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): September 7, 2011
KRAFT FOODS INC.
(Exact Name of Registrant as Specified in Charter)
| Virginia | 1-16483 | 52-2284372 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
| Three Lakes Drive, Northfield, Illinois | 60093-2753 | |||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (847) 646-2000
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 7.01. Regulation FD Disclosure.
On September 7, 2011, Kraft Foods Inc. issued a press release relating to its presentation to financial analysts at the Barclays Capital Back-to-School Consumer Conference. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The presentation will be available via a live audio webcast within the Investor Center section of our Web site, www.kraftfoodscompany.com. An archived rebroadcast and the presentation slides will be available for one year following the webcast. The presentation slides, including Regulation G reconciliations, used in the presentation are being furnished as Exhibit 99.2 to this Current Report on Form 8-K.
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.
Item 9.01. Financial Statements and Exhibits.
| (d) | The following exhibits are being furnished with this Current Report on Form 8-K. |
| Exhibit Number | Description |
|||
| 99.1 | Kraft Foods Inc. Press Release, dated September 7, 2011. | |||
| 99.2 | Kraft Foods Inc. Slide Presentation, dated September 7, 2011. | |||
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.
| KRAFT FOODS INC. | ||
| Date: September 7, 2011 | ||
| /s/ Carol J. Ward | ||
| Name: Carol J. Ward Title: Vice President and Corporate Secretary | ||
Exhibit 99.1
| Contacts: | Michael Mitchell (Media) | Christopher M. Jakubik (Investors) | ||
| +1-847-646-4538 | +1-847-646-5494 | |||
| news@kraftfoods.com | ir@kraftfoods.com |
KRAFT FOODS HIGHLIGHTS KEY BENEFITS OF PLAN
TO CREATE TWO INDEPENDENT PUBLIC COMPANIES
| • | Strong Financial Results, Operating Momentum in Every Geography Provide Opportunity to Take Next Logical Step in Company’s Evolution |
| • | Two Distinct Portfolios Poised for Peak Performance by Focusing on Unique Drivers of Success |
BOSTON – Sept. 7, 2011 – During a presentation at the Barclays Capital Back-to-School Consumer Conference today, Kraft Foods Chairman and CEO Irene Rosenfeld outlined the key drivers and benefits of the decision to launch two independent public companies before year-end 2012. Kraft Foods announced its plan to create a high-margin North American Grocery company and a high-growth Global Snacks company when it reported strong first half financial results on Aug. 4, 2011.
“Over the past four years, we’ve fundamentally changed the face, footprint and prospects of Kraft Foods,” said Rosenfeld. “We’ve successfully positioned our company to deliver sustainable top-tier growth by reinvigorating our iconic brands, transforming our portfolio and strengthening our presence in fast-growing developing markets. But taking our performance to the next level requires a bold new approach: creating two great companies that can optimize value by focusing on their unique drivers of success.”
North American Grocery Will Deliver Consistent Growth, Strong Free Cash Flow
With annual revenues of approximately $16 billion and market-leading positions in about 80 percent of its categories, the North American Grocery business will be one of the largest and most-admired food companies in North America. This business will include four “billion-dollar” brands, including Kraft, Maxwell House, Oscar Mayer and Philadelphia, plus three more with revenues of at least $500 million, and an additional 14 with annual revenues of more than $100 million.
As an independent company, the North American Grocery business will continue to draw on great marketing, innovation and significant scale in the grocery sales channel to deliver revenue growth in line with its categories. It will target industry-leading margins through disciplined portfolio management, optimized trade spending, Lean Six Sigma manufacturing initiatives and negative overhead growth.
1
The economic returns of the North American Grocery business will come from sustained growth of its high-margin iconic brands, capital efficiency and the return of free cash flow in the form of a highly competitive dividend payout and a growing dividend over time.
Global Snacks Will Deliver Exceptional Growth
The Global Snacks business will have annual revenues of approximately $32 billion and a strong growth profile in the top tier of its global peer group. It will rank among the leading consumer packaged goods companies in the world, with one of the most desirable exposures in emerging markets among large-cap CPG players. The company will derive more than 42 percent of its sales from Developing Markets, 36 percent from Western Europe and 22 percent from North America.
