Mondelez 2012 Annual Report Download - page 74

Table of Contents
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 greater transparency to the total costs of our 2012-2014 Restructuring Program. Within our continuing results of
operations, to date, we recorded implementation costs of $8 million in 2012 within cost of sales and selling, general and
administrative expense in our North America segment. These costs primarily include costs to integrate and 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.
Restructuring and Implementation Costs by Segment:
During 2012, we recorded restructuring and implementation costs within our consolidated segment operating income as follows:
Note 7. Integration Program and Cost Savings Initiatives
Integration Program
As a result of our combination with Cadbury in 2010, we launched an integration program to realize expected 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.
Changes in the Integration Program liability were (in millions):
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.
71
Severance
and related
costs
Asset
Write
-
downs
Total
(in millions)
Liability balance, January 1, 2012
$
–
$
–
$
–
Charges
84
18
102
Cash spent
(33
)
–
(
33
)
Non
-
cash settlements
(15
)
(18
)
(33
)
Liability balance, December 31, 2012
$
36
$
–
$
36
For the Year Ended December 31, 2012
Restructuring
Implementation
Costs
Costs
Total
(in millions)
Developing Markets
$
7
$
–
$
7
Europe
6
–
6
North America
89
8
97
Total
$
102
$
8
$
110
2012
2011
Balance at January 1
$
346
$
406
Charges
140
521
Cash spent
(281
)
(554
)
Currency / other
(3
)
(27
)
Balance at December 31
$
202
$
346