On January 27, 2022, the Company’s Board of Directors (the “Board”) approved a targeted productivity program (the “2022 Global Productivity Initiative”). All initiatives under the program have been implemented as of the third quarter of 2024 and the Company expects to incur the remaining charges by the end of 2024. The 2022 Global Productivity Initiative resulted in the reallocation of resources towards the Company’s strategic priorities and faster growth businesses, efficiencies in the Company’s operations and the streamlining of its supply chain to reduce structural costs.

Total pretax charges from the implementation of the 2022 Global Productivity Initiative are expected to be approximately $225 ($180 aftertax), once all the charges are recorded, which is comprised of the following categories: employee-related costs, including severance, pension and other termination benefits (80%); asset-related costs, primarily accelerated depreciation and asset write-downs (5%); and other charges (15%), which include contract termination costs, consisting primarily of implementation-related charges resulting directly from exit activities and the implementation of new strategies. It is expected that approximately 80% of the charges will result in cash expenditures.

For the three months ended September 30, 2024, charges resulting from the 2022 Global Productivity Initiative were $15 pretax ($13 aftertax). For the three months ended September 30, 2023, charges resulting from the 2022 Global Productivity Initiative were $2 pretax ($2 aftertax).

For the nine months ended September 30, 2024 and September 30, 2023, charges resulting from the 2022 Global Productivity Initiative are reflected in the income statement as follows:


	Nine Months Ended September 30,
	2024		2023
Gross Profit	$	19	$	1
Selling, general and administrative expenses	4		2
Other (income) expense, net	54		22
Non-service related postretirement costs	—		4
Total 2022 Global Productivity Initiative charges, pretax	$	77	$	29

Total 2022 Global Productivity Initiative charges, aftertax	$	67	$	23

Restructuring and related implementation charges were 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 and Corporate:


	Nine Months Ended September 30,				Program-to-date Accumulated Charges
	2024		2023
North America(1)	3	%	15	%	9	%
Latin America	—	%	1	%	9	%
Europe(1)	88	%	19	%	43	%
Asia Pacific	—	%	21	%	7	%
Africa/Eurasia	—	%	10	%	6	%
Hill's Pet Nutrition	7	%	14	%	12	%
Corporate	2	%	20	%	14	%
Total	100	%	100	%	100	%

(1) The Company has recast its historical geographic segment information to conform to the reporting structure effective as of July 1, 2024. The results of the skin health business previously reported within the Europe reportable operating segment are reported with the other skin health businesses in the North America reportable operating segment. See Note 10, Segment Information for additional details.

Since the inception of the 2022 Global Productivity Initiative, the Company has incurred cumulative pretax charges of $220 ($178 aftertax) in connection with the implementation of various projects as follows:


	Cumulative Charges
	as of September 30, 2024
Employee-Related Costs	$	175
Incremental Depreciation	13
Asset Impairments	1
Other	31
Total	$	220

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


	Nine Months Ended September 30, 2024
	Employee-Related Costs		Incremental Depreciation		Asset Impairments		Other		Total
Balance at December 31, 2023	$	10	$	—	$	—	$	1	$	11
Charges	49		13		—		15		77
Cash Payments	(13)		—		—		(10)		(23)
Charges against assets	—		(13)		—		—		(13)
Foreign exchange	(1)		—		—		—		(1)
Balance at September 30, 2024	$	45	$	—	$	—	$	6	$	51

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 which are reflected as Charges against assets within Employee-Related Costs in the preceding table as the corresponding balance sheet amounts are

reflected as a reduction of pension assets or an increase in pension liabilities. For the nine months ended September 30, 2024, there were no pension enhancements included in Charges against assets within Employee-Related Costs.

Incremental Depreciation is recorded to reflect changes in useful lives and estimated residual values for long-lived assets that will be taken out of service prior to the end of their normal service period. Asset Impairments are recorded to write down inventories and assets held for sale or disposal to their fair value based on amounts expected to be realized. Charges against assets within Asset Impairments are net of cash proceeds pertaining to the sale of certain assets.