Medtronic 2012 Annual Report Download - page 60

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in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. Of the
$10 million of asset write-downs, $7 million related to inventory write-offs and production-related
asset impairments, and therefore, was recorded within cost of products sold in the consolidated statements
of earnings.
In the first quarter of fiscal year 2010, in connection with the fiscal year 2008 global realignment
initiative, we recorded an $8 million reversal of excess restructuring reserves partially offset by a $5 million
charge related to the further write-down of a non-inventory related asset.
In the fourth quarter of fiscal year 2010, we recorded a $12 million reversal of excess restructuring
reserves related to the fiscal year 2009 initiative. This reversal was primarily a result of a higher than expected
percentage of employees identified for elimination finding positions elsewhere within the Company.
In connection with the fiscal year 2009 initiative, as of the end of the first quarter of fiscal year 2010,
we had identified approximately 1,500 positions for elimination which were achieved through early
retirement packages, voluntary separation, and involuntary separation. As of July 30, 2010, the fiscal year
2009 initiative was substantially complete and produced annualized operating savings of approximately
$100 to $125 million, mostly from reduced compensation expense.
For additional information, see Note 4 to the consolidated financial statements in “Item 8. Financial
Statements and Supplementary Data” in this Annual Report on Form 10-K.
Certain Litigation Charges, Net We classify material litigation reserves and gains recognized as
certain litigation charges, net.
During fiscal year 2012, we recorded certain litigation charges, net of $90 million related to the
agreement in principle to settle the federal securities class action initiated by the Minneapolis Firefighters’
Relief Association in December 2008. During the fourth quarter of fiscal year 2012, Medtronic reached a
settlement agreement to resolve all of these class claims for $85 million and incurred $5 million in additional
litigation fees as a result of the agreement. See Note 17 to the consolidated financial statements in “Item 8.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional
information.
During fiscal year 2011, we recorded certain litigation charges, net of $245 million related primarily to
a $221 million settlement involving the Sprint Fidelis family of defibrillation leads and charges for certain
Other Matters litigation. The Sprint Fidelis settlement related to the resolution of certain outstanding
product liability litigation related to the Sprint Fidelis family of defibrillation leads that were subject to a
field action announced October 15, 2007. During the third quarter of fiscal year 2012, we paid out the
settlement for both the Sprint Fidelis settlement and for certain Other Matters litigation. See Note 17 to the
consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual
Report on Form 10-K for additional information.
During fiscal year 2010, we recorded certain litigation charges, net of $374 million related to settlements
with Abbott and Gore. The Abbott settlement accounted for $444 million in litigation charges and the Gore
settlement accounted for a $70 million litigation gain. The Abbott settlement related to the global resolution
of all outstanding intellectual property litigation. The terms of the Abbott agreement stipulate that neither
party will sue the other in the field of coronary stent and stent delivery systems for a period of at least ten
years, subject to certain conditions. Both parties also agreed to a cross-license of the disputed patents within
the defined field. The $444 million settlement amount included a $400 million payment made to Abbott and
a $42 million success payment made to evYsio Medical Devices, LLC (evYsio). In addition, a $2 million
payment was made to evYsio in connection with an amendment to the parties’ existing agreement in order
to expand the scope of the definition of the license field from evYsio. We paid the settlement in the second
quarter of fiscal year 2010. The Gore settlement related to the resolution of outstanding patent litigation
related to selected patents in Medtronic’s Jervis and Wiktor patent families. The terms of the agreement
stipulate that neither party will sue the other in the defined field of use, subject to certain conditions. We
granted Gore a worldwide, irrevocable, non-exclusive license in the defined field of use. In addition and
subject to certain conditions, Gore began paying us quarterly payments in January 2010 that will continue
through the fiscal quarter ending October 2018.
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