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Restructuring Programs | 9 Months Ended
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Sep. 30, 2014
Restructuring Programs | Note 6. Restructuring Programs 2014-2018 Restructuring Program On May 6, 2014, our Board of Directors approved a $3.5 billion restructuring program, comprised of approximately $2.5 billion in cash costs and $1 billion in non-cash costs (the “2014-2018 Restructuring Program”), and up to $2.2 billion of capital expenditures. The primary objective of the 2014-2018 Restructuring Program is to reduce our operating cost structure in both our supply chain and overhead costs. The program is intended primarily to cover severance as well as asset disposals and other manufacturing-related one-time costs. We expect to incur the majority of the program’s charges in 2015 and 2016 and to complete the program by year-end 2018. Restructuring Costs: We recorded restructuring charges for cash severance and related costs of $25 million in the three months and $26 million in the nine months ended September 30, 2014 within asset impairment and exit costs. The activity for the 2014-2018 Restructuring Program liability, recorded within other current liabilities, for the nine months ended September 30, 2014 was:
|  | Severance and related costs |  |  | Asset Write-downs |  |  | Total |
|  | (in millions) |
Liability balance, January 1, 2014 |  | $ | – |  |  | $ | – |  |  | $ | – |
Charges |  |  | 26 |  |  |  | – |  |  |  | 26 |
Cash spent |  |  | (2 | ) |  |  | – |  |  |  | (2 | )
Liability balance, September 30, 2014 |  | $ | 24 |  |  | $ | – |  |  | $ | 24 |
Implementation Costs: Implementation costs are directly attributable to restructuring activities; however, they do not qualify for special accounting treatment as exit or disposal activities. These costs primarily relate to reorganizing our operations and facilities in connection with our supply chain reinvention program and other identified productivity and cost saving initiatives. The costs include incremental expenses related to the closure of facilities, costs to terminate certain contracts and the simplification of our information systems. We believe the disclosure of implementation costs provides readers of our financial statements with more information on the total costs of our 2014-2018 Restructuring Program. Within our continuing results of operations, we recorded implementation costs of $42 million in the three months and $51 million in the nine months ended September 30, 2014. We recorded these costs within cost of sales and general corporate expense within selling, general and administrative expenses. Restructuring and Implementation Costs in Operating Income: During the three and nine months ended September 30, 2014, we recorded restructuring and implementation costs related to the 2014-2018 Restructuring Program within operating income as follows:
|  | For the Three Months Ended September 30, 2014 |  |  | For the Nine Months Ended September 30, 2014 |
|  | Restructuring |  |  | Implementation |  |  |  |  |  | Restructuring |  |  | Implementation |  |  |  |
|  | Costs |  |  | Costs |  |  | Total |  |  | Costs |  |  | Costs |  |  | Total |
|  | (in millions) |
Latin America |  | $ | 25 |  |  | $ | 7 |  |  | $ | 32 |  |  | $ | 26 |  |  | $ | 8 |  |  | $ | 34 |
Asia Pacific |  |  | – |  |  |  | 4 |  |  |  | 4 |  |  |  | – |  |  |  | 4 |  |  |  | 4 |
EEMEA |  |  | – |  |  |  | 3 |  |  |  | 3 |  |  |  | – |  |  |  | 3 |  |  |  | 3 |
Europe |  |  | – |  |  |  | 14 |  |  |  | 14 |  |  |  | – |  |  |  | 14 |  |  |  | 14 |
North America |  |  | – |  |  |  | 1 |  |  |  | 1 |  |  |  | – |  |  |  | 1 |  |  |  | 1 |
Corporate(1) |  |  | – |  |  |  | 13 |  |  |  | 13 |  |  |  | – |  |  |  | 21 |  |  |  | 21 |
Total |  | $ | 25 |  |  | $ | 42 |  |  | $ | 67 |  |  | $ | 26 |  |  | $ | 51 |  |  | $ | 77 |
| (1) | Includes adjustment for rounding.
