Restructuring, Business Transformation and Other Cost Saving Initiatives

2015 Cost Saving Initiatives

2015 Restructuring Charges

On October 21, 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 million, of which $15.9 million were related to previously accrued 2015 incentive compensation, resulting in expected net restructuring charges totaling approximately $105 million. These amounts are expected to be substantially paid by the end of 2016.

For the three months ended September 30, 2016, we recognized an adjustment to our previous estimates, which resulted in a negative restructuring charge of $1.6 million. For the nine months ended September 30, 2016, we recognized total net restructuring charges of $8.1 million. We previously recognized $93.4 million of restructuring charges in our consolidated statements of income during the fourth quarter of 2015. Our restructuring reserve is included in accrued expenses and other in our condensed consolidated balance sheets.

The following table summarizes the charges and spending related to our 2015 restructuring efforts during the nine months ended September 30, 2016:



(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	(29.6		)	(7.5		)	(37.1		)
Adjustments to previous estimates, net	(5.1		)	2.9			(2.2		)
Restructuring reserve as of September 30, 2016	$	3.9		$	4.4		$	8.3

2016 Organizational Changes and Cost Saving Initiatives

2016 Restructuring Charges

During the third quarter of 2016, we initiated additional cost saving measures which are primarily intended to realign our organizational structure in anticipation of 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 three and nine months ended September 30, 2016, we recognized charges totaling $13.2 million related to this effort, which are in addition to, and separate from, the 2015 corporate restructuring described above. These charges are reflected in restructuring charges in our condensed consolidated statements of income.

Under this initiative, we expect to incur restructuring charges totaling approximately $20.0 million. These amounts are primarily related to severance and are expected to be substantially incurred and paid by the end of 2016.

Cambridge, MA Manufacturing Facility

In June 2016, following an evaluation of our current and future manufacturing capabilities and capacity needs, we determined that we intend to vacate and cease manufacturing in our 67,000 square foot small-scale biologics manufacturing facility in Cambridge, MA and also vacate our 46,000 square foot warehouse space in Somerville, MA by the end of 2016.

We are currently considering alternatives for the facility, which may include a sale of our rights to, lease of, or other form of disposition of, the facility and related assets. In the event we are unsuccessful with a sale, lease or other disposition, we will cease manufacturing by December 31, 2016. As of September 30, 2016, the carrying value of associated assets totaled approximately $29.0 million. An impairment assessment was performed related to the assets, which resulted in no impairments. Our remaining lease obligation related to these facilities totaled $25.5 million.

Our anticipated departure from these facilities has 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. During the three and nine months ended September 30, 2016, we recognized approximately $15.7 million and $31.5 million, respectively, of this additional depreciation, which was recorded as cost of sales in our condensed consolidated statements of income.