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Restructuring Restructuring | 12 Months Ended
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Dec. 31, 2017
Restructuring and Related Activities [Abstract] |
Restructuring | Restructuring, Business Transformation and Other Cost Saving Initiatives 2017 Corporate Strategy In July 2017 we announced an updated strategic framework to optimize the value of our MS business while investing for the future across our core growth areas of MS and neuroimmunology, AD and dementia, movement disorders and neuromuscular diseases including SMA and ALS. We also plan to invest in emerging growth areas such as pain, ophthalmology, neuropsychiatry and acute neurology. In addition, we are employing innovative technologies to discover potential treatments for rare and genetic disorders, including new ways of treating diseases through gene therapy in the previously mentioned areas. In order to deliver positive results in the near term while investing in the next stages of our growth, we will focus on the following strategic priorities:
• | maximizing the resilience of our MS core business;
• | accelerating efforts in SMA as a significant new growth opportunity;
• | developing and expanding our neuroscience portfolio;
• | focusing our capital allocation efforts to drive investment for future growth; and
• | creating a leaner and simpler operating model to streamline our operations and reallocate resources towards prioritized research and development and commercial value creation opportunities.
In October 2017, in connection with creating a leaner and simpler operating model, we approved a corporate restructuring program intended to streamline our operations and reallocate resources. We expect to make total non-recurring operating and capital expenditures of up to $170.0 million, primarily in 2018, and our goal is to redirect resources of up to $400.0 million annually by 2020 to prioritized research and development and other value creation opportunities. For the year ended December 31, 2017, we recognized charges in our consolidated statements of income totaling $19.4 million related to this effort, of which $18.5 million is included in selling, general and administrative expense and $0.9 million is reflected as restructuring charges. These restructuring charges, which were substantially incurred and paid in 2017, were primarily related to severance. 2016 Organizational Changes and Cost Saving Initiatives 2016 Restructuring Charges During the third quarter of 2016 we initiated cost saving measures primarily intended to realign our organizational structure due to the changes in roles and workforce resulting from our decision to spin-off our hemophilia business, and to achieve further targeted cost reductions. For the year ended December 31, 2016, we recognized charges totaling $17.7 million related to this effort, which are in addition to, and separate from, the 2015 restructuring charges described below. These amounts, which were substantially incurred and paid by the end of 2016, were primarily related to severance and are reflected in restructuring charges in our consolidated statements of income. Cambridge, MA Manufacturing Facility In June 2016 following an evaluation of our current and future manufacturing capabilities and capacity needs, we determined that we intended to cease manufacturing and vacate our 67,000 square foot small-scale biologics manufacturing facility in Cambridge, MA and close and vacate our 46,000 square foot warehouse space in Somerville, MA. In December 2016 we subleased our rights to the Cambridge, MA manufacturing facility to Brammer Bio MA, LLC (Brammer). Brammer also purchased from us certain manufacturing equipment, leasehold improvements and other assets in exchange for shares of Brammer common LLC interests and assumed manufacturing operations effective January 1, 2017. In December 2016 we closed and vacated our warehouse space in Somerville, MA. Our departure from these facilities shortened the expected useful lives of certain leasehold improvements and other assets at these facilities. As a result, we recorded additional depreciation expense to reflect the assets' new shorter useful lives. For the year ended December 31, 2016, we recognized approximately $45.5 million of this additional depreciation, which was recorded as cost of sales in our consolidated statements of income. In the fourth quarter of 2016 we also recognized charges totaling $7.4 million for severance costs related to certain employees separated from Biogen in connection with our departure from these facilities. These amounts were substantially incurred and paid by the end of first quarter of 2017 and are reflected in restructuring charges in our consolidated statements of income for the year ended December 31, 2016. 2015 Cost Saving Initiatives 2015 Restructuring Charges In October 2015, we announced a corporate restructuring, which included the termination of certain pipeline programs and an 11% reduction in workforce. Under this restructuring, cash payments were estimated to total approximately $120.0 million, of which $15.9 million were related to previously accrued 2015 incentive compensation, resulting in net restructuring charges totaling approximately $102.0 million. These amounts were substantially paid by the end of 2016. During the years ended December 31, 2016 and 2015, we recognized $8.0 million and $93.4 million, respectively, of restructuring charges related to our 2015 restructuring program in our consolidated statements of income. Our restructuring reserve is included in accrued expenses and other in our consolidated balance sheets. The following table summarizes the charges and spending related to our 2015 restructuring program during 2017:
(In millions) | Workforce Reduction |  | Pipeline Programs |  | Total
Restructuring reserve as of December 31, 2015 | $ | 33.7 |  |  | $ | 3.6 |  |  | $ | 37.3 |
Expense | 4.9 |  |  | 5.4 |  |  | 10.3 |
Payments | (31.2 | ) |  | (9.0 | ) |  | (40.2 | )
Adjustments to previous estimates, net | (5.2 | ) |  | 2.9 |  |  | (2.3 | )
Restructuring reserve as of December 31, 2016 | $ | 2.2 |  |  | $ | 2.9 |  |  | $ | 5.1 |
Payments | (1.7 | ) |  | (2.9 | ) |  | (4.6 | )
Restructuring reserve as of December 31, 2017 | $ | 0.5 |  |  | $ | — |  |  | $ | 0.5 |

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
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