UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 7, 2012
MONDELĒZ INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
| Virginia | 1-16483 | 52-2284372 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
| Three Parkway North, Deerfield, Illinois | 60015 | |
| (Address of Principal executive offices) | (Zip Code) |
Registrant’s Telephone number, including area code: (847) 943-4000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
This information will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
On November 7, 2012, Mondelēz International, Inc., a Virginia corporation, issued a press release announcing earnings for the third quarter ended September 30, 2012. A copy of the earnings press release is furnished as Exhibit 99.1 to this current report.
NON-GAAP FINANCIAL MEASURES
We report our financial results in accordance with accounting principles generally accepted in the United States (“GAAP”).
Our top-line measure is Organic Net Revenues, which excludes the impacts of divestitures, currency and accounting calendar changes. We use Organic Net Revenues and corresponding metrics as non-GAAP financial measures. Management believes Organic Net Revenues better reflects the underlying growth from the ongoing activities of our business and provides improved comparability of results.
We use Adjusted Operating Income and Adjusted Segment Operating Income (formerly known as “Underlying Operating Income” and “Underlying Segment Operating Income,” respectively), which is defined as operating income (or segment operating income) excluding costs related to: the Integration Program; the Restructuring Program; and Spin-Off Costs, including transaction fees and other costs associated with the Spin-Off of the North American grocery business. We use Adjusted Operating Income, Adjusted Segment Operating Income and corresponding metrics as non-GAAP financial measures. Management believes Adjusted Operating Income and Adjusted Segment Operating Income provide improved comparability of operating results.
We use Operating EPS, which is defined as diluted EPS attributable to Mondelēz International excluding costs related to: the Integration Program; the Restructuring Program; and Spin-Off Costs. We use Operating EPS and corresponding metrics as non-GAAP financial measures. Management believes Operating EPS provides improved comparability of operating results.
We use Adjusted Pro Forma Results from Continuing Operations (also, “Adjusted Pro Forma” or “Adjusted Pro Forma Continuing Operations”), which is defined as including the following adjustments from the beginning of all periods presented:
| • | removal of Kraft Foods Group results of operations (“Kraft Foods Group Operation”) which was divested on October 1, 2012; |
| • | removal of Integration Program costs; |
| • | removal of 2012-2014 Restructuring Program costs; |
| • | removal of Spin-Off Costs, including transaction fees and other costs associated with the Spin-Off of Kraft Foods Group; |
| • | adjustment to reduce benefit plan expense in connection with the transfer of certain employee benefit plan obligations to Kraft Foods Group in the Spin-Off transaction; |
| • | adjustment to reflect the finalization of the Spin-Off capitalization plan at Mondelēz International and the assumed pay down of approximately $6 billion of our debt and the related estimated reduction in our interest expense as a result of cash received from Kraft Foods Group. |
We use Adjusted Pro Forma Continuing Operations and corresponding metrics as non-GAAP financial measures to present operating results on a standalone company basis. Management believes Adjusted Pro Forma Continuing Operations provides improved comparability of operating results as a standalone company. The adjusted pro forma information is for informational purposes only and is not intended to represent what our results of operations or financial position would have been had the Spin-Off and related transactions and adjustments occurred at an earlier time within the periods presented, nor should it be considered indicative of our future results of operations as a standalone company.
Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our results prepared in accordance with GAAP. In addition, the non-GAAP measures we are using may differ from non-GAAP measures used by other companies. Because GAAP financial measures on a forward-looking basis are neither accessible nor deemed to be significantly different from the non-GAAP financial measures, and reconciling information is not available without unreasonable effort, with regard to the non-GAAP financial measures in our Outlook, we have not provided that information.
See the attached schedules for supplemental financial data and corresponding reconciliations of the non-GAAP financial measures referred to above to the most comparable GAAP financial measures for the three and nine months ended September 30, 2012 and 2011.
SEGMENT OPERATING INCOME
Management uses segment operating income to evaluate segment performance and allocate resources. We believe it is appropriate to disclose this measure to help investors analyze segment performance and trends. Segment operating income excludes unrealized gains and losses on hedging activities (which are a component of cost of sales), certain components of our U.S. pension plan cost (which is a component of selling, general and administrative expenses), general corporate expenses (which are a component of selling, general and administrative expenses) and amortization of intangibles for all periods presented. We centrally manage pension plan funding decisions and determination of discount rate, expected rate of return on plan assets and other actuarial assumptions. Therefore, we allocate only the service cost component of our U.S. pension plan expense to segment operating income. We exclude the unrealized gains and losses on hedging activities from segment operating income to provide better transparency of our segment operating results. Once realized, we record the gains and losses on hedging activities within segment operating results. Accordingly, we do not present these items by segment because they are excluded from the segment profitability measure that management reviews.
| Item 9.01. | Financial Statements and Exhibits. |
(d) The following exhibit is being furnished with this Current Report on Form 8-K.
| Exhibit Number |
Description | |
| 99.1 | Mondelēz International, Inc. Press Release, dated November 7, 2012. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MONDELĒZ INTERNATIONAL, INC. | ||||||
| Date: November 7, 2012 | /s/ DAVID A. BREARTON | |||||
| Name: | David A. Brearton | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
Exhibit 99.1
| Contacts: | Michael Mitchell (Media) | Dexter Congbalay (Investors) | ||
| +1-847-943-5678 | +1-847-943-5454 | |||
| news@mdlz.com | ir@mdlz.com |
Mondelēz International Reports Q3 2012 Results
and Confirms 2013 Guidance
DEERFIELD, Ill. – Nov. 7, 2012 – Mondelēz International, Inc. (NASDAQ: MDLZ) today reported third quarter 2012 results.
On Oct. 1, 2012, Mondelēz International, formerly known as Kraft Foods Inc., completed the spin-off of its North American grocery business, Kraft Foods Group, Inc. Beginning in the fourth quarter 2012, Kraft Foods Group’s historical financial results for periods prior to Oct. 1, 2012, will be reflected in the company’s financial statements as a discontinued operation.
Results Under the Kraft Foods Inc. Structure
| • | Net revenues declined 2.4% to $12.9 billion; Organic Net Revenues1 increased 2.1% |
| • | Operating income declined 2.7%; Adjusted Operating Income1 increased 6.8% |
| • | Diluted EPS was $0.36; Operating EPS1 was $0.64, up 10.3% |
On a reported basis, including Kraft Foods Group, net revenues were $12.9 billion, down 2.4 percent, including a 4.5 percentage point headwind from currency. Organic Net Revenues increased 2.1 percent.
Operating income was $1.7 billion, and operating income margin was 12.8 percent. Adjusted Operating Income, which excludes Integration Program2 costs, Restructuring Program3 costs and Spin-Off Costs4, grew 6.8 percent to $1.9 billion. Adjusted Operating Income margin increased 1.3 percentage points to 15.0 percent.
Diluted EPS was $0.36, while Operating EPS was $0.64, up 10.3 percent, or 15.5 percent on a constant currency basis.
| 1 | Please see discussion of Non-GAAP Financial Measures at the end of this press release. |
| 2 | Integration Program costs are defined as the costs associated with combining the Kraft Foods and Cadbury businesses, and are separate from those costs associated with the acquisition. |
| 3 | Restructuring Program costs represent non-recurring restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing related non-recurring costs. |
| 4 | Spin-Off Costs represent non-recurring transaction and transition costs associated with preparing the businesses for independent operations consisting primarily of financial advisory fees, legal fees, accounting fees, tax services and information systems infrastructure duplication. In addition, Spin-Off costs include financing and related costs to redistribute debt and secure investment grade credit ratings for both Mondelēz International and Kraft Foods Group. |
1
Results for Mondelēz International on an
Adjusted Pro Forma Continuing Operations Basis
| • | Net revenues declined 5.1% to $8.3 billion; Organic Net Revenues1 increased 1.5% |
| • | Operating income increased 2.2%, up 7.5% on a constant currency basis |
| • | Diluted EPS declined 2.6% to $0.37, up 2.6% on a constant currency basis |
| • | Company reaffirmed 2013 guidance of Organic Net Revenue growth at the low end of 5%-7% range, and Operating EPS of $1.50 to $1.55 based on average August 2012 foreign currency rates |
The following discussion highlights standalone financial results for Mondelēz International on an Adjusted Pro Forma continuing operations basis. This reflects the spin-off and removal of the divested Kraft Foods Group business from all periods presented. It also includes the impacts of the following transactions as if they occurred at the beginning of the periods presented: the transfer of certain North American benefit plan obligations to Kraft Foods Group; and the reduction of debt related to the completion of the spin-off capitalization plans. The Adjusted Pro Forma results exclude Spin-Off Costs, 2012-2014 Restructuring Program costs and Integration Program costs. The company introduced Adjusted Pro Forma results of operations in a Form 8-K filing on October 5, 2012 to facilitate comparisons of past and future operating performance.
“As we expected, our top-line growth this quarter was modest,” said Irene Rosenfeld, Chairman and CEO. “This reflected the lapping of our exceptional performance in the third quarter last year and a lower contribution from pricing. We also had some short-term executional missteps in a few key countries, but these issues should be largely resolved by the end of the year. Growth in our core categories continues to be robust. And we remain confident in our ability to deliver our 2013 and long-term targets.”
Net revenues were $8.3 billion, down 5.1 percent, including a 6.6 percentage point headwind from currency. Organic Net Revenues increased 1.5 percent despite lapping 9.4 percent growth in the prior year third quarter. The increase was driven by 6 percent growth from global and regional Power Brands. Favorable pricing of 2.2 percentage points was partially offset by 0.7 percentage points from lower volume/mix. Through the first nine months of 2012, Organic Net Revenues increased 4.6 percent.
Operating income was $1.1 billion, up 2.2 percent, or 7.5 percent on a constant currency basis, as the effective management of input costs and lower SG&A more than offset the impact of lower volume/mix. Operating income margin rose 0.9 percentage points to 13.1 percent. Year-to-date, operating income grew 4.8 percent, or 9.3 percent on a constant currency basis, while operating income margin increased 0.9 percentage points to 12.7 percent.
1 Please see discussion of Non-GAAP Financial Measures at the end of this press release.
2
Diluted EPS was $0.37, down 2.6 percent, including a $0.02 negative impact from currency. On a constant currency basis, diluted EPS increased 2.6 percent in the third quarter and 7.8 percent year to date. The increase was driven primarily by operating gains, mostly offset by an increase in taxes due to significant one-time benefits in the prior year.
Mixed Results in Developing Markets
Developing Markets delivered modest organic revenue growth reflecting a difficult comparison to the prior year quarter as well as some executional issues in a few key markets.
Net revenues in the third quarter decreased 6.0 percent, including a negative 7.7 percentage point impact from currency. Organic Net Revenues1 grew 1.7 percent, with higher pricing partially offset by lower volume/mix. The modest rise in Organic Net Revenue reflected difficult comparisons to the 15.5 percent growth generated in the prior year quarter, when many customers increased purchases ahead of announced price increases. The region’s Power Brands grew about 7 percent, led by Cadbury Dairy Milk, Lacta and Milka chocolate, and Oreo and Barni biscuits.
Revenue growth reflected mixed performance across the region. Key markets such as China, India and the Middle East & Africa grew strongly, but this was tempered by weak results in Brazil and Russia due to short-term executional issues. The company has taken actions to address these issues, and expects fourth quarter 2012 Organic Net Revenue in the region to grow high single digits.
Segment operating income decreased 6.3 percent, including a negative 5.3 percentage point impact from currency. Excluding currency, segment operating income was essentially flat as lower volume/mix largely offset the effective management of input costs.
Solid Performance in Europe
Europe delivered solid results in a difficult environment through volume/mix gains and continued benefits from a focus on productivity and overhead reduction.
