Note 6. Restructuring Programs

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. On August 31, 2016, our Board of Directors approved a reallocation within the $5.7 billion total cost of the programs of $600 million of previously approved capital expenditures to be spent on restructuring program cash costs. There was no change to the total $5.7 billion cost of the programs and no change to the total $4.7 billion of cash outlays. The $5.7 billion total cost of the programs is now comprised of approximately $4.1 billion of restructuring program costs ($3.1 billion cash costs and $1 billion non-cash costs) and up to $1.6 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 $2.5 billion related to the 2014-2018 Restructuring Program. We have incurred the majority of the program’s charges through 2016 and we expect to complete the program by year-end 2018.

Restructuring Costs:

We recorded restructuring charges of $714 million in 2016, $711 million 2015 and $274 million in 2014 within asset impairment and exit costs. The 2014-2018 Restructuring Program liability activity for the years ended December 31, 2016 and 2015 was:


	Severance
	and related			Asset
	costs			Write-downs			Total
	(in millions)

Liability balance, January 1, 2015	$	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

Charges		402			312			714
Cash spent		(315	)		–			(315	)
Non-cash settlements / adjustments		(9	)		(312	)		(321	)
Currency		(9	)		–			(9	)

Liability balance, December 31, 2016	$	464		$	–		$	464

We spent $315 million in 2016 and $243 million in 2015 in cash severance and related costs. We also recognized non-cash pension settlement losses (See Note 9, Benefit Plans), non-cash asset write-downs (including accelerated depreciation and asset impairments) and other non-cash adjustments totaling $321 million in 2016 and $273 million in 2015. At December 31, 2016, $379 million of our net restructuring liability was recorded within other current liabilities and $85 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 $372 million in 2016, $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 2016, 2015 and 2014, we recorded restructuring and implementation costs related to the 2014-2018 Restructuring Program within operating income by segment (as revised to reflect our new segment structure) as follows:


	Latin						North
	America		AMEA		Europe		America⁽¹⁾		Corporate ⁽²⁾		Total
	(in millions)

For the Year Ended December 31, 2016
Restructuring Costs	$	111	$	96	$	310	$	183	$	14	$	714
Implementation Costs		54		48		88		121		61		372

Total	$	165	$	144	$	398	$	304	$	75	$	1,086

For the Year Ended December 31, 2015
Restructuring Costs	$	145	$	181	$	243	$	114	$	28	$	711
Implementation Costs		39		26		78		69		79		291

Total	$	184	$	207	$	321	$	183	$	107	$	1,002

For the Year Ended December 31, 2014
Restructuring Costs	$	81	$	30	$	96	$	57	$	10	$	274
Implementation Costs		16		12		38		5		36		107

Total	$	97	$	42	$	134	$	62	$	46	$	381

Total Project 2014-2016 ⁽³⁾
Restructuring Costs	$	337	$	307	$	649	$	354	$	52	$	1,699
Implementation Costs		109		86		204		195		176		770

Total	$	446	$	393	$	853	$	549	$	228	$	2,469

(1)

During 2016, our North America region implementation costs included incremental costs that we incurred related to re-negotiating collective bargaining agreements that expired at the end of February 2016 for eight U.S. facilities and related to executing business continuity plans for the North America business.

(2)

Includes adjustment for rounding.

(3)

Includes all charges recorded since program inception on May 6, 2014 through December 31, 2016.

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 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. 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 in 2015 related to accruals no longer required. We recorded restructuring charges of $360 million in 2014 within asset impairment and exit costs. During 2014, we 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 2012-2014 Restructuring Program liability activity for the years ended December 31, 2016 and 2015 was:


	Severance
	and related			Asset
	costs			Write-downs		Total
	(in millions)

Liability balance, January 1, 2015	$	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

Charges		–			–		–
Cash spent		(21	)		–		(21	)
Non-cash settlements / adjustments		(6	)		–		(6	)
Currency		(1	)		–		(1	)

Liability balance, December 31, 2016	$	19		$	–	$	19

We spent $21 million in 2016 and $66 million in 2015 in cash severance and related costs. We also recognized non-cash pension plan settlement losses (See Note 9, Benefit Plans) and non-cash adjustments totaling $6 million in 2016 and $4 million in 2015. At December 31, 2016, $18 million of our net restructuring liability was recorded within other current liabilities and less than $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 Kraft Foods Group 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. We recorded these costs within cost of sales and selling, general and administrative expenses.

Restructuring and Implementation Costs in Operating Income:

During 2014 and since inception of the 2012-2014 Restructuring Program, we recorded restructuring and implementation costs within operating income by segment (as revised to reflect our new segment structure) as follows:


	Latin						North
	America		AMEA		Europe		America		Corporate ⁽¹⁾		Total
	(in millions)

For the Year Ended December 31, 2014
Restructuring Costs	$	8	$	77	$	162	$	113	$	–	$	360
Implementation Costs		3		6		54		32		4		99

Total	$	11	$	83	$	216	$	145	$	4	$	459

Total Project 2012-2014 ⁽²⁾
Restructuring Costs	$	36	$	83	$	271	$	337	$	2	$	729
Implementation Costs		3		8		90		65		4		170

Total	$	39	$	91	$	361	$	402	$	6	$	899

(1)

Includes adjustment for rounding.

(2)

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