asked for another extension. This contract is subject to contingencies. There can be no assurances that the contingencies will be met and the sale will close.
The Registrant has no employees. Program management services are being provided under a contractual agreement with Landmark Realty Services Corporation, an affiliate of the General Partner.
Item 2.

Item 2. Properties
As of December 31, 1995, Registrant owned approximately 162 acres of undeveloped land. For further information concerning the Property, reference is made to the material in Item 1.
Item 3.

Item 3. Legal Proceedings
Registrant is not a party to, nor is any of Registrant's property the subject of, any material legal proceedings.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
The security holders of Registrant did not vote on any matter during the fiscal year covered by this report.
PART II
Item 5.

Item 5. Market for Registrant's Units of Limited Partnership Interest and Related Security Holder Matters
There is no established market for the Units and it is not anticipated that any will exist in the future. The Registrant commenced an offering to the public on April 1, 1987 of 7,500 Units of Limited Partnership Interests. The offering of $7,500,000 was fully subscribed and closed on June 8, 1987. As of February 29, 1996 there were 614 holders of record of the 7,500 Units of Limited Partnership Interests.
There were no cash distributions to the Limited Partners during 1995. There are no material restrictions upon Registrant's present or future ability to make distributions in accordance with the provisions of Registrant's Limited Partnership Agreement.
Item 6.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
1995 Sales
There were no sales during 1995. In May 1995, the Registrant received a $30,722 refund of excess construction escrow funds related to the 1993 sale of the Roanoke property. The deposit was recorded as miscellaneous income.
The Registrant accepted a contract for the entire Macon property in 1994 and continues to work with the developer on this contract. As of December 31, 1995, the Registrant had received a total of $100,000 in non- refundable earnest money for the Macon contract. There are several contingencies for this sales to close. There can be no assurance that the contingencies will be met and the sale will close. A contract for 14 acres of the Lebanon Property expired due to development plans not receiving required city government approval.
1994 Sales
During 1994, the Registrant sold approximately one acre of the Lebanon property for gross proceeds of $45,714. These proceeds were reserved to meet operating costs. The Registrant also received $18,000 in additional sale proceeds from the Kroger sale in 1993. This late receipt was the remaining balance in a construction escrow set up at the date of sale in 1993.
1995 Versus 1994
There have been no significant changes in the Registrant's operations. The increase in interest income is due to higher cash balances.
1994 Versus 1993
The change in sales is due to the difference in number of acres sold in 1994 and 1993. One acre was sold in 1994 for gross proceeds of $63,714 as compared to 22 acres in 1993 for gross proceeds of $1,515,372. The decline in property maintenance costs is due to the lack of development on the Lebanon Property and the minimal sales activity during the year. Property tax expense is lower due to a reduction in Lebanon taxes.
Financial Condition
Development
During 1994, the City of Lebanon agreed to extend a road through the Registrant's Property. Although the city has agreed to fund the construction, the Registrant was asked to fund a $20,000 bond securing the contractor. The General Partner expects the return of these bond proceeds upon completion of the work. As of December 31, 1995, work had begun on this road and it is expected to be finished mid-year 1996.
Liquidity & Capital Resources
As of December 31, 1995 the Registrant had a cash balance of $484,893. This level is expected to be sufficient to cover operating expenses for 1996. The receivable from an affiliated party totalling $40,628 at December 31, 1995 consists of shared development expenses incurred on the Lebanon property. The Registrant collected $1,848 of the receivable in 1995. The Registrant will collect this receivable in partial payments as the affiliate sells land.
In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of (Statement 121). It requires that long-lived assets that are to be disposed of be reported at the lower of carrying amount or fair value less costs to sell. If quoted prices are not available, the estimated fair value is determined using the best information available. After implementation, any material impairments must be recorded to reflect an excess of the carrying amount over the estimated fair value.
Statement 121 is applicable for fiscal years beginning after December 15, 1995, and it will be implemented by the Registrant effective January 1, 1996. Implementation of Statement 121 is not expected to have a material impact on the financial statements of the Registrant.
Item 8.

Item 8. Financial Statements and Supplementary Data
The Financial Statements required by Item 8 are filed at the end of this Report.
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
None.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant
Registrant does not have any directors or officers. 222 LMR, Ltd. is the General Partner. 222 Partners, Inc. is the general partner of the General Partner and as such has general responsibility and ultimate authority in matters affecting Registrant's business.
222 Partners Inc.
222 Partners, Inc. was formed in September, 1986, and serves as co-general partner for several other real estate investment limited partnerships. Steven D. Ezell is the president and sole shareholder of 222 Partners, Inc. The directors of 222 Partners, Inc. are W. Gerald Ezell, Steven D. Ezell and Michael A. Hartley. The directors of 222 Partners, Inc. are elected by the shareholder to serve one year or until their successors are elected and qualified. All officers are elected by the Board of Directors and serve until their successors are elected and qualified.
The officers and directors of 222 Partners, Inc. are as follows:
W. Gerald Ezell
W. Gerald Ezell, age 65, serves on the Board of Directors of 222 Partners, Inc. Mr. Ezell is also a general partner of affiliated limited partnerships which own various real estate properties. Until November, 1985, Mr. Ezell had been for over 20 years an agency manager for Fidelity Mutual Life Insurance Company and a registered securities principal of Capital Analysts Incorporated, a wholly owned subsidiary of Fidelity Mutual Life Insurance Company.
Steven D. Ezell
Steven D. Ezell, age 43, is the President and sole shareholder of 222 Partners, Inc. He has been an officer of 222 Partners, Inc. from September 17, 1986 through the current period. Mr. Ezell is President and 50% owner of Landmark Realty Services Corporation. He was for the prior four years involved in property acquisitions for Dean Witter Realty Inc. in New York City, most recently as Senior Vice President. Steven D. Ezell is the son of W. Gerald Ezell.
Michael A. Hartley
Michael A. Hartley, age 36, is Secretary/Treasurer and a Vice President of 222 Partners, Inc. He has been an officer of 222 Partners, Inc. from September 17, 1986 through the current period. Mr. Hartley is Vice President and 50% owner of Landmark Realty Services Corporation. Prior to joining Landmark in 1986, Mr. Hartley was Vice President of Dean Witter Realty Inc., a New York-based real estate investment firm.
Item 11.

Item 11. Executive Compensation
During 1995, Registrant was not required to and did not pay remuneration to any executives, partners of the General Partner or any affiliates, except as set forth in Item 13 of this report, "Certain Relationships and Related Transactions."
The General Partner does participate in the profits, losses and distributions of the Registrant as set forth in the Partnership Agreement.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management
As of February 29, 1996, no person or "group" (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) was known by the Registrant to beneficially own more than five percent of the Units of Registrant.
As of the above date, the Registrant knew of no officers or directors of 222 Partners, Inc. that beneficially owned any of the Units of the Registrant.
There are no arrangements known by the Registrant, the operation of which may, at a subsequent date, result in a change in control of the Registrant.
Item 13.

