BUSINESS OPTIMIZATION CHARGES

3 Months Ended

Mar. 31, 2024

Restructuring and Related Activities [Abstract]

In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts include restructuring the organization, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. The related costs of those actions consisted primarily of employee termination costs, implementation costs, contract termination costs, and asset impairments. We currently expect to incur additional pre-tax costs, primarily related to implementation of business optimization programs, of approximately $15 million through the completion of initiatives that are currently underway. We continue to pursue cost savings initiatives, including those related to our newly implemented operating model, intended to simplify and streamline our operations, and to the extent further cost savings opportunities are identified, we would incur additional restructuring charges and costs to implement business optimization programs in future periods.

During the three months ended March 31, 2024 and 2023, we recorded the following charges related to business optimization programs.


	Three Months Ended March 31,
(in millions)	2024		2023
Restructuring charges	$	47	$	110
Costs to implement business optimization programs	10		24

Total business optimization charges	$	57	$	134

For segment reporting purposes, business optimization charges are unallocated expenses.

Costs to implement business optimization programs for the three months ended March 31, 2024 and 2023, respectively, consisted primarily of external consulting and transition costs, including employee compensation and related costs. These costs were primarily included within cost of sales and SG&A expense.

During the three months ended March 31, 2024 and 2023, we recorded the following restructuring charges.


	Three months ended March 31, 2024
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	5	$	15	$	16	$	36
Contract termination and other costs	1		5		—		6
Asset impairments	5		—		—		5
Total restructuring charges	$	11	$	20	$	16	$	47


	Three months ended March 31, 2023
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	17	$	63	$	7	$	87
Contract termination and other costs	3		—		—		3
Asset impairments	12		8		—		20
Total restructuring charges	$	32	$	71	$	7	$	110

For the three months ended March 31, 2024, our most significant restructuring actions, reflecting $24 million of the restructuring charges in the table above, were related to a program to centralize certain of our R&D activities into a new location and to our recent implementation of a new operating model intended to simplify and streamline our operations.

For the three months ended March 31, 2023, our most significant restructuring action, reflecting $78 million of the restructuring charges in the table above, was related to the implementation of our new operating model.

The following table summarizes activity in the liability related to our restructuring initiatives.


(in millions)
Liability balance as of December 31, 2023	$	128
Charges	42
Payments	(35)

Currency translation	1
Liability balance as of March 31, 2024	$	136

Substantially all of our restructuring liabilities as of March 31, 2024 relate to employee termination costs, with the remaining liabilities attributable to contract termination costs. Substantially all of the cash payments for those liabilities are expected to be disbursed by the end of 2024.