Mondelez International Takes Strategic Actions to Further Focus Its Portfolio on Snacks and Accelerate Margin Expansion; Reports Solid Q1 Results
Financial Schedules and GAAP to Non-GAAP Information
Earnings Release
Listen to Webcast
Focusing Portfolio
-
Combining coffee portfolio with D.E Master Blenders 1753 to create world's leading pure-play coffee company with more than
$7 billion (€5 billion) in revenues -
Will receive after-tax cash proceeds of approximately
$5 billion and a 49% interest in the new company - Approximately 85% of Mondelēz International's net revenues to come from snacks upon completion
Expanding Margins
- Accelerating supply chain reinvention program and initiating significant overhead reductions to reduce operating costs to best-in-class levels
-
$3.5 billion restructuring program, of which$2.5 billion is cash, expected to generate at least$1.5 billion in cost savings by 2018 - Increasing bottom end of 2016 Adjusted Operating Income margin range; now targeting 15%-16%
- Savings will provide additional opportunity for further margin expansion beyond 2016
Solid Q1 Results
- Organic Net Revenue1 grew 2.8%, including a (0.6)pp impact from lower coffee revenues
- Adjusted Operating Income1 margin expanded 140 basis points to 12.2%
-
Adjusted EPS1 was
$0.39 , up 17.1% on a constant currency basis - Strong market share performance2 with over 60% of revenues gaining or holding share
-
Repurchased
$0.5 billion of shares - Confirms profit outlook for 2014; reduces organic revenue growth target to approximately 3% to reflect slower global category growth
The company also announced plans to reduce operating costs to best-in-class levels through a restructuring program that is expected to deliver cost savings of at least
"The strategic and cost-reduction actions we announced today underscore our determination to become a leaner, more focused and more nimble global snacking powerhouse," said
Creating the World's
Also today,
Jacobs Douwe Egberts is expected to have total revenue of more than
Upon completion of the proposed transactions,
The company expects to use the majority of its cash proceeds to expand its share repurchase program, subject to approval by the Board of Directors, with the balance used for debt reduction and general corporate purposes. The company remains committed to maintaining an investment-grade credit rating and access to Tier 2 commercial paper.
Targeting Best-in-Class Cost Levels
In conjunction with the proposed coffee transaction,
To facilitate these efforts, the Board of Directors approved a
The company expects the 2014-2018 Restructuring Program to generate annualized savings of at least
"Today's coffee announcement creates an opportunity to further reduce our supply chain and overhead costs and fast-track the implementation of best-in-class cost management practices on a global basis," said
First Quarter Results
In the first quarter, the company delivered Organic Net Revenue growth in line with expectations, strong Adjusted Operating Income margin improvement and double-digit growth in both Adjusted Operating Income and Adjusted EPS on a constant currency basis.
On a reported basis, net revenues were
Reported Net Revenues |
Organic Net Revenue Growth |
||||||||||||
% Chg |
Power |
||||||||||||
Q1 2014 |
vs PY |
Q1 2014 |
Vol/Mix |
Pricing |
Brands |
||||||||
|
|
(3.0)% |
14.7 % |
(1.4)pp |
16.1 pp |
14.7 % |
|||||||
|
1,223 |
(10.5) |
(2.7) |
(3.8) |
1.1 |
(3.9) |
|||||||
|
838 |
(2.9) |
7.9 |
5.6 |
2.3 |
11.3 |
|||||||
|
3,557 |
2.9 |
(1.0) |
0.9 |
(1.9) |
1.1 |
|||||||
|
1,667 |
0.5 |
2.5 |
1.0 |
1.5 |
5.0 |
|||||||
|
|
(1.2)% |
2.8 % |
0.3 pp |
2.5 pp |
4.8 % |
Organic Net Revenue Commentary
Organic Net Revenue increased 2.8 percent, including a negative 0.6 percentage point impact from lower coffee revenues, reflecting the pass-through of lower green coffee costs. Overall, pricing was up 2.5 percentage points, as the company increased prices across most non-coffee categories in every region. Volume/mix was up slightly despite these higher prices. The 0.4 percentage point headwind from Easter shifting to the second quarter was lower than expected. Market share performance was strong, with over 60 percent of revenues gaining or holding share.
Organic Net Revenue from emerging markets5 was up 6.7 percent and developed markets6 increased 0.2 percent. Overall, Power Brands grew 4.8 percent. Tuc, Club Social, belVita and Chips Ahoy! biscuits, Cadbury Dairy Milk and Milka chocolate and Tang powdered beverages each posted at least high single-digit increases.