Item 13. Certain Relationships and Related Transactions
No affiliated entities have, for the year ending December 31, 1995, earned or received compensation or payments for services from the Registrant in excess of $60,000. For a listing of miscellaneous transactions with affiliates which were less than $60,000 refer to Note 3 to Financial Statements in Item 8.
The Registrant has incurred costs on behalf of an affiliated partnership. The costs represent development work done on the Lebanon Property and the adjacent land owned by Castle Heights, Ltd, an affiliate. The costs are reflected in the Financial Statements of the Registrant as Accounts Receivable from Affiliate. See Item 8 - Financial Statements and Notes thereto for more information.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) Financial Statements
The following Financial Statements are included herein:
Independent Auditors' Report
Financial Statements Balance Sheets Statements of Operations Statements of Partners' Equity Statements of Cash Flows Notes to Financial Statements
(2) Financial Statement Schedule
Independent Auditors' Report on Schedule S-1
Schedule XI- Real Estate and Accumulated Depreciation S-2
(3) Exhibits
3 Amended and Restated Certificate and Agreement of Limited Partnership, incorporated by reference to Exhibit A to the Prospectus of Registrant dated April 1, 1987 filed pursuant to Rule 424(b) of the Securities and Exchange Commission.
22 Subsidiaries-Registrant has no subsidiaries.
27 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last quarter of 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LMR LAND COMPANY, LTD.
By: 222 LMR, Ltd. General Partner
By: 222 Partners, Inc. General Partner
DATE: March 30, 1996 By: /s/ Steven D. Ezell President and Director
DATE: March 30, 1996 By: /s/ Michael A. Hartley Secretary/Treasurer
SIGNATURES (Cont'd.)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
LMR LAND COMPANY, LTD.
By: 222 LMR, Ltd. General Partner
By: 222 Partners, Inc. General Partner
DATE: March 30, 1996 By: /s/ Steven D. Ezell President and Director
DATE: March 30, 1996 By: /s/ Michael A. Hartley Secretary/Treasurer
Supplemental Information to be Furnished with Reports filed Pursuant to Section 15(d) of the Act by Registrant Which Have Not Registered Securities Pursuant to Section 12 of the Act:
No annual report or proxy material has been sent to security holders.
Independent Auditors' Report
The Partners LMR Land Company, Ltd.:
We have audited the accompanying balance sheets of LMR Land Company, Ltd. (a limited partnership) as of December 31, 1995 and 1994, and the related statements of operations, partners' equity, and cash flows for each of the years in the three-year period ended December 31, 1995. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of LMR Land Company, Ltd. at December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles.
As discussed in Note 6, the Partnership adopted in 1995 the provisions of Statement of Financial Accounting Standards No. 107, Disclosures about Fair Value of Financial Instruments.
KPMG Peat Marwick LLP
Nashville, Tennessee January 19, 1996
LMR LAND COMPANY, LTD. (A Limited Partnership)
Balance Sheets
December 31, 1995 and 1994
Assets 1995 1994 ______ _____ ______
Cash and cash equivalents $ 484,893 484,714 Receivable from affiliate 40,628 42,476 (note 3) Land held for investment 3,974,437 3,974,437 (note 2) ________ ________ Total assets $4,499,958 4,501,627 ======== ========
Liabilities and Partners' Equity
Liabilities: Accounts payable (note 3) 15,078 13,949 Accrued property taxes 20,278 52,985 Deposits on land sale contracts (note 2) 100,000 22,500 ________ ________ Total liabilities 135,356 89,434
Partners' equity 4,364,602 4,412,193 ________ ________ Commitments and contingencies (notes 2 and 3)
Total liabilities and partners' equity $4,499,958 4,501,627 ========= ========
See accompanying notes to financial statements.
LMR LAND COMPANY, LTD. (A Limited Partnership)
Statements of Operations
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
Income: Sales proceeds $ - 63,714 1,515,372 Cost of land sold - (12,785) (1,377,154) Selling expenses - (2,611) (98,753) ________ ________ _______ Gain on sale of land - 48,318 39,465
Interest 26,669 17,737 6,728 Return of escrow funds 30,722 - - Miscellaneous income 250 - 250 Expired land purchase - 10,000 - option ________ ________ _______ Total income 57,641 76,055 46,443
Expenses: Program management fees and property maintenance costs (note 3) 33,453 36,992 57,333 Property tax expense 51,899 53,459 63,353 Legal and accounting fees (note 3) 16,756 15,467 11,130 Other operating expenses 3,124 2,920 4,651 ________ ________ _______ Total expenses 105,232 108,838 136,467 ________ ________ _______ Net loss $(47,591) (32,783) (90,024) ======== ======== =======
Net loss per unit $ (6.35) (4.37) (12.00) ======== ======== =======
See accompanying notes to financial statements.
LMR LAND COMPANY, LTD. (A Limited Partnership)
Statements of Partners' Equity
Years ended December 31, 1995, 1994 and 1993
Limited General partners partner Total ________ ________ _____
Partners' equity, December 31, 1992 $5,434,517 483 5,435,000
Distribution (900,000) - (900,000) (note 5) Net loss (90,024) - (90,024) ________ ____ ________ Partners' equity, December 31, 1993 4,444,493 483 4,444,976
Net loss (32,783) - (32,783) ________ ____ ________ Partners' equity, December 31, 1994 4,411,710 483 4,412,193
Net loss (47,591) - (47,591) ________ ____ ________ Partners' equity, December 31, 1995 $4,364,119 483 4,364,602 ======== ==== ========
See accompanying notes to financial statements.
LMR LAND COMPANY, LTD. (A Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
Cash flows from operating activities: Net loss $(47,591) (32,783) (90,024) Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: Decrease in receivable from affiliate 1,848 13,861 1,674 Cost of land improvements - (19,999) (138,000) Cost of land sold - 12,785 1,377,154 Increase in accounts payable 1,129 2,371 1,079 (Decrease) increase in accrued property taxes (32,707) 4,563 48,422 Increase in deposits on land sale contracts 77,500 22,500 - ________ ________ ________ Total adjustments 47,770 36,081 1,290,329 ________ ________ ________ Net cash provided by operating activities 179 3,298 1,200,305 ________ ________ ________ Cash flows from financing activities - cash distributions to limited partners - - (900,000) ________ ________ ________ Net increase in cash and cash equivalents 179 3,298 300,305
Cash and cash equivalents at beginning of year 484,714 481,416 181,111 ________ ________ ________ Cash and cash equivalents at end of year $ 484,893 484,714 481,416 ======== ======== ========
See accompanying notes to financial statements.
LMR LAND COMPANY, LTD. (A Limited Partnership)
Notes to Financial Statements
December 31, 1995 and 1994
(1) Summary of Significant Accounting Policies _______________________________________ (a) Organization ___________ LMR Land Company, Ltd. (the Partnership) is a Tennessee Limited Partnership organized on December 22, 1986, to acquire undeveloped land located in Roanoke, Virginia; Lebanon, Tennessee; and Macon, Georgia. The General Partner is 222 LMR, Ltd. The general partner of the General Partner is 222 Partners, Inc. (see note 4).
(b) Income Taxes ____________ The Partnership prepares its financial statements and Federal income tax returns on the accrual method and includes only those assets, liabilities and results of operations which relate to the business of the Partnership. No provision has been or will be made in the financial statements for Federal and state income taxes, since such taxes are the personal responsibility of the partners.
