18. Restructuring Charges

In September 2016, the Company initiated a restructuring of its organization in order to conserve resources for commercial sales and marketing of Afrezza and to align cost of goods sold in support of these commercial efforts (2016 Restructuring). In connection with the 2016 Restructuring, the Company reduced its total workforce by approximately 18% to 155 employees. The Company recorded charges of approximately $1.5 million, primarily for employee severance as well as other related termination benefits. The $1.5 million of costs associated with the 2016 Restructuring are included in cost of goods sold, research and development and selling, general and administrative in the consolidated statements of operations as $0.4 million, $0.7 million and $0.4 million, respectively, for the year ended December 31, 2016. The Company substantially paid out the obligation for the 2016 Restructuring in the fourth quarter of 2016, resulting in a remaining accrual balance for the 2016 Restructuring of $0.2 million at December 31, 2016. The Company expects to substantially pay out the remainder of this obligation by the first quarter of 2017.

In 2015, the Company initiated a restructuring of the organization as a result of its shift to commercial production of Afrezza (“2015 Restructuring”). In connection with the 2015 Restructuring, the Company reduced its total workforce by approximately 26% to 198 employees. The Company recorded charges of approximately $6.0 million, primarily for employee severance as well as other related termination benefits. The $6.0 million of costs associated with the 2015 Restructuring are included in operating expenses for cost of goods sold, research and development and selling, general and administrative in the consolidated statements of operations as $1.4 million, $1.3 million and $3.3 million, respectively, for the year ended December 31, 2015. As of December 31, 2016 and 2015, the Company had a remaining accrual balance for the 2015 Restructuring of $1.2 million and $3.0 million, respectively. Certain of the severance arrangements for executives in the 2015 Restructuring were long-term, which the Company expects to substantially pay out the remainder of this obligation by the third quarter of 2017.

A reconciliation of beginning and ending liability balances for the 2016 and 2015 Restructuring charges, which is included in accrued expenses and other current liabilities, is as follows (in thousands):


Description	2016 Restructuring			2015 Restructuring			Total
Accrual — January 1, 2015	$	—		$	—		$	—
Costs incurred and charged to expense		—			6,040			6,040
Costs paid or settled		—			(3,012	)		(3,012	)

Accrual — December 31, 2015		—			3,028			3,028
Costs incurred and charged to expense		1,475			560			2,035
Costs paid or settled		(1,266	)		(2,421	)		(3,687	)

Accrual — December 31, 2016	$	209		$	1,167		$	1,376