Note 6. 2014-2018 Restructuring Program

On May 6, 2014, our Board of Directors approved a $3.5 billion restructuring program and up to $2.2 billion of capital expenditures. On August 31, 2016, our Board of Directors approved a $600 million reallocation between restructuring program cash costs and capital expenditures so that now the $5.7 billion program consists of approximately $4.1 billion of restructuring program costs ($3.1 billion cash costs and $1 billion non-cash costs) and up to $1.6 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 $3.1 billion related to the 2014-2018 Restructuring Program. We expect to incur the full $4.1 billion of program charges by year-end 2018.

Restructuring Costs:

We recorded restructuring charges of $113 million in the three months and $418 million in the nine months ended September 30, 2017 and $187 million in the three months and $480 million in the nine months ended September 30, 2016 within asset impairment and exit costs. The 2014-2018 Restructuring Program liability activity for the nine months ended September 30, 2017 was:


	Severance and related costs			Asset Write-downs			Total
	(in millions)
Liability balance, January 1, 2017	$	464		$	–		$	464
Charges		250			168			418
Cash spent		(245	)		–			(245	)
Non-cash settlements/adjustments		(6	)		(168	)		(174	)
Currency		30			–			30

Liability balance, September 30, 2017	$	493		$	–		$	493

We spent $83 million in the three months and $245 million in the nine months ended September 30, 2017 and $89 million in the three months and $249 million in the nine months ended September 30, 2016 in cash severance and related costs. We also recognized non-cash pension settlement losses (See Note 9, Benefit Plans), non-cash asset write-downs (including accelerated depreciation and asset impairments) and other non-cash adjustments totaling $48 million in the three months and $174 million in the nine months ended September 30, 2017 and $120 million in the three months and $244 million in the nine months ended September 30, 2016. At September 30, 2017, $431 million of our net restructuring liability was recorded within other current liabilities and $62 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 $62 million in the three months and $179 million in the nine months ended September 30, 2017 and $114 million in the three months and $286 million in the nine months ended September 30, 2016. 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 and nine months ended September 30, 2017 and September 30, 2016, and since inception of the 2014-2018 Restructuring Program, we recorded restructuring and implementation costs within operating income by segment (as revised to reflect our current segment structure) as follows:


	Latin						North
	America		AMEA		Europe		America⁽¹⁾		Corporate ⁽²⁾			Total
	(in millions)

For the Three Months Ended September 30, 2017
Restructuring Costs	$	45	$	32	$	30	$	7	$	(1	)	$	113
Implementation Costs		8		11		18		13		12			62

Total	$	53	$	43	$	48	$	20	$	11		$	175


For the Nine Months Ended September 30, 2017
Restructuring Costs	$	76	$	106	$	149	$	79	$	8		$	418
Implementation Costs		28		30		49		38		34			179

Total	$	104	$	136	$	198	$	117	$	42		$	597


For the Three Months Ended September 30, 2016
Restructuring Costs	$	27	$	9	$	76	$	75	$	–		$	187
Implementation Costs		15		9		45		30		15			114

Total	$	42	$	18	$	121	$	105	$	15		$	301


For the Nine Months Ended September 30, 2016
Restructuring Costs	$	71	$	72	$	188	$	144	$	5		$	480
Implementation Costs		34		27		78		101		46			286

Total	$	105	$	99	$	266	$	245	$	51		$	766


Total Project 2014-2017 ⁽³⁾
Restructuring Costs	$	413	$	413	$	798	$	433	$	60		$	2,117
Implementation Costs		137		116		253		233		209			948

Total	$	550	$	529	$	1,051	$	666	$	269		$	3,065

(1)

During 2017 and 2016, our North America region implementation costs included incremental 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.

(2)

Includes adjustment for rounding.

(3)

Includes all charges recorded since program inception on May 6, 2014 through September 30, 2017.