Net revenues in the third quarter decreased 8.1 percent, including a negative 8.8 percentage point impact from currency. Organic Net Revenues increased 0.7 percent, driven by solid volume/mix growth, particularly in chocolate and coffee. The volume/mix gains in the quarter were consistent with the performance in the first half of the year. These gains were partially offset by lower pricing, primarily in coffee. The region’s Power Brands grew 2 percent, led by Milka and Cadbury Dairy Milk chocolate, Oreo and belVita biscuits, the chocobakery platform and Tassimo beverages.
1 Please see discussion of Non-GAAP Financial Measures at the end of this press release.
3
Segment operating income decreased 0.8 percent, including an unfavorable 8.2 percentage point impact from currency. Excluding currency, Europe’s segment operating income grew mid-to-high single digits, and includes the favorable impact of a one-time item.
Strong Biscuit Growth Drove Gains in North America
Strong U.S. biscuit performance drove solid top- and bottom-line growth in North America.
Net revenues in the third quarter increased 1.9 percent. Organic Net Revenues1 grew 2.2 percent, driven by higher pricing, partially offset by lower volume/mix due to product pruning in Canada. Biscuits in the U.S. increased mid-single-digits, reflecting the benefits of a more focused direct store delivery sales force. Gum and candy was flat as double-digit growth in candy and the launch of Stride ID offset weakness in other gum brands. The region’s Power Brands grew 9 percent, led by Honey Maid, Ritz, Triscuit and Oreo biscuits and Halls candy.
Segment operating income increased 14.5 percent reflecting strong gains from pricing and productivity that more than offset a significant increase in advertising and consumer promotions support behind Power Brands.
Outlook
“We remain confident in the 2013 guidance that we outlined in September,” said David Brearton, Executive Vice President and CFO. “As a result, we are reaffirming our 2013 Organic Net Revenue growth outlook to be at the low end of our long-term growth target of 5 to 7 percent, and Operating EPS1 to be $1.50 to $1.55, based on average August 2012 foreign currency rates. Using average foreign currency rates for October 2012, the company’s 2013 Operating EPS guidance would be approximately 5 cents higher.”
Conference Call
Mondelēz International will host a conference call for investors with accompanying slides to review its results at 5 p.m. EST today. Access to a live audio webcast with accompanying slides is available at www.mondelezinternational.com, and a replay of the event will also be available on the company’s web site.
About Mondelēz International
Mondelēz International, Inc. (NASDAQ: MDLZ) is a world leader in chocolate, biscuits, gum, candy, coffee and powdered beverages. The company comprises the global snacking and food brands of the former Kraft Foods Inc. following the spin-off of its North American grocery
1 Please see discussion of Non-GAAP Financial Measures at the end of this press release.
4
operations in October 2012. Mondelēz International’s portfolio includes several billion-dollar brands such as Cadbury and Milka chocolate, Jacobs coffee, LU, Nabisco and Oreo biscuits, Tang powdered beverages and Trident gum. Mondelēz International has annual revenue of approximately $36 billion and operations in more than 80 countries. Visit www.mondelezinternational.com and www.facebook.com/mondelezinternational.
Forward-Looking Statements
This press release contains a number of forward-looking statements. Words, and variations of words such as “reaffirms,” “expect,” “should,” “confident,” “anticipate” and similar expressions are intended to identify our forward-looking statements, including but not limited to, statements about: 2013 guidance; timing of the resolution of executional missteps; 2013 and long-term targets; Developing Markets 2012 Organic Net Revenue; and our Outlook, in particular, 2013 Organic Net Revenue growth and Operating EPS. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from those indicated in our forward-looking statements. Such factors include, but are not limited to, continued volatility of and increase in input costs, pricing actions, increased competition, continued economic weakness and tax law changes. Please also see our risk factors, as they may be amended from time to time, set forth in our filings with the SEC, including our most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Mondelēz International disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation.
Non-GAAP Financial Measures
The company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”).
The company’s top-line measure is Organic Net Revenues, which excludes the impacts of divestitures, currency and accounting calendar changes. The company uses Organic Net Revenues and corresponding metrics as non-GAAP financial measures. Management believes Organic Net Revenues better reflects the underlying growth from the ongoing activities of our business and provides improved comparability of results.
The company uses Adjusted Operating Income and Adjusted Segment Operating Income (formerly known as “Underlying Operating Income” and “Underlying Segment Operating Income,” respectively), which is defined as operating income (or segment operating income) excluding costs related to: the Integration Program; the Restructuring Program; and Spin-Off Costs, including transaction fees and other costs associated with the Spin-Off of the North
5
American grocery business. The company uses Adjusted Operating Income, Adjusted Segment Operating Income and corresponding metrics as non-GAAP financial measures. Management believes Adjusted Operating Income and Adjusted Segment Operating Income provide improved comparability of operating results.
The company uses Operating EPS, which is defined as diluted EPS attributable to Mondelēz International excluding costs related to: the Integration Program; the Restructuring Program; and Spin-Off Costs. The company uses Operating EPS and corresponding metrics as non-GAAP financial measures. Management believes Operating EPS provides improved comparability of operating results.
The company uses Adjusted Pro Forma Results from Continuing Operations (also, “Adjusted Pro Forma” or “Adjusted Pro Forma Continuing Operations”), which is defined as including the following adjustments from the beginning of all periods presented:
| • | removal of Kraft Foods Group results of operations (“Kraft Foods Group Operation”) which was divested on October 1, 2012; |
| • | removal of Integration Program costs; |
| • | removal of 2012-2014 Restructuring Program costs; |
| • | removal of Spin-Off Costs, including transaction fees and other costs associated with the Spin-Off of Kraft Foods Group; |
| • | adjustment to reduce benefit plan expense in connection with the transfer of certain employee benefit plan obligations to Kraft Foods Group in the Spin-Off transaction; |
| • | adjustment to reflect the finalization of the Spin-Off capitalization plan at Mondelēz International and the assumed pay down of approximately $6 billion of our debt and the related estimated reduction in our interest expense as a result of cash received from Kraft Foods Group. |
The company uses Adjusted Pro Forma Continuing Operations and corresponding metrics as non-GAAP financial measures to present operating results on a standalone company basis. Management believes Adjusted Pro Forma Continuing Operations provides improved comparability of operating results as a standalone company. The adjusted pro forma information is for informational purposes only and is not intended to represent what our results of operations or financial position would have been had the Spin-Off and related transactions and adjustments occurred at an earlier time within the periods presented, nor should it be considered indicative of our future results of operations as a standalone company.
Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company’s results prepared in accordance with GAAP. In addition, the non-GAAP measures the company is using may differ from non-GAAP measures used by other companies. Because GAAP financial measures on a forward-looking basis are neither accessible nor
6
deemed to be significantly different from the non-GAAP financial measures, and reconciling information is not available without unreasonable effort, with regard to the non-GAAP financial measures in the company’s Outlook, the company has not provided that information.
See the attached schedules for supplemental financial data and corresponding reconciliations of the non-GAAP financial measures referred to above to the most comparable GAAP financial measures for the three and nine months ended September 30, 2012 and 2011.
Segment Operating Income
Management uses segment operating income to evaluate segment performance and allocate resources. The company believes it is appropriate to disclose this measure to help investors analyze segment performance and trends. Segment operating income excludes unrealized gains and losses on hedging activities (which are a component of cost of sales), certain components of its U.S. pension plan cost (which is a component of selling, general and administrative expenses), general corporate expenses (which are a component of selling, general and administrative expenses) and amortization of intangibles for all periods presented. The company centrally manages pension plan funding decisions and determination of discount rate, expected rate of return on plan assets and other actuarial assumptions. Therefore, the company allocates only the service cost component of its U.S. pension plan expense to segment operating income. The company excludes the unrealized gains and losses on hedging activities from segment operating income to provide better transparency of its segment operating results. Once realized, the company records the gains and losses on hedging activities within segment operating results. Accordingly, the company does not present these items by segment because they are excluded from the segment profitability measure that management reviews.
# # #
7
Schedule 1
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Condensed Consolidated Statements of Earnings
For the Three Months Ended September 30,
(in millions of dollars, except per share data) (Unaudited)
| As Reported (GAAP) | ||||||||||||
| 2012 | 2011 | % Change Fav /(Unfav) |
||||||||||
| Net revenues |
$ | 12,909 | $ | 13,226 | (2.4 | )% | ||||||
| Cost of sales |
8,191 | 8,611 | 4.9 | % | ||||||||
|
|
|
|
|
|||||||||
| Gross profit |
4,718 | 4,615 | 2.2 | % | ||||||||
| Gross profit margin |
36.5 | % | 34.9 | % | ||||||||
| Selling, general and administrative expenses |
2,955 | 2,866 | (3.1 | )% | ||||||||
| Asset impairment and exit costs |
57 | (7 | ) | (100.0+ | )% | |||||||
| Amortization of intangibles |
54 | 58 | 6.9 | % | ||||||||
|
|
|
|
|
|||||||||
| Operating income |
1,652 | 1,698 | (2.7 | )% | ||||||||
| Operating income margin |
12.8 | % | 12.8 | % | ||||||||
| Interest and other expense, net |
864 | 425 | (100.0+ | )% | ||||||||
|
|
|
|
|
|||||||||
| Earnings before income taxes |
788 | 1,273 | (38.1 | )% | ||||||||
| Provision for income taxes |
129 | 346 | 62.7 | % | ||||||||
| Effective tax rate |
16.4 | % | 27.2 | % | ||||||||
|
|
|
|
|
|||||||||
| Net earnings |
$ | 659 | $ | 927 | (28.9 | )% | ||||||
| Noncontrolling interest |
7 | 5 | (40.0 | )% | ||||||||
|
|
|
|
|
|||||||||
| Net earnings attributable to Mondelēz International |
$ | 652 | $ | 922 | (29.3 | )% | ||||||
|
|
|
|
|
|||||||||
| Per share data: |
||||||||||||
| Basic earnings per share attributable to Mondelēz International |
$ | 0.37 | $ | 0.52 | (28.8 | )% | ||||||
|
|
|
|
|
|||||||||
| Diluted earnings per share attributable to Mondelēz International |
$ | 0.36 | $ | 0.52 | (30.8 | )% | ||||||
|
|
|
|
|
|||||||||
| Average shares outstanding: |
||||||||||||
| Basic |
1,779 | 1,770 | (0.5 | )% | ||||||||
| Diluted |
1,789 | 1,777 | (0.7 | )% | ||||||||
Schedule 2
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Reconciliation of GAAP to Non-GAAP Information