On a regional basis, highlights include:
-
Latin America increased 14.7 percent, largely driven by pricing gains, especially in the inflationary economies ofVenezuela and Argentina.Brazil grew high single digits, as strong double-digit growth in powdered beverages and biscuits was partially offset by the impact from the later timing of Easter on chocolate. -
Asia Pacific was down 2.7 percent. Lower volume/mix was mostly attributable toChina where difficult prior year comparisons in biscuits more than offset a strong performance in gum.India delivered another strong quarter with mid-teens growth driven by chocolate and powdered beverages. -
EEMEA was up 7.9 percent, reflecting strong volume/mix gains and modest pricing. Revenue growth in the region was broad-based, with a high single-digit gain in
Russia , and strong double-digit growth in the GCC7 countries,Turkey andEgypt , more than offsetting a double-digit decline inUkraine due to political and economic instability. -
Europe was down 1.0 percent. Pricing in the region was lower, reflecting the pass-through of lower green coffee costs. Lower coffee revenues tempered growth by 1.5 percentage points. Volume/mix increased nearly 1 percentage point despite the impacts of the Easter shift and short-term customer disputes associated with price increases in non-coffee categories. -
North America increased 2.5 percent, driven by continued strong share performance and mid-single digit growth in biscuits. Growth in the category was balanced between volume/mix and pricing. The rate of decline in gum continued to moderate as U.S. market share was up for the third consecutive quarter.
Reported |
Adjusted |
|||||||||
Q1 2014 |
vs PY (Rpt Fx) |
Q1 2014 |
vs PY (Rpt Fx) |
vs PY (Cst Fx) |
||||||
Gross Profit |
|
(1.2)% |
|
(1.1)% |
2.3 % |
|||||
Gross Profit Margin |
37.1 % |
- pp |
37.1 % |
(0.1)pp |
||||||
Operating Income |
|
1.1 % |
|
11.7 % |
15.8 % |
|||||
Operating Income Margin |
9.8 % |
0.3 pp |
12.2 % |
1.4 pp |
||||||
Net Earnings8 |
|
(69.6)% |
|
5.2 % |
||||||
Diluted EPS |
|
(70.0)% |
|
11.4 % |
17.1 % |
Adjusted Operating Income and EPS commentary
Adjusted Gross Profit1 increased 2.3 percent on a constant currency basis. Adjusted Gross Margin was essentially flat to prior year, as higher prices and a strong contribution from supply chain productivity more than offset input cost inflation.
Adjusted Operating Income grew 15.8 percent on a constant currency basis, driven by lower SG&A expense and higher gross profit. Overhead costs declined as a result of the company's continued cost management efforts. Advertising and consumer support expense was also lower as the company cycled significantly higher investments in the prior year and drove efficiencies by consolidating media providers, reducing non-working media costs and shifting spending to lower-cost, digital media outlets.
Adjusted EPS grew 17.1 percent on a constant currency basis, driven entirely by operating gains. Below operating income, the benefits from the share buyback program and lower interest expense were more than offset by an effective tax rate of 20.7 percent compared to 4.0 percent in the prior year1.
Share Repurchases
During the first quarter, the company repurchased
Outlook
Item |
FY 2014 Outlook |
|||||
Organic Net Revenue Growth |
At or above category growth, ~3% |
|||||
Adjusted Operating Income Growth |
Low double-digit growth on a constant currency basis |
|||||
Adjusted Operating Income Margin |
High 12 percent range |
|||||
Lower End |
Upper End |
|||||
Adjusted EPS - Constant Currency9 |
$ 1.73 |
$ 1.78 |
||||
Estimated Currency Impact10 |
(0.06) |
(0.06) |
||||
Adjusted EPS |
$ 1.67 |
$ 1.72 |
"With a solid first quarter, we remain on track to deliver strong gains in Adjusted Operating Income and Adjusted EPS," said Brearton.
"On the top line, however, growth in our global categories has slowed to around 3 percent over the last two quarters, due largely to the weakness in emerging markets and lower coffee prices. We expect these trends will continue in Q2, likely resulting in top-line growth similar to what we saw in Q1.
"While we expect the pass-through of higher green coffee costs will benefit top-line growth as the year unfolds, we anticipate that the challenging environment in emerging markets will continue and that we may realize some disruptions as we implement our strategic initiatives. As a result, we expect revenue growth to improve modestly in the second half. For the full year, we expect our Organic Net Revenue growth to be in line with global category growth of approximately 3 percent."
Conference Call
About
End Notes
- Please see discussion of Non-GAAP Financial Measures at the end of this press release.
-
Market share performance is defined as the percentage of revenues for the biscuits, chocolate, gum, candy, coffee, powdered beverage and cream cheese categories in key markets with share either increasing or holding versus the same prior year period. Based on Global Nielsen data for measured channels for available periods through
March 2014 . -
On
February 6, 2014 , the company completed a$1.6 billion cash tender offer for some of its outstanding high coupon long term debt and recorded a pre-tax loss of$494 million . As a result of this transaction and a separate cash tender offer completed inDecember 2013 , the company has reduced its weighted average cost of long-term debt as ofMarch 31, 2014 , from approximately 6.0% to approximately 4.6%. -
On
March 31, 2014 , the company remeasured its Venezuelan bolivar-denominated net monetary assets and recognized a pre-tax loss of$142 million . The impact of the remeasurement of the net monetary assets inVenezuela , both in current and prior years, is no longer included in the company's non-GAAP financial measures of Adjusted Operating Income and Adjusted EPS. Please see discussion of Items Impacting Comparability of Operating Results included in this press release for more details. -
Emerging markets consist of the
Latin America andEastern Europe ,Middle East andAfrica regions in their entirety; theAsia Pacific region, excludingAustralia ,New Zealand andJapan ; and the following countries from theEurope region:Poland , Czech & Slovak Republics,Hungary ,Bulgaria ,Romania , the Baltics and the East Adriatic countries. -
Developed markets include the entire
North America region, theEurope region excluding the countries included in the emerging markets definition, andAustralia ,New Zealand andJapan from theAsia Pacific region. -
The Gulf Cooperation Council (GCC) countries areBahrain ,Kuwait ,Oman ,Qatar , Saudi Arabia and theUnited Arab Emirates . -
Net earnings attributable to
Mondelez International . -
Adjusted EPS - Constant Currency guidance of
$1.73-$1.78 is based on 2013 average currency rates. -
Currency estimate includes the impact of currency recorded in the company's results for the first three months of 2014 and the estimated impact of currency for the remaining nine months using spot rates as of the close of business on
April 30, 2014 .
