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Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives (Tables)
 6 Months Ended
Jun. 28, 2015
Restructuring and Related Activities [Abstract]  
Schedule of Restructuring and Related Costs
The following table provides the components of costs associated with acquisitions and cost-reduction/productivity initiatives:
 
 
Three Months Ended
 
Six Months Ended
(MILLIONS OF DOLLARS)
 
June 28,
2015

 
June 29,
2014

 
June 28,
2015

 
June 29,
2014

Restructuring charges(a):
 
 

 
 

 
 

 
 

Employee terminations
 
$
34

 
$
17

 
$
65

 
$
47

Asset impairments
 
5

 
13

 
11

 
19

Exit costs
 
4

 
36

 
10

 
40

Total restructuring charges
 
43

 
66

 
85

 
106

Transaction costs(b)
 
1

 
—

 
6

 
—

Pre-integration/integration costs(c)
 
42

 
15

 
54

 
33

Restructuring charges and certain acquisition-related costs
 
86

 
81

 
146

 
139

Additional depreciation––asset restructuring recorded in our condensed consolidated statements of income as follows(d):
 
 

 
 

 
 

 
 

Cost of sales
 
28

 
72

 
45

 
146

Selling, informational and administrative expenses
 
—

 
1

 
—

 
1

Research and development expenses
 
1

 
29

 
2

 
29

Total additional depreciation––asset restructuring
 
28

 
102

 
47

 
176

Implementation costs recorded in our condensed consolidated statements of income as follows(e):
 
 

 
 

 
 

 
 

Cost of sales
 
28

 
22

 
41

 
28

Selling, informational and administrative expenses
 
13

 
38

 
39

 
53

Research and development expenses
 
3

 
16

 
12

 
27

Other (income)/deductions––net
 
1

 
—

 
1

 
—

Total implementation costs
 
45

 
76

 
93

 
108

Total costs associated with acquisitions and cost-reduction/productivity initiatives
 
$
159

 
$
259

 
$
286

 
$
423


(a) 
In the six months ended June 28, 2015, Employee terminations represent the expected reduction of the workforce by approximately 500 employees, mainly in sales.
The restructuring charges for 2015 are associated with the following:
•
For the second quarter of 2015, the Global Innovative Pharmaceutical segment (GIP) ($7 million); the Global Vaccines, Oncology and Consumer Healthcare segment (VOC) ($14 million); the Global Established Pharmaceutical segment (GEP) ($2 million income); Worldwide Research and Development and Medical (WRD/M) ($4 million); manufacturing operations ($14 million); and Corporate ($6 million).
•
For the first six months of 2015, GIP ($19 million); VOC ($27 million); GEP ($8 million); WRD/M ($16 million); manufacturing operations ($8 million income); and Corporate ($24 million).
The restructuring charges for 2014 are associated with the following:
•
For the second quarter of 2014, GIP ($9 million); VOC ($6 million); GEP ($24 million); WRD/M ($8 million); manufacturing operations ($12 million); and Corporate ($7 million).
•
For the first six months of 2014, GIP ($11 million); VOC ($6 million); GEP ($31 million); WRD/M ($9 million); manufacturing operations ($38 million); and Corporate ($11 million).
(b) 
Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures for banking, legal, accounting and other similar services.
(c) 
Pre-integration costs represent external, incremental costs directly related to our pending acquisition with Hospira. 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.
(d) 
Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.
(e) 
Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.
Schedule of Restructuring Reserve by Type of Cost
The following table provides the components of and changes in our restructuring accruals:
(MILLIONS OF DOLLARS)
 
Employee
Termination
Costs

 
Asset
Impairment
Charges

 
Exit Costs

 
Accrual

Balance, December 31, 2014(a)
 
$
1,114

 
$
—

 
$
52

 
$
1,166

Provision
 
65

 
11

 
10

 
85

Utilization and other(b)
 
(197
)
 
(11
)
 
(36
)
 
(244
)
Balance, June 28, 2015(c)
 
$
982

 
$
—

 
$
26

 
$
1,008


(a) 
Included in Other current liabilities ($735 million) and Other noncurrent liabilities ($431 million).
(b) 
Includes adjustments for foreign currency translation.
(c) 
Included in Other current liabilities ($575 million) and Other noncurrent liabilities ($433 million).