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Restructuring Program

9 Months Ended

Sep. 30, 2021

Restructuring and Related Activities [Abstract]

Restructuring Program

Note 7. Restructuring Program

On May 6, 2014, our Board of Directors approved a $3.5 billion 2014-2018 restructuring program and up to $2.2 billion of capital expenditures. On August 31, 2016, our Board of Directors approved a $600 million reallocation between restructuring program cash costs and capital expenditures so the $5.7 billion program consisted of approximately $4.1 billion of restructuring program charges ($3.1 billion cash costs and $1.0 billion non-cash costs) and up to $1.6 billion of capital expenditures. On September 6, 2018, our Board of Directors approved an extension of the restructuring program through 2022, an increase of $1.3 billion in the program charges and an increase of $700 million in capital expenditures. On October 21, 2021, our Board of Directors approved an extension of the restructuring program through 2023. The total $7.7 billion program now consists of $5.4 billion of program charges ($4.1 billion of cash costs and $1.3 billion of non-cash costs) and total capital expenditures of $2.3 billion to be incurred over the life of the program. The current restructuring program, as increased and extended by these actions, is now called the Simplify to Grow Program.

The primary objective of the Simplify to Grow Program is to reduce our operating cost structure in both our supply chain and overhead costs. The program covers severance as well as asset disposals and other manufacturing and procurement-related one-time costs. Since inception, we have incurred total restructuring and implementation charges of $5.1 billion related to the Simplify to Grow Program. We expect to incur the remainder of the program charges by year-end 2023.

Restructuring Costs:

The Simplify to Grow Program liability activity for the nine months ended September 30, 2021 was:

			Severance and related costs						Asset Write-downs						Total
			(in millions)
Liability balance, January 1, 2021			$	304					$	—					$	304
Charges			84						166						250
Cash spent			(129)						—						(129)
Non-cash settlements/adjustments			(4)						(166)						(170)
Currency			(10)						—						(10)
Liability balance, September 30, 2021			$	245					$	—					$	245

•We recorded restructuring charges of $62 million in the third quarter of 2021 and $68 million in the third quarter of 2020 and $250 million in the first nine months of 2021 and $111 million in the first nine months of 2020 within asset impairment and exit costs and benefit plan non-service income.

•We spent $65 million in the third quarter of 2021 and $44 million in the third quarter of 2020 and $129 million in the first nine months of 2021 and $113 million in the first nine months of 2020 in cash severance and related costs.

•We also recognized non-cash asset write-downs (including accelerated depreciation and asset impairments), including any gains on sale of restructuring program assets, non-cash pension settlement losses and other adjustments, which totaled $54 million in the third quarter of 2021 and a gain of $13 million in the third quarter of 2020 and $170 million in the first nine months of 2021 and $1 million in the first nine months of 2020.

•At September 30, 2021, $198 million of our net restructuring liability was recorded within other current liabilities and $47 million was recorded within other long-term liabilities.

Implementation Costs:

Implementation costs are directly attributable to restructuring activities; however, they do not qualify for special accounting treatment as exit or disposal activities. We believe the disclosure of implementation costs provides readers of our financial statements with more information on the total costs of our Simplify to Grow Program. Implementation costs primarily relate to reorganizing our operations and facilities in connection with our supply chain reinvention program and other identified productivity and cost saving initiatives. The costs include incremental expenses related to the closure of facilities, costs to terminate certain contracts and the simplification of our information systems. Within our continuing results of operations, we recorded implementation costs of $65 million in the third quarter of 2021 and $46 million in the third quarter of 2020 and $132 million in the first nine months of 2021 and $141 million in the first nine months of 2020. We recorded these costs within cost of sales and general corporate expense within selling, general and administrative expenses.

Restructuring and Implementation Costs:

During the three and nine months ended September 30, 2021 and September 30, 2020, and since inception of the Simplify to Grow Program, we recorded the following restructuring and implementation costs within segment operating income and earnings before income taxes:

			Latin America						AMEA						Europe						North America						Corporate						Total
			(in millions)
For the Three Months Ended September 30, 2021
Restructuring Costs			$	1					$	1					$	2					$	57					$	1					$	62
Implementation Costs			—						2						6						51						6						65
Total			$	1					$	3					$	8					$	108					$	7					$	127
For the Three Months Ended September 30, 2020
Restructuring Costs			$	1					$	21					$	40					$	3					$	3					$	68
Implementation Costs			4						6						15						15						6						46
Total			$	5					$	27					$	55					$	18					$	9					$	114
For the Nine Months Ended September 30, 2021
Restructuring Costs			$	4					$	(18)					$	7					$	250					$	7					$	250
Implementation Costs			7						7						27						78						13						132
Total			$	11					$	(11)					$	34					$	328					$	20					$	382
For the Nine Months Ended September 30, 2020
Restructuring Costs			$	19					$	25					$	52					$	3					$	12					$	111
Implementation Costs			12						12						40						36						41						141
Total			$	31					$	37					$	92					$	39					$	53					$	252
Total Project (Inception to Date)
Restructuring Costs			$	551					$	540					$	1,150					$	742					$	149					$	3,132
Implementation Costs			294						236						538						534						351						1,953
Total			$	845					$	776					$	1,688					$	1,276					$	500					$	5,085

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- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 420
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 5.P.4(e))
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 420
-URI http://asc.fasb.org/topic&trid=2175745

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
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