Forward-Looking Statements
This press release contains a number of forward-looking statements. Words, and variations of words, such as "will," "expect," "intend," "would," "anticipate," "plan," "likely," "deliver," "target," "outlook," "guidance" and similar expressions are intended to identify our forward-looking statements, including, but not limited to, statements about: our entry into the transactions; the timeframe for completing the transactions and the financial and growth prospects for the new company; the cash proceeds and ownership interest to be received in the transactions; the effect of the transactions and the restructuring program on our business and future financial performance; benefits to shareholders of the transactions; the costs of, cost savings generated by and timing of expenditures under the restructuring program; use of proceeds from the transactions; simplification of our operations; our future performance, including our future revenue growth, operating income, earnings per share and margins; growth in emerging markets; economic conditions; commodity prices; category growth; the amount of our future capital expenditures; return of capital to shareholders; and our Outlook, including 2014 Organic Net Revenue growth, Adjusted Operating Income growth, Adjusted Operating Income margin and Adjusted 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, risks that we will fail to successfully complete the transactions on the anticipated timeframe and that the transactions and the restructuring program will not yield the anticipated benefits, changes in the assumptions on which the restructuring program is based, as well as risks from operating globally and in emerging markets, continued volatility of commodity and other input costs, pricing actions, weakness in economic conditions, continued consumer weakness, unanticipated disruptions to our business, increased competition 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
Schedule 1 |
|||||||
|
|||||||
Condensed Consolidated Statements of Earnings |
|||||||
(in millions of dollars, except per share data) (Unaudited) |
|||||||
Reported (GAAP) |
|||||||
For the Three Months Ended March 31, |
|||||||
2014 |
2013 |
% Change Fav / (Unfav) |
|||||
Net revenues |
|
|
(1.2)% |
||||
Cost of sales |
5,437 |
5,502 |
1.2 % |
||||
Gross profit |
3,204 |
3,242 |
(1.2)% |
||||
Gross profit margin |
37.1% |
37.1% |
|||||
Selling, general and administrative expenses |
2,265 |
2,332 |
2.9 % |
||||
Asset impairment and exit costs |
42 |
44 |
4.5 % |
||||
Gain on acquisition |
- |
(22) |
(100.0)% |
||||
Amortization of intangibles |
54 |
54 |
- % |
||||
Operating income |
843 |
834 |
1.1 % |
||||
Operating income margin |
9.8% |
9.5% |
|||||
Interest and other expense, net |
720 |
279 |
(100.0+)% |
||||
Earnings before income taxes |
123 |
555 |
(77.8)% |
||||
Provision / (benefit) for income taxes |
(27) |
13 |
100.0+% |
||||
Effective tax rate |
(22.0)% |
2.3% |
|||||
Net earnings |
150 |
542 |
(72.3)% |
||||
Noncontrolling interest |
(13) |
6 |
100.0+% |
||||
Net earnings attributable to |
$ 163 |
$ 536 |
(69.6)% |
||||
Per share data: |
|||||||
Basic earnings per share attributable to |
$ 0.10 |
$ 0.30 |
(66.7)% |
||||
Diluted earnings per share attributable to |
$ 0.09 |
$ 0.30 |
(70.0)% |
||||
Average shares outstanding: |
|||||||
Basic |
1,704 |
1,784 |
4.5% |
||||
Diluted |
1,722 |
1,798 |
4.2% |
Schedule 2 |
|||||
|
|||||
Condensed Consolidated Balance Sheets |
|||||
(in millions of dollars) (Unaudited) |
|||||
|
|
|
|||
2014 |
2013 |
2013 |
|||
ASSETS |
|||||
Cash and cash equivalents |
$ 2,422 |
$ 2,664 |
$ 2,759 |
||
Receivables, net |
5,900 |
5,403 |
6,271 |
||
Inventories, net |
4,027 |
3,743 |
3,849 |
||
Deferred income taxes |
517 |
517 |
600 |
||
Other current assets |
836 |
889 |
862 |
||
Total current assets |
13,702 |
13,216 |
14,356 |
||
Property, plant and equipment, net |
10,242 |
10,247 |
9,845 |
||
Goodwill |
25,408 |
25,597 |
25,491 |
||
Intangible assets, net |
21,992 |
21,994 |
22,230 |
||
Other assets |
1,616 |
1,503 |
1,326 |
||
TOTAL ASSETS |
|
|
|
||
LIABILITIES AND EQUITY |
|||||
Short-term borrowings |
$ 2,503 |
