Restructuring and Productivity Initiatives

Phase 1: During the period from April 29, 2013 to December 29, 2013 (the "Transition Period") and the first nine months of 2014, the Company invested in restructuring and productivity initiatives as part of its ongoing cost reduction efforts with the goal of driving efficiencies and creating fiscal resources that will be reinvested into the Company's business as well as to accelerate overall productivity on a global scale. The number of employees impacted by these initiatives was approximately 4,050, all of whom had left the Company as of June 28, 2015, and comprised of corporate and field positions across the Company's global business segments. With respect to these restructuring and productivity initiatives, the Company incurred total charges of $289 million related to severance benefits and other severance-related expenses from inception through its conclusion in December 2014.

Footprint: In addition, the Company announced the planned closure and consolidation of 5 factories across the U.S., Canada and Europe during 2014. The number of employees impacted by these 5 plant closures and consolidation was approximately 1,600, all of whom had left the Company as of June 28, 2015. With respect to these factory closures, the Company incurred charges of $91 million related to severance benefits and other severance-related expenses through its conclusion in March 2015.

License Expiration: Furthermore, in the fourth quarter of 2014, the Company announced the planned closure of one additional factory in Europe in the first half of 2015 due to the expiration of a license to manufacture a non-core product. The number of employees impacted by this plant closure was approximately 200, all of whom had left the Company as of June 28, 2015. With respect to this factory closure, the Company incurred charges of approximately $11 million related to severance benefits and other severance-related expenses through its conclusion in June 2015. In addition, the Company recognized $37 million in non-cash asset write-downs for impairment of long-lived assets to be disposed. In the six months ended June 28, 2015, the Company incurred $9 million in contract termination fees related to this factory closure.

Phase II: In the fourth quarter of 2014 and in the first quarter of 2015, the Company invested in restructuring and productivity initiatives as part of its ongoing cost reduction efforts with the goal of driving efficiencies and creating fiscal resources that will be reinvested into the Company's business as well as to accelerate overall productivity on a global scale. The number of employees impacted by these initiatives was approximately 1,050, all of whom had left the Company as of June 28, 2015, and comprised of corporate and field positions across the Company's global business segments. With respect to these restructuring and productivity initiatives, the Company recognized $30 million in non-cash asset write-downs in 2014 for impairment of long-lived assets to be disposed. The Company incurred total charges of approximately $68 million related to severance benefits and other severance-related expenses from project inception through its conclusion in March 2015.

In the second quarter of 2015, the Company announced the planned closure and consolidation of 2 factories across the U.S. during 2015 and the elimination of corporate and field positions across Asia/Pacific during 2015. The number of employees impacted by these initiatives was approximately 700, of which 400 had left the company as of June 28, 2015. With respect to these restructuring and productivity initiatives, the Company recognized $21 million in non-cash asset write-downs for impairment of assets to be disposed. The Company incurred charges of approximately $8 million related to severance benefits and other severance-related expenses from project inception through June 28, 2015.

Integration Program: Following the 2015 Merger, the Company approved an integration program (the “Integration Program”) designed to integrate and optimize the organization following the 2015 Merger. As a result, the Company expects to incur material charges due to exit and disposal activities. As part of the Integration Program, the Company expects to, among other things, reduce its existing workforce and incur certain one-time severance and postretirement benefit costs.

The Company continues to evaluate actions and the costs of the Integration Program and therefore is currently unable to make a determination of an estimate of the total amount or range of amounts for each major type of cost expected to be incurred in connection with the Integration Program, or a range of amounts of the charges that will result in future cash expenditures. The Company is also currently unable to determine the duration of the plan, but expects that the plan will be implemented over a multi-year period.

The Company recorded pre-tax costs related to these initiatives in the second quarter and six months ended June 28, 2015 and June 29, 2014, which were comprised of the following:



	Second Quarter Ended
	June 28, 2015		June 29, 2014
	(In millions)
Severance and employee benefit costs	$	8	$	30
Non-cash asset write-downs and accelerated depreciation	25		62
Other exit costs ^(a)	2		25
Total productivity charges	$	35	$	117



	Six Months Ended
	June 28, 2015		June 29, 2014
	(In millions)
Severance and employee benefit costs	$	13	$	84
Non-cash asset write-downs and accelerated depreciation	27		135
Other exit costs ^(a)	12		38
Total productivity charges	$	52	$	257

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(a)	Other exit costs primarily represent professional fees, and contract and lease termination costs.

Of the $35 million total pre-tax charges for the three months ended June 28, 2015, $32 million was recorded in cost of products sold and $3 million in selling, general and administrative expenses ("SG&A"). Of the $117 million total pre-tax charges for the three months ended June 29, 2014, $107 million was recorded in cost of products sold and $10 million in SG&A.

Of the $52 million total pre-tax charges for the six months ended June 28, 2015, $48 million was recorded in cost of products sold and $4 million SG&A. Of the $257 million total pre-tax charges for the three months ended June 29, 2014, $225 million was recorded in cost of products sold and $32 million in SG&A.

The Company does not include restructuring and productivity charges in the results of its reportable segments. The pre-tax impact of allocating such charges to segment results would have been as follows:



	Second Quarter Ended
	June 28, 2015		June 29, 2014
	(In millions)
North America	$	27	$	72
Europe	4		34
Asia/Pacific	4		8
Latin America	—		—
RIMEA	—		1
Non-Operating	—		2
Total productivity charges	$	35	$	117



	Six Months Ended
	June 28, 2015		June 29, 2014
	(In millions)
North America	$	30	$	156
Europe	14		63
Asia/Pacific	7		18
Latin America	1		—
RIMEA	—		2
Non-Operating	—		18
Total productivity charges	$	52	$	257

Activity in other accrued liability balances for restructuring and productivity charges incurred were as follows:



	Severance and other severance related costs			Other exit costs (a)			Total
	(In millions)
Accrual balance at December 28, 2014	$	53		$	26		$	79
2015 restructuring and productivity initiatives	13			12			25
Cash payments	(50		)	(13		)	(63		)
Accrual balance at June 28, 2015	$	16		$	25		$	41

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(a)	Other exit costs primarily represent professional fees, and contract and lease termination costs.

The majority of the amount included in the accrual balance at June 28, 2015 is expected to be paid in 2015.