(c) Land Held For Investment _______________________ At various dates between April 27, 1987 and May 22, 1987, the Partnership acquired three tracts of undeveloped land representing approximately 210 acres. During 1989, the Partnership acquired additional tracts adjacent to the Macon, Georgia, property. During 1993, approximately 5 acres were received as partial consideration for the sale of property. Land held for investment is recorded at acquisition cost plus carrying costs. Insurance and property taxes are capitalized as carrying costs of the property during the development period. Insurance and property taxes are charged to expense once development of the property is substantially complete. Remaining acreage is approximately 164 acres at December 31, 1995 and 1994, which includes approximately 10 acres which are unsaleable attributable to roads, right of ways, and landscaping.
(d) Partnership Allocations _____________________ Net earnings, losses, and cash flows of the Partnership are allocated among the limited partners and general partners, in accordance with the agreement of the limited partnership.
(Continued)
LMR LAND COMPANY, LTD. (A Limited Partnership)
Notes to Financial Statements
(e) Cash and Cash Equivalents ________________________ The Partnership considers all short- term investments with original maturities of three months or less to be cash equivalents.
Cash belonging to the Partnership is combined in an account with funds from other partnerships related to the general partner.
(f) Estimates ________ Management of the Partnership has made estimates and assumptions to prepare these financial statements. Actual results could differ from those estimates.
(2) Land Held for Investment _______________________ The components of land held for investment at December 31, 1995 and 1994 are as follows: 1995 1994
Land $ 3,641,360 3,641,360 Land improvements 333,077 333,077 ________ ________ 3,974,437 3,974,437 ======== ======== Aggregate cost for federal income tax purposes for the land held for investment was $3,974,437 and $3,954,370 at December 31, 1995 and 1994, respectively.
During 1994, the Partnership entered into a purchase and sale agreement for the sale of approximately 114 acres of the land in Macon, Georgia held for investment. The proposed sales price is $50,000 per acre or $5,700,000 in total. The closing of this transaction is subject to various terms and conditions.
(3) Related Party Transactions ________________________ The General Partner and its affiliates have been actively involved in managing the property. Affiliates of the General Partner receive fees as consideration for performing certain services. Expenses incurred for these services during the years ended December 31, 1995, 1994 and 1993 are as follows:
1995 1994 1993
Program management $14,000 14,000 14,000 fees Accounting fees 2,000 2,000 2,250 ===== ===== =====
(Continued)
LMR LAND COMPANY, LTD. (A Limited Partnership)
Notes to Financial Statements
The receivable from affiliate totaling $40,628 at December 31, 1995 and $42,476 at December 31, 1994, consists of property development costs incurred at the Lebanon property that will be reimbursed as sales by the affiliate occur. Accounts payable totaling $10,499 at December 31, 1995 and 1994 was payable to an affiliate for commissions on the sale of property.
(4) General Partner Bankruptcy ________________________ On February 25, 1991, W. Gerald Ezell, a former general partner of 222 LMR, Ltd., elected to file for reorganization under Chapter 11 of the United States Bankruptcy Code. This election is designed to allow Mr. Ezell to satisfy his personal creditors in an orderly manner. The filing has no impact on the legal standing of the Partnership.
On April 6, 1994, Mr. Ezell sold his general partnership interest in 222 LMR, Ltd. in accordance with bankruptcy court approved plan to liquidate his assets and satisfy his creditors. In accordance with the partnership agreement, Mr. Ezell's interest in 222 LMR, Ltd. was converted into a special limited partnership interest and his general partner responsibilities were transferred to 222 Partners, Inc., the remaining general partner. W. Gerald Ezell remains on the Board of 222 Partners, Inc.
(5) Distributions ____________ For the year ended December 31, 1993, the Partnership made a distribution to its limited partners in the amount of $900,000 or $120 per unit. There were no distributions in 1995 or 1994.
(6) Fair Value of Financial Statements ______________________________ At December 31, 1995, the Partnership had financial instruments including cash and cash equivalents of $484,893, receivable from affiliate of $40,628, and accrued liabilities of $135,356. The carrying amounts of these financial instruments approximate fair value because of the short maturity of such instruments.
Independent Auditors' Report ______________________________
The Partners LMR Land Company, Ltd.:
Under date of January 19, 1996, we reported on the balance sheets of LMR Land Company, Ltd. as of December 31, 1995 and 1994, and the related statements of operations, partners' equity, and cash flows for each of the years in the three-year period ended December 31, 1995. These financial statements and our report thereon are included elsewhere herein. In connection with our audits of the aforementioned financial statements, we have also audited the related financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Partnership's management. Our responsibility is to express an opinion on this financial statement schedule based on our audit.
In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Nashville, Tennessee January 19, 1996
S-1
Schedule XI
LMR LAND COMPANY, LTD. (A Limited Partnership)
Real Estate and Accumulated Depreciation
December 31, 1995
Initial cost to Partnership
Building and Description Encumbrances Land improvements
164 acres of undeveloped land in Lebanon, Tennessee and $ - 6,201,635 - Macon, Georgia
1995 1994 1993
(1) Balance at beginning $3,974,437 3,967,223 5,206,377 of Period Additions during period: Other acquisitions 70,000 Improvements - 19,999 68,000 -------- -------- -------- - 19,999 138,000 -------- -------- -------- Deductions during period: Cost of real estate sold - 12,785 1,377,154
-------- -------- -------- - 12,785 1,377,154 -------- -------- -------- Balance at end of period $3,974,437 3,974,437 3,967,233 ======== ======== ========
(2) Aggregate cost for Federal income tax purposes $3,974,437 3,954,370 3,947,015 ======== ======== ========
See accompanying independent auditors' report. S-2
Schedule XI
LMR LAND COMPANY, LTD. (A Limited Partnership)
Real Estate and Accumulated Depreciation
December 31, 1995
Cost Gross capitalized subsequent amount at which carried to acquisition at close of period Building & Improve- Carrying improve- Description ments costs Land ments Total
164 acres of undeveloped land in Lebanon, Tennessee 614,092 357,985 3,641,360 333,077 3,974,437 and Macon, Georgia
Schedule XI
LMR LAND COMPANY, LTD. (A Limited Partnership)
Real Estate and Accumulated Depreciation
December 31, 1995
Accumulated Date of Date Description depreciation* construction acquired
164 acres of undeveloped land in - - 4/27/87 Lebanon, Tennessee and Macon, Georgia 9/8/93
*Life on which depreciation in latest income statement is computed is not applicable.(A Limited Partnership)
Exhibits filed pursuant to Item 14(a)(3):
LMR LAND COMPANY, LTD. (A Tennessee Limited Partnership)
Exhibit Index
Exhibit
3 Amended and Restated Certificate and Agreement of Limited Partnership, incorporated by reference to Exhibit A to the Prospectus of Registrant dated April 1, 1987 filed pursuant to Rule 424(b) of the Securities and Exchange Commission.
22 Subsidiaries-Registrant has no subsidiaries.
27 Financial Data Schedule


ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS. Medtronic, Inc. (together with its subsidiaries, "Medtronic" or the "company") was incorporated as a Minnesota corporation in 1957. Medtronic is the world's leading therapeutic medical technology company, developing, manufacturing and marketing therapies for improved cardiovascular and neurological health. Primary products include implantable pacemaker systems used for treatment of bradycardia, implantable tachyarrhythmia management systems, mechanical and tissue heart valves, balloon and guiding catheters and stents used in angioplasty, implantable neurostimulation and drug delivery systems, and perfusion systems including blood oxygenators, centrifugal blood pumps, cannula products, and autotransfusion and blood monitoring systems.
Medtronic operates in a single industry segment, that of providing products for medical applications. Its revenues, operating profits and assets for the past three fiscal years (1993-1995) have been attributable to this single industry segment. The Company does business in more than 120 countries and reports on three business units -- Pacing, Other Cardiovascular, and Neurological and Other -- and three geographic areas -- the Americas, Europe/Middle East/Africa, and Asia/Pacific.
BUSINESS NARRATIVE. Medtronic's Pacing business unit is the company's largest operating unit, consisting of Bradycardia Pacing, which produces products for treating patients with slow or irregular heartbeats, and Tachyarrhythmia Management, which develops products for hearts with abnormally fast rhythms. The bradycardia pacing systems include pacemakers, leads and accessories. The pacemakers can be noninvasively programmed by the physician to adjust sensing, electrical pulse intensity, rate, duration and other characteristics, and can produce impulses to cause contractions in either the upper or lower heart chamber, or both, in appropriate relation to heart activity. In January 1995, the company commercially released the Thera(R) line of pacemakers in the U.S. Thera(R) is a flexible, technically advanced family of five new pacemakers for virtually every pacing application, a new specialized lead and the new Model 9790 programmer. This versatile programmer can be used interchangeably with all of the company's bradycardia pacemakers as well as with its Jewel(R) line of tachyarrhythmia management devices.
More than half of Medtronic's revenues are generated from the sale of implantable cardiac pacemaker systems for treatment of bradycardia. In addition to the "Medtronic" line of pacing products, the company also produces a separate line under the brand name "Vitatron."
The Tachyarrhythmia Management business produces implantable devices and transvenous lead systems for treating ventricular tachyarrhythmias, which are abnormally fast, and sometimes fatal, heartbeats. The systems offer tiered therapy of pacing, cardioversion and defibrillation, and may be implanted without a thoracotomy, which reduces patient trauma, and hospitalization time and costs. The company's Jewel(R) line of devices, which were released in the U.S. in March 1995, are the smallest currently commercially available and are programmed with the Model 9790 pacing programmer. In fiscal 1995 the company also commercially released the Jewel(R) Active Can(tm) outside the United States. This system makes implantation possible with a single lead, resulting in faster, less costly implantation and quicker patient recovery. The Active Can(tm) device continues in clinical trials in the U.S. The company also produces the Atakr(R) radio frequency ablation system to neutralize heart muscle cells that cause tachyarrhythmias through a nonsurgical procedure. The Atakr(R) system consists of a closed-loop, temperature-controlled radio frequency generator with an array of steerable and non-steerable catheters.
The company's Pacing business unit accounted for 65.5% of Medtronic's net sales during the fiscal year ended April 30, 1995 ("fiscal 1995"), 67.2% of net sales in fiscal 1994 and 65.7% of net sales in fiscal 1993.
The company's Other Cardiovascular business unit consists of Cardiopulmonary, Blood Management, DLP, Heart Valves, and Interventional Vascular. Through a series of strategic acquisitions over the past decade, Medtronic now markets a complete line of blood-handling products. These include the Bio-Medicus Bio-Pump(R), the Maxima(R) oxygenator, Electromedics' autotransfusion equipment, a broad line of cannulae and hemostasis management equipment. These devices form a life-saving circuit by maintaining blood circulation, oxygen supply and body temperature while the patient is undergoing emergency treatment or open-heart surgery.
The company's Heart Valve business produces tissue and mechanical valve replacements for damaged or diseased heart valves. Two new tissue valves, the Mosaic(tm) stented valve and the Freestyle(R) non-stented aortic root, have improved antimineralization and durability and are currently in clinical trials outside the U.S. The company's Interventional Vascular business produces balloon and guiding catheters, stents and accessories used by physicians to open arteries obstructed by deposits of fatty plaque. In fiscal 1995, the company commercially released worldwide the Ascent(tm) guiding catheter, which provides the conduit and support of balloon catheters to reach the obstructed coronary artery, and two new balloon catheters, the Evergreen(tm) over-the-wire and the Falcon(tm). The Falcon(tm) is a "rapid exchange" style catheter which makes it possible for a single operator to perform the procedure, reducing the time required for an angioplasty procedure and minimizing the need for additional staff to assist the interventional cardiologist.
The company's Other Cardiovascular business unit accounted for 26.1% of net sales in fiscal 1995, and 23.6% and 22.9% of net sales, respectively, for fiscal 1994 and 1993.
The Neurological and Other business unit produces implantable systems for spinal cord stimulation and programmable drug delivery that are used in treating chronic intractable pain, tremor and spasticity. These include the SynchroMed(R) pump and the Itrel(R) II spinal cord stimulation system. The Mattrix(R) stimulator, which was commercially released in the U.S. in June 1995, is the first neurostimulation system that offers a dual stimulation mode for more effective pain management. The company is also collaborating with several biotechnology companies to develop therapies for neurodegenerative disorders such as Alzheimer's disease, Parkinson's disease, and amyotrophic lateral sclerosis or Lou Gehrig's disease. Compounds for treating these diseases, called neurotrophic factors, are still in development by these companies. Once they are proven to be safe and effective, Medtronic believes its drug delivery technology could be effective in administering these agents directly to their site of action in precise doses. The Neurological and Other business unit accounted for 8.4% of net sales for fiscal 1995, and 9.2% and 11.4% of net sales, respectively, for fiscal 1994 and 1993. The decrease in percentage of revenue is due to divested product lines during fiscal 1994 and 1995.
GOVERNMENT REGULATION. The industry segment in which Medtronic competes involves development, production and sales of medical devices. In the United States, the Food and Drug Administration (the "FDA"), among other governmental agencies, is responsible for regulating the introduction of new medical devices, laboratory and manufacturing practices, and labeling and recordkeeping for medical devices, as well as for reviewing manufacturers' required reports of adverse experience to identify potential problems with marketed medical devices. The FDA can ban certain medical devices, detain or seize adulterated or misbranded medical devices, order repair, replacement, or refund of such devices, and require notification of health professionals and others with regard to medical devices that present unreasonable risks of substantial harm to the public health. The FDA may also enjoin and restrain certain violations of the Food, Drug and Cosmetic Act and the Safe Medical Devices Act pertaining to medical devices, or initiate action for criminal prosecution of such violations. Many of the devices that Medtronic develops and markets are in a category for which the FDA has implemented stringent clinical investigation and premarket clearance requirements. Moreover, the FDA administers certain controls over the export of such devices from the United States.
The number of medical devices approved by the FDA for commercial release has decreased significantly in recent years due to more rigorous clinical evaluation requirements, increased enforcement actions and more stringent product regulation by the FDA. Rigorous regulatory action may be taken in response to deficiencies noted in inspections or to product performance problems. The risks in the United States of lengthened introduction times for new products and additional expense have increased substantially. In addition, the requirements for post-market surveillance and device tracking under the Safe Medical Devices Act will continue to increase the expense of the regulatory process.
Medical device laws are also in effect in many of the countries in which Medtronic does business outside the United States. These range from comprehensive device approval requirements for some or all of Medtronic's medical device products to requests for product data or certifications. The number and scope of these requirements is increasing. This trend toward increasing product regulation is evident in the European Economic Community, where efforts are underway to harmonize the regulatory systems.
The U.S. Health Care Financing Administration, which determines Medicare reimbursement policy and practice, has changed its practice of reimbursing hospitals for procedures involving medical devices in clinical evaluation. This change in practice is causing hospitals to treat Medicare patients only with medical devices that have been cleared for commercial release by the FDA. This action has further limited the scope of clinical trials in the U.S., is forcing more clinical research to non-U.S. markets, and is increasing the cost and time required to complete clinical evaluations in the U.S.
Government and private sector initiatives to limit the growth of health care costs, including price regulation and competitive pricing, are continuing in several countries in which the company does business, including the United States. These changes are causing the marketplace to put increased emphasis on the delivery of more cost-effective medical therapies. Although the company believes it is well positioned to respond to changes resulting from this worldwide trend toward cost containment, the uncertainty as to the outcome of any proposed legislation or changes in the marketplace preclude the company from predicting the impact these changes may have on future operating results.
Medtronic is also subject to various environmental laws and regulations both in the United States and abroad. The operations of the company, like those of other medical device companies, involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes. While it is difficult to quantify the potential impact of compliance with environmental protection laws, management believes that such compliance will not have a material impact on the company's financial position.
The Company operates in an industry susceptible to significant product liability claims. Product liability claims may be asserted against the company in the future relative to events not known to management at the present time. Management believes that the company's risk management practices, including insurance coverage, are reasonably adequate to protect against potential product liability losses.
SALES, MARKETS AND DISTRIBUTION METHODS. The primary markets for Medtronic's products are hospitals, other medical institutions and physicians, both in the United States and abroad. No one customer individually accounts for a material amount of Medtronic's total sales.
Medtronic sells most of its products and services directly through its staff of trained, full-time sales representatives. Sales by these representatives accounted for approximately 93.6% of Medtronic's U.S. sales and approximately 64.8% of its sales from other countries in fiscal 1995. The remaining sales were made through independent distributors.
RAW MATERIALS AND PRODUCTION. Medtronic generally has vertically integrated manufacturing operations, and makes its own lithium batteries, feedthroughs, integrated and hybrid circuits, microprocessors, and certain other components. Medtronic purchases many of the parts and materials used in manufacturing its components and products from external suppliers. Medtronic's single- and sole-sourced materials include biomaterials such as adhesives, polymers, elastomers and resins; certain integrated circuits and other electrical/electronic components; power sources, battery anodes, pyrolytic carbon discs, pharmaceutical preparations such as Lioresal(R) (baclofen, USP) Intrathecal (registered trademark of CIBA-GEIGY Corporation), and computer and other peripheral equipment.