$ 1,636 |
$ 203 |
||
Current portion of long-term debt |
1,674 |
1,003 |
3,328 |
||
Accounts payable |
5,372 |
5,345 |
4,378 |
||
Accrued marketing |
2,274 |
2,318 |
2,347 |
||
Accrued employment costs |
917 |
1,043 |
965 |
||
Other current liabilities |
2,585 |
3,051 |
2,624 |
||
Total current liabilities |
15,325 |
14,396 |
13,845 |
||
Long-term debt |
14,772 |
14,482 |
14,970 |
||
Deferred income taxes |
6,202 |
6,282 |
6,203 |
||
Accrued pension costs |
1,862 |
1,962 |
2,729 |
||
Accrued postretirement health care costs |
416 |
412 |
456 |
||
Other liabilities |
2,607 |
2,491 |
2,996 |
||
TOTAL LIABILITIES |
41,184 |
40,025 |
41,199 |
||
TOTAL EQUITY |
31,776 |
32,532 |
32,049 |
||
TOTAL LIABILITIES AND EQUITY |
|
|
|
||
|
|
Incr/(Decr) |
|||
Short-term borrowings |
$ 2,503 |
$ 1,636 |
$ 867 |
||
Current portion of long-term debt |
1,674 |
1,003 |
671 |
||
Long-term debt |
14,772 |
14,482 |
290 |
||
Total Debt |
18,949 |
17,121 |
1,828 |
||
Cash and cash equivalents |
2,422 |
2,664 |
(242) |
||
Net Debt (1) |
$ 16,527 |
$ 14,457 |
$ 2,070 |
(1) |
Net debt is defined as total debt, which includes short-term borrowings, current portion of long-term debt and long-term debt, less cash and cash equivalents. |
Schedule 3 |
|||
|
|||
Condensed Consolidated Statements of Cash Flows |
|||
(in millions of dollars) (Unaudited) |
|||
For the Three Months Ended March 31, |
|||
2014 |
2013 |
||
CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES |
|||
Net earnings |
$ 150 |
$ 542 |
|
Adjustments to reconcile net earnings to operating cash flows: |
|||
Depreciation and amortization |
262 |
266 |
|
Stock-based compensation expense |
35 |
33 |
|
Deferred income tax benefit |
(98) |
(67) |
|
Gain on acquisition |
- |
(22) |
|
Asset impairments |
12 |
14 |
|
Loss on early extinguishment of debt |
492 |
- |
|
Other non-cash items, net |
48 |
45 |
|
Change in assets and liabilities, net of acquisition: |
|||
Receivables, net |
(305) |
(315) |
|
Inventories, net |
(299) |
(160) |
|
Accounts payable |
67 |
(246) |
|
Other current assets |
(59) |
(86) |
|
Other current liabilities |
(815) |
(371) |
|
Change in pension and postretirement assets and liabilities, net |
(67) |
(18) |
|
Net cash used in operating activities |
(577) |
(385) |
|
CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES |
|||
Capital expenditures |
(326) |
(235) |
|
Acquisition, net of cash received |
- |
(119) |
|
Cash received from Kraft Foods Group related to the Spin-Off |
- |
55 |
|
Other |
9 |
1 |
|
Net cash used in investing activities |
(317) |
(298) |
|
CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES |
|||
Issuances of commercial paper, maturities greater than 90 days |
1,607 |
- |
|
Repayments of commercial paper, maturities greater than 90 days |
(723) |
- |
|
Net (repayments) / issuances of other short-term borrowings, net |
(19) |
(66) |
|
Long-term debt proceeds |
2,994 |
6 |
|
Long-term debt repaid |
(2,514) |
(752) |
|
Repurchase of Common Stock |
(468) |
- |
|
Dividends paid |
(238) |
(232) |
|
Other |
40 |
51 |
|
Net cash provided by / (used in) financing activities |
679 |
(993) |
|
Effect of exchange rate changes on cash and cash equivalents |
(27) |
(40) |
|
Cash and cash equivalents: |
|||
Increase / (decrease) |
(242) |
(1,716) |
|
Balance at beginning of period |
2,664 |
4,475 |
|
Balance at end of period |
|
|
Reconciliation of GAAP and Non-GAAP Financial Measures
(Unaudited)
The company reports its financial results in accordance with accounting principles generally accepted in
DEFINITIONS OF THE COMPANY'S NON-GAAP FINANCIAL MEASURES
The company's non-GAAP financial measures and corresponding metrics reflect how the company evaluates its operating results currently and provide improved comparability of operating results. As new events or circumstances arise, these definitions could change over time:
- "Organic Net Revenues" is defined as net revenues excluding the impacts of acquisitions, divestitures (including businesses under sales agreements and exits of major product lines under a sale or licensing agreement), Integration Program costs, accounting calendar changes and foreign currency rate fluctuations.