Net Revenues
For the Three Months Ended September 30,
($ in millions) (Unaudited)
| % Change | Organic Growth Drivers | |||||||||||||||||||||||||||||||
| As Reported (GAAP) |
Impact of Currency |
Organic (Non-GAAP) |
As Reported (GAAP) |
Organic (Non-GAAP) |
Vol /Mix | Price | ||||||||||||||||||||||||||
| 2012 |
||||||||||||||||||||||||||||||||
| U.S. Beverages |
$ | 682 | $ | — | $ | 682 | 0.1 | % | 0.1 | % | 0.7 | pp | (0.6) | pp | ||||||||||||||||||
| U.S. Cheese |
917 | — | 917 | 1.7 | % | 1.7 | % | 6.0 | (4.3 | ) | ||||||||||||||||||||||
| U.S. Convenient Meals |
891 | — | 891 | 3.2 | % | 3.2 | % | 0.8 | 2.4 | |||||||||||||||||||||||
| U.S. Grocery |
898 | — | 898 | 7.4 | % | 7.4 | % | 3.8 | 3.6 | |||||||||||||||||||||||
| U.S. Snacks |
1,621 | — | 1,621 | 2.7 | % | 2.7 | % | (0.7 | ) | 3.4 | ||||||||||||||||||||||
| Canada & N.A. Foodservice |
1,286 | 15 | 1,301 | 1.1 | % | 2.3 | % | 2.9 | (0.6 | ) | ||||||||||||||||||||||
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|||||||||||||||||||
| Mondelēz North America |
$ | 6,295 | $ | 15 | $ | 6,310 | 2.6 | % | 2.9 | % | 2.0 | 0.9 | ||||||||||||||||||||
| Mondelēz Europe |
2,849 | 273 | 3,122 | (8.1 | )% | 0.7 | % | 1.4 | (0.7 | ) | ||||||||||||||||||||||
| Mondelēz Developing Markets |
3,765 | 301 | 4,066 | (5.7 | )% | 1.8 | % | (2.5 | ) | 4.3 | ||||||||||||||||||||||
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|||||||||||||||||||
| Mondelēz International |
$ | 12,909 | $ | 589 | $ | 13,498 | (2.4 | )% | 2.1 | % | 0.6 | pp | 1.5 | pp | ||||||||||||||||||
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|||||||||||||||||||
| 2011 |
||||||||||||||||||||||||||||||||
| U.S. Beverages |
$ | 681 | $ | — | $ | 681 | ||||||||||||||||||||||||||
| U.S. Cheese |
902 | — | 902 | |||||||||||||||||||||||||||||
| U.S. Convenient Meals |
863 | — | 863 | |||||||||||||||||||||||||||||
| U.S. Grocery |
836 | — | 836 | |||||||||||||||||||||||||||||
| U.S. Snacks |
1,579 | — | 1,579 | |||||||||||||||||||||||||||||
| Canada & N.A. Foodservice |
1,272 | — | 1,272 | |||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||
| Mondelēz North America |
$ | 6,133 | $ | — | $ | 6,133 | ||||||||||||||||||||||||||
| Mondelēz Europe |
3,099 | — | 3,099 | |||||||||||||||||||||||||||||
| Mondelēz Developing Markets |
3,994 | — | 3,994 | |||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||
| Mondelēz International |
$ | 13,226 | $ | — | $ | 13,226 | ||||||||||||||||||||||||||
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|||||||||||||||||||||||||||
Schedule 3
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Operating Income by Reportable Segments
For the Three Months Ended September 30,
($ in millions) (Unaudited)
| 2011 Impacts | 2012 Impacts | |||||||||||||||||||||||||||||||||||||||
| 2011 Operating Income - As Reported (GAAP) |
Integration Program costs (1) |
Asset Impairment & Exit costs (2) |
Integration Program costs (1) |
Impact of Currency |
Spin-Off Costs (3) |
2012-2014 Restructuring Program costs (4) |
Operations (2) | 2012 Operating Income - As Reported (GAAP) |
% Change |
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| Segment Operating Income: |
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| U.S. Beverages |
$ | 101 | $ | — | $ | (1 | ) | $ | — | $ | — | $ | — | $ | (24 | ) | $ | — | $ | 76 | (24.8 | )% | ||||||||||||||||||
| U.S. Cheese |
145 | — | — | — | — | — | (11 | ) | 25 | 159 | 9.7 | % | ||||||||||||||||||||||||||||
| U.S. Convenient Meals |
105 | — | — | — | — | — | (6 | ) | 17 | 116 | 10.5 | % | ||||||||||||||||||||||||||||
| U.S. Grocery |
292 | — | — | — | — | — | (7 | ) | (1 | ) | 284 | (2.7 | )% | |||||||||||||||||||||||||||
| U.S. Snacks |
221 | 14 | (1 | ) | (3 | ) | — | — | (17 | ) | 27 | 241 | 9.0 | % | ||||||||||||||||||||||||||
| Canada & N.A. Foodservice |
171 | 5 | — | — | (1 | ) | — | (2 | ) | 18 | 191 | 11.7 | % | |||||||||||||||||||||||||||
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| Mondelēz North America |
$ | 1,035 | $ | 19 | $ | (3 | ) | $ | (3 | ) | $ | (1 | ) | $ | — | $ | (67 | ) | $ | 87 | $ | 1,067 | 3.1 | % | ||||||||||||||||
| Mondelēz Europe |
334 | 56 | (3 | ) | 28 | (32 | ) | — | — | 32 | 415 | 24.3 | % | |||||||||||||||||||||||||||
| Mondelēz Developing Markets |
582 | 31 | (1 | ) | (11 | ) | (32 | ) | (25 | ) | (2 | ) | (3 | ) | 539 | (7.4 | )% | |||||||||||||||||||||||
| Unrealized G/(L) on Hedging Activities |
(4 | ) | — | — | — | — | — | — | 58 | 54 | ||||||||||||||||||||||||||||||
| HQ Pension |
(57 | ) | — | — | — | — | — | — | (33 | ) | (90 | ) | ||||||||||||||||||||||||||||
| General Corporate Expenses |
(134 | ) | 6 | — | — | 1 | (201 | ) | — | 49 | (279 | ) | ||||||||||||||||||||||||||||
| Amortization of Intangibles |
(58 | ) | — | — | — | 1 | — | — | 3 | (54 | ) | |||||||||||||||||||||||||||||
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| Mondelēz International |
$ | 1,698 | $ | 112 | $ | (7 | ) | $ | 14 | $ | (63 | ) | $ | (226 | ) | $ | (69 | ) | $ | 193 | $ | 1,652 | (2.7 | )% | ||||||||||||||||
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| (1) | Integration Program costs are defined as the costs associated with combining the Mondelēz International and Cadbury businesses, and are separate from those costs associated with the acquisition. In Q3 2012, $6 million was recorded in Cost of Sales and $(20) million was recorded in Selling, General and Administrative expenses. In Q3 2011, $38 million was recorded in Cost of Sales and $74 million was recorded in Selling, General and Administrative expenses. |
| (2) | May not foot due to rounding. |
| (3) | Spin-Off Costs represent non-recurring transaction and transition costs associated with preparing the businesses for independent operations consisting primarily of financial advisory fees, legal fees, accounting fees, tax services and information systems infrastructure duplication. |
| (4) | Restructuring Program costs represent non-recurring restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing related non-recurring costs. |
Schedule 4
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Reconciliation of GAAP to Non-GAAP Information
Operating Income
For the Three Months Ended September 30,
($ in millions) (Unaudited)
| As Reported (GAAP) |
Integration Program costs (1) |
Spin-Off Costs (2) | 2012-2014 Restructuring Program costs (3) |
Adjusted (Non-GAAP) |
||||||||||||||||
| 2012 | ||||||||||||||||||||
| Net Revenues |
$ | 12,909 | $ | — | $ | — | $ | — | $ | 12,909 | ||||||||||
| Operating Income |
$ | 1,652 | $ | (14 | ) | $ | 226 | $ | 69 | $ | 1,933 | |||||||||
| Operating Income Margin |
12.8 | % | 15.0 | % | ||||||||||||||||
| 2011 | ||||||||||||||||||||
| Net Revenues |
$ | 13,226 | $ | — | $ | — | $ | — | $ | 13,226 | ||||||||||
| Operating Income |
$ | 1,698 | $ | 112 | $ | — | $ | — | $ | 1,810 | ||||||||||
| Operating Income Margin |
12.8 | % | 13.7 | % | ||||||||||||||||
| (1) | Integration Program costs are defined as the costs associated with combining the Mondelēz International and Cadbury businesses, and are separate from those costs associated with the acquisition. |
| (2) | Spin-Off Costs represent non-recurring transaction and transition costs associated with preparing the businesses for independent operations consisting primarily of financial advisory fees, legal fees, accounting fees, tax services and information systems infrastructure duplication. |
| (3) | Restructuring Program costs represent non-recurring restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing related non-recurring costs. |
Schedule 5
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Reconciliation of GAAP to Non-GAAP Information
Diluted EPS
(Unaudited)
| Diluted EPS | % Growth | |||||||
| Diluted EPS Attributable to Mondelēz International for the Three Months Ended September 30, 2011 (GAAP) |
$ | 0.52 | ||||||
| Integration Program costs (1) |
0.06 | |||||||
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| Operating EPS for the Three Months Ended September 30, 2011 (Non-GAAP) |
0.58 | |||||||
| Increases in operations |
0.05 | |||||||
| Change in unrealized gains/losses on hedging activities |
0.02 | |||||||
| Accounting calendar changes |
— | |||||||
| Unfavorable foreign currency (2) |
(0.03 | ) | ||||||
| Lower interest and other expense, net (3) |
0.01 | |||||||
| Changes in taxes |
0.01 | |||||||
| Higher shares outstanding |
— | |||||||
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| Operating EPS for the Three Months Ended September 30, 2012 (Non-GAAP) |
0.64 | 10.3 | % | |||||
| Integration Program costs (1) |
— | |||||||
| Spin-Off Costs (4) |
(0.25 | ) | ||||||
| 2012-2014 Restructuring Program costs (5) |
(0.03 | ) | ||||||
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| Diluted EPS Attributable to Mondelēz International for the Three Months Ended September 30, 2012 (GAAP) |
$ | 0.36 | (30.8 | )% | ||||
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| (1) | Integration Program costs are defined as the costs associated with combining the Mondelēz International and Cadbury businesses, and are separate from those costs associated with the acquisition. Integration Program costs were $(14) million, or $(5) million after-tax including certain tax costs associated with the integration of Cadbury, for the three months ended September 30, 2012, as compared to $112 million, or $111 million after-tax for the three months ended September 30, 2011. |
| (2) | Includes the favorable foreign currency impact on Mondelēz International foreign denominated debt and interest expense due to the strength of the U.S. dollar. |
| (3) | Excludes financing costs/other fees related to our planned Spin-Off. |
| (4) | Spin-Off Costs represent non-recurring transaction and transition costs associated with preparing the businesses for independent operations consisting primarily of financial advisory fees, legal fees, accounting fees, tax services and information systems infrastructure duplication, and financing and related costs to redistribute debt and secure investment grade ratings for both the Kraft Foods Group Business and the Mondelēz International Business. Spin-Off Costs for the three months ended September 30, 2012 were $683 million, or $452 million after-tax and include $457 million of pre-tax financing costs/other fees recorded in interest and other expense, net. |
| (5) | Restructuring Program costs for the three months ended September 30, 2012 were $69 million, or $43 million after-tax and represent non-recurring restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing related non-recurring costs. |
Schedule 6
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Reconciliation of GAAP to Non-GAAP Information
Diluted Earnings Per Share
Constant Currency Growth
For the Three Months Ended September 30,
(Unaudited)
| % Growth | ||||||||||||||||||||||||||||||||||||||||||
| As Reported (GAAP) |
Integration Program costs (1) |
Spin-Off Cost (2) | 2012 - 2014 Restructuring Program costs (3) |
Operating (Non-GAAP) |
Currency (4) | Operating Constant FX (Non-GAAP) |
As Reported EPS Growth (GAAP) |
Operating EPS Growth (Non-GAAP) |
Operating Constant FX EPS Growth (Non-GAAP) |
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| 2012 |
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| Diluted EPS attributable to Mondelēz International |
$ | 0.36 | $ | — | $ | 0.25 | $ | 0.03 | $ | 0.64 | $ | 0.03 | $ | 0.67 | (30.8 | )% | 10.3 | % | 15.5 | % | ||||||||||||||||||||||
| 2011 |
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| Diluted EPS attributable to Mondelēz International |
$ | 0.52 | $ | 0.06 | $ | — | $ | — | $ | 0.58 | $ | — | $ | 0.58 | ||||||||||||||||||||||||||||
| (1) | Integration Program costs are defined as the costs associated with combining the Mondelēz International and Cadbury businesses, and are separate from those costs associated with the acquisition. |
| (2) | Spin-Off Costs represent non-recurring transaction and transition costs associated with preparing the businesses for independent operations consisting primarily of financial advisory fees, legal fees, accounting fees, tax services and information systems infrastructure duplication, and financing and related costs to redistribute debt and secure investment grade ratings for both the Kraft Foods Group Business and the Mondelēz International Business. |