Approximately 75 percent of revenues will come from snacks, and this company will be the pre-eminent player in snacking worldwide, with leading market shares in each major region of the world. The business will have a powerful brand portfolio featuring eight “billion-dollar” brands, including Cadbury, Jacobs, LU, Milka, Nabisco, Oreo, Tang and Trident. Its portfolio will include six additional brands with revenues of more than $500 million, and nearly 40 more brands with over $100 million in sales.
Global Snacks will focus on industry-leading growth by extending its global product platforms, taking advantage of its significant scale in emerging markets, expanding in instant consumption channels and aggressively entering white-space markets. This business will drive margins higher by leveraging its cost structure through volume growth and improved product mix. Global Snacks will redeploy capital to support future growth through investments in sales, distribution and manufacturing.
Targeting Launch of New Companies by Late 2012
“I’m confident this is the best way to stage our businesses for long-term success, the best way for shareholders to value each business and the best way to ensure a bright future for our people,” Rosenfeld concluded.
Until the new companies are created late in 2012, Kraft Foods will continue to report as one company and focus on delivering on its goals for 2011 and 2012. Financial guidance for the new companies will be provided next year after the work of establishing separate financial reports and capital structures is completed. Tax rulings from the Internal Revenue Service are expected early in the second quarter of 2012, and the company expects to file an initial Form 10 shortly after that.
Kraft Foods’ presentation was accompanied by slides. Access to a replay of the webcast and slides is available at kraftfoodscompany.com.
2
ABOUT KRAFT FOODS
Kraft Foods Inc. (NYSE: KFT) is a global snacks powerhouse with an unrivaled portfolio of brands people love. Proudly marketing delicious biscuits, confectionery, beverages, cheese, grocery products and convenient meals in approximately 170 countries, Kraft Foods had 2010 revenue of $49.2 billion. Twelve of the company’s iconic brands – Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer, Philadelphia, Tang and Trident – generate revenue of more than $1 billion annually. On Aug. 4, 2011, Kraft Foods announced plans to divide and create two independent public companies: a high-growth global snacks business with estimated revenue of $32 billion and a high-margin North American grocery business with estimated revenue of $16 billion, based on 2010 financial results, adjusted for divestitures. The transaction will take at least 12 months to complete, during which time plans regarding the structure, management, governance and other matters will be announced. A leader in innovation, marketing, health & wellness and sustainability, Kraft Foods is a member of the Dow Jones Industrial Average, Standard & Poor’s 500, Dow Jones Sustainability Index and Ethibel Sustainability Index. Visit kraftfoodscompany.com and facebook.com/kraftfoodscorporate.
FORWARD-LOOKING STATEMENTS
This press release contains a number of forward-looking statements. Words, and variations of words such as “expect,” “goals,” “plan,” “continue,” “will” and similar expressions are intended to identify our forward-looking statements, including but not limited to, statements regarding our plan to create a high-margin North American Grocery company and a high-growth Global Snacks company; sustainable top-tier growth; the two companies’ focus on their unique drivers of success; North American Grocery business and performance description; Global Snacks business, revenue, growth and economic performance description; target launch dates; Kraft Foods’ focus on delivering its goals for 2011 and 2012; and expected tax ruling and Form 10 filing dates. These forward-looking statements involve risks and uncertainties, many of which are beyond our control, and important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, continued volatility and increase in commodities’ costs, increased competition, pricing actions, our failure to successfully create two independent companies, risks from operating globally and tax law changes. For additional information on these and other factors that could affect our forward-looking statements, 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. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation.
- make today delicious -
3
 Kraft
Foods Barclays Capital
Back-to-School Conference
September 7, 2011
Exhibit 99.2 |
 Irene
Rosenfeld Chairman and CEO |
 Forward-looking statements
This
slide
presentation
contains
a
number
of
forward-looking
statements.
