Restructuring and Related Implementation Charges

12 Months Ended

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

Restructuring and Related Implementation Charges

On January 27, 2022, the Board approved a targeted productivity program (the “2022 Global Productivity Initiative”). The program is intended to reallocate resources towards the Company’s strategic priorities and faster growth businesses, drive efficiencies in the Company’s operations and streamline the Company’s supply chain to reduce structural costs.

Implementation of the 2022 Global Productivity Initiative, which is expected to be substantially completed by mid-year 2024, is estimated to result in cumulative pre-tax charges, once all phases are approved and implemented, in the range of $200 to $240 ($170 to $200 aftertax), which is currently estimated to be comprised of the following: employee-related costs, including severance, pension and other termination benefits (80%); asset-related costs, primarily accelerated depreciation and asset write-downs (10%); and other charges (10%), which include contract termination costs, consisting primarily of implementation-related charges resulting directly from exit activities and the implementation of new strategies. It is estimated that approximately 80% to 90% of the charges will result in cash expenditures.

It is expected that the cumulative pretax charges, once all projects are approved and implemented, will relate to initiatives undertaken in North America (5%), Latin America (10%), Europe (45%), Asia Pacific (5%), Africa/Eurasia (10%), Hill’s Pet Nutrition (10%) and Corporate (15%).

For the twelve months ended December 31, 2022, charges resulting from the 2022 Global Productivity Initiative are reflected in the income statement as follows:


	Twelve Months Ended December 31,
		2022

Selling, general and administrative expenses		5
Other (income) expense, net		90
Non-service related postretirement costs		15
Total 2022 Global Productivity Initiative charges, pretax		$	110

Total 2022 Global Productivity Initiative charges, aftertax		$	87

Restructuring and related implementation charges in the preceding table are recorded in the Corporate segment as these initiatives are predominantly centrally directed and controlled and are not included in internal measures of segment operating performance. Total charges incurred for the 2022 Global Productivity Initiative relate to initiatives undertaken by the following reportable operating segments:


	Twelve Months Ended December 31,
	2022
North America	11	%
Latin America	18	%
Europe	19	%
Asia Pacific	8	%
Africa/Eurasia	11	%
Hill's Pet Nutrition	11	%
Corporate	22	%
Total	100	%

The following table summarizes the activity for the restructuring and related implementation charges discussed above and the related accruals:


	Twelve Months Ended December 31,
	Employee-Related Costs		Incremental Depreciation		Asset Impairments		Other		Total
Balance at December 31, 2021	$	—	$	—	$	—	$	—	$	—
Charges	102		—		1		7		110
Cash Payments	(53)		—		—		(4)		(57)
Charges against assets	(15)		—		—		—		(15)
Foreign exchange	(4)		—		—		—		(4)
Balance at December 31, 2022	$	30	$	—	$	1	$	3	$	34

Employee-Related Costs primarily include severance and other termination benefits and are calculated based on long-standing benefit practices, written severance policies, local statutory requirements and, in certain cases, voluntary termination arrangements. Employee-Related Costs also include pension enhancements of $15 for the twelve months ended December 31, 2022, which are reflected as Charges against assets within Employee-Related Costs in the preceding tables as the corresponding balance sheet amounts are reflected as a reduction of pension assets or an increase in pension liabilities.