Certain of the raw materials and components (e.g., silicone adhesives and polyurethanes) used in Medtronic products are available only from a sole U.S. supplier. Materials are purchased from single sources for reasons of quality assurance and cost effectiveness. Medtronic works closely with its suppliers to assure continuity of supply while maintaining high quality and reliability. However, in an effort to reduce potential product liability exposure, certain suppliers have terminated or are planning to terminate sales of certain materials and parts to companies that manufacture implantable medical devices. Medtronic believes that various design, material or supplier alternatives can be found for these materials and components without a significant interruption in production.
PATENTS AND LICENSES. Medtronic owns patents on certain of its inventions, and obtains licenses from others as it deems necessary to its business. Medtronic's policy is to obtain patents on its inventions whenever practical. Technological advancement characteristically has been rapid in the medical device industry, and Medtronic does not consider its business to be materially dependent upon any individual patent.
COMPETITION AND INDUSTRY. Medtronic sells therapeutic medical devices in the United States and throughout the world. In the businesses in which Medtronic competes, the company faces a mixture of competitors ranging from large multi-national industrial manufacturers to diversified pharmaceutical companies, as well as regional or national manufacturers that offer a limited number of products. Important factors to Medtronic's customers include product reliability and performance, product technology that provides for improved patient benefits, product price, and related product services provided by the manufacturer. Major shifts in industry market shares have occurred in connection with product problems, physician advisories and safety alerts, reflecting the importance and risks of product quality in the medical device industry.
Medtronic is the leading manufacturer and supplier of pacemakers in both the U.S. and non-U.S. markets. Worldwide, approximately ten manufacturers compete in the pacemaker industry. In the U.S., Medtronic and four other manufacturers account for a significant portion of pacemaker sales. Medtronic and five other manufacturers account for most of the non-U.S. pacemaker sales.
In the tachyarrhythmia management device market, Medtronic and two other manufacturers based in the U.S. account for most sales of implantable defibrillators within and outside the U.S. Medtronic and one of these other manufacturers have transvenous lead systems cleared for commercial sale in the U.S. Medtronic's Jewel(R) PCD(R) devices are commercially available with the company's Transvene(tm) leads in U.S. and non-U.S. markets. Approximately three other companies have devices in various stages of development and clinical evaluation.
In the coronary angioplasty market, which includes balloon and guiding catheters and implantable stents, there are numerous competitors worldwide. Medtronic believes that it is the leading manufacturer and supplier of guiding catheters worldwide. Medtronic and three other manufacturers account for most combined balloon and guiding catheter sales. In stents, Medtronic and two competitors account for most sales worldwide, with one competitor holding a dominant market position and numerous new competitors emerging.
Medtronic is the second largest manufacturer and supplier of tissue heart valves and also of mechanical heart valves within and outside the U.S. A large manufacturer and distributor of hospital products and services is the major competitor in tissue heart valves and another company is the major competitor in mechanical heart valves. These two companies and Medtronic are the primary manufacturers and suppliers of heart valves within the U.S. These three companies plus a few competitors outside the U.S. account for most of the non-U.S. heart valve sales.
In the blood oxygenator market, there are approximately seven companies that account for a significant portion of the U. S. and non-U.S. markets. Medtronic is the leading manufacturer and supplier of blood oxygenators and centrifugal blood pumps worldwide.
Medtronic is the market leader in cannula products. Medtronic and four competitors account for a significant portion of cannulae sales in the U.S.
Medtronic and three competitors account for a significant portion of autotransfusion sales in both U.S. and non-U.S. markets.
In neurological devices, Medtronic is the leading manufacturer and supplier of implantable neurostimulation and drug delivery systems. Medtronic and two competitors account for most sales worldwide.
Market complexity has been intensifying in the medical device industry in recent years. Factors such as relative patent portfolios, government regulation (including the regulatory approval process for medical devices), a more rigorous enforcement climate at the FDA, anticipated health care reform, government reimbursement systems for health care costs, product liability litigation and the rapid rate of technological change are increasingly important considerations for existing medical device manufacturers and any potential entrants to the industry.
RESEARCH AND DEVELOPMENT. Medtronic spent $191.4 million on research and development (11.0% of net sales) in fiscal 1995, $156.3 million (11.2% of net sales) in fiscal 1994 and $133.0 million (10.0%of net sales) in fiscal 1993. Such amounts have been applied toward improving existing products, expanding their applications, and developing new products. Medtronic's research and development projects span such areas as sensing and treatment of cardiovascular disorders (including bradycardia and tachyarrhythmia, fibrillation, and sinus node abnormalities); improved heart valves, membrane oxygenators and centrifugal blood pump systems; implantable drug delivery systems for pain, spasticity and other neurological applications; muscle and neurological stimulators; therapeutic catheters; coronary stents and treatments for restenosis; implantable physiologic sensors; cardiac assist systems (cardiomyoplasty) and other applications of transformed muscle; and materials and coatings to enhance the blood/device interface.
Medtronic has not engaged in significant customer or government sponsored research.
EMPLOYEES. On April 30, 1995, Medtronic and its subsidiaries employed 8,896 people on a regular, full-time basis and, including temporary and part-time employees, a total of 10,313 employees on a full-time equivalent basis.
U.S. AND NON-U.S. OPERATIONS AND EXPORT SALES. Medtronic sells products in more than 120 countries in three geographic areas: the Americas, Europe/Middle East/Africa, and Asia/Pacific. For financial reporting purposes, revenues, profitability, and identifiable assets attributable to significant geographic areas are presented in Note 14 to the consolidated financial statements, incorporated herein by reference to Medtronic's 1995 Annual Shareholder Report on page 49. U.S. export sales to unaffiliated customers comprised less than two percent of Medtronic's consolidated sales in each of fiscal 1995, 1994 and 1993.
Operation in countries outside the U.S. is accompanied by certain financial and other risks. Relationships with customers and effective terms of sale frequently vary by country, often with longer-term receivables than are typical in the U.S. Inventory management is an important business concern due to the potential for rapidly changing business conditions and currency exposure. Currency exchange rate fluctuations can affect income from, and profitability of, non-U.S. operations. Medtronic attempts to hedge these exposures to reduce the effects of foreign currency fluctuations on net earnings. Certain countries also limit or regulate the repatriation of earnings to the United States. Non-U.S. operations in general present complex tax and money management questions requiring sophisticated analysis and precise execution of strategy to meet the company's financial objectives.
EXECUTIVE OFFICERS OF MEDTRONIC
Set forth below are the names and ages of current executive officers of Medtronic, Inc., as well as information regarding their positions with Medtronic, Inc., their periods of service in these capacities, and their business experience for the past five or more years. Executive officers generally serve terms of office of approximately one year. There are no family relationships between any of the officers named, nor is there any arrangement or understanding pursuant to which any person was selected as an officer.
WILLIAM W. GEORGE, age 52, has been President and Chief Executive Officer since May 1991, was President and Chief Operating Officer from March 1989 to April 1991, and has been a director since March 1989. Prior to joining the company, Mr. George was President, Space and Aviation Systems Business, at Honeywell Inc. from December 1987 to March 1989. During his 11 years with Honeywell, Mr. George served in several other executive positions including President, Industrial Automation and Control, from May 1987 to December 1987; and Executive Vice President of that business from January 1983 to May 1987.
GLEN D. NELSON, M.D., age 58, has been Vice Chairman since July 1988, and has been a director since 1980. From September 1986 to July 1988, he was Executive Vice President of the company. Dr. Nelson was Chairman and Chief Executive Officer of American MedCenters, Inc., an HMO management corporation, from July 1984 to August 1986.
ARTHUR D. COLLINS, JR., age 47, has been Chief Operating Officer since January 1994 and has been a director since August 1994. From June 1992 to January 1994, Mr. Collins was Executive Vice President and President of Medtronic International. Prior to joining the company, Mr. Collins was Corporate Vice President, Diagnostic Products, at Abbott Laboratories from October 1989 to May 1992 and Divisional Vice President, Diagnostic Products, from May 1984 to October 1989. During his 14 years with Abbott, Mr. Collins served in various general management positions both in the United States and Europe.
BOBBY I. GRIFFIN, age 58, has been Executive Vice President since July 1988, and President, Pacing, since March 1991. From September 1985 to July 1988, Mr. Griffin was Vice President of the Pacing Business Unit.
BILL K. ERICKSON, age 51, has been Senior Vice President and President, Americas, since January 1994. From May 1992 to January 1994, Mr. Erickson was Senior Vice President and President, U.S. Cardiovascular Sales and Marketing Division. Mr. Erickson was Senior Vice President, U.S. Cardiovascular Division, from January 1990 to May 1992 and was Vice President, U.S. Cardiovascular Distribution, from January 1982 to December 1989.
JANET S. FIOLA, age 53, has been Senior Vice President, Human Resources since March 1994. She was Vice President, Human Resources, from February 1993 to March 1994, and was Vice President, Human Resources Development, from February 1988 to February 1993.
PHILIP M. LAUGHLIN, age 47, joined the company as Senior Vice President and President, Cardiac Surgery, in July 1995. Prior to that he served with Clintec Nutrition Company (worldwide joint venture of Baxter International and Nestle Company in the field of clinical nutrition), as President, North America, from 1994 through July 1995 and as President, United States, from 1989 to 1993. From 1976 to 1989, he held numerous management positions at Baxter International, most recently as Vice President, Operations, Global Business Group.
RONALD E. LUND, age 60, has been Senior Vice President and General Counsel since November 1990, and Secretary since July 1992, and was Vice President and General Counsel from February 1989 to November 1990. Prior to joining the company, Mr. Lund served as Vice President and Associate General Counsel of The Pillsbury Company from 1984 to February 1989.
JOHN A. MESLOW, age 56, has been Senior Vice President and President, Neurological Business, since March 1994. He was Vice President and President, Neurological Business, from March 1991 to March 1994, and was Vice President, Neurological Division, from March 1985 to March 1991.
ROBERT L. RYAN, age 52, has been Senior Vice President and Chief Financial Officer since April 1993. Prior to joining the company, Mr. Ryan was Vice President, Finance, and Chief Financial Officer of Union Texas Petroleum Corp. from May 1984 to April 1993, Controller from May 1983 to May 1984, and Treasurer from March 1982 to May 1983.
ITEM 2.

