Third Party Arrangements and Related Party Disclosures (Tables)

12 Months Ended

Dec. 31, 2021

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The allocations reflected in the Consolidated Statement of Income for continuing operations are as follows:

($ in millions)	2021(1)		2020		2019
Cost of sales	$	69	$	452	$	520
Selling, general and administrative	134		658		725
Research and development	35		152		190
	$	238	$	1,262	$	1,435

(1) Includes costs through the Separation Date.

The following transactions represent activity between Organon Entities and Transferred Entities with other Merck affiliates prior to the Separation:

($ in millions)	2021		2020		2019
Included in continuing operations
Supply sales to Merck affiliates	$	143	$	57	$	—
Purchases from Merck affiliates	65		657		—
Cost reimbursements and fees from Merck affiliates	1		—		—
Included in discontinued operations
Supply sales to Merck affiliates	$	12	$	542	$	501
Purchases from Merck affiliates	53		382		1,087
Cost reimbursements and fees (to) from Merck affiliates	$	—	$	22	$	19
Interest expense, net on loans and advances with Merck affiliates	$	—	$	2	$	3

The Company had the following balances with Merck affiliates:

($ in millions)	December 31, 2020
Included in continuing operations
Short term borrowings, net	$	1,512
Trade payables (receivables), net	(173)
Due to related party	$	1,339
Included in discontinued operations
Short term loans receivables, net	$	247
Short term notes payable, net	(25)
Trade payables, net	(33)
Due from related party	$	189

The components of Net transfers to Merck & Co., Inc. were as follows:

($ in millions)	2021(1)		2020		2019
Cash pooling and general financing activities	$	168	$	5,216	$	5,310
Cost allocations, excluding non-cash stock-based compensation	(209)		(1,222)		(1,394)
Taxes deemed settled with Merck	(259)		(409)		(1,039)
Allocated derivative and hedging (losses) gains	(88)		(51)		55
Net transfers (from) to Merck & Co., Inc. as reflected in the Consolidated Statement of Cash Flows for Continuing Operations(2)	$	(388)	$	3,534	$	2,932
Net transfers to (from) Merck included in Net Cash Provided by (Used in) Discontinued Operations	597		(194)		(355)
Total net transfers to Merck as included in the Consolidated Statement of Cash Flows	$	209	$	3,340	$	2,577
Stock-based compensation expense (includes $3 and $7 of discontinued operations for 2021 and 2020, respectively)	(32)		(54)		(52)
Net assets (distributed to) contributed by Merck affiliates	(778)		250		—
Recognition of amounts in Accumulated other comprehensive loss related to employee benefit plan transfers to Merck affiliates	13		465		—
Net transfers (from) to Merck & Co., Inc. as reflected in the Consolidated Statement of Equity	$	(588)	$	4,001	$	2,525

(1)The amounts for the year ended December 31, 2021 represent activity through the date of the Separation.

(2)Net transfers (from) to Merck & Co., Inc. as reflected in the Consolidated Statement of Cash Flows for Continuing Operations for the year ended December 31, 2021 include Separation adjustments of $52 million, identified after the date of the Separation. Refer to Note 2 for further details.