Restructuring Charges, Net

Fiscal Year 2015 Initiative

In the fourth quarter of fiscal year 2015, the Company recorded a $248 million restructuring charge, which consisted of employee termination costs of $213 million, asset write-downs of $28 million, contract termination costs of $6 million, and other related costs of $1 million. Of the $28 million of asset write-downs, $15 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 2015 initiative primarily relates to the Covidien acquisition, strategic alignment of certain manufacturing processes, certain inventory rationalizations, and certain program cancellations.

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.

In fiscal year 2015, the Company recorded a reversal of excess restructuring reserves related to the fiscal year 2014 initiative of $17 million. The reversal was primarily a result of result of revisions to particular strategies and certain employees identified for elimination finding other positions within the Company.

A summary of the activity related to the fiscal year 2014 initiative is presented below:



	Fiscal Year 2014 Initiative
(in millions)	Employee Termination Costs			Asset Write-downs			Other Costs			Total
Balance as of April 26, 2013	$	—		$	—		$	—		$	—
Restructuring charges	65			26			25			116
Payments/write-downs	(1		)	(26		)	(14		)	(41		)
Balance as of April 25, 2014	$	64		$	—		$	11		$	75
Restructuring charges	1			9			28			38
Payments/write-downs	(44		)	(9		)	(34		)	(87		)
Reversal of excess accrual	(14		)	—			(3		)	(17		)
Balance as of April 24, 2015	$	7		$	—		$	2		$	9

Fiscal Year 2013 Initiative

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. 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 cost of products sold in the consolidated statements of income. In the first quarter of fiscal year 2014, the Company recorded an $18 million restructuring charge, which was the final charge related to the fiscal year 2013 initiative and consisted primarily of contract termination costs of $14 million and other related costs of $4 million. As of April 24, 2015, the fiscal year 2013 initiative was substantially complete.

In fiscal year 2015 and 2014, the Company recorded a reversal of excess restructuring reserves related to the fiscal year 2013 initiative of $10 million and $46 million, respectively. The reversal was primarily a result of revisions to particular strategies and certain employees identified for elimination finding other positions within the Company.