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

12 Months Ended

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

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

6. Restructuring Charges and Other Costs Associated with Acquisitions, Cost-Reduction and Productivity Initiatives

In connection with our cost-reduction/productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems. In connection with our acquisition activity, we typically incur costs and charges associated with executing the transactions, integrating the acquired operations, which may include expenditures for consulting and the integration of systems and processes, product transfers and restructuring the consolidated company, which may include charges related to employees, assets and activities that will not continue in the consolidated company. All operating functions can be impacted by these actions, including sales and marketing, manufacturing and R&D, as well as functions such as business technology, shared services and corporate operations.

The components of costs incurred in connection with restructuring initiatives, acquisitions and cost-reduction/productivity initiatives are as follows:

	Year Ended December 31,
(MILLIONS OF DOLLARS)	2022		2021		2020
Restructuring charges and certain acquisition-related costs:
Integration costs(a)	$	4	$	10	$	17
Transaction costs(b)	1		—		—
Restructuring charges(c)(d):
Employee termination costs	3		17		8
Asset impairment charges	2		13		—
Exit costs	1		3		—
Total Restructuring charges and certain acquisition-related costs	$	11	$	43	$	25

(a)    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, as well as product transfer costs.

(b)    Transaction costs represent external costs directly related to acquiring businesses and primarily includes expenditures for banking, legal, accounting and other similar services.

(c)    The restructuring charges for the year ended December 31, 2022 are primarily related to employee termination and exit costs associated with cost-reduction and productivity initiatives in certain international markets, as well as asset impairment charges primarily related to the consolidation of manufacturing sites in China.

    The restructuring charges for the year ended December 31, 2021 are primarily related to the realignment of our international operations and other cost-reduction and productivity initiatives.

    The restructuring charges for the year ended December 31, 2020 are primarily related to CEO transition-related costs and other cost-reduction and productivity initiatives.

(d)    The restructuring charges are associated with the following:

•For the year ended December 31, 2022, Manufacturing/research/corporate of $2 million and International of $4 million.

•For the year ended December 31, 2021, Manufacturing/research/corporate of $21 million and International of $12 million.

•For the year ended December 31, 2020, Manufacturing/research/corporate of $8 million.

The components of, and changes in, our restructuring accruals are as follows:

	Employee		Asset
	Termination		Impairment		Exit
(MILLIONS OF DOLLARS)	Costs		Charges		Costs		Accrual
Balance, December 31, 2019	$	45	$	—	$	—	$	45
Provision	8		—		—		8
Utilization and other(a)	(32)		—		—		(32)
Balance, December 31, 2020	$	21	$	—	$	—	$	21
Provision	17		13		3		33
Non-cash activity	—		(13)		—		(13)
Utilization and other(a)	(15)		—		(1)		(16)
Balance, December 31, 2021(b)	$	23	$	—	$	2	$	25
Provision	3		2		1		6
Non-cash activity	—		(2)		—		(2)
Utilization and other(a)	(12)		—		(2)		(14)
Balance, December 31, 2022(b)(c)	$	14	$	—	$	1	$	15

(a)    Includes adjustments for foreign currency translation.

(b)    At December 31, 2022 and 2021, included in Accrued Expenses ($5 million and $14 million, respectively) and Other noncurrent liabilities ($10 million and $11 million, respectively).

(c)    Includes contractual obligations of $7 million, of which payments are expected to be approximately $6 million in 2023 and $1 million thereafter.