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 $120.0 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.

For the year ended December 31, 2016, we recognized total net restructuring charges of $8.0 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 consolidated balance sheets.

The following table summarizes the charges and spending related to our 2015 restructuring program during 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	(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

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 corporate restructuring described above. These amounts, which were substantially incurred and paid by the end of 2016, are 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 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.

In December 2016 we subleased our rights to the manufacturing facility in Cambridge, MA 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 also 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.

Under the terms of the agreement, Brammer will also provide manufacturing and other transition and support services to us.

In the fourth quarter of 2016 we recognized charges totaling $7.4 million for severance costs related to certain employees separated from Biogen in connection with this transaction. These amounts will be substantially incurred and paid by the end of first quarter of 2017 and are reflected in restructuring charges in our consolidated statements of income.