- "Adjusted Gross Profit" is defined as gross profit excluding the impacts of pension costs related to obligations transferred in the Spin-Off, the 2012-2014 Restructuring Program, the Integration Program and other acquisition integration costs and the operating results of divestitures (including businesses under sales agreements and exits of major product lines under a sale or licensing agreement). We also evaluate growth in the company's Adjusted Gross Profit on a constant currency basis.
-
"Adjusted Operating Income" and "Adjusted Segment Operating Income" are defined as operating income (or segment operating income) excluding the impacts of Spin-Off Costs, pension costs related to the obligations transferred in the Spin-Off, the 2012-2014 Restructuring Program, the Integration Program and other acquisition integration costs, the benefit from the
Cadbury acquisition-related indemnification resolution, the remeasurement of net monetary assets inVenezuela , gains / losses from divestitures or acquisitions, acquisition-related costs and the operating results of divestitures (including businesses under sales agreements and exits of major product lines under a sale or licensing agreement). The company also evaluates growth in the company's Adjusted Operating Income and Adjusted Segment Operating Income on a constant currency basis. -
"Adjusted EPS" is defined as diluted EPS attributable to
Mondelez International from continuing operations excluding the impacts of Spin-Off Costs, pension costs related to the obligations transferred in the Spin-Off, the 2012-2014 Restructuring Program, the Integration Program and other acquisition integration costs, the remeasurement of net monetary assets inVenezuela , the benefit from theCadbury acquisition-related indemnification resolution, the loss on debt extinguishment and related expenses, the residual tax impact from the resolution of the Starbucks arbitration, gains / losses from divestitures or acquisitions, acquisition-related costs and net earnings from divestitures (including businesses under sales agreements and exits of major product lines under a sale or licensing agreement), and including an interest expense adjustment related to the Spin-Off transaction. The company also evaluates growth in the company's Adjusted EPS on a constant currency basis.
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 months ended
SEGMENT OPERATING INCOME
The company 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), general corporate expenses (which are a component of selling, general and administrative expenses), amortization of intangibles, gains and losses on divestitures and acquisitions and acquisition-related costs (which are a component of selling, general and administrative expenses) in all periods presented. The company excludes these items from segment operating income in order to provide better transparency of our segment operating results. Furthermore, the company centrally manages interest and other expense, net. Accordingly, the company does not present these items by segment because they are excluded from the segment profitability measure that management reviews.
ITEMS IMPACTING COMPARABILITY OF OPERATING RESULTS
The following information is provided to give qualitative and quantitative information related to items impacting comparability of operating results. The company determines which items to consider as "items impacting comparability" based on how management views the company's business; makes financial, operating and planning decisions; and evaluates the company's ongoing performance. In addition, the company provides the impact that changes in currency exchange rates had on the company's financial results (referred to as "constant currency").
Divestitures
The company excludes the operating results of businesses divested, including businesses under sales agreements and exits of major product lines under a sale or licensing agreement. The company did not divest any businesses during the three months ended
Acquisition
On
Integration Program and other acquisition integration costs
Integration Program costs
Integration Program costs are defined as the costs associated with combining the
Other acquisition integration costs
In connection with the acquisition of a biscuit operation in
Spin-Off Costs
Spin-Off Costs represent transaction, transition and financing and related costs associated with preparing the businesses (
2012-2014 Restructuring Program
In 2012, the company's Board of Directors approved
Restructuring costs
The company recorded within asset impairment and exit costs charges of
Implementation costs
Implementation costs are directly attributable to restructuring activities; however, they do not qualify for accounting treatment as exit or disposal activities. The company recorded implementation costs of
Remeasurement of Venezuelan Net Monetary Assets
As a result of recent Venezuelan currency exchange developments and the expected impact on the company's Venezuelan operations, the company remeasured its Venezuelan bolivar-denominated net monetary assets as of
In the three months ended
The company continues to monitor developments in the currency and actively manage its investment and exposures in
Loss on debt extinguishment and related costs
On
Gain on acquisition
In connection, with the acquisition of a biscuit operation in
Acquisition-related costs
In connection, with the acquisition of a biscuit operation in
Constant currency
Management evaluates the operating performance of the company and its international subsidiaries on a constant currency basis. The company determines its constant currency operating results by dividing or multiplying, as appropriate, the current period local currency operating results by the currency exchange rates used to translate the company's financial statements in the comparable prior year period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior year period.
