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Restructuring Programs

12 Months Ended

Dec. 31, 2015

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. Since inception, we have incurred total restructuring and related implementation charges of $1.4 billion related to the 2014-2018 Restructuring Program. We expect to incur the majority of the program’s remaining charges in 2016 and to complete the program by year-end 2018.

Restructuring Costs:

We recorded restructuring charges of $711 million 2015 and $274 million in 2014 within asset impairment and exit costs. The activity for the 2014-2018 Restructuring Program liability for the years ended December 31, 2015 and 2014 was:

		Severance
		and related				Asset
		costs				Write-downs				Total
						(in millions)
Liability balance, January 1, 2014		$	–			$	–			$	–
Charges			251				23				274
Cash spent			(17	)			–				(17	)
Non-cash settlements / adjustments			(5	)			(23	)			(28	)
Currency			(5	)			–				(5	)
Liability balance, December 31, 2014		$	224			$	–			$	224
Charges			442				269				711
Cash spent			(243	)			–				(243	)
Non-cash settlements / adjustments			(4	)			(269	)			(273	)
Currency			(24	)			–				(24	)
Liability balance, December 31, 2015		$	395			$	–			$	395

We spent $243 million in 2015 and $17 million in 2014 in cash severance and related costs. We also recognized non-cash pension settlement losses (See Note 10, Benefit Plans), non-cash asset write-downs (including accelerated depreciation and asset impairments) and other non-cash adjustments totaling $273 million in 2015 and $28 million in 2014. At December 31, 2015, $351 million of our net restructuring liability was recorded within other current liabilities and $44 million was recorded within other long-term 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. 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. Implementation 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. Within our continuing results of operations, we recorded implementation costs of $291 million in 2015 and $107 million in 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 2015 and 2014, we recorded restructuring and implementation costs related to the 2014-2018 Restructuring Program within operating income as follows:

For the Years Ended December 31,		Latin				Asia												North
		America				Pacific				EEMEA				Europe				America				Corporate (1)				Total
														(in millions)
2015
Restructuring Costs		$	145			$	133			$	63			$	228			$	114			$	28			$	711
Implementation Costs			39				19				12				73				69				79				291
Total		$	184			$	152			$	75			$	301			$	183			$	107			$	1,002
2014
Restructuring Costs		$	81			$	16			$	19			$	91			$	57			$	10			$	274
Implementation Costs			16				9				4				37				5				36				107
Total		$	97			$	25			$	23			$	128			$	62			$	46			$	381
Total Project 2014-2015 (2)
Restructuring Costs		$	226			$	149			$	82			$	319			$	171			$	38			$	985
Implementation Costs			55				28				16				110				74				115				398
Total		$	281			$	177			$	98			$	429			$	245			$	153			$	1,383

(1) Includes adjustment for rounding.

(2) Includes all charges recorded since program inception on May 6, 2014 through December 31, 2015.

2012-2014 Restructuring Program

On October 1, 2012, we completed the Spin-Off of our North American grocery business, Kraft Foods Group, to our shareholders. Prior to this transaction, in 2012, our Board of Directors approved $1.5 billion of related restructuring and 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. Through the end of 2014, we incurred total restructuring and related implementation charges of $899 million and completed incurring planned charges on the 2012-2014 Restructuring Program.

Restructuring Costs:

We recorded reversals to the restructuring charges of $4 million 2015 related to accruals no longer required. We recorded restructuring charges of $360 million in 2014 and $267 million in 2013 within asset impairment and exit costs. During 2014, we also recorded out-of-period accruals for $73 million of severance ($52 million related to 2014 and $21 million related to 2013) in connection with a change in the timing of accruals for ongoing negotiations with workers’ councils and labor unions.

The activity for the 2012-2014 Restructuring Program liability for the years ended December 31, 2015 and 2014 was:

		Severance
		and related				Asset
		costs				Write-downs				Total
		(in millions)
Liability balance, January 1, 2014		$	68			$	–			$	68
Charges			201				159				360
Cash spent			(130	)			–				(130	)
Non-cash settlements / adjustments			(2	)			(159	)			(161	)
Currency			(9	)			–				(9	)
Liability balance, December 31, 2014		$	128			$	–			$	128
Charges			(4	)			–				(4	)
Cash spent			(66	)			–				(66	)
Non-cash settlements / adjustments			(4	)			–				(4	)
Currency			(7	)			–				(7	)
Liability balance, December 31, 2015		$	47			$	–			$	47

We spent $66 million in 2015 and $130 million in 2014 in cash severance and related costs. We also recognized non-cash pension plan settlement losses (See Note 10, Benefit Plans), non-cash asset write-downs (including accelerated depreciation and asset impairments) and other non-cash adjustments totaling $4 million in 2015 and $161 million in 2014. At December 31, 2015, $46 million of our net restructuring liability was recorded within other current liabilities and $1 million was recorded within other long-term liabilities.

Implementation Costs:

Implementation costs related to our 2012-2014 Restructuring Program primarily relate to activities in connection with the Spin-Off such as reorganizing our operations and facilities, the discontinuance of certain product lines and incremental expenses related to the closure of facilities, replicating our information systems infrastructure and reorganizing our sales function. Within our continuing results of operations, we recorded implementation costs of $99 million in 2014 and $63 million in 2013. We recorded these costs within cost of sales and selling, general and administrative expenses.

Restructuring and Implementation Costs in Operating Income:

During 2014 and 2013 and since inception of the 2012-2014 Restructuring Program, we recorded restructuring and implementation costs within operating income as follows:

For the Years Ended December 31,		Latin				Asia												North
		America				Pacific				EEMEA				Europe				America				Corporate (1)				Total
														(in millions)
2014
Restructuring Costs		$	8			$	34			$	57			$	148			$	113			$	–			$	360
Implementation Costs			3				6				2				52				32				4				99
Total		$	11			$	40			$	59			$	200			$	145			$	4			$	459
2013
Restructuring Costs		$	21			$	2			$	12			$	95			$	135			$	2			$	267
Implementation Costs			–				–				2				36				25				–				63
Total		$	21			$	2			$	14			$	131			$	160			$	2			$	330
Total Project 2012-2014 (2)
Restructuring Costs		$	36			$	36			$	69			$	249			$	337			$	2			$	729
Implementation Costs			3				6				4				88				65				4				170
Total		$	39			$	42			$	73			$	337			$	402			$	6			$	899

(1) Includes adjustment for rounding.

(2) Includes all charges recorded since program inception in 2012 through conclusion on December 31, 2014.

X

- 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 2
-Subparagraph (SAB TOPIC 5.P.4)
-URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140904-122747

Reference 2: 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 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 SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 5
-Section P
-Subsection 3, 4

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