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Restructuring
 9 Months Ended
Sep. 30, 2022
Restructuring and Related Activities [Abstract]  
Restructuring

5. Restructuring

 

In December 2021, we initiated a new global restructuring program (the “2021 Restructuring Plan”) to reorganize our operations in preparation for the planned spinoff of ZimVie with an objective of reducing costs. The 2021 Restructuring Plan is expected to result in total pre-tax restructuring charges of approximately $220 million and reduce gross annual pre-tax operating expenses by approximately $190 million by the end of 2024 as program benefits are realized. The pre-tax restructuring charges consist of employee termination benefits; contract terminations for sales agents; and other charges, such as consulting fees and project management expenses. The restructuring charges incurred in the three and nine-month periods ended September 30, 2022 primarily related to employee termination benefits, sales agent contract terminations, consulting fees and project management expenses. The following table summarizes the liabilities recognized related to the 2021 Restructuring Plan (in millions):

 

 

 

Employee

 

 

 

 

 

 

 

 

 

 

 

 

Termination

 

 

Contract

 

 

 

 

 

 

 

 

 

Benefits

 

 

Terminations

 

 

Other

 

 

Total

 

Expenses incurred in the three months ended September 30, 2022

 

$

10.4

 

 

$

10.7

 

 

$

1.4

 

 

$

22.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

$

19.5

 

 

$

2.3

 

 

$

10.3

 

 

$

32.1

 

Expenses incurred in the nine months ended September 30, 2022

 

 

41.0

 

 

 

39.2

 

 

 

12.6

 

 

 

92.8

 

Cash payments

 

 

(48.3

)

 

 

(22.7

)

 

 

(20.1

)

 

 

(91.1

)

Foreign currency exchange rate changes

 

 

(0.2

)

 

 

(0.1

)

 

 

-

 

 

 

(0.3

)

Balance, September 30, 2022

 

$

12.0

 

 

$

18.7

 

 

$

2.8

 

 

$

33.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense incurred since the start of the 2021 Restructuring Plan

 

$

60.5

 

 

$

41.5

 

 

$

22.9

 

 

$

124.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense estimated to be recognized for the 2021 Restructuring Plan

 

$

70.0

 

 

$

100.0

 

 

$

50.0

 

 

$

220.0

 

 

In December 2019, we initiated a global restructuring program (the “2019 Restructuring Plan”) with an objective of reducing costs to allow us to further invest in higher priority growth opportunities. The 2019 Restructuring Plan is expected to result in total pre-tax restructuring charges of approximately $350 million to $400 million and reduce gross annual pre-tax operating expenses by approximately $180 million to $280 million by the end of 2023 as program benefits are realized. The pre-tax restructuring charges consist of employee termination benefits; contract terminations for facilities and sales agents; and other charges, such as consulting fees, project management and relocation costs. The restructuring charges incurred in the three and nine-month periods ended September 30, 2022 primarily related to distributor contract terminations, consulting and project management. The following table summarizes the liabilities recognized related to the 2019 Restructuring Plan (in millions):

 

 

 

Employee

 

 

 

 

 

 

 

 

 

 

 

 

Termination

 

 

Contract

 

 

 

 

 

 

 

 

 

Benefits

 

 

Terminations

 

 

Other

 

 

Total

 

Expenses incurred in the three months ended September 30, 2022

 

$

1.8

 

 

$

0.1

 

 

$

6.6

 

 

$

8.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

$

14.8

 

 

$

16.5

 

 

$

-

 

 

$

31.3

 

Expenses incurred in the nine months ended September 30, 2022

 

 

1.5

 

 

 

1.3

 

 

 

26.2

 

 

 

29.0

 

Cash payments

 

 

(2.9

)

 

 

(6.6

)

 

 

(12.4

)

 

 

(21.9

)

Foreign currency exchange rate changes

 

 

(2.3

)

 

 

(0.9

)

 

 

(1.0

)

 

 

(4.2

)

Balance, September 30, 2022

 

$

11.1

 

 

$

10.3

 

 

$

12.8

 

 

$

34.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense incurred since the start of the 2019 Restructuring Plan

 

$

80.7

 

 

$

35.6

 

 

$

120.7

 

 

$

237.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expense estimated to be recognized for the 2019 Restructuring Plan

 

$

160.0

 

 

$

35.0

 

 

$

180.0

 

 

$

375.0

 

 

We do not include restructuring charges in the operating profit of our reportable segments.

In our condensed consolidated statement of earnings, we report restructuring charges in our “Restructuring and other cost reduction initiatives” financial statement line item. We report the expenses for other cost reduction initiatives with restructuring

expenses because these activities also have the goal of reducing costs across the organization. However, since the cost reduction initiative expenses are not considered restructuring, they have been excluded from the amounts presented in this note.