ITEM 2. PROPERTIES
Medtronic's principal offices are owned by the company and located in the Minneapolis, Minnesota metropolitan area. Manufacturing or research facilities are located in Arizona, California, Colorado, Massachusetts, Michigan, Minnesota, Texas, Puerto Rico, Canada, France, Germany, Italy, the Netherlands and Japan. The company's total manufacturing and research space is approximately 1,653,000 square feet, of which 80% is owned by the company and the balance is leased.
Medtronic also maintains sales and administrative offices inside the United States at 47 locations in 27 states and outside the United States at 96 locations in 24 countries. Most of these locations are leased. Medtronic is utilizing substantially all of its currently available productive space to develop, manufacture and market its products. The company's facilities are in good operating condition, suitable for their respective uses and adequate for current needs.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
Notes 11 and 12 to the consolidated financial statements appearing on pages 48 and 49 of Medtronic's 1995 Annual Shareholder Report are incorporated herein by reference.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5.

ITEM 5. MARKET FOR MEDTRONIC'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The information in the sections entitled "Price Range of Medtronic Stock" and "Investor Information" on page 51 of Medtronic's 1995 Annual Shareholder Report is incorporated herein by reference.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The information for the years 1985 through 1995 on page 50 of Medtronic's 1995 Annual Shareholder Report is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information on pages 33 through 37 of Medtronic's 1995 Annual Shareholder Report is incorporated herein by reference.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report thereon of independent accountants dated May 22, 1995, appearing on pages 38 through 49 of Medtronic's 1995 Annual Shareholder Report are incorporated herein by reference.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF MEDTRONIC
The information on pages 1 through 6 of Medtronic's Proxy Statement for its 1995 Annual Shareholders' Meeting and on page 9 of such Proxy Statement regarding Section 16(a) reporting is incorporated herein by reference. See also "Executive Officers of Medtronic" on pages 5 and 6 hereof.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
The sections entitled "Election of Directors -- Director Compensation" and "Executive Compensation" on pages 7 and 8, and 14 through 20, respectively, of Medtronic's Proxy Statement for its 1995 Annual Shareholders' Meeting are incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
"Shareholdings of Certain Owners and Management" on page 9 of Medtronic's Proxy Statement for its 1995 Annual Shareholders' Meeting is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information on page 8 of Medtronic's Proxy Statement for its 1995 Annual Shareholders' Meeting, concerning services provided to the company by the Chairman of the Board and the Founder of the company in fiscal 1995, is incorporated herein by reference.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
Report of Independent Accountants (incorporated herein by reference to page 38 of Medtronic's 1995 Annual Shareholder Report)
Statement of Consolidated Earnings -- years ended April 30, 1995, 1994, and 1993 (incorporated herein by reference to page 39 of Medtronic's 1995 Annual Shareholder Report)
Consolidated Balance Sheet -- April 30, 1995 and 1994 (incorporated herein by reference to page 40 of Medtronic's 1995 Annual Shareholder Report)
Statement of Consolidated Cash Flow -- years ended April 30, 1995, 1994, and 1993 (incorporated herein by reference to page 41 of Medtronic's 1995 Annual Shareholder Report)
Notes to Consolidated Financial Statements (incorporated herein by reference to pages 42 through 49 of Medtronic's 1995 Annual Shareholder Report)
2. FINANCIAL STATEMENT SCHEDULES
II Valuation and Qualifying Accounts -- years ended April 30, 1995, 1994, and 1993
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
3. EXHIBITS
3.1 Medtronic Restated Articles of Incorporation, as amended to date (Exhibit 3.1).(g) 3.2 Medtronic Bylaws, as amended to date (Exhibit 3.2).(f) 4 Form of Rights Agreement dated as of June 27, 1991 between Medtronic and Norwest Bank Minnesota, National Association, including as Exhibit A thereto the form of Preferred Stock Purchase Right Certificate, incorporated by reference to Exhibit (1) of Medtronic's Form 8-A Registration Statement dated June 27, 1991 and filed with the Securities and Exchange Commission on June 28, 1991. *10.1 1994 Stock Award Plan (Appendix A).(b) *10.2 Management Incentive Plan (Appendix B).(b) *10.3 1979 Restricted Stock and Performance Share Award Plan, as amended to date (Exhibit 10.1).(d) *10.4 1979 Nonqualified Stock Option Plan, as amended (Exhibit A).(e) *10.5 Form of Employment Agreement for Medtronic executive officers. *10.6 1991 Restricted Stock Plan for Non-Employee Directors (Exhibit B).(e) *10.7 Capital Accumulation Plan Deferral Program (Exhibit 10.6).(d) *10.8 Postretirement Survivor Benefit Plan (Exhibit 10.7).(d) *10.9 Amendment effective October 1, 1993 to the Directors' Retirement Plan (Exhibit 10.9).(a) *10.10 Nonqualified Supplemental Benefit Plan (Exhibit 10.9).(d) *10.11 Management Incentive Plan Stock Option Replacement Program 11 Computation of Earnings Per Share. 13 Those portions of Medtronic's 1995 Annual Shareholder Report expressly incorporated by reference herein, which shall be deemed filed with the Commission. 21 List of Subsidiaries. 23 Consent and Report of Price Waterhouse (set forth on page 11 of this report). 24 Powers of Attorney. 27 Financial Data Schedule
(a) Incorporated herein by reference to the cited exhibit in Medtronic's Annual Report on Form 10-K for the year ended April 30, 1994, filed with the Commission on July 27, 1994.
(b) Incorporated herein by reference to the cited Appendix in Medtronic's Proxy Statement for its 1994 Annual Meeting of Shareholders filed with the Commission on July 27, 1994.
(c) Incorporated herein by reference to the cited exhibit in Medtronic's Annual Report on Form 10-K for the year ended April 30, 1993, filed with the Commission on July 23, 1993.
(d) Incorporated herein by reference to the cited exhibit in Medtronic's Annual Report on Form 10-K for the year ended April 30, 1992, filed with the Commission under cover of Form SE dated July 24, 1992.
(e) Incorporated herein by reference to the cited exhibit in Medtronic's Proxy Statement for its 1991 Annual Meeting of Shareholders, filed with the Commission on July 24, 1991.
(f) Incorporated herein by reference to the cited exhibit in Medtronic's Annual Report on Form 10-K for the year ended April 30, 1991, filed with the Commission under cover of Form SE dated July 24, 1991.
(g) Incorporated herein by reference to the cited exhibit in Medtronic's Annual Report on Form 10-K for the year ended April 30, 1990, filed with the Commission under cover of Form SE dated July 20, 1990.
*Items that are management contracts or compensatory plans or arrangements required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by Medtronic during the quarter ended April 30, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MEDTRONIC, INC.
Dated: July 25, 1995
BY: /S/ WILLIAM W. GEORGE William W. George President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Dated: July 25, 1995
BY: /S/ WILLIAM W. GEORGE William W. George President and Chief Executive Officer Dated: July 25, 1995
BY: /S/ ROBERT L. RYAN Robert L. Ryan Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
F. CALEB BLODGETT ARTHUR D. COLLINS, JR. WILLIAM W. GEORGE ANTONIO M. GOTTO, JR., M.D. BERNADINE P. HEALY, M.D. VERNON H. HEATH THOMAS E. HOLLORAN EDITH W. MARTIN, PH.D. DIRECTORS GLEN D. NELSON, M.D. RICHARD L. SCHALL JACK W. SCHULER GERALD W. SIMONSON GORDON M. SPRENGER RICHARD W. SWALIN, PH.D. WINSTON R. WALLIN
Ronald E. Lund, by signing his name hereto, does hereby sign this document on behalf of each of the above named directors of the registrant pursuant to powers of attorney duly executed by such persons.
Dated: July 25, 1995
BY: /S/ RONALD E. LUND Ronald E. Lund Attorney-in-Fact
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of Medtronic, Inc.
Our audits of the consolidated financial statements referred to in our report dated May 22, 1995 appearing on page 38 of the 1995 Annual Shareholder Report of Medtronic, Inc. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Minneapolis, Minnesota May 22, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in each Prospectus constituting part of the Registration Statements on Form S-8 (Registration Nos. 2-65157, 2-68408, 33-169, 33-36552, 2-65156, 33-24212, 33-37529, 33-44230 and 33-55329) and Form S-4 (Registration No. 33-52751) of Medtronic, Inc. of our report dated May 22, 1995 appearing on page 38 of the 1995 Annual Shareholder Report which is incorporated by reference in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule as shown above.
PRICE WATERHOUSE LLP
Minneapolis, Minnesota July 25, 1995
MEDTRONIC, INC. AND SUBSIDIARIES SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS OF DOLLARS)
(a) Uncollectible accounts written off, less recoveries.
(b) Reflects primarily the effects of foreign currency fluctuations.
(c) Reflects the sale of all assets of the CardioCare division.
(d) Reflects reclassification of assets retained in the sale of the Nortech division.
(e) Includes both current and noncurrent amounts.
(f) Claims settled, less reimbursement by insurance carrier
Commission File Number 1-7707
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED APRIL 30, 1995
[LOGO]
Medtronic, Inc. 7000 Central Avenue N.E. Minneapolis, Minnesota 55432 Telephone: 612/574-4000
EXHIBIT INDEX
3.1 Medtronic Restated Articles of Incorporation, as amended to date (Exhibit 3.1).(g)
3.2 Medtronic Bylaws, as amended to date (Exhibit 3.2).(f)
4 Form of Rights Agreement dated as of June 27, 1991 between Medtronic and Norwest Bank Minnesota, National Association, including as Exhibit A thereto the form of Preferred Stock Purchase Right Certificate, incorporated by reference to Exhibit (1) of Medtronic's Form 8-A Registration Statement dated June 27, 1991 and filed with the Securities and Exchange Commission on June 28, 1991.
10.1 1994 Stock Award Plan (Appendix A).(b)
10.2 Management Incentive Plan (Appendix B).(b)
10.3 1979 Restricted Stock and Performance Share Award Plan, as amended to date (Exhibit 10.1).(d)
10.4 1979 Nonqualified Stock Option Plan, as amended (Exhibit A).(e)
10.5 Form of Employment Agreement for Medtronic executive officers.
10.6 1991 Restricted Stock Plan for Non-Employee Directors (Exhibit B).(e)
10.7 Capital Accumulation Plan Deferral Program (Exhibit 10.6).(d)
10.8 Postretirement Survivor Benefit Plan (Exhibit 10.7).(d)
10.9 Amendment effective October 1, 1993 to the Directors' Retirement Plan (Exhibit 10.9).(a)
10.10 Nonqualified Supplemental Benefit Plan (Exhibit 10.9).(d)
10.11 Management Incentive Plan Stock Option Replacement Program
11 Computation of Earnings Per Share.
13 Those portions of Medtronic's 1995 Annual Shareholder Report expressly incorporated by reference herein, which shall be deemed filed with the Commission.
21 List of Subsidiaries.
23 Consent and Report of Price Waterhouse (set forth on page 11 of this report).
24 Powers of Attorney.
27 Financial Data Schedule
_________________
(a) Incorporated herein by reference to the cited exhibit in Medtronic's Annual Report on Form 10-K for the year ended April 30, 1994, filed with the Commission on July 27, 1994.
(b) Incorporated herein by reference to the cited Appendix in Medtronic's Proxy Statement for its 1994 Annual Meeting of Shareholders filed with the Commission on July 27, 1994.
(c) Incorporated herein by reference to the cited exhibit in Medtronic's Annual Report on Form 10-K for the year ended April 30, 1993, filed with the Commission on July 23, 1993.
(d) Incorporated herein by reference to the cited exhibit in Medtronic's Annual Report on Form 10-K for the year ended April 30, 1992, filed with the Commission under cover of Form SE dated July 24, 1992.
(e) Incorporated herein by reference to the cited exhibit in Medtronic's Proxy Statement for its 1991 Annual Meeting of Shareholders, filed with the Commission on July 24, 1991.
(f) Incorporated herein by reference to the cited exhibit in Medtronic's Annual Report on Form 10-K for the year ended April 30, 1991, filed with the Commission under cover of Form SE dated July 24, 1991.
(g) Incorporated herein by reference to the cited exhibit in Medtronic's Annual Report on Form 10-K for the year ended April 30, 1990, filed with the Commission under cover of Form SE dated July 20, 1990.


