Restructuring and Other Costs (Income), Net

6 Months Ended

Jun. 29, 2019

Restructuring and Related Activities [Abstract]

Restructuring and Other Costs, Net [Text Block]

Note 14.

Restructuring and Other Costs (Income), Net

Restructuring and other costs (income), net, in the first six months of 2019 primarily included the gain on the sale of the company's Anatomical Pathology business, and, to a lesser extent, transaction/integration costs related to acquisitions and a divestiture; sales of inventories revalued at the date of acquisition; and continuing charges for headcount reductions and facility consolidations in an effort to streamline operations, including the closure and consolidation of operations within several facilities in the U.S. and Europe. In the first six months of 2019, severance actions associated with facility consolidations and cost reduction measures affected less than 1% of the company’s workforce.

As of August 2, 2019, the company has identified restructuring actions that will result in additional charges of approximately $75 million, primarily in 2019 and 2020, and expects to identify additional actions during 2019 which will be recorded when specified criteria are met, such as communication of benefit arrangements or when the costs have been incurred.

During the second quarter of 2019, the company recorded net restructuring and other costs (income) by segment as follows:

(In millions)	Cost of Revenues		Selling, General and Administrative Expenses		Restructuring and Other Costs (Income), Net			Total
Life Sciences Solutions	$	5	$	—	$	8		$	13
Analytical Instruments	—		18		5			23
Specialty Diagnostics	—		—		(504		)	(504		)
Laboratory Products and Services	—		18		6			24
Corporate	—		—		1			1
	$	5	$	36	$	(484	)	$	(443	)

During the first six months of 2019, the company recorded net restructuring and other costs (income) by segment as follows:

(In millions)	Cost of Revenues		Selling, General and Administrative Expenses		Restructuring and Other Costs (Income), Net			Total
Life Sciences Solutions	$	11	$	—	$	11		$	22
Analytical Instruments	—		24		9			33
Specialty Diagnostics	—		4		(503		)	(499		)
Laboratory Products and Services	—		19		8			27
Corporate	—		—		2			2
	$	11	$	47	$	(473	)	$	(415	)

The principal components of net restructuring and other costs (income) by segment are as follows:

Life Sciences Solutions

In the first six months of 2019, the Life Sciences Solutions segment recorded $22 million of net restructuring and other costs, principally charges to cost of revenues of $11 million for the sales of inventory revalued at the date of acquisition. The segment also recorded $11 million of restructuring and other charges for the impairment of acquired technology in development, and severance and other costs associated with facility consolidations in the U.S. and Europe.

Analytical Instruments

In the first six months of 2019, the Analytical Instruments segment recorded $33 million of net restructuring and other charges, including $24 million of charges to selling, general, and administrative expense, principally transaction costs related to the acquisition of Gatan, subsequently terminated. The segment also recorded $9 million of restructuring and other costs, primarily for employee severance and other costs associated with facility consolidations in the U.S. and Europe.

Specialty Diagnostics

In the first six months of 2019, the Specialty Diagnostics segment recorded $499 million of net restructuring and other income, primarily a gain on the divestiture of its Anatomical Pathology business (see Note 2). The segment also recorded $4 million of charges to selling, general, and administrative expense for transaction costs in connection with the sale of the Anatomical Pathology business.

Laboratory Products and Services

In the first six months of 2019, the Laboratory Products and Services segment recorded $27 million of net restructuring and other charges. The segment recorded $19 million of charges to selling, general, and administrative expense, principally transaction costs related to the acquisition of Brammer Bio. The segment also recorded $8 million of restructuring and other costs, primarily for employee severance at businesses streamlining operations and employee compensation due at Brammer Bio on the date of acquisition.

Corporate

In the first six months of 2019, the company recorded $2 million of net restructuring and other costs for severance at its corporate operations.

The following table summarizes the cash components of the company’s restructuring plans. The non-cash components and other amounts reported as restructuring and other costs (income), net, in the accompanying statement of income have been summarized in the notes to the tables. Accrued restructuring costs are included in other accrued expenses in the accompanying balance sheet.

(In millions)	Severance			Abandonment of Excess Facilities			Other (a)			Total
Balance at December 31, 2018	$	34		$	42		$	4		$	80
Cumulative effect of accounting change (b)	—			(28		)	—			(28		)
Costs incurred in 2019 (d)	13			3			7			23
Reserves reversed (c)	(1		)	(1		)	—			(2		)
Payments	(20		)	(7		)	(7		)	(34		)
Balance at June 29, 2019	$	26		$	9		$	4		$	39

(a) Other includes relocation and moving expenses associated with facility consolidations, as well as employee retention costs which are accrued ratably over the period through which employees must work to qualify for a payment.

(b) Impact of adopting new lease accounting guidance on January 1, 2019.

(c) Represents reductions in cost of plans.

(d) Excludes $505 million gain on the sale of the company's Anatomical Pathology business; $6 million of impairment of acquired in-process research and development; $3 million of compensation due to employees on the date of acquisition; and $2 million of other non-cash charges, net.

The company expects to pay accrued restructuring costs primarily through 2019.