Mondelez 2012 Annual Report Download - page 27

Table of Contents
2012-2014 Restructuring Program
On March 14, 2012, our Board of Directors approved $1.1 billion of restructuring and related implementation costs (“2012-2014
Restructuring Program”) reflecting primarily severance, asset disposals and other manufacturing-related one-time costs. The
primary objective of the restructuring and implementation activities was to ensure that both Kraft Foods Group and Mondelēz
International were each set up to operate efficiently and execute on our respective business strategies upon separation and in the
future. On October 23, 2012, our Board of Directors approved $400 million of additional restructuring and related implementation
programs, totaling $1.5 billion of expected 2012-2014 Restructuring Program costs.
Of the $1.5 billion of 2012-2014 Restructuring Program costs, $575 million relates to Kraft Foods Group and approximately $925
million are costs we expect to incur or have incurred in our results from continuing operations.
Through December 31, 2012, we have recorded restructuring charges of $102 million, or $0.04 per diluted share, in our results from
continuing operations, which were recorded within asset impairment and exit costs. In 2012, we spent $33 million on primarily
severance and related costs and also recognized non-cash severance and related costs and asset write-downs (including
accelerated depreciation and asset impairments) totaling $33 million. At December 31, 2012, $36 million of restructuring liabilities
were recorded within other current liabilities. In 2012, we also incurred $8 million of implementation costs which were recorded
within cost of sales and selling, general and administrative expenses. See Note 6,
2012-2014 Restructuring Program
, for additional
information.
Integration Program
As a result of our combination with Cadbury in 2010, we launched an integration program to realize annual cost savings of
approximately $750 million by the end of 2013 and revenue synergies from investments in distribution, marketing and product
development. In order to achieve these cost savings and synergies and integrate the two businesses, we expect to incur total
integration charges of approximately $1.5 billion through the end of 2013 (the “Integration Program”).
Integration Program costs include the costs associated with combining the Cadbury operations within our Global Snacks Business
and are separate from the costs related to the acquisition. Since the inception of the Integration Program, we have incurred
approximately $1.3 billion of the estimated $1.5 billion total integration charges. In 2012, we met and exceeded our annual cost
savings target of $750 million and achieved approximately $800 million of annual costs savings one year ahead of schedule.
We recorded Integration Program charges of $185 million in 2012, $521 million in 2011 and $646 million in 2010. During 2012, we
reversed $45 million of Integration Program charges previously accrued in 2010 and primarily related to planned and announced
position eliminations that did not occur within our Europe segment. We recorded these charges in operations as a part of selling,
general and administrative expenses primarily within our Europe and Developing Markets segments, as well as within general
corporate expenses. At December 31, 2012, we had an accrual of $202 million related to the Integration Program. See Note 7,
Integration Program and Cost Savings Initiatives , to the consolidated financial statements for additional information.
Cost Savings Initiatives
Cost savings initiatives generally include exit, disposal and other project costs outside of our Integration Program and 2012-2014
Restructuring Program and consist of the following specific initiatives:
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• In 2012, we recorded a $21 million charge primarily within the segment operating income of Europe related to severance
benefits provided to terminated employees and charges in connection with the reorganization within the Europe and
Developing Markets segment (the “Europe reorganization”).
• In 2011, we recorded a $61 million charge primarily within the segment operating income of Europe related to severance
benefits provided to terminated employees and charges in connection with the Europe reorganization. We also reversed
approximately $15 million of cost savings initiative program costs across the North America and Developing Markets
segments.
• In 2010, we recorded $117 million primarily within the segment operating income of Europe in connection with the
Europe reorganization.