Note 6. 2014-2018 Restructuring Program

On May 6, 2014, our Board of Directors approved a $3.5 billion restructuring program, comprised of approximately $2.5 billion in cash costs and $1 billion in non-cash costs (the “2014-2018 Restructuring Program”), and up to $2.2 billion of capital expenditures. The primary objective of the 2014-2018 Restructuring Program is to reduce our operating cost structure in both our supply chain and overhead costs. The program is intended primarily to cover severance as well as asset disposals and other manufacturing-related one-time costs. Since inception, we have incurred total restructuring and related implementation charges of $1.6 billion related to the 2014-2018 Restructuring Program. We expect to incur the majority of the program’s remaining charges in 2016 and to complete the program by year-end 2018.

Restructuring Costs:

We recorded restructuring charges of $139 million in the three months ended March 31, 2016 and $163 million in the three months ended March 31, 2015 within asset impairment and exit costs. The activity for the 2014-2018 Restructuring Program liability for the three months ended March 31, 2016 was:


	Severance and related costs			Asset Write-downs			Total
	(in millions)

Liability balance, January 1, 2016	$	395		$	–		$	395
Charges		87			52			139
Cash spent		(74	)		–			(74	)
Non-cash settlements / adjustments		–			(52	)		(52	)
Currency		10			–			10

Liability balance, March 31, 2016	$	418		$	–		$	418

We spent $74 million in the three months ended March 31, 2016 and $39 million in the three months ended March 31, 2015 in cash severance and related costs. We also recognized non-cash asset write-downs (including accelerated depreciation and asset impairments) of $52 million in the three months ended March 31, 2016 and $78 million in the three months ended March 31, 2015. At March 31, 2016, $332 million of our net restructuring liability was recorded within other current liabilities and $86 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 2014-2018 Restructuring 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 $98 million in the three months ended March 31, 2016 and $61 million in the three months ended March 31, 2015. We recorded these costs within cost of sales and general corporate expense within selling, general and administrative expenses.

Restructuring and Implementation Costs in Operating Income:

During the three months ended March 31, 2016 and 2015 and since inception of the 2014-2018 Restructuring Program, we recorded restructuring and implementation costs within operating income as follows:


	Latin America		Asia Pacific		EEMEA		Europe		North America⁽¹⁾		Corporate⁽²⁾		Total
							(in millions)

For the Three Months Ended March 31, 2016
Restructuring Costs	$	12	$	23	$	9	$	64	$	31	$	–	$	139
Implementation Costs		7		6		3		29		38		15		98

Total	$	19	$	29	$	12	$	93	$	69	$	15	$	237


For the Three Months Ended March 31, 2015
Restructuring Costs	$	15	$	25	$	2	$	109	$	11	$	1	$	163
Implementation Costs		9		4		4		20		9		15		61

Total	$	24	$	29	$	6	$	129	$	20	$	16	$	224


Total Project 2014-2016 ⁽³⁾
Restructuring Costs	$	238	$	172	$	91	$	383	$	202	$	38	$	1,124
Implementation Costs		62		34		19		139		112		130		496

Total	$	300	$	206	$	110	$	522	$	314	$	168	$	1,620

(1)

During the three months ended March 31, 2016, our North America region implementation costs included costs that we incurred related to re-negotiating collective bargaining agreements that expired at the end of February 2016 for eight U.S. facilities and related to executing business continuity plans for the North America business. We expect to incur additional costs related to these activities in future quarters of 2016.

(2)

Includes adjustment for rounding.

(3)

Includes all charges recorded since program inception on May 6, 2014 through March 31, 2016.