ITEM 2 PROPERTIES
The Company's principal banking subsidiary, CTC, operates banking facilities in 39 locations in Vermont. The offices of CTC are in good physical condition with modern equipment and facilities considered adequate to meet the banking needs of customers in the communities serviced.
The offices of the Company are located in the main office of the CTC, which occupied all of the five-floor Chittenden Building at Two Burlington Square in Burlington as of December 31, 1995. The Chittenden Building is owned by CTC.
BWM operates banking facilities in 3 locations in Massachusetts. The offices of BWM are in good physical condition with modern equipment and facilities consid- ered adequate to meet thebanking needs of customers in the communities serviced.
The Company continues to conduct business out of properties owned or leased by FBT in the area of Worcester, Massachusetts. Reference is made to The Company's Registration Statement No. 33-64527 on Form S-4 under the Securities Act of 1933, filed in connection with the Company's acquisition of FBT.
ITEM 3

ITEM 3 LEGAL PROCEEDINGS
A number of legal claims against the Company arising in the normal course of business were outstanding at December 31, 1995. Management, after reviewing these claims with legal counsel, is of the opinion that these matters, when resolved, will not have a material effect on the consolidated financial statements.
ITEM 4

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters.
PART II
ITEM 5

ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information regarding the market in which the Company's common stock is traded, and the quarterly high and low bid quotations for the Company's common stock during the past five years are included in the Company's 1995 Annual Report to Stockholders on page 57, and is attached hereto as Exhibit 13. The approximate number of stockholders at March 1, 1996 was 3,354. Note 8 of the Consolidated Financial Statements appearing on page 27 of the Company's 1995 Annual Report to Stockholders contains a discussion of restrictions on dividends and is attached hereto as Exhibit 13.
ITEM 6

ITEM 6 SELECTED FINANCIAL DATA
A five-year summary of selected consolidated financial data for the Company and its subsidiaries is included on page 39 of the Company's 1995 Annual Report to Stockholders and is attached hereto as Exhibit 13.
The Company consummated an acquisition of FBT on February 29, 1996. Reference is made to the Company's Registration Statement No. 33-64527 on Form S-4 under the Securities Act of 1933, filed in connection with the Company's acquisition of FBT, Worcester, Massachusetts.
ITEM 7

ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations is included on pages 40 to 54 of the Company's 1995 Annual Report to Stockholders and is attached hereto as Exhibit 13.
ITEM 8

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company and its subsidiaries appear in the Company's 1995 Annual Report to Stockholders at the pages indicated and are attached hereto as Exhibit 13:
Report of Independent Public Accountants Page 38
Consolidated Balance Sheets at December 31, 1995 and 1994 Page 13
Consolidated Statements of Income for the Years Ended December 31, 1995, 1994, and 1993 Page 14
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1995, 1994, and 1993 Page 15
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994, and 1993 Page 16
Notes to Consolidated Financial Statements Pages 17-37
ITEM 9

ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable
PART III
ITEM 10

ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the directors and director-nominees of the Registrant is included in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders at pages 5-11, and is specifically incorporated herein by reference.
At December 31, 1995, the principal officers of the Company and its principal subsidiary, CTC, with their ages, positions, and years of appointment, were as follows:
YEAR NAME AND AGE APPOINTED POSITIONS - --------------------------------------------------------------------------------
Barbara W. Snelling, 68 1990 Chair of the Company
Paul A. Perrault, 44 1990 President and Chief Executive Officer of the Company and Chittenden Trust
Lawrence W. DeShaw, 49 1990 Executive Vice President of the Company and Chittenden Trust
John W. Kelly, 46 1990 Executive Vice President of the Company and Chittenden Trust
Nancy Rowden Brock, 39 1984 Treasurer of the Company and Senior Vice President, Chief Financial Officer, and Treasurer of Chittenden Trust
F. Sheldon Prentice, 45 1985 Secretary of the Company and Senior Vice President, General Counsel, and Secretary of Chittenden Trust
John P. Barnes, 40 1990 Senior Vice President of the Company and Chittenden Trust
Danny H. O'Brien, 45 1990 Senior Vice President of the Company and Chittenden Trust
- --------------------------------------------------------------------------------
All of the current officers have been principally employed in executive positions with CTC for more than five years.
In accordance with the provisions of the Company's By-Laws, the officers, with the exception of the Secretary, hold office at the pleasure of the Board of Directors. The Secretary is elected annually by the Board of Directors.
ITEM 11

ITEM 11 EXECUTIVE COMPENSATION
Information regarding remuneration of the directors and officers of the Company is included in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders at pages 11-19 and is specifically incorporated herein by reference.
ITEM 12

ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding the security ownership of directors and director-nominees of the Company, all directors and officers of the Company as a group, and certain beneficial owners of the Company's common stock, as of February 1, 1996, is included in the Company's definitive Proxy Statement for its 1996 Annual Meeting of Stockholders, at pages 4-10, and is specifically incorporated herein by reference.
There are no arrangements known to the registrant which may, at a subsequent date, result in a change of control of the registrant.
ITEM 13

ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and transactions between the Company and its Directors, Director-Nominees, Executive Officers, and family members of these individuals, is included in the Company's definitive Proxy Statement for its 1996 Annual Meeting of Stockholders at pages 10 and 21, and is specifically incorporated herein by reference.
PART IV
ITEM 14

ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(l) FINANCIAL STATEMENTS
The following consolidated financial statements of the Company and its subsidiaries appear in the Company's 1995 Annual Report to Stockholders:
Report of Independent Public Accountants Page 38
Consolidated Balance Sheets at December 31, 1995 and 1994 Page 13
Consolidated Statements of Income for the Years Ended December 31, 1995, 1994, and 1993 Page 14
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1995, 1994, and 1993 Page 15
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994, and 1993 Page 16
Notes to Consolidated Financial Statements Pages 17-37
(2) FINANCIAL STATEMENT SCHEDULES
There are no financial statement schedules required to be included in this report.
(3) REPORTS ON FORM 8-K
A report was filed by the Company on Form 8-K December 13, 1995 in connection with the Company's acquisition of FBT so as to file with the Securities and Exchange Commission certain paper reports that would be incorporated by reference into its Registration Statement on Form S-4.
(4) EXHIBITS
The following are included as exhibits to this report:
3. By-Laws of the Company, as amended, incorporated herein by reference to Exhibit 3 to the Company's Annual Report on Form 10-K for the year ended December 31, 1985.
3.01 Amendment to the By-Laws of the Company, dated February 16, 1988, incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987.
3.02 Amendment to the By-Laws of the Company, dated January 17, 1990, incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989.
3.03 Amendment to the By-Laws of the Company, dated June 19, 1991, incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991.
3.04 Amendment to the By-Laws of the Company, dated November 15, 1995. CHANGED FROM: "A director elected to fill a vacancy shall hold office until the next regular election of directors." CHANGED TO: "A director elected to fill a vacancy shall hold office until the expiration of the term of the departed director who creates the vacancy."
3.1 Articles of Association of the Company, as amended, incorporated herein by reference to the Proxy Statement for the 1994 Annual Meeting of Stockholders.
4. Statement of the Company regarding its Dividend Reinvestment Plan is incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993.
10.1 Directors' Deferred Compensation Plan, dated April 1972, as amended January 1, 1992, incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992.
10.2 Pension Plan of CTC, attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, as amended on March 15, 1995 and December 20, 1995 and attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
10.3 Incentive Savings and Profit Sharing Plan, attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, as amended on March 15, 1995 and attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
10.4 The Company's Stock Option Plan, incorporated herein by reference to the Company's Proxy Statement in connection with the 1986 Annual Meeting of Stockholders.
10.5 The Company's Stock Option Plan, incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987.
10.6 The Company's Restricted Stock Plan, incorporated herein by reference to the Company's Proxy Statement in connection with the 1986 Annual Meeting of Stockholders.
10.7 Executive Management Incentive Compensation Plan, attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and is incorporated herein by reference.
10.8 The Company's Stock Incentive Plan, dated January 1, 1993, incorporated herein by reference to the Company's Proxy Statement for the 1993 Annual Meeting of Stockholders.
13. The Company's 1995 Annual Report to Stockholders.
21. List of subsidiaries of the Registrant.
23. Consent of Arthur Andersen LLP.
EXHIBITS
EXHIBIT 3.04 AMENDMENT TO THE BY-LAWS OF THE COMPANY
EXHIBIT 10.2 AMENDMENT NUMBER ONE
AMENDMENT NUMBER ONE TO THE PENSION PLAN FOR EMPLOYEES OF THE CHITTENDEN CORPORATION
(As Amended and Restated Effective January 1, 1989)
WHEREAS, Chittenden Corporation (the "Principal Employer") heretofore adopted the Pension Plan for Employees of The Chittenden Corporation (the "Plan"); and
WHEREAS, Article X permits the Principal Employer to amend the Plan from time to time; and
WHEREAS, the Principal Employer will acquire the Bank of Western Massachusetts (such date to be known as the "Acquisition Date"); and
WHEREAS, the Principal Employer intends to maintain the qualified retirement plans of the Bank of Western Massachusetts on and after the Acquisition Date;
NOW, THEREFORE, the Plan is hereby amended effective as of the Acquisition Date, as follows:
Section 3.1, "MEMBERSHIP" shall be amended by adding the following paragraph (d) immediately after paragraph (c) thereof:
"(d) Notwithstanding the foregoing, each Employee who is employed by the Bank of Western Massachusetts shall not be eligible for membership hereunder."
IN WITNESS WHEREOF, Chittenden Corporation has caused this amendment to be executed by its officer thereunto duly authorized and its corporate seal to be hereunto affixed as of the 15th day of March, 1995.
CHITTENDEN CORPORATION
BY: /s/ F. Sheldon Prentice, Esq. Secretary
CORPORATE SEAL
EXHIBIT 10.2 AMENDMENT NUMBER TWO
BOARD OF DIRECTORS RESOLUTION AUTHORIZING THE ADOPTION OF AMENDMENT NUMBER TWO TO THE PENSION PLAN FOR EMPLOYEES OF THE CHITTENDEN CORPORATION (As Amended and Restated Effective January 1, 1989)
WHEREAS, the Chittenden Corporation (the "Principal Employer") heretofore adopted the Pension Plan for Employees of the Chittenden Corporation (the "Plan"); and
WHEREAS, Article X permits the Principal Employer to amend the Plan at any time by means of a resolution of the Board of Directors;
WHEREAS, it is the desire of the Principal Employer to credit certain past service under the Plan;
NOW, THEREFORE, the Plan is amended effective January 1, 1995, as follows:
1. Section 3.3, ELIGIBILITY SERVICE, is amended by adding the following paragraph (f) to the end thereof:
"(f) Subject to the Break in Service provisions of Section 3.5, an Employee who terminates employment with the Employer and all Affiliated Companies on or after January 1, 1995, shall be credited with Eligibility Service in accordance with the provisions set forth in this Section 3.3 for periods of employment with the Employer or an Affiliated Company prior to December 1, 1976."
2. Section 3.4, BENEFIT SERVICE, is amended by adding the following paragraph (g) to the end thereof:
"(g) Subject to the Break in Service provisions of Section 3.5, a Member who terminates employment with the Employer on or after January 1, 1995, shall receive Benefit Service in accordance with the provisions set forth in this Section 3.4 for periods of employment with the Employer prior to December 1, 1976."
IN WITNESS WHEREOF, the Principal Employer has caused this instrument to be executed by its officer duly authorized and its corporate seal to be hereunto affixed as of the 20th day of December, 1995.
CHITTENDEN CORPORATION BY: /s/ Paul A. Perrault
ATTEST:
/s/ F. Sheldon Prentice
CORPORATE SEAL
EXHIBIT 10.2 AMENDMENT NUMBER THREE
BOARD OF DIRECTORS RESOLUTION AUTHORIZING THE ADOPTION OF PROPOSED AMENDMENT NUMBER THREE TO THE PENSION PLAN FOR EMPLOYEES OF THE CHITTENDEN CORPORATION (As Amended and Restated Effective January 1, 1989)
WHEREAS, Chittenden Corporation (the "Principal Employer") heretofore adopted the Pension Plan for Employees of The Chittenden Corporation (the "Plan"); and
WHEREAS, Article X permits the Principal Employer to amend the Plan at any time by means of a resolution of the Board of Directors; and
WHEREAS, the Internal Revenue Service (IRS) has requested that the Plan be amended in response to the Principal Employer's application for a letter of determination for the Plan;
NOW, THEREFORE, the following proposed amendments shall be effective January 1, 1989, and shall be adopted by the Board upon approval of the IRS:
Section 2.12, "COMPENSATION" shall be amended by deleting the last paragraph thereof and replacing it with the following:
"Effective for Plan Years beginning after December 31, 1988, Compensation taken in to account under the Plan shall not exceed $200,000 ($150,000 effective for Plan Years beginning after December 31, 1993) or such other amount as indexed pursuant to Sections 401(a)(17) and 415(d) of the Code. In any event, the Accrued Benefit of any Member determined in accordance with this provision shall not be less than the Accrued Benefit of such Member determined as of December 31, 1988, in accordance with the applicable provisions of the Plan as in effect on such date.
In determining the Compensation of an Employee for purposes of the Code Section 401(a)(17) limitation, the rules of Section 414(q)(6) of the Code shall apply; provided, however, that in applying such rules, the term "family" shall include only the spouse of the Employee and any lineal descendants of the Employee who have not attained age 19 before the close of the Plan Year.
If the Compensation of the Employee exceeds the Code Section 401(a)(17) limitation, then the Code Section 401(a)(17) limitation shall be prorated among the Compensation of the Employee and his family (as determined under this Section 2.12 prior to the application of the Code Section 401(a)(17) limitation) in proportion to each such individual's Compensation (as determined under the Section 2.12 prior to the application of the Code Section 401(a)(17) limitation)."
IN WITNESS WHEREOF, the Principal Employer has caused this instrument to be executed by is officer duly authorized and its corporate seal to be hereunto affixed as of the 20th day of December, 1995.
CHITTENDEN CORPORATION
BY: /s/ Paul A. Perrault
ATTEST:
/s/ F. Sheldon Prentice
CORPORATE SEAL
EXHIBIT 10.3 AMENDMENT NUMBER ONE
THE CHITTENDEN CORPORATION INCENTIVE SAVINGS AND PROFIT SHARING PLAN
(As Amended and Restated Effective January 1, 1989)
WHEREAS, Chittenden Corporation (the "Employer") heretofore adopted the Chittenden Corporation Incentive Savings and Profit Sharing Plan (the "Plan"); and
WHEREAS, Article XIII permits the Employer to amend the Plan from time to time; and
WHEREAS, the Employer will acquire the Bank of Western Massachusetts (such date to be known as the "Acquisition Date"); and
WHEREAS, the Employer intends to maintain the qualified retirement plans of the Bank of Western Massachusetts on and after the Acquisition Date;
NOW THEREFORE, the Plan is hereby amended effective as of the Acquisition Date, as follows:
Section 2.1, "ELIGIBILITY TO PARTICIPATE" shall be amended by adding the following paragraph immediately after paragraph (e) thereof:
"Notwithstanding the foregoing, each Employee who is employed by the Bank of Western Massachusetts shall not be considered an Eligible Employee hereunder."
IN WITNESS WHEREOF, Chittenden Corporation has caused this amendment to be executed by its officer thereunto duly authorized and its corporate seal to be hereunto affixed as of the 15th day of March, 1995.
CHITTENDEN CORPORATION
BY: /s/ F. Sheldon Prentice, Esq. Secretary
CORPORATE SEAL
EXHIBIT 13 CHITTENDEN'S 1995 ANNUAL REPORT HAS BEEN FILED AS AN EXHIBIT ATTACHED HERETO
EXHIBIT 21 LIST OF SUBSIDIARIES OF CHITTENDEN CORPORATION
Chittenden Trust Company, Vermont, d/b/a Chittenden Bank
The Bank of Western Massachusetts, Massachusetts
Chittenden Acquisition Bank, Massachusetts d/b/a Flagship Bank and Trust Company, is a Bank in formation to effectuate the acquisition of Flagship Bank and Trust Company.
EXHIBIT 23 CONSENT LETTER ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our report dated January 16, 1996, included in Chittenden Corporation's Form 10-K for the year ended December 31, 1995, into the Company's previously filed Registration Statement File No. 33-1229.
s/ARTHUR ANDERSEN LLP Boston, Massachusetts March 25, 1996