| (3) | Restructuring Program costs represent non-recurring restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing related non-recurring costs. |
| (4) | Includes the favorable foreign currency impact on Mondelēz International foreign denominated debt and interest expense due to the strength of the U.S. dollar. |
Schedule 7
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Condensed Consolidated Statements of Earnings
For the Nine Months Ended September 30,
(in millions of dollars, except per share data) (Unaudited)
| As Reported (GAAP) | ||||||||||||
| 2012 | 2011 | % Change Fav / (Unfav) |
||||||||||
| Net revenues |
$ | 39,288 | $ | 39,677 | (1.0 | )% | ||||||
| Cost of sales |
25,033 | 25,555 | 2.0 | % | ||||||||
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| Gross profit |
14,255 | 14,122 | 0.9 | % | ||||||||
| Gross profit margin |
36.3 | % | 35.6 | % | ||||||||
| Selling, general and administrative expenses |
8,631 | 8,807 | 2.0 | % | ||||||||
| Asset impairment and exit costs |
239 | (7 | ) | (100.0+ | )% | |||||||
| Amortization of intangibles |
163 | 172 | 5.2 | % | ||||||||
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| Operating income |
5,222 | 5,150 | 1.4 | % | ||||||||
| Operating income margin |
13.3 | % | 13.0 | % | ||||||||
| Interest and other expense, net |
1,846 | 1,312 | (40.7 | )% | ||||||||
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| Earnings before income taxes |
3,376 | 3,838 | (12.0 | )% | ||||||||
| Provision for income taxes |
864 | 1,133 | 23.7 | % | ||||||||
| Effective tax rate |
25.6 | % | 29.5 | % | ||||||||
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| Net earnings |
$ | 2,512 | $ | 2,705 | (7.1 | )% | ||||||
| Noncontrolling interest |
18 | 8 | (100.0+ | )% | ||||||||
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| Net earnings attributable to Mondelēz International |
$ | 2,494 | $ | 2,697 | (7.5 | )% | ||||||
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| Per share data: |
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| Basic earnings per share attributable to Mondelēz International |
$ | 1.40 | $ | 1.53 | (8.5 | )% | ||||||
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| Diluted earnings per share attributable to Mondelēz International |
$ | 1.40 | $ | 1.52 | (7.9 | )% | ||||||
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| Average shares outstanding: |
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| Basic |
1,776 | 1,763 | (0.7 | )% | ||||||||
| Diluted |
1,786 | 1,770 | (0.9 | )% | ||||||||
Schedule 8
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Reconciliation of GAAP to Non-GAAP Information
Net Revenues
For the Nine Months Ended September 30,
($ in millions) (Unaudited)
| % Change | Organic Growth Drivers | |||||||||||||||||||||||||||||||||||||||
| As Reported (GAAP) |
Impact
of Divestitures (1) |
Impact of Accounting Calendar Changes |
Impact of Currency |
Organic (Non-GAAP) |
As Reported (GAAP) |
Organic (Non-GAAP) |
Vol /Mix | Price | ||||||||||||||||||||||||||||||||
| 2012 |
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| U.S. Beverages |
$ | 2,168 | $ | — | $ | — | $ | — | $ | 2,168 | (5.0 | )% | (1.2 | )% | (2.2) | pp | 1.0 | pp | ||||||||||||||||||||||
| U.S. Cheese |
2,749 | — | — | — | 2,749 | 3.7 | % | 3.7 | % | 0.0 | 3.7 | |||||||||||||||||||||||||||||
| U.S. Convenient Meals |
2,601 | — | — | — | 2,601 | 2.6 | % | 2.6 | % | 0.4 | 2.2 | |||||||||||||||||||||||||||||
| U.S. Grocery |
2,739 | — | — | — | 2,739 | 5.2 | % | 5.2 | % | 1.4 | 3.8 | |||||||||||||||||||||||||||||
| U.S. Snacks |
4,716 | — | — | — | 4,716 | 2.9 | % | 2.9 | % | (3.1 | ) | 6.0 | ||||||||||||||||||||||||||||
| Canada & N.A. Foodservice |
3,725 | — | — | 60 | 3,785 | (0.3 | )% | 1.4 | % | (0.6 | ) | 2.0 | ||||||||||||||||||||||||||||
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| Mondelēz North America |
$ | 18,698 | $ | — | $ | — | $ | 60 | $ | 18,758 | 1.7 | % | 2.5 | % | (0.9 | ) | 3.4 | |||||||||||||||||||||||
| Mondelēz Europe |
9,004 | — | — | 653 | 9,657 | (6.6 | )% | 3.1 | % | 1.6 | 1.5 | |||||||||||||||||||||||||||||
| Mondelēz Developing Markets |
11,586 | — | — | 760 | 12,346 | (0.5 | )% | 6.8 | % | 1.0 | 5.8 | |||||||||||||||||||||||||||||
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| Mondelēz International |
$ | 39,288 | $ | — | $ | — | $ | 1,473 | $ | 40,761 | (1.0 | )% | 3.9 | % | 0.2 | pp | 3.7 | pp | ||||||||||||||||||||||
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| 2011 |
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| U.S. Beverages |
$ | 2,281 | $ | (87 | ) | $ | — | $ | — | $ | 2,194 | |||||||||||||||||||||||||||||
| U.S. Cheese |
2,651 | — | — | — | 2,651 | |||||||||||||||||||||||||||||||||||
| U.S. Convenient Meals |
2,536 | — | — | — | 2,536 | |||||||||||||||||||||||||||||||||||
| U.S. Grocery |
2,603 | — | — | — | 2,603 | |||||||||||||||||||||||||||||||||||
| U.S. Snacks |
4,581 | — | — | — | 4,581 | |||||||||||||||||||||||||||||||||||
| Canada & N.A. Foodservice |
3,735 | (4 | ) | — | — | 3,731 | ||||||||||||||||||||||||||||||||||
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| Mondelēz North America |
$ | 18,387 | $ | (91 | ) | $ | — | $ | — | $ | 18,296 | |||||||||||||||||||||||||||||
| Mondelēz Europe |
9,640 | — | (269 | ) | — | 9,371 | ||||||||||||||||||||||||||||||||||
| Mondelēz Developing Markets |
11,650 | — | (92 | ) | — | 11,558 | ||||||||||||||||||||||||||||||||||
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| Mondelēz International |
$ | 39,677 | $ | (91 | ) | $ | (361 | ) | $ | — | $ | 39,225 | ||||||||||||||||||||||||||||
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| (1) | Impact of divestitures includes for reporting purposes Starbucks CPG business. |
Schedule 9
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Operating Income by Reportable Segments
For the Nine Months Ended September 30,
($ in millions) (Unaudited)
| 2011 Impacts | 2012 Impacts | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 2011 Operating Income - As Reported (GAAP) |
Integration Program costs (1) |
Asset Impairment & Exit costs (6) |
Impact
of Divestitures (3) |
Impact of Accounting Calendar Changes |
Integration Program costs (1) |
Asset Impairment & Exit costs (2) |
Impact of Currency |
Spin-off Costs (4) |
2012-2014 Restructuring Program costs (5) |
Operations (6) | 2012 Operating Income - As Reported (GAAP) |
% Change |
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| Segment Operating Income: |
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| U.S. Beverages |
$ | 400 | $ | — | $ | (1 | ) | $ | (13 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (41 | ) | $ | (37 | ) | $ | 308 | (23.0)% | |||||||||||||||||||||||
| U.S. Cheese |
422 | — | — | — | — | — | — | — | — | (56 | ) | 116 | 482 | 14.2% | ||||||||||||||||||||||||||||||||||||||
| U.S. Convenient Meals |
309 | — | — | — | — | — | — | — | — | (18 | ) | 47 | 338 | 9.4% | ||||||||||||||||||||||||||||||||||||||
| U.S. Grocery |
963 | — | — | — | — | — | — | — | — | (24 | ) | 35 | 974 | 1.1% | ||||||||||||||||||||||||||||||||||||||
| U.S. Snacks |
606 | 29 | (1 | ) | — | — | (5 | ) | — | — | — | (63 | ) | 77 | 643 | 6.1% | ||||||||||||||||||||||||||||||||||||
| Canada & N.A. Foodservice |
510 | 12 | — | (2 | ) | — | 1 | — | (9 | ) | — | (29 | ) | 8 | 491 | (3.7)% | ||||||||||||||||||||||||||||||||||||
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| Mondelēz North America |
$ | 3,210 | $ | 41 | $ | (3 | ) | $ | (15 | ) | $ | — | $ | (4 | ) | $ | — | $ | (9 | ) | $ | — | $ | (231 | ) | $ | 247 | $ | 3,236 | 0.8% | ||||||||||||||||||||||
| Mondelēz Europe |
1,057 | 165 | (3 | ) | — | (41 | ) | (8 | ) | — | (82 | ) | — | — | 107 | 1,195 | 13.1% | |||||||||||||||||||||||||||||||||||
| Mondelēz Developing Markets |
1,505 | 121 | (1 | ) | — | (10 | ) | (50 | ) | (21 | ) | (72 | ) | (25 | ) | (7 | ) | 168 | 1,608 | 6.8% | ||||||||||||||||||||||||||||||||
| Unrealized G/(L) on Hedging Activities |
(42 | ) | — | — | — | — | — | — | — | — | — | 143 | 101 | |||||||||||||||||||||||||||||||||||||||
| HQ Pension |
(143 | ) | — | — | — | — | — | — | — | — | — | (94 | ) | (237 | ) | |||||||||||||||||||||||||||||||||||||
| General Corporate Expenses |
(265 | ) | 25 | — | — | — | (2 | ) | — | 8 | (340 | ) | — | 56 | (518 | ) | ||||||||||||||||||||||||||||||||||||
| Amortization of Intangibles |
(172 | ) | — | — | — | — | — | — | 8 | — | — | 1 | (163 | ) | ||||||||||||||||||||||||||||||||||||||
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| Mondelēz International |
$ | 5,150 | $ | 352 | $ | (7 | ) | $ | (15 | ) | $ | (51 | ) | $ | (64 | ) | $ | (21 | ) | $ | (147 | ) | $ | (365 | ) | $ | (238 | ) | $ | 628 | $ | 5,222 | 1.4% | |||||||||||||||||||
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| (1) | Integration Program costs are defined as the costs associated with combining the Mondelēz International and Cadbury businesses, and are separate from those costs associated with the acquisition. For the nine months ended September 30, 2012, $14 million was recorded in Cost of Sales and $50 million was recorded in Selling, General and Administrative expenses. For the nine months ended September 30, 2011, $60 million was recorded in Cost of Sales and $292 million was recorded in Selling, General and Administrative expenses. |
| (2) | Includes an asset impairment charge related to a trademark in Japan. |
| (3) | Impact of divestitures includes for reporting purposes Starbucks CPG business. |
| (4) | Spin-Off Costs represent non-recurring transaction and transition costs associated with preparing the businesses for independent operations consisting primarily of financial advisory fees, legal fees, accounting fees, tax services and information systems infrastructure duplication. |
| (5) | Restructuring Program costs represent non-recurring restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing related non-recurring costs. |
| (6) | May not foot due to rounding. |
Schedule 10
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Reconciliation of GAAP to Non-GAAP Information
Operating Income
For the Nine Months Ended September 30,
($ in millions) (Unaudited)
| As Reported (GAAP) |
Integration Program costs (1) |
Spin-off Costs (2) | 2012-2014 Restructuring Program costs (3) |
Adjusted (Non-GAAP) |
||||||||||||||||
| 2012 |
||||||||||||||||||||
| Net Revenues |
$ | 39,288 | $ | — | $ | — | $ | — | $ | 39,288 | ||||||||||
| Operating Income |
$ | 5,222 | $ | 64 | $ | 365 | $ | 238 | $ | 5,889 | ||||||||||
| Operating Income Margin |
13.3 | % | 15.0 | % | ||||||||||||||||
| 2011 |
||||||||||||||||||||
| Net Revenues |
$ | 39,677 | $ | — | $ | — | $ | — | $ | 39,677 | ||||||||||
| Operating Income |
$ | 5,150 | $ | 352 | $ | — | $ | — | $ | 5,502 | ||||||||||
| Operating Income Margin |
13.0 | % | 13.9 | % | ||||||||||||||||
| (1) | Integration Program costs are defined as the costs associated with combining the Mondelēz International and Cadbury businesses, and are separate from those costs associated with the acquisition. |
| (2) | Spin-Off Costs represent non-recurring transaction and transition costs associated with preparing the businesses for independent operations consisting primarily of financial advisory fees, legal fees, accounting fees, tax services and information systems infrastructure duplication. |
| (3) | Restructuring Program costs represent non-recurring restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing related non-recurring costs. |
Schedule 11
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Reconciliation of GAAP to Non-GAAP Information
Diluted EPS
(Unaudited)
| Diluted EPS | % Growth | |||||||
| Diluted EPS Attributable to Mondelēz International for the Nine Months Ended September 30, 2011 (GAAP) |
$ | 1.52 | ||||||
| Integration Program costs (1) |
0.20 | |||||||
|
|
|
|||||||
| Operating EPS for the Nine Months Ended September 30, 2011 (Non-GAAP) |
1.72 | |||||||
| Increases in operations |
