Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives (Tables)

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

Schedule of 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:
	Three Months Ended						Six Months Ended
(MILLIONS OF DOLLARS)	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018
Restructuring charges/(credits):
Employee terminations	$	(166	)	$	(21	)	$	(167	)	$	(29	)
Asset impairments	(9		)	(6		)	—			(4		)
Exit costs	31			3			34			—
Restructuring credits(a)	(144		)	(24		)	(134		)	(33		)
Integration costs(b)	29			68			64			120
Restructuring charges and certain acquisition-related costs	(115		)	44			(69		)	87
Net periodic benefit costs recorded in Other (income)/deductions––net	4			29			10			61
Additional depreciation––asset restructuring recorded in our condensed consolidated statements of income as follows(c):
Cost of sales	7			13			15			30
Selling, informational and administrative expenses	1			—			2			—
Research and development expenses	2			—			5			—
Total additional depreciation––asset restructuring	10			13			23			31
Implementation costs recorded in our condensed consolidated statements of income as follows(d):
Cost of sales	17			20			31			36
Selling, informational and administrative expenses	16			16			25			34
Research and development expenses	9			7			13			13
Total implementation costs	42			44			69			82
Total costs associated with acquisitions and cost-reduction/productivity initiatives	$	(59	)	$	131		$	32		$	262

^(a)  In the second quarter and first six months of 2019, restructuring credits mostly represent the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. IRS audit for multiple tax years (see Note 5B). In the three and six months ended July 1, 2018, restructuring credits were associated with cost-reduction and productivity initiatives not associated with acquisitions, as well as acquisition-related costs, primarily associated with Hospira.

The restructuring activities for 2019 are associated with the following:

• For the second quarter of 2019, Biopharma ($62 million credit); Upjohn ($9 million credit); and Other ($74 million credit).

• For the first six months of 2019, Biopharma ($48 million credit); Upjohn ($22 million credit); and Other ($63 million credit).

The restructuring activities for 2018 are associated with the following:

• For the second quarter of 2018, total reportable segments ($10 million credit); and Other ($13 million credit).

• For the first six months of 2018, total reportable segments ($24 million credit); and Other ($9 million credit). At the beginning of fiscal 2019, we revised our operating segments and are unable to directly associate these prior-period restructuring charges with the new individual segments.

^(b)  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. In the second quarter and first six months of 2019 and 2018, integration costs were primarily related to our acquisition of Hospira.

^(c)  Additional depreciation––asset restructuring represents the impact of changes in the estimated useful lives of assets involved in restructuring actions.

^(d) 

Implementation costs represent external, incremental costs directly related to implementing our non-acquisition-related cost-reduction/productivity initiatives.

Schedule of Components of and Changes in Restructuring Accruals

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, 2018(a)	$	1,203		$	—	$	49		$	1,252
Provision/(credit)(b)	(167		)	—		34			(134		)
Utilization and other(c)	(303		)	—		(18		)	(321		)
Balance, June 30, 2019(d)	$	733		$	—	$	64		$	797

^(a)  Included in Other current liabilities ($823 million) and Other noncurrent liabilities ($428 million).

^(b)  Includes the reversal of certain accruals related to our acquisition of Wyeth upon the effective favorable settlement of a U.S. IRS audit for multiple tax years. See Note 5B for additional information.

^(c)  Includes adjustments for foreign currency translation.

^(d) 

Included in Other current liabilities ($593 million) and Other noncurrent liabilities ($204 million).