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

12 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

Schedule of Costs Associated with Cost-Reduction/Productivity Initiatives and Acquisition Activity

The components of costs incurred in connection with restructuring initiatives, acquisitions and cost-reduction/productivity initiatives follow:

	Year Ended December 31,
(MILLIONS OF DOLLARS)	2013			2012			2011
Restructuring charges and certain acquisition-related costs:
Integration costs(a)	$	21		$	26		$	30
Restructuring charges (benefits)(b):
Employee termination costs	(23		)	49			53
Accelerated depreciation	5			—			—
Asset impairment charges	19			4			—
Exit costs	4			(1		)	1
Total direct	26			78			84
Transaction costs(c)	—			—			2
Integration costs(a)	—			21			41
Restructuring charges(b):
Employee termination costs	—			19			20
Asset impairment charges	—			10			7
Exit costs	—			7			—
Total allocated	—			57			70
Total Restructuring charges and certain acquisition-related costs	26			135			154
Other costs associated with cost-reduction/productivity initiatives:
Additional depreciation associated with asset restructuring––direct(d)	1			11			9
Additional depreciation associated with asset restructuring––allocated(d)	2			13			20
Implementation costs––direct(e)	—			—			3
Implementation costs––allocated(e)	1			9			—
Total costs associated with restructuring, acquisitions and cost-reduction/productivity initiatives	$	30		$	168		$	186

^(a)  Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes, as well as product transfer costs.

^(b)  The restructuring charges (benefits) for the year ended December 31, 2013 are primarily related to the following:

• When we were a business unit of Pfizer, we announced a restructuring plan related to our operations in Europe. In connection with these actions, we recorded a pre-tax charge of $27 million to recognize employee termination costs. As a result of becoming an independent public company (no longer being a majority-owned subsidiary of Pfizer) and related economic consideration, we revisited this restructuring action and decided to no longer implement this restructuring plan. As such, we reversed the existing reserve of $27 million in the second quarter of 2013.

• We recorded asset impairment charges related to one of our manufacturing facilities of $17 million.

• We recorded restructuring charges related to the exiting of certain leased manufacturing and research facilities and recorded employee termination expenses of $2 million, exit costs of $4 million, and accelerated depreciation of $5 million.

The direct restructuring charges (benefits) are associated with the following:

• For the year ended December 31, 2013––EuAfME ($4 million), CLAR ($4 million) and manufacturing/research/corporate ($3 million income).

• For the year ended December 31, 2012—EuAfME ($51 million), CLAR ($3 million), APAC ($1 million income) and manufacturing/research/corporate ($1 million income).

• For the year ended December 31, 2011––U.S. ($2 million), EuAfME ($33 million), CLAR ($2 million), APAC ($2 million income) and manufacturing/research/corporate ($19 million).

^(c)  Transaction costs represent external costs directly related to acquiring businesses and primarily include expenditures for banking, legal, accounting and other similar services.

^(d)  Additional depreciation associated with asset restructuring represents the impact of changes in the estimated lives of assets involved in restructuring actions. In 2013, included in Cost of sales ($1 million) and Selling, general and administrative expenses ($2 million). For 2012, included in Cost of sales ($10 million), Selling, general and administrative expenses ($5 million) and Research and development expenses ($9 million). For 2011, included in Cost of sales ($6 million), Selling, general and administrative expenses ($4 million) and Research and development expenses ($19 million).

^(e)  Implementation costs—allocated represent external, incremental costs directly related to implementing cost reduction/productivity initiatives, and primarily include expenditures related to system and process standardization and the expansion of shared services. Included in Selling, general and administrative expenses.

Schedule of Restructuring and Related Costs

The components of and changes in our direct restructuring accruals follow:

	Employee			Asset
	Termination			Impairment			Accelerated			Exit
(MILLIONS OF DOLLARS)	Costs			Charges			Depreciation			Costs			Accrual
Balance, December 31, 2010	$	90		$	—		$	—		$	11		$	101
Provision/(Benefit)	53			—			—			1			54
Utilization and other(a)	(73		)	—			—			(1		)	(74		)
Balance, December 31, 2011	70			—			—			11			81
Provision/(Benefit)	49			4			—			(1		)	52
Utilization and other(a)	(51		)	(4		)	—			(4		)	(59		)
Balance, December 31, 2012(b)	68			—			—			6			74
Provision/(Benefit)	(23		)	19			5			4			5
Utilization and other(a)	(16		)	—						(4		)	(20		)
Non-cash activity	—			(19		)	(5		)	—			(24		)
Separation adjustment(c)	(14		)	—			—			—			(14		)
Balance, December 31, 2013(b)	$	15		$	—		$	—		$	6		$	21

^(a)  Includes adjustments for foreign currency translation.

^(b)  At December 31, 2013 and 2012, included in Other current liabilities ($13 million and $63 million, respectively) and Other noncurrent liabilities ($8 million and $11 million, respectively).

^(c)  See Note 2B. The Separation, Adjustments Associated with the Separation, Senior Notes Offering, Initial Public Offering and Exchange Offer— Adjustments Associated with the Separation.