Mondelez 2014 Annual Report Download - page 75

Table of Contents
On January 1, 2014, an organizational change occurred within our North America region from a country and product category
structure to a regional product category structure. As a result, our North America region now has two instead of four reporting units.
For any reporting units that were reorganized, the goodwill was allocated to the new reporting unit structure based on relative fair
values of the related business units.
In 2014, 2013 and 2012, there were no impairments of goodwill. In connection with our 2014 annual impairment testing, each of our
reporting units had sufficient fair value in excess of carrying value. While all reporting units passed our annual impairment testing, if
expectations are not met or specific valuation factors outside of our control, such as discount rates, change significantly, then the
estimated fair values of a reporting unit or reporting units might decline and lead to a goodwill impairment in the future.
During our 2014 review of non-amortizable intangible assets, we recorded $57 million of impairment charges related to two
trademarks. In both cases, the impairments arose due to lower than expected product growth and decisions made in the fourth
quarter to redirect support for the products to other regional brands. We recorded a $48 million charge related to a biscuit
trademark in our Asia Pacific segment and a $9 million charge related to a candy trademark in our Europe segment. The
impairment charges were calculated as the excess of the carrying value over the estimated fair value of the intangible assets on a
global basis and were recorded within asset impairment and exit costs. We primarily use a relief of royalty valuation method,
which utilizes estimates of future sales, growth rates, royalty rates and discount rates in determining a brand
’s global fair
value. During our 2014 intangible asset impairment review, we also noted three brands with $341 million of aggregate book value
as of December 31, 2014 that each had a fair value in excess of book value of 10% or less. While these intangible assets passed
our annual impairment testing and we believe our current plans for each of these brands will allow them to continue to not be
impaired, if expectations are not met or specific valuation factors outside of our control, such as discount rates, change significantly,
then a brand or brands could become impaired in the future.
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 of $274 million in 2014 within asset impairment and exit costs. The activity for the 2014-2018
Restructuring Program liability for the year ended December 31, 2014 was:
We spent $17 million in 2014 in cash severance and related costs. We also recognized non-cash pension plan settlement losses
(see Note 10, Benefit Plans, for more details), non-cash asset write-downs (including accelerated depreciation and asset
impairments) and other non-cash adjustments totaling $28 million in 2014. At December 31, 2014, $209 million of our net
restructuring liability was recorded within other current liabilities and $15 million was recorded within other long-term liabilities.
72
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
(5
)
(23
)
(28
)
Currency
(5
)
–
(
5
)
Liability balance, December 31, 2014
$
224
$
–
$
224