Schedule 4 |
|||||||||||
|
|||||||||||
Reconciliation of GAAP to Non-GAAP Measures |
|||||||||||
Net Revenues |
|||||||||||
(in millions of dollars) (Unaudited) |
|||||||||||
Latin America |
Pacific |
EEMEA |
|
North America |
International |
||||||
For the Three Months Ended |
|||||||||||
Reported (GAAP) |
$ 1,356 |
|
$ 838 |
$ 3,557 |
$ 1,667 |
$ 8,641 |
|||||
Divestitures |
- |
- |
- |
- |
- |
- |
|||||
Acquisitions |
- |
- |
(14) |
- |
- |
(14) |
|||||
Currency |
248 |
107 |
87 |
(138) |
20 |
324 |
|||||
Organic (Non-GAAP) |
$ 1,604 |
|
$ 911 |
$ 3,419 |
$ 1,687 |
$ 8,951 |
|||||
For the Three Months Ended |
|||||||||||
Reported (GAAP) |
$ 1,398 |
|
$ 863 |
$ 3,458 |
$ 1,658 |
$ 8,744 |
|||||
Divestitures |
- |
- |
(19) |
(3) |
(12) |
(34) |
|||||
Organic (Non-GAAP) |
$ 1,398 |
|
$ 844 |
$ 3,455 |
$ 1,646 |
$ 8,710 |
|||||
% Change |
|||||||||||
Reported (GAAP) |
(3.0)% |
(10.5)% |
(2.9)% |
2.9 % |
0.5 % |
(1.2)% |
|||||
Divestitures |
- pp |
- pp |
2.2 pp |
0.1 pp |
0.8 pp |
0.4 pp |
|||||
Acquisitions |
- |
- |
(1.7) |
- |
- |
(0.1) |
|||||
Currency |
17.7 |
7.8 |
10.3 |
(4.0) |
1.2 |
3.7 |
|||||
Organic (Non-GAAP) |
14.7 % |
(2.7)% |
7.9 % |
(1.0)% |
2.5 % |
2.8 % |
Schedule 5 |
|||||||||
|
|||||||||
Reconciliation of GAAP to Non-GAAP Measures |
|||||||||
Gross Profit / Operating Income |
|||||||||
(in millions of dollars) (Unaudited) |
|||||||||
For the Three Months Ended |
|||||||||
Net Revenues |
Gross Profit |
Gross Profit Margin |
Operating Income |
Operating Income margin |
|||||
Reported (GAAP) |
|
|
37.1% |
$ 843 |
9.8% |
||||
Integration Program and other acquisition integration costs |
- |
(1) |
(1) |
||||||
Spin-Off Costs |
- |
- |
3 |
||||||
2012-2014 Restructuring Program |
- |
2 |
66 |
||||||
Remeasurement of net monetary assets in |
- |
- |
142 |
||||||
Divestitures |
- |
- |
- |
||||||
Adjusted (Non-GAAP) |
|
|
37.1% |
|
12.2% |
||||
Currency |
111 |
39 |
|||||||
Adjusted @ Constant FX (Non-GAAP) |
|
|
|||||||
For the Three Months Ended |
|||||||||
Net Revenues |
Gross Profit |
Gross Profit Margin |
Operating Income |
Operating Income margin |
|||||
Reported (GAAP) |
|
|
37.1% |
$ 834 |
9.5% |
||||
Integration Program and other acquisition integration costs |
- |
5 |
21 |
||||||
Spin-Off Costs |
- |
- |
9 |
||||||
2012-2014 Restructuring Program |
- |
- |
44 |
||||||
Remeasurement of net monetary assets in |
- |
- |
54 |
||||||
Gain on acquisition |
- |
- |
(22) |
||||||
Divestitures |
(34) |
(6) |
1 |
||||||
Acquisition-related costs |
- |
- |
2 |
||||||
Adjusted (Non-GAAP) |
|
|
37.2% |
$ 943 |
10.8% |
||||
Currency |
- |
- |
|||||||
Adjusted @ Constant FX (Non-GAAP) |
|
$ 943 |
|||||||
Gross Profit |
Operating Income |
||||||||
% Change - Reported (GAAP) |
(1.2)% |
1.1 % |
|||||||
% Change - Adjusted (Non-GAAP) |
(1.1)% |
11.7 % |
|||||||
% Change - Adjusted @ Constant FX (Non-GAAP) |
2.3 % |
15.8 % |
Schedule 6 |
|||||||||||||||
|
|||||||||||||||
Reconciliation of GAAP to Non-GAAP Measures |
|||||||||||||||
Condensed Consolidated Statements of Earnings |
|||||||||||||||
(in millions, except per share data) (Unaudited) |
|||||||||||||||
For the Three Months Ended |
|||||||||||||||
Operating Income |
Interest and other expense, net |
Earnings before taxes |
Income taxes |
Effective tax rate |
Non-controlling interest |
Net Earnings attributable to |
Diluted EPS attributable to |
||||||||
Reported (GAAP) |
$ 843 |
$ 720 |
$ 123 |
$ (27) |
(22.0)% |
$ (13) |
$ 163 |
$ 0.09 |
|||||||
Integration Program and other acquisition integration costs |
(1) |
- |
(1) |
- |
- |
(1) |
- |
||||||||
