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

3 Months Ended

Mar. 29, 2020

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
(MILLIONS OF DOLLARS)	March 29, 2020			March 31, 2019
Restructuring charges/(credits):
Employee terminations	$	25		$	(2	)
Asset impairments	31			9
Exit costs	—			3
Restructuring charges(a)	56			10
Transaction costs(b)	3			—
Integration costs and other(c)	10			36
Restructuring charges and certain acquisition-related costs	69			46
Net periodic benefit costs recorded in Other (income)/deductions––net	24			6
Additional depreciation––asset restructuring recorded in our condensed consolidated statements of income as follows(d):
Cost of sales	5			9
Selling, informational and administrative expenses	—			1
Research and development expenses	(5		)	3
Total additional depreciation––asset restructuring	—			13
Implementation costs recorded in our condensed consolidated statements of income as follows(e):
Cost of sales	10			13
Selling, informational and administrative expenses	15			9
Research and development expenses	—			4
Total implementation costs	24			26
Total costs associated with acquisitions and cost-reduction/productivity initiatives	$	117		$	92

^(a)  In the first quarter of 2020, restructuring charges mainly represent asset write-downs and employee termination costs associated with cost reduction initiatives. In the first quarter of 2019, restructuring charges were primarily associated with cost reduction initiatives and mainly represent asset write-downs, partially offset by the reversal of previously recorded accruals for employee termination costs and asset impairments related to our acquisition of Hospira.

The restructuring activities for the first quarter of 2020 are associated with the following:

• Biopharma ($2 million charge); Upjohn ($13 million charge); and Other ($41 million charge).

The restructuring activities for the first quarter of 2019 are associated with the following:

• Biopharma ($13 million charge); Upjohn ($13 million credit); and Other ($10 million charge).

^(b)  Transaction costs represent external costs for banking, legal, accounting and other similar services. In the first quarter of 2020, transaction costs relate to our acquisition of Array.

^(c)  Integration costs and other represent external, incremental costs directly related to integrating acquired businesses, such as expenditures for consulting and the integration of systems and processes, and certain other qualifying costs. In the first quarter of 2020, integration costs and other were mostly related to our acquisition of Array. In the first quarter of 2019, integration costs and other were primarily related to our acquisition of Hospira.

^(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 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, 2019(a)	$	887		$	—		$	46		$	933
Provision	25			31			—			56
Utilization and other(b)	(243		)	(31		)	(1		)	(275		)
Balance, March 29, 2020(c)	$	669		$	—		$	45		$	714

^(a)  Included in Other current liabilities ($714 million) and Other noncurrent liabilities ($219 million).

^(b)  Includes adjustments for foreign currency translation.

^(c) 

Included in Other current liabilities ($532 million) and Other noncurrent liabilities ($182 million).