Restructuring Program

12 Months Ended

Dec. 31, 2019

Restructuring and Related Activities [Abstract]

Note 8. Restructuring Program

On May 6, 2014, our Board of Directors approved a $3.5 billion 2014-2018 restructuring program and up to $2.2 billion of capital expenditures. On August 31, 2016, our Board of Directors approved a $600 million reallocation between restructuring program cash costs and capital expenditures so the $5.7 billion program consisted of approximately $4.1 billion of restructuring program costs ($3.1 billion cash costs and $1.0 billion non-cash costs) and up to $1.6 billion of capital expenditures. On September 6, 2018, our Board of Directors approved an extension of the restructuring program through 2022, an increase of $1.3 billion in the program charges and an increase of $700 million in capital expenditures. The total $7.7 billion program now consists of $5.4 billion of program charges ($4.1 billion of cash costs and $1.3 billion of non-cash costs) and total capital expenditures of $2.3 billion to be incurred over the life of the program. The current restructuring program, as increased and extended by these actions, is now called the Simplify to Grow Program.

The primary objective of the Simplify to Grow Program is to reduce our operating cost structure in both our supply chain and overhead costs. The program covers severance as well as asset disposals and other manufacturing and procurement-related one-time costs. Since inception, we have incurred total restructuring and related implementation charges of $4.3 billion related to the Simplify to Grow Program. We expect to incur the program charges by year-end 2022.

Restructuring Costs:

The Simplify to Grow Program liability activity for the years ended December 31, 2019 and 2018 was:



	Severance and related costs			Asset Write-downs			Total
	(in millions)
Liability Balance, January 1, 2018	$	464		$	—		$	464
Charges ⁽¹⁾	253			63			316
Cash spent	(310		)	—			(310		)
Non-cash settlements/adjustments	(4		)	(63		)	(67		)
Currency	(30		)	—			(30		)
Liability Balance, December 31, 2018	$	373		$	—		$	373
Charges ⁽¹⁾	125			51			176
Cash spent	(162		)	—			(162		)
Non-cash settlements/adjustments ⁽²⁾	(31		)	(51		)	(82		)
Currency	(4		)	—			(4		)
Liability Balance, December 31, 2019	$	301		$	—		$	301


(1)	Includes settlement losses of $5 million in 2019 and $5 million in 2018 recorded within benefit plan non-service income on our consolidated statements of earnings.


(2)	We adopted the new lease accounting ASU as of January 1, 2019. The ASU requires recording onerous lease liabilities netted with right of use assets. Therefore, during the first quarter of 2019, we reclassified onerous lease liabilities that totaled $23 million as of March 31, 2019, from accrued liabilities and other accrued liabilities to operating lease right of use assets.

We recorded restructuring charges of $176 million in 2019, $316 million in 2018 and $535 million in 2017 within asset impairment and exit costs and benefit plan non-service income. We spent $162 million in 2019 and $310 million in 2018 in cash severance and related costs. We also recognized non-cash pension settlement losses (See Note 11, Benefit Plans), non-cash asset write-downs (including accelerated depreciation and asset impairments) and other non-cash adjustments (including a transfer of onerous lease liabilities to operating lease ROU assets during the first quarter of 2019) totaling $82 million in 2019 and $67 million in 2018. At December 31, 2019, $275 million of our net restructuring liability was recorded within other current liabilities and $26 million was recorded within other long-term liabilities.

Implementation Costs:

Implementation costs are directly attributable to restructuring activities; however, they do not qualify for special accounting treatment as exit or disposal activities. We believe the disclosure of implementation costs provides readers of our financial statements with more information on the total costs of our Simplify to Grow Program. Implementation costs primarily relate to reorganizing our operations and facilities in connection with our supply chain reinvention program and other identified productivity and cost saving initiatives. The costs include incremental expenses related to the closure of facilities, costs to terminate certain contracts and the simplification of our information systems. Within our continuing results of operations, we recorded implementation costs of $272 million in 2019, $315 million in 2018 and $257 million in 2017. We recorded these costs within cost of sales and general corporate expense within selling, general and administrative expenses.

Restructuring and Implementation Costs in Operating Income:

During 2019, 2018 and 2017, and since inception of the Simplify to Grow Program, we recorded the following restructuring and implementation costs within segment operating income and earnings before income taxes:



	Latin America		AMEA		Europe		North America⁽¹⁾		Corporate⁽²⁾		Total
	(in millions)
For the Year Ended December 31, 2019
Restructuring Costs	$	24	$	18	$	105	$	16	$	13	$	176
Implementation Costs	50		38		103		52		29		272
Total	$	74	$	56	$	208	$	68	$	42	$	448
For the Year Ended December 31, 2018
Restructuring Costs	$	63	$	69	$	132	$	32	$	20	$	316
Implementation Costs	67		39		73		79		57		315
Total	$	130	$	108	$	205	$	111	$	77	$	631
For the Year Ended December 31, 2017
Restructuring Costs	$	93	$	140	$	195	$	84	$	23	$	535
Implementation Costs	43		43		68		58		45		257
Total	$	136	$	183	$	263	$	142	$	68	$	792
Total Project ⁽³⁾
Restructuring Costs	$	517	$	535	$	1,076	$	469	$	129	$	2,726
Implementation Costs	269		206		448		384		307		1,614
Total	$	786	$	741	$	1,524	$	853	$	436	$	4,340


(1)	During 2017-2019, our North America region implementation costs included incremental costs that we incurred related to renegotiating collective bargaining agreements that expired in February 2016 for eight U.S. facilities and related to executing business continuity plans for the North America business.


(2)	Benefit plan non-service income amounts associated with restructuring program activities that are no longer recorded in segment operating income are included in the Corporate column in the table above for all periods presented. The Corporate column also includes minor adjustments for pension settlement losses and rounding.

(3)

Includes all charges recorded since program inception on May 6, 2014 through December 31, 2019.