XML 31 R13.htm IDEA: XBRL DOCUMENT v3.19.2
Restructuring Charges
 12 Months Ended
Apr. 26, 2019
Restructuring and Related Activities [Abstract]  
Restructuring Charges Restructuring Charges
For fiscal year 2019, the Company recognized $407 million in restructuring charges, net of $17 million of accrual adjustments. For fiscal year 2018, the Company recognized $107 million in restructuring charges, net of $34 million of accrual adjustments, including $96 million in restructuring charges related to the Enterprise Excellence restructuring program and $11 million in restructuring charges, net of $34 million of accrual adjustments, related to the Cost Synergies restructuring program. For fiscal year 2017, the Company recognized $300 million in restructuring charges, net of $68 million of accrual adjustments related to the Cost Synergies restructuring program. Accrual adjustments relate to certain employees identified for termination finding other positions within the Company, cancellations of employee terminations, and employee termination benefits being less than initially estimated.
Enterprise Excellence
In the third quarter of fiscal year 2018, the Company announced its Enterprise Excellence restructuring program, which is expected to leverage the Company's global size and scale, as well as enhance the customer and employee experience, with a focus on three objectives: global operations, functional optimization, and commercial optimization. Primary activities of the restructuring program include integrating and enhancing global manufacturing and supply processes, systems and site presence, enhancing and leveraging global operating models across several enabling functions, and optimizing certain commercial processes, systems, and models.
The Company estimates that, in connection with its Enterprise Excellence restructuring program, it will recognize pre-tax exit and disposal costs and other costs associated with the restructuring program across all segments of approximately $1.6 billion to $1.8 billion, the majority of which are expected to be incurred by the end of fiscal year 2022. Approximately half of the estimated charges are related to employee termination benefits. The remaining restructuring charges are costs associated with the restructuring program, such as salaries for employees supporting the program and consulting expenses. These charges are recognized within restructuring charges, net, cost of products sold, and selling, general, and administrative expense in the consolidated statements of income.
During fiscal year 2019, the Company recognized $424 million in charges, including $91 million recognized within cost of products sold and $118 million recognized within selling, general, and administrative expense in the consolidated statements of income. During fiscal year 2018, the Company recognized $96 million in charges, including $28 million within cost of products sold and $33 million recognized within selling, general, and administrative expense in the consolidated statements of income.
The following table summarizes the activity related to the Enterprise Excellence restructuring program for fiscal years 2019 and 2018:
(in millions)
Employee Termination Benefits
 
Associated Costs(1)
 
Asset
Write-downs(2)
 
Other
Costs
 
Total
April 28, 2017
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Charges
35

 
61

 
—

 
—

 
96

Cash payments
(8
)
 
(59
)
 
—

 
—

 
(67
)
April 27, 2018
27

 
2

 
—

 
—

 
29

Charges
192

 
193

 
17

 
22

 
424

Cash payments
(118
)
 
(186)
 
—

 
(10
)
 
(314
)
Settled non-cash
—

 
—

 
(17
)
 
—

 
(17
)
April 26, 2019
$
101

 
$
9

 
$
—

 
$
12

 
$
122

(1)
Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.
(2)
Recognized within selling, general, and administrative expense in the consolidated statements of income.
Cost Synergies
The cost synergies program related to administrative office optimization, manufacturing and supply chain infrastructure, and certain general and administrative savings was achieved as part of the Covidien plc (Covidien) integration and completed in the third quarter of fiscal year 2018. Restructuring charges incurred throughout the life of the initiative affecting all segments were primarily related to employee termination costs and costs related to manufacturing and facility closures.
The following table summarizes the activity related to the Cost Synergies restructuring program for fiscal years 2019, 2018, and 2017:
(in millions)
Employee
Termination
 Benefits
 
Asset
Write-downs
 
Other
 Costs
 
Total
April 29, 2016
$
213

 
$
—

 
$
37

 
$
250

Charges
287

 
27

 
54

 
368

Cash payments
(179
)
 
—

 
(53
)
 
(232
)
Settled non-cash
—

 
(27
)
 
—

 
(27
)
Accrual adjustments
(60
)
 
—

 
(8
)
 
(68
)
April 28, 2017
261

 
—

 
30

 
291

Charges
25

 
—

 
20

 
45

Cash payments
(132
)
 
—

 
(32
)
 
(164
)
Accrual adjustments
(38
)
 
—

 
4

 
(34
)
April 27, 2018
116

 
—

 
22

 
138

Cash payments
(44
)
 
—

 
(13
)
 
(57
)
Accrual adjustments
(13
)
 
—

 
(4
)
 
(17
)
April 26, 2019
$
59

 
$
—

 
$
5

 
$
64


For fiscal year 2019, the Company recognized no charges and accrual adjustments of $17 million. For fiscal year 2018, the Company recognized $45 million in charges, partially offset by accrual adjustments of $34 million, including $12 million recognized within
cost of products sold and $4 million recognized within selling, general, and administrative expense in the consolidated statements of income.
For fiscal year 2017, the Company recognized $441 million in charges, which included $73 million of incremental defined pension and post-retirement related expenses for employees that accepted voluntary early retirement packages. These costs are not included in the table summarizing the restructuring above, because they are associated with costs that are accounted for under the pension and post-retirement rules. See Note 16 for further discussion on the incremental defined benefit pension and post-retirement related expenses. The charges recognized during 2017 were partially offset by accrual adjustments of $68 million. For fiscal year 2017, asset write-downs included $17 million of property, plant, and equipment impairments. Fiscal year 2017 assets write-downs also included $10 million of inventory write-offs of discontinued product lines recognized within cost of products sold in the consolidated statements of income.