0.17 | |||||||
| Change in unrealized gains/losses on hedging activities |
0.05 | |||||||
| Gain on sale of property |
0.02 | |||||||
| Accounting calendar changes |
(0.02 | ) | ||||||
| Decreased operating income from the Starbucks CPG business cessation (2) |
(0.01 | ) | ||||||
| Asset impairment charge |
(0.01 | ) | ||||||
| Unfavorable foreign currency (3) |
(0.05 | ) | ||||||
| Lower interest and other expense, net (4) |
0.03 | |||||||
| Changes in taxes |
— | |||||||
| Higher shares outstanding |
(0.02 | ) | ||||||
|
|
|
|||||||
| Operating EPS for the Nine Months Ended September 30, 2012 (Non-GAAP) |
1.88 | 9.3 | % | |||||
| Integration Program costs (1) |
(0.04 | ) | ||||||
| Spin-Off Costs (5) |
(0.36 | ) | ||||||
| 2012-2014 Restructuring Program costs (6) |
(0.08 | ) | ||||||
|
|
|
|||||||
| Diluted EPS Attributable to Mondelēz International for the Nine Months Ended September 30, 2012 (GAAP) |
$ | 1.40 | (7.9 | )% | ||||
|
|
|
|||||||
| (1) | Integration Program costs are defined as the costs associated with combining the Mondelēz International and Cadbury businesses, and are separate from those costs associated with the acquisition. Integration Program costs were $64 million, or $68 million after-tax including certain tax costs associated with the integration of Cadbury, for the nine months ended September 30, 2012, as compared to $352 million, or $345 million after-tax for the nine months ended September 30, 2011. |
| (2) | Effective March 1, 2011 Starbucks unilaterally took control of the sale and distribution of the packaged coffee business in grocery stores and other channels by terminating its agreements with Mondelēz International and in a manner that Mondelēz International believes violates the terms of those agreements. |
| (3) | Includes the favorable foreign currency impact on Mondelēz International foreign denominated debt and interest expense due to the strength of the U.S. dollar. |
| (4) | Excludes financing costs/other fees related to our planned Spin-Off. |
| (5) | Spin-Off Costs represent non-recurring transaction and transition costs associated with preparing the businesses for independent operations consisting primarily of financial advisory fees, legal fees, accounting fees, tax services and information systems infrastructure duplication, and financing and related costs to redistribute debt and secure investment grade ratings for both the Kraft Foods Group Business and the Mondelēz International Business. Spin-Off Costs for the nine months ended September 30, 2012 were $984 million, or $654 million after-tax and include $619 million of pre-tax financing and related costs recorded in interest and other expense, net. |
| (6) | Restructuring Program costs for the nine months ended September 30, 2012 were $238 million, or $150 million after-tax and represent non-recurring restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing related non-recurring costs. |
Schedule 12
Mondelēz International, Inc. and Subsidiaries
(Includes the Results of Kraft Foods Group, Inc.)
Reconciliation of GAAP to Non-GAAP Information
Diluted Earnings Per Share
Constant Currency Growth
For the Nine Months Ended September 30,
(Unaudited)
| % Growth | ||||||||||||||||||||||||||||||||||||||||||
| As Reported (GAAP) |
Integration Program costs (1) |
Spin-off Costs (2) |
2012 - 2014 Restructuring Program costs (3) |
Operating (Non-GAAP) |
Currency (4) | Operating Constant FX (Non-GAAP) |
As Reported EPS Growth (GAAP) |
Operating EPS Growth (Non-GAAP) |
Operating Constant FX EPS Growth (Non-GAAP) |
|||||||||||||||||||||||||||||||||
| 2012 |
||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS attributable to Mondelēz International |
$ | 1.40 | $ | 0.04 | $ | 0.36 | $ | 0.08 | $ | 1.88 | $ | 0.06 | $ | 1.94 | (7.9 | )% | 9.3 | % | 12.8 | % | ||||||||||||||||||||||
| 2011 |
||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS attributable to Mondelēz International |
$ | 1.52 | $ | 0.20 | $ | — | $ | — | $ | 1.72 | $ | — | $ | 1.72 | ||||||||||||||||||||||||||||
| (1) | Integration Program costs are defined as the costs associated with combining the Mondelēz International and Cadbury businesses, and are separate from those costs associated with the acquisition. |
| (2) | Spin-Off Costs represent non-recurring transaction and transition costs associated with preparing the businesses for independent operations consisting primarily of financial advisory fees, legal fees, accounting fees, tax services and information systems infrastructure duplication, and financing and related costs to redistribute debt and secure investment grade ratings for both the Kraft Foods Group Business and the Mondelēz International Business. |
| (3) | Restructuring Program costs represent non-recurring restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing related non-recurring costs. |
| (4) | Includes the favorable foreign currency impact on Mondelēz International foreign denominated debt and interest expense due to the strength of the U.S. dollar. |
Schedule 13
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Consolidated Statement of Earnings
($ in millions) (Unaudited)
| Three Months Ended September 30, 2012 | ||||||||||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Integration Program costs |
Spin-Off Costs | Restructuring Program costs |
Pension | Interest | Adjusted Pro Forma (Non-GAAP) |
|||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||||||||||||||
| Net Revenues |
$ | 12,909 | $ | (4,583 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 8,326 | |||||||||||||||
| COGS |
8,191 | (2,985 | ) | (6 | ) | — | (1 | ) | (11 | ) | — | 5,188 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Gross Profit |
4,718 | (1,598 | ) | 6 | — | 1 | 11 | — | 3,138 | |||||||||||||||||||||||
| % NR |
36.5 | % | 37.7 | % | ||||||||||||||||||||||||||||
| SG&A |
2,955 | (740 | ) | 20 | (226 | ) | (4 | ) | (12 | ) | — | 1,993 | ||||||||||||||||||||
| Asset impairment & exit costs |
57 | (44 | ) | — | — | (13 | ) | — | — | — | ||||||||||||||||||||||
| Amortization of intangibles |
54 | — | — | — | — | — | — | 54 | ||||||||||||||||||||||||
|
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|
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|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income |
1,652 | (814 | ) | (14 | ) | 226 | 18 | 23 | — | 1,091 | ||||||||||||||||||||||
| % NR |
12.8 | % | 13.1 | % | ||||||||||||||||||||||||||||
| Interest and other expense, net |
864 | (127 | ) | — | (457 | ) | — | — | (26 | ) | 254 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Earnings from operations |
788 | (687 | ) | (14 | ) | 683 | 18 | 23 | 26 | 837 | ||||||||||||||||||||||
| Provision for income taxes |
129 | (205 | ) | (9 | ) | 231 | 7 | 9 | 10 | 172 | ||||||||||||||||||||||
|
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|
|
|
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|
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|
|
|||||||||||||||||
| Effective tax rate |
16.4 | % | 20.5 | % | ||||||||||||||||||||||||||||
| Net earnings |
659 | (482 | ) | (5 | ) | 452 | 11 | 14 | 16 | 665 | ||||||||||||||||||||||
| Noncontrolling interest |
7 | — | — | — | — | — | — | 7 | ||||||||||||||||||||||||
|
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|
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|
|
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|
|
|||||||||||||||||
| Net earnings attributable to Mondelēz |
$ | 652 | $ | (482 | ) | $ | (5 | ) | $ | 452 | $ | 11 | $ | 14 | $ | 16 | $ | 658 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Diluted EPS attributable to Mondelēz |
$ | 0.36 | $ | 0.37 | ||||||||||||||||||||||||||||
| shares |
1,789 | 1,789 | ||||||||||||||||||||||||||||||
Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KFG Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
| (c) | Removal of $14 million net reversal of Integration Program costs and related taxes; these costs directly related to integrating the 2010 Cadbury acquisition and have been removed from the unaudited adjusted pro forma consolidated statements of earnings to provide improved transparency and comparability of our operating results. |
| (d) | Removal of $683 million of one-time Spin-Off transaction, transition and financing and related costs and related taxes; these costs directly relate to the Spin-Off of KFG and not recur and as such, have been removed from the unaudited adjusted pro forma consolidated statements of earnings. |
| (e) | Removal of $18 million of restructuring and implementation costs and related taxes; these costs directly relate to optimizing our businesses for future operations (the “2012-2014 Restructuring Program”) and have been removed from the unaudited adjusted pro forma consolidated statement of earnings to provide improved transparency and comparability of our operating results. |
| (f) | Reduction in our estimated annual benefit plan expense as a result of transferring certain benefit plan obligations to KFG in the Spin-Off. The reduction in benefit plan expense is estimated to be approximately $90 million, which reflects a 2012 estimate based on market conditions and benefit plan assumptions as of January 1, 2012. For the three months ended September 30, 2012, a prorated estimate of $23 million was reflected. The estimates may change significantly as we finalize the amount of net liability transfers and the impacts on our statement of earnings during the fourth quarter of 2012. |
| (g) | An adjustment to remove $26 million of interest expense and related taxes. This adjustment is based on the assumed reduction of $6 billion of our debt on January 1, 2011 from the utilization of funds received from the $6 billion of notes KFG issued directly and cash proceeds distributed to us in June 2012 in connection with our Spin-Off capitalization plan. Note during the nine months ended September 30, 2012, a portion of the $6 billion of debt was retired. As such, we adjusted interest expense during this period as if this debt had been repaid on January 1, 2011 to ensure consistency of our assumption and related results. |
Schedule 14
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Consolidated Statement of Earnings
($ in millions) (Unaudited)
| Nine Months Ended September 30, 2012 | ||||||||||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Integration Program costs |
Spin-Off Costs | Restructuring Program costs |
Pension | Interest | Adjusted Pro Forma (Non-GAAP) |
|||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||||||||||||||
| Net Revenues |
$ | 39,288 | $ | (13,768 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 25,520 | |||||||||||||||
| COGS |
25,033 | (9,039 | ) | (14 | ) | — | — | (33 | ) | — | 15,947 | |||||||||||||||||||||
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|
|||||||||||||||||
| Gross Profit |
14,255 | (4,729 | ) | 14 | — | — | 33 | — | 9,573 | |||||||||||||||||||||||
| % NR |
36.3 | % | 37.5 | % | ||||||||||||||||||||||||||||
| SG&A |
8,631 | (2,030 | ) | (50 | ) | (365 | ) | (6 | ) | (35 | ) | — | 6,145 | |||||||||||||||||||
| Asset impairment & exit costs |
239 | (155 | ) | — | — | (63 | ) | — | — | 21 | ||||||||||||||||||||||
| Amortization of intangibles |
163 | — | — | — | — | — | — | 163 | ||||||||||||||||||||||||
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|
|||||||||||||||||
| Operating Income |
5,222 | (2,544 | ) | 64 | 365 | 69 | 68 | — | 3,244 | |||||||||||||||||||||||
| % NR |
13.3 | % | 12.7 | % | ||||||||||||||||||||||||||||
| Interest and other expense, net |
1,846 | (278 | ) | — | (619 | ) | — | — | (135 | ) | 814 | |||||||||||||||||||||
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|
|||||||||||||||||
| Earnings from operations |
3,376 | (2,266 | ) | 64 | 984 | 69 | 68 | 135 | 2,430 | |||||||||||||||||||||||
| Provision for income taxes |
864 | (760 | ) | (4 | ) | 330 | 25 | 26 | 51 | 532 | ||||||||||||||||||||||
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|
|||||||||||||||||
| Effective tax rate |
25.6 | % | 21.9 | % | ||||||||||||||||||||||||||||
| Net earnings |
2,512 | (1,506 | ) | 68 | 654 | 44 | 42 | 84 | 1,898 | |||||||||||||||||||||||
