Medtronic 2015 Annual Report Download - page 64

Special (Gains) Charges, Net During fiscal year 2015, we recognized special gains of $138 million, which consisted of a $41
million gain on the sale of a product line in the Surgical Technologies division and a $97 million gain on the sale of an equity
method investment.
During fiscal years 2015 and 2014, consistent with our commitment to improving the health of people and communities
throughout the world, we made charitable contributions of $100 million and $40 million, respectively, to the Medtronic
Foundation, which is a related party non-profit organization.
During fiscal year 2013, there were no special (gains) charges, net.
Restructuring Charges, Net We incur restructuring charges in connection with our cost-reduction and productivity initiatives
or with acquisitions when we implement plans to restructure and integrate the acquired operations. Amounts recognized as
restructuring charges result from a series of judgments and estimates about future events and uncertainties and rely heavily on
assumptions upon implementation of the initiative programs. Restructuring programs will affect the comparability of our
operating results between periods. Currently, we have several initiative programs in various states of progress with total
restructuring liabilities of $233 million and $99 million at April 24, 2015 and April 25, 2014, respectively. During fiscal year
2015, we incurred $286 million in restructuring charges, which were partially offset by a $34 million reversal of excess
restructuring reserves.
We began our restructuring program related to the acquisition of Covidien in the fourth quarter of fiscal year 2015. We
anticipate approximately $850 million in cost synergies 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 as
restructuring programs are finalized. Restructuring charges are expected to be primarily related to employee termination costs
and costs related to manufacturing/building site closures. No assurance can be provided that such cost synergies will be
achieved on such timing or at all. See “Item 1A. Risk Factors. We may not realize all of the anticipated benefits of the
Transactions or those benefits may take longer to realize than expected. We may also encounter significant unexpected
difficulties in integrating Medtronic, Inc. and Covidien.”
For additional information, see Note 3 to the consolidated financial statements in “Item 8. Financial Statements and
Supplementary Data” in this Annual Report on Form 10-K.
Certain Litigation Charges, Net We classify material litigation charges and gains recognized as certain litigation charges,
net. During fiscal year 2015, we recorded certain litigation charges, net of $42 million, which primarily relates to additional
accounting charges for probable and reasonably estimable INFUSE product liability litigation, which were recorded as a result
of additional filed and unfiled claims, and other matters. See Note 16 to the consolidated financial statements in “Item 8.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information.
During fiscal year 2014, we recorded certain litigation charges, net of $770 million, which primarily included the global patent
settlement agreement with Edwards of $589 million and accounting charges for probable and reasonably estimable INFUSE
product liability litigation of $140 million.
During fiscal year 2013, we recorded certain litigation charges, net of $245 million related to probable and reasonably estimated
damages resulting from patent litigation with Edwards.
Acquisition-Related Items During fiscal year 2015, we recorded charges from acquisition-related items of $550 million,
primarily related to costs incurred in connection with the Covidien acquisition. The charges incurred in connection with the
Covidien acquisition include $275 million of professional services and integration costs, $189 million of accelerated or
incremental stock compensation expense, and $69 million of incremental officer and director excise tax.
During fiscal year 2014, we recorded net charges from acquisition-related items of $117 million, primarily including IPR&D
and long-lived asset impairment charges of $236 million related to the Ardian, Inc. acquisition recorded in the third quarter of
fiscal year 2014. The impairment charges were partially offset by income of $138 million related to the change in fair value of
contingent consideration associated with acquisitions subsequent to April 29, 2009.
During fiscal year 2013, we recorded net income from acquisition-related items of $49 million, primarily including income of
$62 million related to the change in fair value of contingent consideration associated with acquisitions subsequent to April 29,
2009. The change in fair value of contingent consideration primarily related to the reduction in fair value of contingent
consideration associated with Ardian. Additionally, we recorded transaction-related expenses of $13 million.
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