The
words
“believe,”
“expect,”
“anticipate,”
“optimistic,”
“intend,”
“plan,”
“goals,”
“may,”
“aim,”
“will”
and similar
expressions
are
intended
to
identify
our
forward-looking
statements.
Examples
of
forward-
looking statements include, but are not limited to, statements we make regarding being
well- positioned for sustainable growth; two distinct portfolios poised for peak
performance; top-line growth; 2011 guidance; top-tier organic revenue growth;
EPS growth; North America Grocery business description and performance; position within
the new reality of the U.S. food industry; Global Snacks business description, ranking,
geographic profile and performance; benefits from creating two independent entities;
and what’s next. These forward-looking statements involve
risks and uncertainties, many of which are beyond our control, and important factors that
could cause actual results to differ materially from those in the forward-looking
statements include, but are not limited to, increased competition, pricing actions,
continued volatility and increases in commodity costs, increased costs of sales, our
indebtedness and our ability to pay our indebtedness, risks from operating globally,
our failure to successfully execute in emerging markets,
our
failure
to
create
two
success
independent
companies
and
tax
law
changes.
For
additional information on these and other factors that could affect our forward-looking
statements, 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.
We disclaim and do not undertake any obligation
to update or revise any forward-looking statement in this slide presentation, except as
required by applicable law or regulation.
3 |
 Why now?
•
Well-Positioned for Sustainable Growth
•
Two Distinct Portfolios Poised for Peak
Performance
4 |
 Three key
ingredients to sustainable growth •
Fix our base
–
Rewire the organization
–
Rejuvenate our brands
5
Kraft
Foods
Base
Business
(1)
% of Products Preferred to Competition
(1)
Excludes Cadbury.
Source: Kraft Foods. |
 Three key
ingredients to sustainable growth •
Fix our base
•
Transform the portfolio
–
Strengthen North American
business
–
Build a global snacks
powerhouse
6 |
 Three key
ingredients to sustainable growth •
Fix our base
•
Transform the portfolio
•
Make Virtuous Cycle
work in each region
–
Sustainable, top-tier growth
7
Focus on Power
Brands,
Categories,
Markets
Drive Top-Tier
Growth
Reduce Costs
Leverage Overheads
Reinvest in
Growth |
 Top-line
growth accelerating in each region 8
Organic Net Revenue Growth*
North America
Developing Markets
Europe
*
For 2010, reflects Combined Organic Net Revenue growth. Reported Net Revenue growth for
2010 were as follows: North America, 8.8%; Europe, 32.6%; Developing Markets,
71.1%. Reported Net Revenue growth for H1 2011 were as follows: North America,
3.4%; Europe, 18.9%; Developing Markets, 23.1%. See GAAP to Non-GAAP reconciliation
at the end of this presentation. 1.1%
3.1%
2010
H1 2011
9.5%
11.6%
2010
H1 2011
2.3%
5.4%
2010
H1 2011 |
 Strong H1
operating momentum in each geography
•
Executed necessary pricing
–
Quickly responded to higher input costs
•
Winning with consumers
–
Focused brand investments, innovation and improved
marketing
–
Solid share performance while pricing earlier than competition
•
Grew profit dollars versus difficult comparisons
–
Driving End-to-End Cost Management
–
Funding strong increase in A&C
9 |
 Snacks
portfolio up more than 6% in H1 *
•
Global Biscuits +7% through H1
*
–
Developing Markets up strong double-digits
–
Oreo
+22%,
Chips
Ahoy!
