Medtronic 2015 Annual Report Download - page 98

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Medtronic plc
Notes to Consolidated Financial Statements (Continued)
The fiscal year 2015 initiative is scheduled to be substantially complete by the end of the fourth quarter of fiscal year 2016. The
fiscal year 2015 initiative was the beginning of our restructuring program related to the acquisition of Covidien which is
expected to contribute to the approximately $850 million in cost synergies expected to be achieved as a result of the Covidien
acquisition through fiscal year 2018, including administrative office optimization, manufacturing and supply chain
infrastructure, and certain general and administrative savings. Restructuring charges are expected to be incurred on a quarterly
basis throughout fiscal year 2016.
A summary of the activity related to the fiscal year 2015 initiative is presented below:
Fiscal Year 2015 Initiative
(in millions)
Employee
Termination
Costs
Asset
Write-downs
Other
Costs Total
Balance as of April 25, 2014 $—$—$—$—
Restructuring charges 213 28 7 248
Payments/write-downs (77) (28) — (105)
Balance as of April 24, 2015 $ 136 $ — $ 7 $ 143
Covidien Initiative
Covidien’s pre-acquisition restructuring program is designed to improve Covidien’s cost structure. The program consists of
reducing corporate expenses, expanding shared services, consolidating manufacturing locations, and optimizing distribution
centers. The Covidien restructuring initiative is scheduled to be substantially complete by the end of fiscal year 2018.
In the fourth quarter of fiscal year 2015, the Company recorded a reversal of excess restructuring reserves related to the
Covidien initiative of $5 million. The reversal was primarily a result of early lease termination negotiations and certain
employees identified for elimination finding other positions within the Company.
A summary of the activity related to the Covidien initiative is presented below:
Covidien Initiative
(in millions)
Employee
Termination
Costs
Other
Costs Total
Balance as of January 26, 2015 (Acquisition Date) $ 76 $ 27 $ 103
Restructuring charges — — —
Payments/write-downs (10) (10) (20)
Reversal of excess accrual (5) — (5)
Balance as of April 24, 2015 $61$17$78
Fiscal Year 2014 Initiative
In the fourth quarter of fiscal year 2014, the Company 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 income. The fiscal year 2014 initiative primarily relates to the Company’s renal denervation
business, certain manufacturing shut-downs, and a reduction of back-office support functions in Europe. In the first quarter of
fiscal year 2015, the Company recorded a $38 million restructuring charge, which was the final charge related to the fiscal year
2014 initiative and consisted primarily of contract termination and other related costs of $28 million. As of April 24, 2015, the
fiscal year 2014 initiative was substantially complete.
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