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75732me_10K.indd 72 7/1/13 6:36 PM
Table of Contents
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
A summary of the activity related to the fiscal year 2012 initiative is presented below:
Fiscal Year 2012 Initiative
Employee
Termination Asset Other
(in millions) Costs Write-downs Costs Total
Balance as of April 29, 2011 $ — $ — $ — $ —
Restructuring charges 66 9 43 118
Payments/write-downs (2) (9) (16) (27)
Balance as of April 27, 2012 $ 64 $ — $ 27 $ 91
Payments (54) — (23) (77)
Reversal of excess accrual (10) — — (10)
Balance as of April 26, 2013 $ — $ — $ 4 $ 4
Fiscal Year 2011 Initiative
In the fourth quarter of fiscal year 2011, the Company recorded a $272 million restructuring charge (including $2 million of
restructuring charges related to the Physio-Control business presented as divestiture-related costs within discontinued operations),
which consisted of employee termination costs of $177 million, asset write-downs of $24 million, contract termination fees of
$45 million, and other related costs of $26 million. The fiscal year 2011 initiative was designed to restructure the business to align
its cost structure to current market conditions and to continue to position the Company for long-term sustainable growth in emerging
markets and new technologies. Included in the $177 million of employee termination costs were severance and the associated
costs of continued medical benefits and outplacement services, as well as $15 million of incremental defined benefit pension and
post-retirement related expenses for employees that accepted voluntary early retirement packages. These costs are not included
in the table summarizing the restructuring costs below because they are associated with costs that are accounted for under the
pension and post-retirement rules. For further discussion on the incremental defined benefit pension and post-retirement related
expenses, see Note 14. Of the $24 million of asset write-downs, $11 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. Additionally, included in the other related costs was a $19 million intangible asset impairment related to
the discontinuance of a product line within the Structural Heart business.
As of the end of the fourth quarter of fiscal year 2011, the Company identified approximately 2,100 net positions (including 55
net positions at Physio-Control) for elimination, which were achieved through voluntary early retirement packages, voluntary separation,
and involuntary separation. As of April 27, 2012, the fiscal year 2011 initiative was substantially complete.
In the fourth quarter of fiscal year 2012, the Company recorded a $31 million reversal of excess restructuring reserves related to
the fiscal year 2011 initiative. This reversal was primarily a result of certain employees identified for elimination finding positions
elsewhere within the Company, favorable severance negotiations outside the U.S., and more favorable than expected outcomes
in the sub-leasing of previously vacated properties.
69