Restructuring costs

Our accounting for employee separations is dependent upon how the particular program is designed. For voluntary programs, eligible separation costs are recognized at the time of employee acceptance unless the acceptance requires explicit approval by the company. For involuntary programs, eligible costs are recognized when management has approved the program, the affected employees have been properly notified and the costs are estimable.

Restructuring costs for the three months ended March 31, 2018 and 2017 were as follows:




(Millions of dollars)	Three Months Ended March 31
	2018		2017
Employee separations ¹	$	33	$	464
Contract terminations ¹	—		9
Long-lived asset impairments ¹	—		212
Defined benefit plan curtailments and termination benefits ²	—		29
Other ³	36		38
Total restructuring costs	$	69	$	752

¹ Recognized in Other operating (income) expenses.
² Recognized in Other income (expense).
³ Represents costs related to our restructuring programs, primarily for accelerated depreciation, project management costs and equipment
relocation (all of which are primarily included in Cost of Goods sold).

For the three months ended March 31, 2018, the restructuring costs were primarily related to ongoing facility closures across the company.

The restructuring costs for the three months ended March 31, 2017, were primarily related to the closure of the facility in Gosselies, Belgium, within Construction Industries. The remaining costs were related to our decision to move production from the Aurora, Illinois, facility into other U.S. manufacturing facilities, as well as other ongoing manufacturing facility consolidations.

Restructuring costs are a reconciling item between Segment profit and Consolidated profit before taxes. See Note 15 for more information.

The following table summarizes the 2017 and 2018 employee separation activity:




(Millions of dollars)
Liability balance at December 31, 2016	$	147
Increase in liability (separation charges)	525
Reduction in liability (payments)	(423		)
Liability balance at December 31, 2017	$	249
Increase in liability (separation charges)	33
Reduction in liability (payments)	(90		)
Liability balance at March 31, 2018	$	192

Most of the liability balance at March 31, 2018 is expected to be paid in 2018 and primarily includes employee separation payments related to closure of the Gosselies, Belgium, facility.

In March 2017, Caterpillar informed Belgian authorities of the decision to proceed to a collective dismissal, which will lead to the closure of the Gosselies site, impacting about 2,000 employees. Production of Caterpillar products at the Gosselies site ended during the second quarter of 2017. The other operations and functions at the Gosselies site are expected to be gradually phased out by the end of the second quarter of 2018. We estimate restructuring costs incurred under this program to be about $675 million. In the first three months of 2018, we incurred $10 million of restructuring costs, and we incurred $653 million in 2017 for a total of $663 million through March 31, 2018. We expect to recognize the remaining costs in 2018.

In September 2015, we announced a large scale restructuring plan (the Plan) including a voluntary retirement enhancement program for qualifying U.S. employees, several voluntary separation programs outside of the U.S., additional involuntary programs throughout the company and manufacturing facility consolidations and closures expected to occur through 2018. The largest action among those included in the Plan was related to our European manufacturing footprint, which led to the Gosselies, Belgium, facility closure as discussed above. In the first three months of 2018, we incurred $38 million of restructuring costs related to the Plan, and we incurred $817 million, $281 million and $569 million in 2017, 2016 and 2015, respectively, for a total of $1,705 million through March 31, 2018. We expect to recognize approximately $150 million of additional restructuring costs related to the Plan in 2018.