Restructuring Liabilities

2003 Kendall Restructuring

In 2003, the Company adopted a plan to restructure its operations to coincide with its increasing internal emphasis on advancing drug candidates through clinical development to commercialization. The restructuring liability relates to specialized laboratory and office space that is leased to the Company pursuant to a 15-year lease that terminates in 2018. The Company has not used more than 50% of this space since it adopted the plan to restructure its operations in 2003. This unused laboratory and office space currently is subleased to third parties.

The activities related to the restructuring liability for the three and nine months ended September 30, 2014 and 2013 were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(in thousands)
Liability, beginning of the period	$	14,936		$	22,052		$	19,115		$	23,328
Cash payments	(4,249		)	(3,902		)	(12,071		)	(11,323		)
Cash received from subleases	2,689			2,670			8,067			8,000
Restructuring (income) expense	(464		)	524			(2,199		)	1,339
Liability, end of the period	$	12,912		$	21,344		$	12,912		$	21,344

Fan Pier Move Restructuring

In connection with the relocation of its Massachusetts operations to Fan Pier in Boston, Massachusetts, which commenced in 2013, the Company is incurring restructuring charges related to its remaining lease obligations at its facilities in Cambridge, Massachusetts, which include lease obligations related to the 120,000 square feet of the Kendall Square facility that the Company continued to use for its operations following its 2003 Kendall Restructuring. The majority of these restructuring charges were recorded in the third quarter of 2014 upon decommissioning three facilities in Cambridge. To record the restructuring expense and related liability on the cease use date for these facilities, the Company estimated (i) its remaining lease obligations including operating costs for these facilities, (ii) the lead-time necessary to sublease the facilities, (iii) projected sublease rental rates and (iv) the anticipated duration of the subleases. The Company discounted the estimated cash flows related to the facilities using a credit-adjusted risk-free rate of 9%. The Company will continue to incur charges through April 2018 related to the difference between the Company’s estimated future cash flows related to its lease obligations, which include an estimate for sublease income to be received if applicable, and its actual cash flows.

The activities related to the restructuring liability for the three and nine months ended September 30, 2014 were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(in thousands)
Liability, beginning of the period	$	3,256		$	—		$	797		$	—
Cash payments	(2,266		)	(80		)	(6,643		)	(80		)
Restructuring expense	39,752			80			46,588			80
Liability, end of the period	$	40,742		$	—		$	40,742		$	—

Other Restructuring Activities

The Company has incurred several other restructuring activities that are unrelated to its 2003 Kendall Restructuring and the Fan Pier Move Restructuring. The most significant activity commenced in October 2013 when the Company adopted a restructuring plan that included (i) a workforce reduction primarily related to the commercial support of INCIVEK following the continued and rapid decline in the number of patients being treated with INCIVEK as new medicines for the treatment of HCV infection neared approval and (ii) the write-off of certain assets. This action resulted from the Company's decision to focus its investment on future opportunities in cystic fibrosis and other research and development programs.

The activities related to the Company's other restructuring liabilities for the three and nine months ended September 30, 2014 were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(in thousands)
Liability, beginning of the period	$	792		$	—		$	8,441		$	—
Cash payments	(399		)	—			(8,865		)	—
Impairment of property and equipment	—			(6,650		)	—			(6,650		)
Restructuring expense	1,555			11,444			2,372			11,444
Liability, end of the period	$	1,948		$	4,794		$	1,948		$	4,794