Medtronic 2014 Annual Report Download - page 56

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Furthermore, we expect our development activities to help reduce patient care costs and the length of hospital stays in the future.
In addition to our investment in research and development, we continue to access new technologies in areas served by our
existing businesses, as well as in new areas, through acquisitions, licensing agreements, alliances, and certain strategic equity
investments.
Selling, General, and Administrative Fiscal year 2014 selling, general, and administrative expense was $5.847 billion,
representing 34.4 percent of net sales, reflecting an increase of 0.1 of a percentage point from fiscal year 2013. This increase
was primarily driven by unfavorable foreign currency. Fiscal year 2013 selling, general, and, administrative expense was $5.698
billion, representing 34.3 percent of net sales, reflecting a decrease of 0.4 of a percentage point from fiscal year 2012. This
decrease was driven by several initiatives focused on leveraging our expenses.
Special Charges, Restructuring Charges, Net, Certain Litigation Charges, Net, Acquisition-Related Items, and Certain
Tax Adjustments We believe that in order to properly understand our short-term and long-term financial trends, investors
may find it useful to consider the impact of special charges, restructuring charges, net, certain litigation charges, net,
acquisition-related items, and certain tax adjustments. Special charges, restructuring charges, net, certain litigation charges, net,
acquisition-related items, and certain tax adjustments recorded during fiscal years 2014, 2013, and 2012 were as follows:
Fiscal Year
(in millions) 2014 2013 2012
Special charges $ 40 $ — $ —
Restructuring charges, net(1) 88 182 87
Certain litigation charges, net 770 245 90
Acquisition-related items 117 (49) 12
Total special charges, restructuring charges, net, certain litigation charges,
net, and acquisition-related items 1,015 378 189
Net tax impact of special charges, restructuring charges, net, certain
litigation charges, net, acquisition-related items, and certain tax
adjustments(1) (212) (47) (56)
Total special charges, restructuring charges, net, certain litigation charges,
net, acquisition-related items, and certain tax adjustments, net of tax(1) $ 803 $ 331 $ 133
(1) For fiscal years 2014 and 2013, restructuring charges, net and the related tax impact within this table include the impact
of amounts recorded within cost of products sold in the consolidated statements of earnings related to the fiscal year
2014 initiative and fiscal year 2013 initiative, respectively.
Special Charges During fiscal year 2014, consistent with the our commitment to improving the health of people and
communities throughout the world, we made a $40 million charitable contribution to the Medtronic Foundation, which is a
related party non-profit organization.
During fiscal years 2013 and 2012, there were no special charges.
Restructuring Charges, Net
Fiscal Year 2014 Initiative
In the fourth quarter of fiscal year 2014, we recorded a $116 million restructuring charge, which consisted of employee
termination costs of $65 million, asset write-downs of $26 million, contract termination costs of $3 million, and other related
costs of $22 million. Of the $26 million of asset write-downs, $10 million related to inventory write-offs of discontinued
product lines and production-related asset impairments, and therefore, was recorded within cost of products sold in the
consolidated statements of earnings. The fiscal year 2014 initiative primarily relates to our renal denervation business, certain
manufacturing shut-downs, and a reduction of back-office support functions in Europe.
As of the end of the fourth quarter of fiscal year 2014, we identified approximately 600 positions for elimination to be achieved
primarily through involuntary separation. The fiscal year 2014 initiative is scheduled to be substantially complete by the end of
the fourth quarter of fiscal year 2015 and is expected to produce annualized operating savings of approximately $60 to
$75 million. These savings will arise mostly from reduced compensation expense. In the first quarter of fiscal year 2015, we
expect to incur an additional restructuring charge of $25 to $40 million, primarily related to contract termination fees.
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