RESTRUCTURING

In October 2016, the Company announced a restructuring to evolve and streamline its operating model and expects to incur charges in connection with employee workforce reductions and early site exits. The charges are expected to be incurred through 2020, range between $1.5 billion to $2.0 billion and consist of employee termination benefit costs, contract termination costs, accelerated depreciation on property, plant and equipment, impairments on long-lived assets and other site shutdown costs. Cash outlays in connection with these actions are expected to be approximately 40% to 50% of the total charges. Charges of approximately $90 million were recognized for these actions during the fourth quarter of 2016, primarily resulting from certain R&D employee workforce reductions and accelerated depreciation on expected early site exits. Restructuring charges are recognized upon meeting certain criteria, including finalization of committed plans, reliable estimates and discussions with local works councils in certain markets.

Other restructuring charges recognized prior to the above actions were primarily related to specialty care transformation initiatives designed to create a more simplified organization across all functions and geographic markets. In addition, accelerated depreciation and other charges were incurred in connection with early exits of a manufacturing site in Ireland and R&D site in the U.S.

Employee termination benefit costs were incurred for manufacturing, selling, administrative, and R&D employee workforce reductions across all geographic regions of approximately 1,100 in 2016, 1,200 in 2015 and 1,400 in 2014.

The following tables summarize the charges and activity related to the restructuring actions:



	Year Ended December 31,
Dollars in Millions	2016		2015		2014
Employee termination costs	$	97	$	110	$	157
Other termination costs	12		8		6
Provision for restructuring	109		118		163
Accelerated depreciation	72		104		138
Asset impairments	13		1		13
Other shutdown costs	19		10		—
Total charges	$	213	$	233	$	314



	Year Ended December 31,
Dollars in Millions	2016		2015		2014
Cost of products sold	$	21	$	84	$	151
Research and development	83		31		—
Other (income)/expense	109		118		163
Total charges	$	213	$	233	$	314



	Year Ended December 31,
Dollars in Millions	2016			2015			2014
Liability at January 1	$	125		$	156		$	102
Charges	116			133			155
Change in estimates	(7		)	(15		)	8
Provision for restructuring	109			118			163
Foreign currency translation	—			(15		)	(2		)
Spending	(120		)	(134		)	(107		)
Liability at December 31	$	114		$	125		$	156