+18%,
Club
Social
+35%
•
Global Chocolate +9% through H1
*
–
Developing Markets up low-to-mid teens
–
Cadbury
Dairy
Milk
+13%,
Lacta
+18%,
Cadbury
Flake
+13%
•
Global Gum & Candy +2% through H1
*
–
Developing Markets up high single-digits
–
Fixing developed markets through advertising, innovation
and price points
10
* Reflects H1 2011 Organic Net Revenue Growth. Reported H1 2011 Net Revenue growth was
16.7% for Snacks, 10% for Biscuits and 22.5% for Confectionery, which is
comprised of 26.2% for Chocolate, 24.3% for Gum & Candy and (37.1)% for Other
Confectionery. See GAAP to Non-GAAP reconciliation at the end of this presentation. |
 Increased 2011
guidance with Q2 results •
Organic Net Revenue growth of at least 5%
–
Taking additional pricing to address climbing input costs
•
Operating EPS of at least $2.25
–
Delivering strong operating results
–
Reflecting year-to-date currency benefit
11 |
 Delivering
top-tier organic revenue growth 12
1
ConAgra
9.5%
1
General Mills
8.5%
1
Danone
6.9%
1
Danone
6%-8%
2
Danone
8.4%
2
ConAgra
7.7%
2
Hershey
6.1%
2
PepsiCo
6%-8%
3
Nestlé
8.3%
3
Heinz
5.5%
3
Coca-Cola
6.0%
3
Nestlé
6%
4
General Mills
8.2%
4
Nestlé
4.1%
4
Nestlé
6.0%
4
Hershey
~6%
5
Heinz
6.9%
5
Coca-Cola
4.0%
5
General Mills
4.0%
5
Coca-Cola
5%-6%
6
Kraft Foods
6.7%
6
Hershey
4.0%
6
Kraft Foods
3.5/3.7%
6
Kraft Foods
5%+
7
PepsiCo
6.6%
7
PepsiCo
4.0%
7
PepsiCo
3.5%
7
Sara Lee
4.9%
8
Coca-Cola
5.7%
8
Danone
3.2%
8
Heinz
2.1%
8
Kellogg
4%-5%
9
Kellogg
5.4%
9
Campbell
3.0%
9
ConAgra
(0.8)%
9
General Mills
2.0%
10
Sara Lee
4.6%
10
Kellogg
3.0%
10
Kellogg
(1.3)%
10
Heinz
1.9%
11
Hershey
3.4%
11
Sara Lee
2.7%
11
Campbell
(2.0)%
11
ConAgra
1.1%
12
Campbell
3.0%
12
Kraft Foods
1.5%
12
Sara Lee
(2.8)%
12
Campbell
(2.0)%
(1)
Reported Net Revenue growth was 27.0%; Combined Organic Net Revenue Growth was 3.5%; Kraft
Foods Base Organic Net Revenue
growth
was
3.7%.
See GAAP to Non-GAAP reconciliation at the end of this presentation.
(2)
Per company reports.
(3)
PepsiCo reflects the company’s medium-term target. Coca-Cola reflects the
company’s long-term target. (4)
As reported.
Organic Revenue Growth (Fiscal Year)
*
2008
2009
2010
2011E
(2)
(1)
(4)
(4)
(4)
(4)
(3)
(3)
* Source: Thomson First Call. |
 Poised to
improve EPS growth versus peers 13
1
ConAgra
32.9%
1
Hershey
15.4%
1
Hershey
17.5%
1
Kraft Foods
11.4%+
2
Sara Lee
19.3%
2
General Mills
13.1%
2
General Mills
15.6%
2
Coca-Cola
11.2%
3
Coca-Cola
16.7%
3
Heinz
10.3%
3
ConAgra
14.5%
3
Hershey
11.0%
4
General Mills
10.7%
4
Kraft Foods
8.0%
4
Coca-Cola
14.1%
4
Danone
10.3%
5
Heinz
10.5%
5
Campbell
6.2%
5
PepsiCo
11.3%
5
General Mills
7.8%
6
PepsiCo
8.9%
6
Kellogg
5.7%
6
Campbell
11.3%
6
PepsiCo
7.7%
7
Kellogg
8.3%
7
PepsiCo
0.8%
7
Nestlé
7.4%
7
Heinz
7.3%
8
Campbell
7.2%
8
Nestlé
0.7%
8
Danone
5.4%
8
Kellogg
5.8%
9
Nestlé
4.0%
9
Danone
(0.8)%
9
Kraft Foods
4.7%
9
Sara Lee
2.6%
10
Kraft Foods
3.3%
10
Coca-Cola
(2.9)%
10
Kellogg
4.4%
10
Campbell
0.8%
11
Danone
1.2%
11
Sara Lee
(15.2)%
11
Heinz
(1.0)%
11
ConAgra
0.6%
12
Hershey
(9.6)%
12
ConAgra
(20.0)%
12
Sara Lee
(9.5)%
12
Nestlé
(7.8)%
2008
2009
2010
2011E
Operating EPS Growth
(1)
(2)
(4)
(4)
(4)
(4)
(3)
(1)
Source: Thomson First Call.
