Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives (Tables)

12 Months Ended

Dec. 31, 2020

Restructuring and Related Activities [Abstract]

Schedule Providing Components of Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives


The following summarizes acquisitions and cost-reduction/productivity initiatives costs and credits:
	Year Ended December 31,
(MILLIONS OF DOLLARS)		2020		2019		2018
Restructuring charges/(credits):
Employee terminations		$	474	$	108	$	473
Asset impairments(a)		88		69		290
Exit costs/(credits)		(6)		50		33
Restructuring charges(b)		556		227		796
Transaction costs(c)		10		63		1
Integration costs and other(d)		34		311		260
Restructuring charges and certain acquisition-related costs		600		601		1,058
Net periodic benefit costs recorded in Other (income)/deductions––net		39		23		144
Additional depreciation––asset restructuring recorded in our consolidated statements of income as follows(e):
Cost of sales		23		29		36
Selling, informational and administrative expenses		—		3		2
Research and development expenses		(3)		8		—
Total additional depreciation––asset restructuring		19		40		38

Implementation costs recorded in our consolidated statements of income as follows(f):
Cost of sales		40		61		75
Selling, informational and administrative expenses		197		73		71
Research and development expenses		1		22		39

Total implementation costs		238		156		186
Total costs associated with acquisitions and cost-reduction/productivity initiatives		$	896	$	820	$	1,426

(a)2018 charges are largely for cost-reduction initiatives not associated with acquisitions.

(b)Represents acquisition-related costs ($192 million credit in 2019, and $37 million charge in 2018) and cost reduction initiatives ($556 million charge in 2020, $418 million charge in 2019, and $759 million charge in 2018). 2020 charges mainly represent employee termination costs for our Transforming to a More Focused Company cost-reduction program. 2019 restructuring charges mainly represent employee termination costs for cost-reduction and productivity initiatives, partially offset by the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of an IRS audit for multiple tax years (see Note 5B). 2018 charges were primarily related to employee termination costs and asset write downs. The employee termination costs for

2019 and 2018 were primarily for our improvements to operational effectiveness as part of the realignment of our business structure, and for 2019, also includes employee termination costs for the Transforming to a More Focused Company cost-reduction program.

(c)Represents external costs for banking, legal, accounting and other similar services.

(d)Represents external, incremental costs directly related to integrating acquired businesses, such as expenditures for consulting and the integration of systems and processes, and certain other qualifying costs. 2020 costs primarily related to our acquisition of Array. 2019 costs mainly related to our acquisitions of Array, including $157 million in payments to Array employees for the fair value of previously unvested stock options that was recognized as post-closing compensation expense (see Note 2A), and Hospira. 2018 costs mostly related to our acquisition of Hospira.

(e)Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.

(f)Represents external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.

Schedule of Restructuring Reserve by Type of Cost


The following summarizes the components and changes in restructuring accruals:
(MILLIONS OF DOLLARS)	Employee Termination Costs		Asset Impairment Charges		Exit Costs		Accrual
Balance, January 1, 2019	$	1,113	$	—	$	49	$	1,161
Provision(a)	108		69		50		227
Utilization and other(b)	(450)		(69)		(53)		(572)
Balance, December 31, 2019(c)	770		—		46		816
Provision	474		88		(6)		556
Utilization and other(b)	(462)		(88)		(25)		(575)
Balance, December 31, 2020(d)	$	782	$	—	$	15	$	798

(a)Includes the reversal of certain accruals related to our acquisition of Wyeth upon the favorable settlement of an IRS audit for multiple tax years. See Note 5D.

(b)Includes adjustments for foreign currency translation.

(c)Included in Other current liabilities ($641 million) and Other noncurrent liabilities ($175 million).

(d)Included in Other current liabilities ($628 million) and Other noncurrent liabilities ($169 million).