RESTRUCTURING

In October 2016, the Company announced a restructuring plan 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, plant and equipment accelerated depreciation and impairment charges 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 $310 million have been recognized for these actions since the announcement (approximately $220 million for the three months ended March 31, 2017), primarily resulting from employee workforce reductions and accelerated depreciation from 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 workforce reductions were approximately 900 and 100 for the three months ended March 31, 2017 and 2016, respectively, across all geographic regions for manufacturing, selling, administrative and R&D personnel.

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



	Three Months Ended March 31,
Dollars in Millions	2017		2016
Employee termination costs	$	161	$	4
Other termination costs	3		—
Provision for restructuring	164		4
Accelerated depreciation	70		14
Asset impairments	2		—
Other shutdown costs	—		3
Total charges	$	236	$	21



	Three Months Ended March 31,
Dollars in Millions	2017		2016
Cost of products sold	$	—	$	4
Research and development	72		13
Other (income)/expense	164		4
Total charges	$	236	$	21



	Three Months Ended March 31,
Dollars in Millions	2017			2016
Liability at January 1	$	114		$	125
Charges	170			8
Change in estimates	(6		)	(4		)
Provision for restructuring	164			4
Foreign currency translation	1			—
Spending	(44		)	(33		)
Liability at March 31	$	235		$	96