(2)
Represents Operating EPS. Reported Diluted EPS declined 23.8%. See GAAP to
Non-GAAP reconciliation at the end (3)
Based on Operating EPS guidance of at least $2.25. (4)
As reported.
of this presentation. |
 Well-positioned to deliver top-tier growth
14
Focus on Power
Brands, Categories,
Markets
Drive Top-Tier Growth
Reduce Costs
Leverage Overheads
Reinvest in Growth |
 Why now?
•
Well-Positioned for Sustainable Growth
•
Two Distinct Portfolios Poised for Peak
Performance
15 |
 Significant
differences in operating models of NA Grocery and Global Snacks
16
North American
Grocery
Global
Snacks
Categories/Brands
Regional
Global
Products
Everyday Staples
Ubiquitous,
Discretionary
Store Presence
Center of Store
Snacking Aisle,
End Caps, Hot Zone
Sales & Distribution
Warehouse
DSD, High Touch
Cost Structure
Low,
Variable
High,
Fixed
Selling Costs
Modest
High |
 17
Two strong portfolios with unique drivers
of success
North American
Grocery
Global
Snacks |
 North American
Grocery will be a major force in the industry
18
U.S.
Beverages
17%
$16 Billion in Revenues
*
U.S. Cheese
22%
U.S.
Convenient
Meals
19%
U.S. Grocery
22%
Canada &
NA Foodservice
20%
Significant scale across categories
—
#3 in size to Nestle and PepsiCo
#1 in ~80% of categories
—
Four $1B+ brands…
Kraft, Maxwell
House,
Oscar Mayer, Philadelphia
—
Three $500MM-$1B brands
—
Fourteen $100MM-$500MM brands
Biggest and best grocery sales
force in U.S.
—
Highest rated in Cannondale and
Kantar
—
Gaining share with key customers
* Based on 2010 reported net revenues adjusted for accounting calendar changes and
divestitures, including the Starbucks CPG business. |
 Well-positioned within the new reality
of the U.S. food industry
19
* Excludes Cookies, Crackers and Snack Nuts
Source: Nielsen.
’07-’09
CAGR
2010
5.3%
1.9%
Kraft Foods Categories
*
’07-’09
CAGR
2010
5.0%
0.3%
Total U.S. Food & Beverage |
 North American
Grocery will deliver consistent growth, significant free cash flow
20
•
Moderate growth in line with categories
–
Innovation and marketing excellence
–
Disciplined portfolio management
–
Grocery channel scale
•
Strong margins with upside opportunity
–
Trade spend optimization
–
Lean Six Sigma
–
Negative overhead growth
–
High dividend payout, growing dividend over time
Substantial
free
cash
generation
• |
 Global Snacks
will be the pre-eminent player in snacking worldwide
21
#1 player in global snacks
—
#1 in Biscuits
—
#1 in Chocolate
—
#2 in Gum
Strong stable of global and
local icons
—
Eight $1B+ brands …
Cadbury,
Jacobs,
LU,
Milka, Nabisco, Oreo, Tang, Trident
—
Six $500MM-$1B brands
—
Nearly 40 $100MM-$500MM brands
Beverages to drive strong growth
with high margins
* Based on 2010 reported net revenues adjusted for accounting calendar changes and
divestitures. ** Includes salted snacks
Chocolate
26%
$32 Billion in Revenues
*
Gum &
Candy
16%
Biscuits
**
33%
Beverages
16%
Cheese &
Grocery
9%
•
•
• |
 (1)
Global Snacks will rank among the leading
CPG players in developing markets
22 Avon
Percentage of Revenues from Developing Markets
Colgate
P&G
Danone
Kimberly
Clark
Heinz
PepsiCo
Coca-
Cola
Campbell
Soup
Nestlé
Clorox
Sara Lee
Unilever
Kellogg
General
Mills
68%
53%
50%
49%
42%
39%
35%
34%
32%
31%
23%
21%
17%
14%
11%
8%
(1)
Reflects the percentage of revenues from Developing Markets of the proposed Global Snacks
company.
