St. Jude Medical (STJ)

Certain of our insurers have filed suits seeking court orders declaring that they are not required to provide coverage for some of the costs we have incurred in the Silzone® litigation described above. These same insurers, as well as other insurers from whom we have purchased product liability insurance, may deny coverage of these and other past and/or future losses relating to our products on the grounds that such losses are outside the scope of coverage of our insurance policies. To the extent that we suffer losses that are outside of the scope of coverage of our product liability insurance policies, those losses may have an adverse effect on our financial condition and results of operations.

Our remaining product liability insurance for Silzone® claims consists of a number of layers, each of which is covered by one or more insurance companies. Part of our final layer of insurance is covered by a unit of the Kemper Insurance Companies (Kemper), which is currently in “run off” and not issuing new policies or generating any new revenue that could be used to cover claims made under previously-issued policies such as ours. In the event that Kemper is unable to pay part or all of the claims directed to it, we believe that the other insurance carriers in Kemper’s layer will take the position that we will be directly liable for any claims and costs that Kemper is unable to pay and that the other insurance carriers in that layer will not provide coverage for Kemper’s portion. If Kemper or any other insurance companies are unable to meet their respective obligations to us, we could incur substantial losses which could have an adverse effect on our financial condition and results of operations.

Certain of our insurers have filed suits seeking court
orders declaring that they are not required to provide coverage for some of the costs we have incurred in the Silzone®
litigation described above. These same insurers, as well as other insurers from whom we have purchased product liability
insurance, may deny coverage of these and other past and/or future losses relating to our products on the grounds that such losses
are outside the scope of coverage of our insurance policies. To the extent that we suffer losses that are outside of the scope of
coverage of our product liability insurance policies, those losses may have an adverse effect on our financial condition and
results of operations.

Our remaining product liability insurance for Silzone® claims consists of a number of layers, each of which is covered by one or more insurance companies. Part of our final layer of insurance is covered by a unit of the Kemper Insurance Companies (Kemper), which is currently in “run off” and not issuing new policies or generating any new revenue that could be used to cover claims made under previously-issued policies such as ours. In the event that Kemper is unable to pay part or all of the claims directed to it, we believe that the other insurance carriers in Kemper’s layer will take the position that we will be directly liable for any claims and costs that Kemper is unable to pay and that the other insurance carriers in that layer will not provide coverage for Kemper’s portion. If Kemper or any other insurance companies are unable to meet their respective obligations to us, we could
incur substantial losses which could have an adverse effect on our financial condition and results of operations.