Medtronic 2011 Annual Report Download - page 64

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60 Medtronic, Inc.
Notes to Consolidated Financial Statements
(continued)
A summary of the activity related to the fiscal year 2009
initiative is presented below:
Fiscal Year 2009 Initiative
(in millions)
Employee
Termination
Costs
Asset
Write-
downs Total
Balance as of April 25, 2008 $ — $ — $ —
Restructuring charges 29 5 34
Payments/write-downs (1) (5) (6)
Balance as of April 24, 2009 $ 28 $ — $ 28
Restructuring charges 53 10 63
Reversal of excess accrual (12) — (12)
Payments (64) (10) (74)
Balance as of April 30, 2010 $ 5 $ — $ 5
Payments/write-downs (5) — (5)
Balance as of July 30, 2010 $ — $ — $ —
Global Realignment Initiative
In the fourth quarter of fiscal year 2008, the Company began a
global realignment initiative which focused on shifting resources
to those areas where the Company had the greatest opportunities
for growth and streamlining operations to drive operating
leverage. The global realignment initiative impacted most
businesses and certain corporate functions. Within the Company’s
Cardiac Rhythm Disease Management business, the Company
reduced research and development infrastructure by closing a
facility outside the U.S., reprioritizing research and development
projects to focus on the core business and consolidating
manufacturing operations to drive operating leverage. Within
the Company’s Spinal business, the Company reorganized
and consolidated certain activities where Medtronic’s existing
infrastructure, resources, and systems could be leveraged to
obtain greater operational synergies. The global realignment
initiative was also designed to further consolidate manufacturing
of CardioVascular products, streamline distribution of products in
select businesses and to reduce general and administrative costs
in the Company’s corporate functions.
In the first quarter of fiscal year 2009, as a continuation of the
global realignment initiative, the Company incurred $96 million of
incremental restructuring charges, which consisted of employee
termination costs of $91 million and asset write-downs of $5
million. The majority of the expense recognized in the first quarter
of fiscal year 2009 related to the execution of the Company’s
global realignment initiative outside the U.S. This included the
realignment and elimination of certain personnel throughout
Europe and the emerging markets and the closure of an existing
facility in the Netherlands that has been integrated into the U.S.
operations. The remainder of the expense was associated with
enhanced severance benefits provided to employees identified
in the fourth quarter of fiscal year 2008. These incremental costs
were not accrued in fiscal year 2008 because the enhanced
benefits had not yet been communicated to the impacted
employees.
In the fourth quarter of fiscal year 2009, the Company recorded
a $7 million reversal of excess restructuring reserves related to the
global realignment initiative. This reversal was primarily a result
of favorable severance negotiations with certain employee
populations outside the U.S. as well as a higher than expected
percentage of employees identified for elimination finding
positions elsewhere within the Company.
In the first quarter of fiscal year 2010, the Company recorded an
$8 million reversal of excess restructuring reserves primarily as a
result of favorable severance negotiations as well as a higher than
expected percentage of employees identified for elimination
finding positions elsewhere in the Company. This $8 million
reversal of excess reserves was partially offset by a $5 million
charge the Company recorded in the first quarter of fiscal year
2010 related to the further write-down of a non-inventory related
asset resulting from the continued decline in the international
real estate market.
In connection with the global realignment initiative, as of
the end of the first quarter of fiscal year 2009, the Company had
identified approximately 900 positions for elimination which were
achieved through both voluntary and involuntary separation.
As of October 30, 2009, the global realignment initiative was
substantially complete.
A summary of the activity related to the global realignment
initiative is presented below:
Global Realignment Initiative
(in millions)
Employee
Termination
Costs
Asset
Write-
downs Total
Balance as of April 25, 2008 $ 25 $— $ 25
Restructuring charges 91 5 96
Reversal of excess accrual (7) — (7)
Payments/write-downs (89) (5) (94)
Currency adjustment, net (5) — (5)
Balance as of April 24, 2009 $ 15 $— $ 15
Restructuring charges — 5 5
Reversal of excess accrual (8) — (8)
Payments/write-downs (9) (5) (14)
Currency adjustment, net 2 — 2
Balance as of October 30, 2009 $ — $— $ —