| Noncontrolling interest |
18 | — | — | — | — | — | — | 18 | ||||||||||||||||||||||||
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|||||||||||||||||
| Net earnings attributable to Mondelēz |
$ | 2,494 | $ | (1,506 | ) | $ | 68 | $ | 654 | $ | 44 | $ | 42 | $ | 84 | $ | 1,880 | |||||||||||||||
|
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|||||||||||||||||
| Diluted EPS attributable to Mondelēz |
$ | 1.40 | $ | 1.05 | ||||||||||||||||||||||||||||
| shares |
1,786 | 1,786 | ||||||||||||||||||||||||||||||
Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KFG Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
| (c) | Removal of $64 million of Integration Program costs and related taxes; these costs directly related to integrating the 2010 Cadbury acquisition and have been removed from the unaudited adjusted pro forma consolidated statements of earnings to provide improved transparency and comparability of our operating results. |
| (d) | Removal of $984 million of one-time Spin-Off transaction, transition and financing and related costs and related taxes; these costs directly relate to the Spin-Off of KFG and not recur and as such, have been removed from the unaudited adjusted pro forma consolidated statements of earnings. |
| (e) | Removal of $69 million of restructuring and implementation costs and related taxes; these costs directly relate to optimizing our businesses for future operations (the “2012-2014 Restructuring Program”) and have been removed from the unaudited adjusted pro forma consolidated statement of earnings to provide improved transparency and comparability of our operating results. |
| (f) | Reduction in our estimated annual benefit plan expense as a result of transferring certain benefit plan obligations to KFG in the Spin-Off. The reduction in benefit plan expense is estimated to be approximately $90 million, which reflects a 2012 estimate based on market conditions and benefit plan assumptions as of January 1, 2012. For the nine months ended September 30, 2012, a prorated estimate of $68 million was reflected. The estimates may change significantly as we finalize the amount of net liability transfers and the impacts on our statement of earnings during the fourth quarter of 2012. |
| (g) | An adjustment to remove $135 million of interest expense and related taxes. This adjustment is based on the assumed reduction of $6 billion of our debt on January 1, 2011 from the utilization of funds received from the $6 billion of notes KFG issued directly and cash proceeds distributed to us in June 2012 in connection with our Spin-Off capitalization plan. Note during the nine months ended September 30, 2012, a portion of the $6 billion of debt was retired. As such, we adjusted interest expense during this period as if this debt had been repaid on January 1, 2011 to ensure consistency of our assumption and related results. |
Schedule 15
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Consolidated Statement of Earnings
($ in millions) (Unaudited)
| Three Months Ended September 30, 2011 | ||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Integration Program costs |
Pension | Interest | Adjusted Pro Forma (Non-GAAP) |
|||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | ||||||||||||||||||||
| Net Revenues |
$ | 13,226 | $ | (4,448 | ) | $ | — | $ | — | $ | — | $ | 8,778 | |||||||||||
| COGS |
8,611 | (3,080 | ) | (38 | ) | (11 | ) | — | 5,482 | |||||||||||||||
|
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|
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|
|||||||||||||
| Gross Profit |
4,615 | (1,368 | ) | 38 | 11 | — | 3,296 | |||||||||||||||||
| % NR |
34.9 | % | 37.5 | % | ||||||||||||||||||||
| SG&A |
2,866 | (605 | ) | (74 | ) | (12 | ) | — | 2,175 | |||||||||||||||
| Asset impairment & exit costs |
(7 | ) | 2 | — | — | — | (5 | ) | ||||||||||||||||
| Amortization of intangibles |
58 | — | — | — | — | 58 | ||||||||||||||||||
|
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|
|||||||||||||
| Operating Income |
1,698 | (765 | ) | 112 | 23 | — | 1,068 | |||||||||||||||||
| % NR |
12.8 | % | 12.2 | % | ||||||||||||||||||||
| Interest and other expense, net |
425 | (66 | ) | — | — | (78 | ) | 281 | ||||||||||||||||
|
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|
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|
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|
|||||||||||||
| Earnings from operations |
1,273 | (699 | ) | 112 | 23 | 78 | 787 | |||||||||||||||||
| Provision for income taxes |
346 | (280 | ) | 1 | 9 | 29 | 105 | |||||||||||||||||
|
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|
|||||||||||||
| Effective tax rate |
27.2 | % | 13.3 | % | ||||||||||||||||||||
| Net earnings |
927 | (419 | ) | 111 | 14 | 49 | 682 | |||||||||||||||||
| Noncontrolling interest |
5 | — | — | — | — | 5 | ||||||||||||||||||
|
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|||||||||||||
| Net earnings attributable to Mondelēz |
$ | 922 | $ | (419 | ) | $ | 111 | $ | 14 | $ | 49 | $ | 677 | |||||||||||
|
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|
|||||||||||||
| Diluted EPS attributable to Mondelēz |
$ | 0.52 | $ | 0.38 | ||||||||||||||||||||
| shares |
1,777 | 1,777 | ||||||||||||||||||||||
Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KFG Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
| (c) | Removal of $112 million of Integration Program costs and related taxes; these costs directly related to integrating the 2010 Cadbury acquisition and have been removed from the unaudited adjusted pro forma consolidated statements of earnings to provide improved transparency and comparability of our operating results. |
| (d) | Reduction in our estimated annual benefit plan expense as a result of transferring certain benefit plan obligations to KFG in the Spin-Off. The reduction in benefit plan expense is estimated to be approximately $90 million, which reflects a 2012 estimate based on market conditions and benefit plan assumptions as of January 1, 2012. For the three months ended September 30, 2012 and September 30, 2011, a prorated estimate of $23 million was reflected. The estimates may change significantly as we finalize the amount of net liability transfers and the impacts on our statement of earnings during the fourth quarter of 2012. |
| (e) | An adjustment to remove $78 million of interest expense and related taxes. This adjustment is based on the assumed reduction of $6 billion of our debt on January 1, 2011 from the utilization of funds received from the $6 billion of notes KFG issued directly and cash proceeds distributed to us in June 2012 in connection with our Spin-Off capitalization plan. |
Schedule 16
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Consolidated Statement of Earnings
($ in millions) (Unaudited)
| Nine Months Ended September 30, 2011 | ||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Integration Program costs |
Pension | Interest | Adjusted Pro Forma (Non-GAAP) |
|||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | ||||||||||||||||||||
| Net Revenues |
$ | 39,677 | $ | (13,546 | ) | $ | — | $ | — | $ | — | $ | 26,131 | |||||||||||
| COGS |
25,555 | (9,099 | ) | (60 | ) | (33 | ) | — | 16,363 | |||||||||||||||
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|
|
|||||||||||||
| Gross Profit |
14,122 | (4,447 | ) | 60 | 33 | — | 9,768 | |||||||||||||||||
| % NR |
35.6 | % | 37.4 | % | ||||||||||||||||||||
| SG&A |
8,807 | (1,974 | ) | (292 | ) | (35 | ) | — | 6,506 | |||||||||||||||
| Asset impairment & exit costs |
(7 | ) | 2 | — | — | — | (5 | ) | ||||||||||||||||
| Amortization of intangibles |
172 | — | — | — | — | 172 | ||||||||||||||||||
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|||||||||||||
| Operating Income |
5,150 | (2,475 | ) | 352 | 68 | — | 3,095 | |||||||||||||||||
| % NR |
13.0 | % | 11.8 | % | ||||||||||||||||||||
| Interest and other expense, net |
1,312 | (198 | ) | — | — | (233 | ) | 881 | ||||||||||||||||
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|||||||||||||
| Earnings from operations |
3,838 | (2,277 | ) | 352 | 68 | 233 | 2,214 | |||||||||||||||||
| Provision for income taxes |
1,133 | (850 | ) | 7 | 26 | 88 | 404 | |||||||||||||||||
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|||||||||||||
| Effective tax rate |
29.5 | % | 18.2 | % | ||||||||||||||||||||
| Net earnings |
2,705 | (1,427 | ) | 345 | 42 | 145 | 1,810 | |||||||||||||||||
| Noncontrolling interest |
8 | — | — | — | — | 8 | ||||||||||||||||||
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|||||||||||||
| Net earnings attributable to Mondelēz |
$ | 2,697 | $ | (1,427 | ) | $ | 345 | $ | 42 | $ | 145 | $ | 1,802 | |||||||||||
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|||||||||||||
| Diluted EPS attributable to Mondelēz |
$ | 1.52 | $ | 1.02 | ||||||||||||||||||||
| shares |
1,770 | 1,770 | ||||||||||||||||||||||
Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KFG Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
| (c) | Removal of $352 million of Integration Program costs and related taxes; these costs directly related to integrating the 2010 Cadbury acquisition and have been removed from the unaudited adjusted pro forma consolidated statements of earnings to provide improved transparency and comparability of our operating results. |
| (d) | Reduction in our estimated annual benefit plan expense as a result of transferring certain benefit plan obligations to KFG in the Spin-Off. The reduction in benefit plan expense is estimated to be approximately $90 million, which reflects a 2012 estimate based on market conditions and benefit plan assumptions as of January 1, 2012. For the nine months ended September 30, 2012 and September 30, 2011, a prorated estimate of $68 million was reflected. The estimates may change significantly as we finalize the amount of net liability transfers and the impacts on our statement of earnings during the fourth quarter of 2012. |
| (e) | An adjustment to remove $233 million of interest expense and related taxes. This adjustment is based on the assumed reduction of $6 billion of our debt on January 1, 2011 from the utilization of funds received from the $6 billion of notes KFG issued directly and cash proceeds distributed to us in June 2012 in connection with our Spin-Off capitalization plan. |
Schedule 17
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Operating Income by Segment
($ in millions) (Unaudited)
| Three Months Ended | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Integration Program costs |
Spin- Off Costs |
Restructuring Program costs |
Pension | Adjusted Pro Forma (Non-GAAP) |
Impact of Currency |
Adjusted Pro Forma @ Constant FX (Non-GAAP) |
GAAP | Adjusted Pro Forma (Non-GAAP) |
Adjusted Pro Forma @ Constant FX (Non-GAAP) |
|||||||||||||||||||||||||||||||||||||
| September 30, 2012 |
(a) | (b) | (c) | (d) | (e) | (f) | ||||||||||||||||||||||||||||||||||||||||||
| Segment Operating income: |
||||||||||||||||||||||||||||||||||||||||||||||||
| North America |
$ | 1,067 | $ | (804 | ) | $ | 3 | $ | — | $ | 15 | $ | 12 | $ | 293 | $ | (1 | ) | $ | 292 | 3.1 | % | 14.5 | % | 14.1 | % | ||||||||||||||||||||||
| Europe |
415 | — | (28 | ) | — | — | — | 387 | 32 | 419 | 24.3 | % | (0.8 | )% | 7.4 | % | ||||||||||||||||||||||||||||||||
| Developing Markets |
539 | (14 | ) | 11 | 25 | 2 | — | 563 | 32 | 595 | (7.4 | )% | (6.3 | )% | (1.0 | )% | ||||||||||||||||||||||||||||||||
| Unrealized gains / (losses) on hedging activities |
54 | (52 | ) | — | — | — | — | 2 | — | 2 | n/m | (87.5 | )% | (87.5 | )% | |||||||||||||||||||||||||||||||||
| Certain U.S. pension plan costs |
(90 | ) | 60 | — | — | — | 11 | (19 | ) | — | (19 | ) | 57.9 | % | 100.0+ | % | 100.0+ | % | ||||||||||||||||||||||||||||||
| General corporate expenses |
(279 | ) | (4 | ) | — | 201 | 1 | — | (81 | ) | (5 | ) | (86 | ) | 100.0+ | % | (36.7 | )% | (32.8 | )% | ||||||||||||||||||||||||||||
| Amortization of intangibles |
(54 | ) | — | — | — | — | — | (54 | ) | (1 | ) | (55 | ) | (6.9 | )% | (6.9 | )% | (5.2 | )% | |||||||||||||||||||||||||||||
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|||||||||||||||||||||||||