Spin-Off Costs |
3 |
- |
3 |
1 |
- |
2 |
- |
||||||||
2012-2014 Restructuring Program |
66 |
- |
66 |
17 |
- |
49 |
0.03 |
||||||||
Remeasurement of net monetary assets in |
142 |
- |
142 |
(8) |
- |
150 |
0.09 |
||||||||
Loss on debt extinguishment and related expenses |
- |
(494) |
494 |
188 |
- |
306 |
0.18 |
||||||||
Divestitures |
- |
- |
- |
- |
- |
- |
- |
||||||||
Adjusted (Non-GAAP) |
$ 1,053 |
$ 226 |
$ 827 |
$ 171 |
20.7 % |
$ (13) |
$ 669 |
$ 0.39 |
|||||||
Diluted Average Shares Outstanding |
1,722 |
||||||||||||||
For the Three Months Ended |
|||||||||||||||
Operating Income |
Interest and other expense, net |
Earnings before taxes |
Income taxes |
Effective tax rate |
Non-controlling interest |
Net Earnings attributable to |
Diluted EPS attributable to |
||||||||
Reported (GAAP) |
$ 834 |
$ 279 |
$ 555 |
$ 13 |
2.3 % |
$ 6 |
$ 536 |
$ 0.30 |
|||||||
Integration Program and other acquisition integration costs |
21 |
- |
21 |
4 |
- |
17 |
0.01 |
||||||||
Spin-Off Costs |
9 |
- |
9 |
4 |
- |
5 |
- |
||||||||
2012-2014 Restructuring Program |
44 |
- |
44 |
11 |
- |
33 |
0.02 |
||||||||
Remeasurement of net monetary assets in |
54 |
- |
54 |
(5) |
- |
59 |
0.03 |
||||||||
Gain on acquisition |
(22) |
- |
(22) |
- |
- |
(22) |
(0.01) |
||||||||
Divestitures |
1 |
- |
1 |
- |
- |
1 |
- |
||||||||
Acquisition-related costs |
2 |
(5) |
7 |
- |
- |
7 |
- |
||||||||
Adjusted (Non-GAAP) |
$ 943 |
$ 274 |
$ 669 |
$ 27 |
4.0 % |
$ 6 |
$ 636 |
$ 0.35 |
|||||||
Diluted Average Shares Outstanding |
1,798 |
Schedule 7 |
||||
|
||||
Reconciliation of GAAP to Non-GAAP Measures |
||||
Diluted EPS |
||||
(Unaudited) |
||||
For the Three Months
Ended |
||||
Diluted EPS |
% Growth |
|||
2013 Diluted EPS Attributable to |
$ 0.30 |
|||
Spin-Off Costs |
- |
|||
2012-2014 Restructuring Program costs |
0.02 |
|||
Integration Program and other acquisition integration costs |
0.01 |
|||
Remeasurement of net monetary assets in |
0.03 |
|||
Gain on acquisition |
(0.01) |
|||
Net earnings from divestitures |
- |
|||
2013 Adjusted EPS (Non-GAAP) |
0.35 |
|||
Increase in operations |
0.08 |
|||
Gain on sale of property in 2014 |
- |
|||
Unrealized gains/(losses) on hedging activities |
- |
|||
Lower interest expense and other expense, net |
0.02 |
|||
Changes in shares outstanding |
0.02 |
|||
Changes in income taxes |
(0.06) |
|||
2014 Adjusted EPS (Constant Currency) |
0.41 |
17.1% |
||
Unfavorable foreign currency - translation |
(0.02) |
|||
2014 Adjusted EPS (Non-GAAP) |
0.39 |
11.4% |
||
Spin-Off Costs |
- |
|||
2012-2014 Restructuring Program costs |
(0.03) |
|||
Loss on debt extinguishment and related expenses |
(0.18) |
|||
Integration Program and other acquisition integration costs |
- |
|||
Remeasurement of net monetary assets in |
(0.09) |
|||
Net earnings from divestitures |
- |
|||
2014 Diluted EPS Attributable to |
$ 0.09 |
(70.0)% |
Schedule 8 |
||||||||||||||||||||
|
||||||||||||||||||||
Reconciliation of GAAP to Non-GAAP Measures |
||||||||||||||||||||
Segment Data |
||||||||||||||||||||
(in millions of dollars) (Unaudited) |
||||||||||||||||||||
For the Three Months Ended |
||||||||||||||||||||
|
|
EEMEA |
|
|
Unrealized G/(L) on Hedging Activities |
General Corporate Expenses |
Amortization of Intangibles |
Other Items |
|
|||||||||||
Net Revenue |
||||||||||||||||||||
Reported (GAAP) |
$ 1,356 |
$ 1,223 |
$ 838 |
|
$ 1,667 |
$ - |
$ - |
$ - |
$ - |
$ 8,641 |
||||||||||
Divestitures |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||
Adjusted (Non-GAAP) |
$ 1,356 |
$ 1,223 |
$ 838 |
|
$ 1,667 |
$ - |
$ - |
