Medtronic 2013 Annual Report Download - page 86

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75732me_10K.indd 71 6/25/13 6:39 PM
Table of Contents
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
3. Restructuring Charges, Net
Fiscal Year 2013 Initiative
In the fourth quarter of fiscal year 2013, the Company recorded a $192 million restructuring charge, which consisted of employee
termination costs of $150 million, asset write-downs of $13 million, contract termination costs of $18 million, and other related
costs of $11 million. Of the $13 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 costs of products sold in the consolidated
statements of earnings. The fiscal year 2013 initiative was designed to scale back the Company's infrastructure in slower growing
areas of the business, while continuing to invest in geographies, businesses, and products where faster growth is anticipated. A
number of factors have contributed to ongoing challenging market dynamics, including increased pricing pressure, various
governmental austerity measures, and the U.S. medical device excise tax.
As of the end of the fourth quarter of fiscal year 2013, the Company identified approximately 2,000 positions for elimination to
be achieved through involuntary and voluntary separation. The fiscal year 2013 initiative is scheduled to be substantially complete
by the end of the fourth quarter of fiscal year 2014.
A summary of the activity related to the fiscal year 2013 initiative is presented below:
Fiscal Year 2013 Initiative
Employee
Termination Asset Other
(in millions) Costs Write-downs Costs Total
Balance as of April 27, 2012 $ — $ — $ — $ —
Restructuring charges 150 13 29 192
Payments/write-downs (3) (13) (6) (22)
Balance as of April 26, 2013 $ 147 $ — $ 23 $ 170
Fiscal Year 2012 Initiative
In the fourth quarter of fiscal year 2012, the Company recorded a $118 million restructuring charge, which consisted of employee
termination costs of $66 million, asset write-downs of $9 million, contract termination costs of $30 million, and other related costs
of $13 million. The fiscal year 2012 initiative was designed to reduce general, administrative, and indirect distribution costs in
certain organizations within the Company while prioritizing investment in research and development, and sales and marketing in
those organizations within the Company where faster growth is anticipated, such as emerging markets and new technologies.
As of the end of the fourth quarter of fiscal year 2012, the Company identified approximately 1,000 positions for elimination to
be achieved through involuntary and voluntary separation. As of April 26, 2013, the fiscal year 2012 initiative was substantially
complete.
In the fourth quarter of fiscal year 2013, the Company recorded a $10 million reversal of excess restructuring reserves related to
the fiscal year 2012 initiative. This reversal was primarily a result of revisions to particular strategies and certain employees
identified for elimination finding other positions within the Company.
68