| Operating income |
1,652 | (814 | ) | (14 | ) | 226 | 18 | 23 | 1,091 | 57 | 1,148 | (2.7 | )% | 2.2 | % | 7.5 | % | |||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||
| Segment Operating income margin: |
||||||||||||||||||||||||||||||||||||||||||||||||
| North America |
16.9 | % | 16.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Europe |
14.6 | % | 13.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Developing Markets |
14.3 | % | 15.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Operating income margin: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Mondelēz International |
12.8 | % | 13.1 | % | ||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2011 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Operating income: |
||||||||||||||||||||||||||||||||||||||||||||||||
| North America |
$ | 1,035 | $ | (810 | ) | $ | 19 | $ | — | $ | — | $ | 12 | $ | 256 | $ | — | $ | 256 | |||||||||||||||||||||||||||||
| Europe |
334 | — | 56 | — | — | — | 390 | — | 390 | |||||||||||||||||||||||||||||||||||||||
| Developing Markets |
582 | (12 | ) | 31 | — | — | — | 601 | — | 601 | ||||||||||||||||||||||||||||||||||||||
| Unrealized gains / (losses) on hedging activities |
(4 | ) | 20 | — | — | — | — | 16 | — | 16 | ||||||||||||||||||||||||||||||||||||||
| Certain U.S. pension plan costs |
(57 | ) | 37 | — | — | — | 11 | (9 | ) | — | (9 | ) | ||||||||||||||||||||||||||||||||||||
| General corporate expenses |
(134 | ) | — | 6 | — | — | — | (128 | ) | — | (128 | ) | ||||||||||||||||||||||||||||||||||||
| Amortization of intangibles |
(58 | ) | — | — | — | — | — | (58 | ) | — | (58 | ) | ||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||
| Operating income |
1,698 | (765 | ) | 112 | — | — | 23 | 1,068 | — | 1,068 | ||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||
| Segment Operating income margin: |
||||||||||||||||||||||||||||||||||||||||||||||||
| North America |
16.9 | % | 14.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Europe |
10.8 | % | 12.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Developing Markets |
14.6 | % | 15.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Operating income margin: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Mondelēz International |
12.8 | % | 12.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KFG Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
| (c) | Remove the net reversal of $14 million of Integration Program costs for the three months ended September 30, 2012 and charges of $112 million of Integration Program costs for the three months ended September 30, 2011; these costs directly related to integrating the 2010 Cadbury acquisition and have been removed from unaudited adjusted pro forma operating income to provide improved transparency and comparability of our operating results. |
| (d) | Remove one-time Spin-Off transaction and transition costs of $226 million for the three months ended September 30, 2012; these costs directly relate to the Spin-Off of KFG and not recur and as such, have been removed from unaudited adjusted pro forma operating income. |
| (e) | Remove restructuring and implementation costs of $18 million for the three months ended September 30, 2012; these costs directly relate to optimizing our businesses for future operations (the “2012-2014 Restructuring Program”) and have been removed from unaudited adjusted pro forma operating income to provide improved transparency and comparability of our operating results. |
| (f) | Reduction in our estimated annual benefit plan expense as a result of transferring certain benefit plan obligations to KFG in the Spin-Off. The reduction in benefit plan expense is estimated to be approximately $90 million, which reflects a 2012 estimate based on market conditions and benefit plan assumptions as of January 1, 2012. For the three months ended September 30, 2012 and September 30, 2011, a prorated estimate of $23 million was reflected. The estimates may change significantly as we finalize the amount of net liability transfers and the impacts on our statement of earnings during the fourth quarter of 2012. |
Schedule 18
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Operating Income by Segment
($ in millions) (Unaudited)
| Nine Months Ended | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Integration Program costs |
Spin-Off Costs |
Restructuring Program costs |
Pension | Adjusted Pro Forma (Non-GAAP) |
Impact of Currency |
Adjusted Pro Forma @ Constant FX (Non-GAAP) |
GAAP | Adjusted Pro Forma (Non-GAAP) |
Adjusted Pro Forma @ Constant FX (Non-GAAP) |
|||||||||||||||||||||||||||||||||||||
| September 30, 2012 | (a) | (b) | (c) | (d) | (e) | (f) | ||||||||||||||||||||||||||||||||||||||||||
| Segment Operating income: |
||||||||||||||||||||||||||||||||||||||||||||||||
| North America |
$ | 3,236 | $ | (2,591 | ) | $ | 4 | $ | — | $ | 61 | $ | 34 | $ | 744 | $ | 3 | $ | 747 | 0.8 | % | 5.7 | % | 6.1 | % | |||||||||||||||||||||||
| Europe |
1,195 | — | 8 | — | — | — | 1,203 | 82 | 1,285 | 13.1 | % | (1.6 | )% | 5.2 | % | |||||||||||||||||||||||||||||||||
| Developing Markets |
1,608 | (37 | ) | 50 | 25 | 7 | — | 1,653 | 72 | 1,725 | 6.8 | % | 4.0 | % | 8.5 | % | ||||||||||||||||||||||||||||||||
| Unrealized gains / (losses) on hedging activities |
101 | (58 | ) | — | — | — | — | 43 | — | 43 | n/m | 100.0+ | % | 100.0+ | % | |||||||||||||||||||||||||||||||||
| Certain U.S. pension plan costs |
(237 | ) | 157 | — | — | — | 34 | (46 | ) | — | (46 | ) | 65.7 | % | 100.0+ | % | 100.0+ | % | ||||||||||||||||||||||||||||||
| General corporate expenses |
(518 | ) | (15 | ) | 2 | 340 | 1 | — | (190 | ) | (11 | ) | (201 | ) | 95.5 | % | (20.2 | )% | (15.5 | )% | ||||||||||||||||||||||||||||
| Amortization of intangibles |
(163 | ) | — | — | — | — | — | (163 | ) | (8 | ) | (171 | ) | (5.2 | )% | (5.2 | )% | (0.6 | )% | |||||||||||||||||||||||||||||
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|||||||||||||||||||||||||
| Operating income |
5,222 | (2,544 | ) | 64 | 365 | 69 | 68 | 3,244 | 138 | 3,382 | 1.4 | % | 4.8 | % | 9.3 | % | ||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||
| Segment Operating income margin: |
||||||||||||||||||||||||||||||||||||||||||||||||
| North America |
17.3 | % | 14.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Europe |
13.3 | % | 13.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Developing Markets |
13.9 | % | 14.5 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Operating income margin: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Mondelēz International |
13.3 | % | 12.7 | % | ||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2011 |
||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Operating income: |
||||||||||||||||||||||||||||||||||||||||||||||||
| North America |
$ | 3,210 | $ | (2,581 | ) | $ | 41 | $ | — | $ | — | $ | 34 | $ | 704 | $ | — | $ | 704 | |||||||||||||||||||||||||||||
| Europe |
1,057 | — | 165 | — | — | — | 1,222 | — | 1,222 | |||||||||||||||||||||||||||||||||||||||
| Developing Markets |
1,505 | (36 | ) | 121 | — | — | — | 1,590 | — | 1,590 | ||||||||||||||||||||||||||||||||||||||
| Unrealized gains / (losses) on hedging activities |
(42 | ) | 51 | — | — | — | — | 9 | — | 9 | ||||||||||||||||||||||||||||||||||||||
| Certain U.S. pension plan costs |
(143 | ) | 89 | — | — | — | 34 | (20 | ) | — | (20 | ) | ||||||||||||||||||||||||||||||||||||
| General corporate expenses |
(265 | ) | 2 | 25 | — | — | — | (238 | ) | — | (238 | ) | ||||||||||||||||||||||||||||||||||||
| Amortization of intangibles |
(172 | ) | — | — | — | — | — | (172 | ) | — | (172 | ) | ||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||
| Operating income |
5,150 | (2,475 | ) | 352 | — | — | 68 | 3,095 | — | 3,095 | ||||||||||||||||||||||||||||||||||||||
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| Segment Operating income margin: |
||||||||||||||||||||||||||||||||||||||||||||||||
| North America |
17.5 | % | 14.1 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Europe |
11.0 | % | 12.7 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Developing Markets |
12.9 | % | 13.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Operating income margin: |
||||||||||||||||||||||||||||||||||||||||||||||||
| Mondelēz International |
13.0 | % | 11.8 | % | ||||||||||||||||||||||||||||||||||||||||||||
Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KFG Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
| (c) | Remove Integration Program costs of $64 million for the nine months ended September 30, 2012 and $352 million for the nine months ended September 30, 2011; these costs directly related to integrating the 2010 Cadbury acquisition and have been removed from unaudited adjusted pro forma operating income to provide improved transparency and comparability of our operating results. |
| (d) | Remove one-time Spin-Off transaction and transition costs of $365 million for the nine months ended September 30, 2012; these costs directly relate to the Spin-Off of KFG and not recur and as such, have been removed from unaudited adjusted pro forma operating income. |
| (e) | Remove restructuring and implementation costs of $69 million for the nine months ended September 30, 2012; these costs directly relate to optimizing our businesses for future operations (the “2012-2014 Restructuring Program”) and have been removed from unaudited adjusted pro forma operating income to provide improved transparency and comparability of our operating results. |
| (f) | Reduction in our estimated annual benefit plan expense as a result of transferring certain benefit plan obligations to KFG in the Spin-Off. The reduction in benefit plan expense is estimated to be approximately $90 million, which reflects a 2012 estimate based on market conditions and benefit plan assumptions as of January 1, 2012. For the nine months ended September 30, 2012 and September 30, 2011, a prorated estimate of $68 million was reflected. The estimates may change significantly as we finalize the amount of net liability transfers and the impacts on our statement of earnings during the fourth quarter of 2012. |
Schedule 19
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Net Revenue by Reportable Segment
($ in millions) (Unaudited)
| Three Months Ended | % Change | |||||||||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Adjusted Pro Forma (Non-GAAP) |
Impact of Currency |
Organic (Non-GAAP) |
GAAP | Adjusted Pro Forma (Non-GAAP) |
Organic (Non-GAAP) |
|||||||||||||||||||||||||
| September 30, 2012 |
(a) | (b) | ||||||||||||||||||||||||||||||
| North America |
$ | 6,295 | $ | (4,527 | ) | $ | 1,768 | $ | 6 | $ | 1,774 | 2.6 | % | 1.9 | % | 2.2 | % | |||||||||||||||
| Europe |
2,849 | — | 2,849 | 273 | 3,122 | (8.1 | )% | (8.1 | )% | 0.7 | % | |||||||||||||||||||||
| Developing Markets |
3,765 | (56 | ) | 3,709 | 301 | 4,010 | (5.7 | )% | (6.0 | )% | 1.7 | % | ||||||||||||||||||||
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|||||||||||||||||
| Mondelēz International |
$ | 12,909 | $ | (4,583 | ) | $ | 8,326 | $ | 580 | $ | 8,906 | (2.4 | )% | (5.1 | )% | 1.5 | % | |||||||||||||||
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|||||||||||||||||
| September 30, 2011 |
||||||||||||||||||||||||||||||||
| North America |
$ | 6,133 | $ | (4,398 | ) | $ | 1,735 | $ | — | $ | 1,735 | |||||||||||||||||||||
| Europe |
3,099 | — | 3,099 | — | 3,099 | |||||||||||||||||||||||||||
| Developing Markets |
3,994 | (50 | ) | 3,944 | — | 3,944 | ||||||||||||||||||||||||||
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| Mondelēz International |
$ | 13,226 | $ | (4,448 | ) | $ | 8,778 | — | $ | 8,778 | ||||||||||||||||||||||
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Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KFG Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
Schedule 20
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Net Revenue by Reportable Segment
($ in millions) (Unaudited)
| Nine Months Ended | % Change | |||||||||||||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Adjusted Pro Forma (Non-GAAP) |
