Restructuring

9 Months Ended

Jan. 24, 2020

Restructuring and Related Activities [Abstract]

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 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 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.

For the three and nine months ended January 24, 2020, the Company recognized charges of $97 million and $328 million, respectively. Additionally, the Company incurred accrual adjustments of $13 million for the nine months ended January 24, 2020, related to certain employees identified for termination finding other positions within Medtronic. For the three and nine months ended January 24, 2020, charges included $50 million and $117 million, respectively, recognized within cost of products sold and $34 million and $111 million, respectively, recognized within selling, general, and administrative expense in the consolidated statements of income.

For the three and nine months ended January 25, 2019, the Company recognized charges of $69 million and $264 million, respectively. Additionally, the Company incurred accrual adjustments of $3 million and $8 million for the three and nine months ended January 25, 2019, respectively, related to certain employees identified for termination finding other positions within Medtronic. For the three and nine months ended January 25, 2019, charges included $21 million and $58 million,

respectively, recognized within cost of products sold and $19 million and $86 million, respectively, 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 the nine months ended January 24, 2020:


(in millions)	Employee Termination Benefits		Associated Costs⁽¹⁾		Asset Write-Downs⁽²⁾		Other Costs		Total
April 26, 2019	$	101	$	9	$	—	$	12	$	122
Charges	91		223		6		8		328
Cash payments	(118)		(223)		—		(8)		(349)
Settled non-cash	—		—		(6)		—		(6)
Accrual adjustments	(5)		—		—		(8)		(13)
January 24, 2020	$	69	$	9	$	—	$	4	$	82

(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 cost of products sold in the consolidated statements of income.