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

12 Months Ended

Dec. 31, 2020

Restructuring and Related Activities [Abstract]

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

n connection with our cost-reduction/productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems. In connection with our acquisition activity, we typically incur costs and charges associated with executing the transactions, integrating the acquired operations, which may include expenditures for consulting and the integration of systems and processes, product transfers and restructuring the consolidated company, which may include charges related to employees, assets and activities that will not continue in the consolidated company. All operating functions can be impacted by these actions, including sales and marketing, manufacturing and R&D, as well as functions such as business technology, shared services and corporate operations.

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

	Year Ended December 31,
(MILLIONS OF DOLLARS)	2020		2019		2018
Restructuring charges and certain acquisition-related costs:
Integration costs(a)	$	17	$	18	$	21
Transaction costs(b)	—		—		21
Restructuring charges(c)(d):
Employee termination costs/(reversals)	8		33		25
Exit costs	—		—		1
Total Restructuring charges and certain acquisition-related costs	$	25	$	51	$	68

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

(c)    The restructuring charges for the year ended December 31, 2020 are primarily related to CEO transition-related costs and other cost-reduction and productivity initiatives.

    The restructuring charges for the year ended December 31, 2019 are primarily related to the acquisition of Abaxis and CEO transition-related costs.

    The restructuring charges for the year ended December 31, 2018 are primarily related to:

•employee termination costs of $7 million in Europe as a result of initiatives to better align our organizational structure;

•employee termination costs of $21 million related to the acquisition of Abaxis; and

•a net reversal of employee termination costs of $3 million, and exit costs of $1 million as a result of our operational efficiency initiative and supply network strategy initiative launched in 2015.

(d)    The restructuring charges are associated with the following:

•For the year ended December 31, 2020, Manufacturing/research/corporate of $8 million.

•For the year ended December 31, 2019, International of $2 million, and Manufacturing/research/corporate of $31 million.

•For the year ended December 31, 2018, International of $7 million, and Manufacturing/research/corporate of $19 million.

The components of, and changes in, our restructuring accruals are as follows:

	Employee
	Termination		Exit
(MILLIONS OF DOLLARS)	Costs		Costs		Accrual
Balance, December 31, 2017	$	41	$	—	$	41
Provision	25		1		26
Utilization and other(a)	(21)		(1)		(22)
Balance, December 31, 2018	$	45	$	—	$	45
Provision	33		—		33
Utilization and other(a)	(33)		—		(33)
Balance, December 31, 2019(b)	$	45	$	—	$	45
Provision	8		—		8
Utilization and other(a)	(32)		—		(32)
Balance, December 31, 2020(b)	$	21	$	—	$	21

(a)    Includes adjustments for foreign currency translation.

(b)    At December 31, 2020 and 2019, included in Accrued Expenses ($6 million and $23 million, respectively) and Other noncurrent liabilities ($15 million and $22 million, respectively).