Impact of Accounting Calendar Changes |
Impact of Currency |
Organic (Non-GAAP) |
GAAP | Adjusted Pro Forma (Non-GAAP) |
Organic (Non-GAAP) |
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| September 30, 2012 |
(a) | (b) | ||||||||||||||||||||||||||||||||||
| North America |
$ | 18,698 | $ | (13,611 | ) | $ | 5,087 | $ | — | $ | 20 | $ | 5,107 | 1.7 | % | 2.0 | % | 2.4 | % | |||||||||||||||||
| Europe |
9,004 | — | 9,004 | — | 653 | 9,657 | (6.6 | )% | (6.6 | )% | 3.1 | % | ||||||||||||||||||||||||
| Developing Markets |
11,586 | (157 | ) | 11,429 | — | 760 | 12,189 | (0.5 | )% | (0.7 | )% | 6.8 | % | |||||||||||||||||||||||
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| Mondelēz International |
$ | 39,288 | $ | (13,768 | ) | $ | 25,520 | $ | — | $ | 1,433 | $ | 26,953 | (1.0 | )% | (2.3 | )% | 4.6 | % | |||||||||||||||||
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| September 30, 2011 |
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| North America |
$ | 18,387 | $ | (13,402 | ) | $ | 4,985 | $ | — | $ | — | $ | 4,985 | |||||||||||||||||||||||
| Europe |
9,640 | — | 9,640 | (269 | ) | — | 9,371 | |||||||||||||||||||||||||||||
| Developing Markets |
11,650 | (144 | ) | 11,506 | (92 | ) | — | 11,414 | ||||||||||||||||||||||||||||
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| Mondelēz International |
$ | 39,677 | $ | (13,546 | ) | $ | 26,131 | $ | (361 | ) | $ | — | $ | 25,770 | ||||||||||||||||||||||
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Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KFG Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
Schedule 21
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Net Revenue by Reportable Segment
($ in millions) (Unaudited)
| Three Months Ended | % Change | |||||||||||||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Adjusted Pro Forma (Non-GAAP) |
Impact of Divestitures |
Impact of Currency |
Organic (Non-GAAP) |
GAAP | Adjusted Pro Forma (Non-GAAP) |
Organic (Non-GAAP) |
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| (a) | (b) | |||||||||||||||||||||||||||||||||||
| September 30, 2011 |
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| North America |
$ | 6,133 | $ | (4,398 | ) | $ | 1,735 | $ | — | $ | (17 | ) | $ | 1,718 | 4.4 | % | 5.3 | % | 4.3 | % | ||||||||||||||||
| Europe |
3,099 | — | 3,099 | — | (291 | ) | 2,808 | 16.1 | % | 16.1 | % | 5.2 | % | |||||||||||||||||||||||
| Developing Markets |
3,994 | (50 | ) | 3,944 | — | (194 | ) | 3,750 | 20.3 | % | 20.6 | % | 15.5 | % | ||||||||||||||||||||||
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| Mondelēz International |
$ | 13,226 | $ | (4,448 | ) | $ | 8,778 | $ | — | $ | (502 | ) | $ | 8,276 | 11.5 | % | 15.7 | % | 9.4 | % | ||||||||||||||||
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| September 30, 2010 |
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| North America |
$ | 5,873 | $ | (4,226 | ) | $ | 1,647 | $ | — | $ | — | $ | 1,647 | |||||||||||||||||||||||
| Europe |
2,670 | — | 2,670 | — | — | 2,670 | ||||||||||||||||||||||||||||||
| Developing Markets |
3,320 | (49 | ) | 3,271 | (25 | ) | — | 3,246 | ||||||||||||||||||||||||||||
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| Mondelēz International |
$ | 11,863 | $ | (4,275 | ) | $ | 7,588 | $ | (25 | ) | $ | — | $ | 7,563 | ||||||||||||||||||||||
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Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KGF Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
Schedule 22
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Diluted EPS Attributable to Mondelēz International
($ in millions) (Unaudited)
| Three Months Ended | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Integration Program costs |
Spin-Off Costs |
Restructuring Program costs |
Pension | Interest | Adjusted Pro Forma (Non-GAAP) |
Currency | Adjusted Pro Forma @ Constant FX (Non-GAAP) |
GAAP | Adjusted Pro Forma (Non-GAAP) |
Adjusted Pro Forma @ Constant FX (Non-GAAP) |
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| (a) | (b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2012 |
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| Net Earnings attributable to Mondelēz |
$ | 652 | $ | (482 | ) | $ | (5 | ) | $ | 452 | $ | 11 | $ | 14 | $ | 16 | $ | 658 | $ | 44 | $ | 702 | ||||||||||||||||||||||||||||||
| shares (in millions) |
1,789 | 1,789 | 1,789 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS attributable to Mondelēz |
$ | 0.36 | $ | 0.37 | $ | 0.02 | $ | 0.39 | (30.6 | )% | (2.6 | )% | 2.6 | % | ||||||||||||||||||||||||||||||||||||||
| September 30, 2011 |
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| Net Earnings attributable to Mondelēz |
$ | 922 | $ | (418 | ) | $ | 111 | $ | — | $ | — | $ | 14 | $ | 49 | $ | 678 | $ | — | $ | 678 | |||||||||||||||||||||||||||||||
| shares (in millions) |
1,777 | 1,777 | 1,777 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS attributable to Mondelēz |
$ | 0.52 | $ | 0.38 | $ | — | $ | 0.38 | ||||||||||||||||||||||||||||||||||||||||||||
Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KFG Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
| (c) | Removal of Integration Program costs, net of taxes. |
| (d) | Removal of $452 million of one-time Spin-Off transaction, transition and financing and related costs, net of taxes for the three months ended September 30, 2012; these costs directly relate to the Spin-Off of KFG and will not recur. |
| (e) | Removal of $11 million of restructuring and implementation costs, net of taxes, for the three months ended September 30, 2012; these costs directly relate to optimizing our businesses for future operations (the “2012-2014 Restructuring Program”) and have been removed to provide improved transparency and comparability of our operating results. |
| (f) | Reduction in our estimated annual benefit plan expense as a result of transferring certain benefit plan obligations to KFG in the Spin-Off. The reduction in benefit plan expense is estimated to be approximately $90 million pre-tax, which reflects a 2012 estimate based on market conditions and benefit plan assumptions as of January 1, 2012. For the three months ended September 30, 2012 and 2011, a prorated estimate of $14 million net of taxes was reflected. The estimates may change significantly as we finalize the amount of net liability transfers and the impacts on our statement of earnings during the fourth quarter of 2012. |
| (g) | An adjustment to remove $16 million and $49 million of interest expense net of taxes for the three months ended September 30, 2012 and 2011, respectively. This adjustment is based on the assumed reduction of $6 billion of our debt on January 1, 2011 from the utilization of funds received from the $6 billion of notes KFG issued directly and cash proceeds distributed to us in June 2012 in connection with our Spin-Off capitalization plan. Note during the three months ended September 30, 2012, a portion of the $6 billion of debt was retired. As such, we adjusted interest expense during this period as if this debt had been repaid on January 1, 2011 to ensure consistency of our assumption and related results. |
Schedule 23
Mondelēz International, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
Adjusted Pro Forma Diluted EPS Attributable to Mondelēz International
($ in millions) (Unaudited)
| Nine Months Ended | % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP | Kraft Foods Group Operation |
Integration Program costs |
Spin-Off Costs |
Restructuring Program costs |
Pension | Interest | Adjusted Pro Forma (Non-GAAP) |
Currency | Adjusted Pro Forma @ Constant FX (Non-GAAP) |
GAAP | Adjusted Pro Forma (Non-GAAP) |
Adjusted Pro Forma @ Constant FX (Non-GAAP) |
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| (a) | (b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2012 |
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| Net Earnings attributable to Mondelēz |
$ | 2,494 | $ | (1,506 | ) | $ | 68 | $ | 654 | $ | 43 | $ | 42 | $ | 84 | $ | 1,879 | $ | 84 | $ | 1,965 | |||||||||||||||||||||||||||||||
| shares (in millions) |
1,786 | 1,786 | 1,786 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS attributable to Mondelēz |
$ | 1.40 | $ | 1.05 | $ | 0.05 | $ | 1.10 | (7.9 | )% | 2.9 | % | 7.8 | % | ||||||||||||||||||||||||||||||||||||||
| September 30, 2011 |
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| Net Earnings attributable to Mondelēz |
$ | 2,697 | $ | (1,425 | ) | $ | 345 | $ | — | $ | — | $ | 42 | $ | 145 | $ | 1,804 | $ | — | $ | 1,804 | |||||||||||||||||||||||||||||||
| shares (in millions) |
1,770 | 1,770 | 1,770 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS attributable to Mondelēz |
$ | 1.52 | $ | 1.02 | $ | — | $ | 1.02 | ||||||||||||||||||||||||||||||||||||||||||||
Refer to the Non-GAAP Financial Measures section of this document for additional information regarding Adjusted Pro Forma financial results.
| (a) | Represents GAAP results for the period. |
| (b) | Adjustment to eliminate the financial results of Kraft Foods Group, Inc. (“KFG”) from operations. The KFG Operation will be classified as a discontinued operation in accordance with GAAP beginning in the fourth quarter of 2012, the period in which the spin-off of the business occurred and prior historical results will be revised to conform to the discontinued operations presentation. Historical results were derived from KFG’s unaudited interim combined financial statements included in the KFG Form 10 and were adjusted as follows: (i) to exclude certain corporate and business unit costs that were allocated to KFG as well as dis-synergies which we expect to continue at Mondelēz International after the Spin-Off; (ii) to reduce interest expense to remove the interest expense related to the $4 billion of debt migrated to KFG in July 2012 as if it was migrated effective January 1, 2011; (iii) to exclude royalty income historically reported by KFG that we will not pay following the Distribution Date and to exclude intercompany sales from KFG to Mondelēz International in order to properly reflect net revenues from continuing operations. |
| (c) | Removal of Integration Program costs, net of taxes. |
| (d) | Removal of $654 million of one-time Spin-Off transaction, transition and financing and related costs, net of taxes for the nine months ended September 30, 2012; these costs directly relate to the Spin-Off of KFG and will not recur. |
| (e) | Removal of $43 million of restructuring and implementation costs, net of taxes, for the nine months ended September 30, 2012; these costs directly relate to optimizing our businesses for future operations (the “2012-2014 Restructuring Program”) and have been removed to provide improved transparency and comparability of our operating results. |
| (f) | Reduction in our estimated annual benefit plan expense as a result of transferring certain benefit plan obligations to KFG in the Spin-Off. The reduction in benefit plan expense is estimated to be approximately $90 million pre-tax, which reflects a 2012 estimate based on market conditions and benefit plan assumptions as of January 1, 2012. For the nine months ended September 30, 2012 and 2011, a prorated estimate of $42 million net of taxes was reflected. The estimates may change significantly as we finalize the amount of net liability transfers and the impacts on our statement of earnings during the fourth quarter of 2012. |
| (g) | An adjustment to remove $84 million and $145 million of interest expense net of taxes for the nine months ended September 30, 2012 and 2011, respectively. This adjustment is based on the assumed reduction of $6 billion of our debt on January 1, 2011 from the utilization of funds received from the $6 billion of notes KFG issued directly and cash proceeds distributed to us in June 2012 in connection with our Spin-Off capitalization plan. Note during the nine months ended September 30, 2012, a portion of the $6 billion of debt was retired. As such, we adjusted interest expense during this period as if this debt had been repaid on January 1, 2011 to ensure consistency of our assumption and related results. |