Asset Impairment, Restructuring and Other Special Charges (Tables)

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Total Charges Related to Asset Impairment, Restructuring and Other Special Charges

Components of asset impairment, restructuring and other special charges are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Restructuring charges (credits):
Severance and other costs (1)	$	(2)	$	1	$	(9)	$	28
Facility exit costs	1		—		2		—
Acquisition related charges:
Transaction and integration costs (2)	26		30		50		111
Non-cash and other items:
Asset impairment (3)	59		4		59		13
Asset write-down (4)	—		267		28		269
Net periodic benefit cost (credits) (Note 14)	—		(8)		—		(17)
Settlements and other (5)	2		5		2		3
Total expense	$	86	$	299	$	132	$	407

(1)2022 credits primarily related to adjustments resulting from the reversal of severance accruals associated with the November 2021 program. For the three and six months ended June 30, 2021, charges mainly represent employee termination costs for the restructuring program announced and initiated in January 2021, partially offset by $1 million and $14 million, respectively, for the reversal of severance accruals associated with a restructuring program announced and initiated in 2020.

(2)Transaction costs represent external costs directly related to acquiring businesses and primarily include expenditures for banking, legal, accounting and other similar services. Integration costs represent internal and external incremental costs directly related to integrating acquired businesses, including the acquisitions of KindredBio and Bayer Animal Health (e.g., expenditures for consulting, system and process integration, and product transfers), as well as independent company stand-up costs related to the implementation of new systems, programs, and processes.

(3)2022 includes a charge of $59 million related to the expensing of an IPR&D asset with no alternative future use licensed from BexCaFe during the second quarter. See Note 5: Acquisitions, Divestitures and Other Arrangements for further discussion. 2021 represents the impact of adjustments to fair value of property and equipment, IPR&D assets, and marketed products that were subject to product rationalization.

(4)2022 includes the finalization of the write-down charge upon the final sale of the Speke manufacturing site. 2021 represents adjustments recorded to write down assets classified as held for sale to an amount equal to fair value less costs to sell. These charges related to our Shawnee and Speke manufacturing sites. See Note 5: Acquisitions, Divestitures and Other Arrangements for further discussion. Also included are charges recorded to write down assets in Belford Roxo, Brazil; Basel, Switzerland; Cuxhaven, Germany; and Manukau, New Zealand that were classified as held and used to their current fair value. These charges were recorded in connection with announced restructuring programs.

(5)2022 includes a $2 million measurement period adjustment to the charge associated with the settlement of a liability for future royalty and milestone payments triggered in connection with our acquisition of KindredBio. See Note 5: Acquisitions, Divestitures and Other Arrangements for further discussion. For the three and six months ended June 30, 2021, charges mainly represent accounting and advisory fees related to the planned sale of our Shawnee and Speke manufacturing sites, partially offset by a gain recorded on the divestiture of an early-stage IPR&D asset acquired as part of the Bayer Animal Health acquisition.

Summary of Activity in Reserves

The following table summarizes the activity in our reserves established in connection with restructuring activities:

	Severance
Balance at December 31, 2020	$	130
Charges	42
Reserve adjustments	(14)
Cash paid	(70)
Balance at June 30, 2021	$	88
Balance at December 31, 2021	$	126
Reserve adjustments	(9)
Cash paid	(63)
Balance at June 30, 2022	$	54