2012-2014 Restructuring Program In 2012, our Board of Directors approved $1.5 billion of restructuring and related implementation costs (the “2012-2014 Restructuring Program”) reflecting primarily severance, asset disposals and other manufacturing-related one-time costs. The primary objective of the 2012-2014 Restructuring Program was to ensure that Mondelēz International and Kraft Foods Group were each set up to operate efficiently and execute on our respective business strategies upon separation and in the future. Of the $1.5 billion of 2012-2014 Restructuring Program costs, we retained approximately $925 million and Kraft Foods Group retained the balance of the program. Since inception, we have incurred $765 million of our estimated $925 million total 2012-2014 Restructuring Program charges. Restructuring Costs: We recorded restructuring charges of $163 million in the three months and $259 million in the nine months ended September 30, 2014 and $43 million in the three months and $131 million in the nine months ended September 30, 2013 within asset impairment and exit costs. During the three months ended September 30, 2014, we recorded out-of-period accruals for $73 million of severance in connection with ongoing labor negotiations. The activity for the 2012-2014 Restructuring Program liability for the nine months ended September 30, 2014 was:
|  | Severance and related costs |  |  | Asset Write-downs |  |  | Total |
|  | (in millions) |
Liability balance, January 1, 2014 |  | $ | 68 |  |  | $ | – |  |  | $ | 68 |
Charges |  |  | 182 |  |  |  | 77 |  |  |  | 259 |
Cash spent |  |  | (110 | ) |  |  | – |  |  |  | (110 | )
Non-cash settlements |  |  | – |  |  |  | (77 | ) |  |  | (77 | )
Liability balance, September 30, 2014 |  | $ | 140 |  |  | $ | – |  |  | $ | 140 |
We spent $44 million in the three months and $110 million in the nine months ended September 30, 2014 in cash severance and related costs. We also recognized non-cash asset write-downs (including accelerated depreciation and asset impairments) totaling $53 million in the three months and $77 million in the nine months ended September 30, 2014. At September 30, 2014, our net restructuring liability was $140 million recorded within other current liabilities. Implementation Costs: Implementation costs are directly attributable to restructuring activities; however, they do not qualify for special accounting treatment as exit or disposal activities. These costs primarily include costs to reorganize our operations and facilities, the discontinuance of certain product lines and the incremental expenses related to the closure of facilities, replicating our information systems infrastructure and reorganizing costs related to our sales function. We believe the disclosure of implementation costs provides readers of our financial statements with more information on the total costs of our 2012-2014 Restructuring Program. Within our continuing results of operations, we recorded implementation costs of $23 million in the three months and $66 million in the nine months ended September 30, 2014 and $20 million in the three months and $31 million in the nine months ended September 30, 2013. We recorded these costs within cost of sales and selling, general and administrative expenses primarily within our Europe, North America, Asia Pacific and EEMEA segments. Restructuring and Implementation Costs in Operating Income: During the three and nine months ended September 30, 2014 and 2013, we recorded restructuring and implementation costs related to the 2012-2014 Restructuring Program within operating income as follows:
|  | For the Three Months Ended September 30, 2014 |  |  | For the Nine Months Ended September 30, 2014 |
|  | Restructuring |  |  | Implementation |  |  |  |  |  | Restructuring |  |  | Implementation |  |  |  |
|  | Costs |  |  | Costs |  |  | Total |  |  | Costs |  |  | Costs |  |  | Total |
|  | (in millions) |
Latin America |  | $ | 3 |  |  | $ | – |  |  | $ | 3 |  |  | $ | 7 |  |  | $ | 1 |  |  | $ | 8 |
Asia Pacific |  |  | 27 |  |  |  | 1 |  |  |  | 28 |  |  |  | 28 |  |  |  | 1 |  |  |  | 29 |
EEMEA |  |  | 14 |  |  |  | – |  |  |  | 14 |  |  |  | 26 |  |  |  | 2 |  |  |  | 28 |
Europe |  |  | 85 |  |  |  | 14 |  |  |  | 99 |  |  |  | 128 |  |  |  | 42 |  |  |  | 170 |
North America |  |  | 34 |  |  |  | 7 |  |  |  | 41 |  |  |  | 70 |  |  |  | 20 |  |  |  | 90 |
Corporate(1) |  |  | – |  |  |  | 1 |  |  |  | 1 |  |  |  | – |  |  |  | – |  |  |  | – |
Total |  | $ | 163 |  |  | $ | 23 |  |  | $ | 186 |  |  | $ | 259 |  |  | $ | 66 |  |  | $ | 325 |
|  | For the Three Months Ended September 30, 2013 |  |  | For the Nine Months Ended September 30, 2013 |
|  | Restructuring |  |  | Implementation |  |  |  |  |  | Restructuring |  |  | Implementation |  |  |  |
|  | Costs |  |  | Costs |  |  | Total |  |  | Costs |  |  | Costs |  |  | Total |
|  | (in millions) |
Latin America |  | $ | 9 |  |  | $ | – |  |  | $ | 9 |  |  | $ | 9 |  |  | $ | – |  |  | $ | 9 |
Asia Pacific |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
EEMEA |  |  | 3 |  |  |  | – |  |  |  | 3 |  |  |  | 7 |  |  |  | – |  |  |  | 7 |
Europe |  |  | 18 |  |  |  | 10 |  |  |  | 28 |  |  |  | 55 |  |  |  | 14 |  |  |  | 69 |
North America |  |  | 12 |  |  |  | 10 |  |  |  | 22 |  |  |  | 58 |  |  |  | 17 |  |  |  | 75 |
Corporate(1) |  |  | 1 |  |  |  | – |  |  |  | 1 |  |  |  | 2 |  |  |  | – |  |  |  | 2 |
Total |  | $ | 43 |  |  | $ | 20 |  |  | $ | 63 |  |  | $ | 131 |  |  | $ | 31 |  |  | $ | 162 |
| (1) | Includes adjustment for rounding.

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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 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 5.P.3) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140864-122747 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 5 -Section P -Subsection 3, 4 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 5.P.4) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140904-122747 + Details
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