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Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives (Tables)
 12 Months Ended
Dec. 31, 2015
Restructuring and Related Activities [Abstract]  
Schedule Providing Components of Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
The following table provides the components of costs associated with acquisitions and cost-reduction/productivity initiatives:
 
 
Year Ended December 31,
(MILLIONS OF DOLLARS)
 
2015

 
2014

 
2013

Restructuring charges(a):
 
 
 
 
 
 
Employee terminations
 
$
489

 
$
68

 
$
805

Asset impairments
 
254

 
45

 
165

Exit costs
 
68

 
58

 
68

Total restructuring charges
 
811

 
170

 
1,038

Transaction costs(b)
 
123

 
—

 
—

Integration costs(c)
 
219

 
80

 
144

Restructuring charges and certain acquisition-related costs
 
1,152

 
250

 
1,182

Additional depreciation––asset restructuring recorded in our
consolidated statements of income as follows(d):
 
 
 
 
 
 
Cost of sales
 
117

 
228

 
178

Selling, informational and administrative expenses
 
—

 
1

 
19

Research and development expenses
 
5

 
31

 
94

Total additional depreciation––asset restructuring
 
122

 
261

 
291

Implementation costs recorded in our consolidated statements of income as follows(e):
 
 
 
 
 
 
Cost of sales
 
102

 
78

 
53

Selling, informational and administrative expenses
 
82

 
140

 
145

Research and development expenses
 
14

 
52

 
33

Other (income)/deductions––net
 
5

 
1

 
—

Total implementation costs
 
203

 
270

 
231

Total costs associated with acquisitions and cost-reduction/productivity initiatives
 
$
1,478

 
$
781

 
$
1,704

(a) 
In 2015, Employee terminations represent the expected reduction of the workforce by approximately 3,900 employees, mainly in sales, corporate and research. Employee termination costs are generally recorded when the actions are probable and estimable and include accrued severance benefits, pension and postretirement benefits, many of which may be paid out during periods after termination.

The restructuring charges in 2015, which include a $39 million charge related to a 36% reduction in our labor force in Venezuela, are associated with the following:
•
Global Innovative Pharmaceutical segment (GIP) ($39 million); the Global Vaccines, Oncology and Consumer Healthcare segment (VOC) ($45 million); the Global Established Pharmaceutical segment (GEP) ($402 million); Worldwide Research and Development and Medical (WRD/M) ($80 million); manufacturing operations ($80 million); and Corporate ($164 million).
The restructuring charges in 2014 are associated with the following:
•
GIP ($35 million); VOC ($28 million); GEP ($57 million); WRD/M ($37 million); manufacturing operations ($97 million); and Corporate ($65 million), as well as $149 million of income related to the partial reversal of prior-period restructuring charges not directly associated with the new individual segments, and primarily reflecting a change in estimate with respect to our sales force restructuring plans.
The restructuring charges in 2013 are associated with the following:
•
Total operating segments ($496 million); WRD/M ($13 million); manufacturing operations ($356 million); and Corporate ($173 million).
At the beginning of fiscal 2014, we revised our operating segments and are unable to directly associate these prior-period restructuring charges with the new individual segments.
In September 2015, in order to eliminate certain redundancies in our biosimilar drug products pipeline created as a result of the acquisition of Hospira, we opted to return rights to Celltrion Inc. and Celltrion Healthcare, Co., Ltd. (collectively, Celltrion) that Hospira had previously acquired to potential biosimilars to Rituxan® (rituximab) and Herceptin® (trastuzumab). As such, upon return of the acquired rights, in 2015 we incurred charges of $215 million, which are comprised of (i) a write-off of the applicable IPR&D assets, totaling $170 million, which is included in Asset impairments; (ii) a write-off of amounts prepaid to Celltrion in the amount of $25 million, which is included in Asset impairments; and (iii) a payment to Celltrion of $20 million, which is included in Exit costs. The recorded amounts for the assets acquired from Hospira are provisional and are subject to change. See Note 2A.
(b) 
Transaction costs represent external costs directly related to the acquisition of Hospira and our pending combination with Allergan and primarily include expenditures for banking, legal, accounting and other similar services.
(c) 
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, January 1, 2014
 
$
1,685

 
$
—

 
$
94

 
$
1,779

Provision
 
68

 
45

 
58

 
170

Utilization and other(a)
 
(639
)
 
(45
)
 
(100
)
 
(783
)
Balance, December 31, 2014(b)
 
1,114

 
—

 
52

 
1,166

Provision
 
489

 
254

 
68

 
811

Utilization and other(a)
 
(495
)
 
(254
)
 
(71
)
 
(820
)
Balance, December 31, 2015(c)
 
$
1,109

 
$
—

 
$
48

 
$
1,157

(a) 
Includes adjustments for foreign currency translation.
(b) 
Included in Other current liabilities ($735 million) and Other noncurrent liabilities ($431 million).
(c) 
Included in Other current liabilities ($776 million) and Other noncurrent liabilities ($381 million).