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 majority of 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 $631 million have been recognized for these actions since the announcement ($82 million and $534 million for the three and nine months ended September 30, 2017, respectively). These charges include an impairment charge for the manufacturing operations in Swords, Ireland discussed in "—Note 4. Acquisitions, Divestitures and Licensing Arrangements." 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 the expected early exits of a manufacturing site in Ireland and R&D site in the U.S.

Employee workforce reductions were approximately 1,200 and 500 for the nine months ended September 30, 2017 and 2016, respectively, across all geographic regions for manufacturing, marketing, selling, administrative and R&D personnel.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in Millions	2017		2016		2017		2016
Employee termination costs	$	18	$	17	$	190	$	32
Other termination costs	10		2		17		9
Provision for restructuring	28		19		207		41
Accelerated depreciation	64		15		216		42
Asset impairments	1		—		144		—
Other shutdown costs	—		6		3		13
Total charges	$	93	$	40	$	570	$	96



	Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in Millions	2017		2016		2017		2016
Cost of products sold	$	1	$	7	$	131	$	15
Research and development	64		14		232		40
Other (income)/expense	28		19		207		41
Total charges	$	93	$	40	$	570	$	96



	Nine Months Ended September 30,
Dollars in Millions	2017			2016
Liability at January 1	$	114		$	125
Charges	233			48
Change in estimates	(26		)	(7		)
Provision for restructuring	207			41
Foreign currency translation	17			2
Spending	(179		)	(88		)
Liability at September 30	$	159		$	80