Asset Impairment, Restructuring and Other Special Charges

6 Months Ended

Jun. 30, 2024

Restructuring and Related Activities [Abstract]

Asset Impairment, Restructuring and Other Special Charges

Note 5. Asset Impairment, Restructuring and Other Special Charges

In recent years, we have incurred substantial costs associated with restructuring programs and cost-reduction initiatives designed to achieve a flexible and competitive cost structure. Restructuring activities have primarily included charges associated with product, facility and business rationalizations and workforce reductions. We have also incurred costs associated with executing acquisition, divestiture and other significant transactions and related integration and/or separation activities. Components of asset impairment, restructuring and other special charges were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Restructuring charges(1)	$	4	$	—	$	43	$	—
Acquisition and divestiture-related charges(2)	10		35		17		75
Non-cash and other items:
Asset impairments(3)	61		—		61		—
Other	5		—		5		—
Total expense	$	80	$	35	$	126	$	75

(1)Restructuring charges in 2024 primarily related to expected cash-based severance costs associated with a restructuring program approved and announced in February 2024 intended to reallocate resources by shifting international resources from farm animal to pet health. This restructuring program also resulted in changes in how we operate in and sell into the Argentina market, among others.

(2)Acquisition and divestiture-related charges in 2024 consisted of transaction costs directly related to the recent divestiture of our aqua business (see Note 4. Acquisitions, Divestitures and Other Arrangements for further information). Acquisition and divestiture-related charges

in 2023 primarily represented costs associated with the implementation of new systems, programs and processes due to the integration of Bayer Animal Health.

(3)Asset impairments principally reflected the write-off of our IL-4R IPR&D asset ($53 million), which was acquired from Kindred Biosciences, Inc. in 2021. In June 2024, we completed required studies for IL-4R, and while no adverse events were reported, the performance of the product did not meet efficacy expectations to attain commercial viability. As such, future research and development activities were terminated and the IPR&D asset was written-off.

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

Balance at December 31, 2023	$	7
Charges	43
Cash paid	(20)
Balance at June 30, 2024	$	30

Timing of when the restructuring reserve obligations are expected to be paid can vary due to certain country-specific negotiations and regulations. Of the total reserve, $21 million is included within other current liabilities on our condensed consolidated balance sheet at June 30, 2024, with the remainder included within other noncurrent liabilities.