$ - |
$ - |
$ 8,641 |
||||||||||
Operating Income |
||||||||||||||||||||
Reported (GAAP) |
$ 44 |
$ 188 |
$ 64 |
$ 463 |
$ 203 |
$ 7 |
$ (72) |
$ (54) |
$ - |
$ 843 |
||||||||||
Integration Program and other acquisition integration costs |
- |
- |
1 |
(1) |
- |
- |
(1) |
- |
- |
(1) |
||||||||||
Spin-Off Costs |
- |
- |
- |
- |
- |
- |
3 |
- |
- |
3 |
||||||||||
2012-2014 Restructuring Program |
1 |
- |
5 |
32 |
27 |
- |
1 |
- |
- |
66 |
||||||||||
Remeasurement of net monetary assets in |
142 |
- |
- |
- |
- |
- |
- |
- |
- |
142 |
||||||||||
Divestitures |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||
Adjusted (Non-GAAP) |
$ 187 |
$ 188 |
$ 70 |
$ 494 |
$ 230 |
$ 7 |
$ (69) |
$ (54) |
$ - |
$ 1,053 |
||||||||||
Currency |
40 |
14 |
9 |
(22) |
1 |
- |
(2) |
(1) |
- |
39 |
||||||||||
Adjusted @ Constant FX (Non-GAAP) |
$ 227 |
$ 202 |
$ 79 |
$ 472 |
$ 231 |
$ 7 |
$ (71) |
$ (55) |
$ - |
$ 1,092 |
||||||||||
% Change - Reported (GAAP) |
(52.2)% |
(0.5)% |
4.9 % |
14.0 % |
19.4 % |
(63.2)% |
4.3 % |
0.0 % |
(100.0)% |
1.1 % |
||||||||||
% Change - Adjusted (Non-GAAP) |
24.7 % |
(2.6)% |
(2.8)% |
13.6 % |
22.3 % |
(63.2)% |
15.0 % |
0.0 % |
n/m |
11.7 % |
||||||||||
% Change - Adjusted @ Constant FX (Non-GAAP) |
51.3 % |
4.7 % |
9.7 % |
8.5 % |
22.9 % |
(63.2)% |
18.3 % |
1.9 % |
n/m |
15.8 % |
||||||||||
Operating Income Margin |
||||||||||||||||||||
Reported % |
3.2 % |
15.4 % |
7.6 % |
13.0 % |
12.2 % |
9.8 % |
||||||||||||||
Reported pp change |
(3.3)pp |
1.5 pp |
0.6 pp |
1.3 pp |
1.9 pp |
0.2 pp |
||||||||||||||
Adjusted % |
13.8 % |
15.4 % |
8.4 % |
13.9 % |
13.8 % |
12.2 % |
||||||||||||||
Adjusted pp change |
3.1 pp |
1.3 pp |
(0.2)pp |
1.3 pp |
2.4 pp |
1.4 pp |
||||||||||||||
For the Three Months Ended |
||||||||||||||||||||
|
|
EEMEA |
|
|
Unrealized G/(L) on Hedging Activities |
General Corporate Expenses |
Amortization of Intangibles |
Other Items |
|
|||||||||||
Net Revenue |
||||||||||||||||||||
Reported (GAAP) |
$ 1,398 |
$ 1,367 |
$ 863 |
|
$ 1,658 |
$ - |
$ - |
$ - |
$ - |
$ 8,744 |
||||||||||
Divestitures |
- |
- |
(19) |
(3) |
(12) |
- |
- |
- |
- |
(34) |
||||||||||
Adjusted (Non-GAAP) |
$ 1,398 |
$ 1,367 |
$ 844 |
|
$ 1,646 |
$ - |
$ - |
$ - |
$ - |
$ 8,710 |
||||||||||
Operating Income |
||||||||||||||||||||
Reported (GAAP) |
$ 92 |
$ 189 |
$ 61 |
$ 406 |
$ 170 |
$ 19 |
$ (69) |
$ (54) |
$ 20 |
$ 834 |
||||||||||
Integration Program and other acquisition integration costs |
4 |
4 |
3 |
9 |
- |
- |
1 |
- |
- |
21 |
||||||||||
Spin-Off Costs |
- |
- |
- |
- |
- |
- |
9 |
- |
- |
9 |
||||||||||
2012-2014 Restructuring Program |
- |
- |
1 |
21 |
22 |
- |
- |
- |
- |
44 |
||||||||||
Remeasurement of net monetary assets in |
54 |
- |
- |
- |
- |
- |
- |
- |
- |
54 |
||||||||||
Divestitures |
- |
- |
7 |
(1) |
(4) |
- |
(1) |
- |
- |
1 |
||||||||||
Gain on acquisition |
- |
- |
- |
- |
- |
- |
- |
- |
(22) |
(22) |
||||||||||
Acquisition-related costs |
- |
- |
- |
- |
- |
- |
- |
- |
2 |
2 |
||||||||||
Adjusted (Non-GAAP) |
$ 150 |
$ 193 |
$ 72 |
$ 435 |
$ 188 |
$ 19 |
$ (60) |
$ (54) |
$ - |
$ 943 |
||||||||||
Currency |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||
Adjusted @ Constant FX (Non-GAAP) |
$ 150 |
$ 193 |
$ 72 |
$ 435 |
$ 188 |
$ 19 |
$ (60) |
$ (54) |
$ - |
$ 943 |
||||||||||
Operating Income Margin |
||||||||||||||||||||
Reported % |
6.6 % |
13.8 % |
7.1 % |
11.7 % |
10.3 % |
9.5 % |
||||||||||||||
Adjusted % |
10.7 % |
14.1 % |
8.5 % |
12.6 % |
11.4 % |
10.8 % |
Logo - http://photos.prnewswire.com/prnh/20121003/MM86695LOGO
SOURCE
News Provided by Acquire Media