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 $3.3 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 $535 million in 2017, $714 million in 2016 and $711 million in 2015 within asset impairment and exit costs. The 2014-2018 Restructuring Program liability activity for the years ended December 31, 2017 and 2016 was:


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

Liability balance, January 1, 2016	$	395		$	–		$	395
Charges		402			312			714
Cash spent		(315	)		–			(315	)
Non-cash settlements/adjustments		(9	)		(312	)		(321	)
Currency		(9	)		–			(9	)

Liability balance, December 31, 2016	$	464		$	–		$	464

Charges		323			212			535
Cash spent		(347	)		–			(347	)
Non-cash settlements/adjustments		(3	)		(212	)		(215	)
Currency		27			–			27

Liability balance, December 31, 2017	$	464		$	–		$	464

We spent $347 million in 2017 and $315 million in 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 $215 million in 2017 and $321 million in 2016. At December 31, 2017, $412 million of our net restructuring liability was recorded within other current liabilities and $52 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 $257 million in 2017, $372 million in 2016 and $291 million in 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 2017, 2016 and 2015, 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 Year Ended December 31, 2017
Restructuring Costs	$	93	$	141	$	195	$	94	$	12	$	535
Implementation Costs		43		43		68		58		45		257

Total	$	136	$	184	$	263	$	152	$	57	$	792

For the Year Ended December 31, 2016
Restructuring Costs	$	111	$	96	$	310	$	183	$	14	$	714
Implementation Costs		54		48		88		121		61		372

Total	$	165	$	144	$	398	$	304	$	75	$	1,086

For the Year Ended December 31, 2015
Restructuring Costs	$	145	$	181	$	243	$	114	$	28	$	711
Implementation Costs		39		26		78		69		79		291

Total	$	184	$	207	$	321	$	183	$	107	$	1,002

Total Project 2014-2017 ⁽³⁾
Restructuring Costs	$	430	$	448	$	844	$	448	$	64	$	2,234
Implementation Costs		152		129		272		253		221		1,027

Total	$	582	$	577	$	1,116	$	701	$	285	$	3,261

(1)

During 2017 and 2016, our North America region implementation costs included incremental costs that we incurred related to renegotiating 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 December 31, 2017.