Source: Company reports and presentations, reflecting the following: Avon -
Emerging & developing markets per CAGNY 2011 presentation; Unilever -
Emerging markets per 2010 annual report; Colgate - Emerging markets per CAGNY 2011
presentation; Danone - Emerging markets pro forma for Unimilk per 2010 results
presentation; Nestle - Emering markets approaching 40% of sales per full year 2010 results roadshow; P&G - Developing markets per fiscal
2011 10-K; Coca-Cola - Pacific, Latin America, Eurasia & Africa excluding
Bottling Investments; Kimberly-Clark - Asia, Latin America and Other; PepsiCo -
Emerging markets pro forma for Wimm-Bill-Dann per CAGNY 2011 presentation; Heinz -
Emerging markets per Q1 2012 earnings release; Campbell - Australia/Asia
Pacific, Other; Sara Lee - Other; Kellogg - Latin America, Asia Pacific; General Mills - Asia Pacific, Latin America.
|
 23
Latin
America
CEEMA
Asia
Pacific
Europe
36%
North
America
22%
Developing
Developing
Markets
Markets
42%
42%
$32 Billion in Revenues
*
Well-balanced Developing
Markets presence
—
Scale and profitable growth in key
developing markets
Strong presence, prospects in
Europe
—
Significant synergies, whitespace
opportunities
Lower-than-average exposure
to North America
—
Instant Consumption Channel
expansion
* Based on 2010 reported net revenues adjusted for accounting calendar changes and
divestitures. •
•
•
Global Snacks’
geographic profile is
unique within consumer products |
 Global Snacks
will deliver exceptional growth 24
•
Industry-leading growth
–
Global product platforms
–
Developing Market presence
–
Instant Consumption Channels
–
Whitespace opportunities
•
Leverage cost structure to drive margin gains
–
Volume growth and improved product mix
Reinvest to support future growth
Top-tier EPS growth plus a modest dividend
•
• |
 Several
important benefits from creating two independent entities
•
Enable focus on distinct strategic priorities
–
Customize operating models, cultures, organizational
structures
•
Optimize resource allocation and capital deployment
–
North American Grocery resources dedicated to the
Grocery business
•
Increase transparency for shareholders
–
Value each business versus respective peer set
–
Expand shareholder base
25 |
 What’s
Next •
Continue to report as one company
•
Tax Rulings by early Q2
•
Initial Form 10 filing during Q2
•
Complete transaction no later than Dec. 31, 2012
26 |
 27
Summary
•
Strong business momentum
•
Virtuous cycle at work in every region
•
Taking next logical step in evolution of Kraft Foods |
 |
 29
GAAP to Non-GAAP Reconciliation
As Reported
(GAAP)
Impact of
Divestitures
Impact of
Acquisitions
Impact of
Integration
Program
Impact of
Currency
Base Kraft
Foods
Organic
(Non-GAAP)
Impact of
Acquisitions -
Cadbury
(1)
Divestitures -
Cadbury's
Poland and
Romania
Operations
(1)
Impact of
Currency -
Cadbury
(1)
Cadbury
Organic
(Non-GAAP)
(1)
Combined
Organic
(Non-GAAP)
As Reported
(GAAP)
Base Kraft
Foods Organic
(Non-GAAP)
Cadbury
Organic
(Non-GAAP)
(1)
Combined
Organic
(Non-GAAP)
2010
Kraft Foods North America
23,966
$
(21)
$
(1,498)
$
-
$
(251)
$
22,196
$
1,498
$
-
$
(35)
$
1,463
$
23,659
$
8.8%
1.1%
0.8%
1.1%
Kraft Foods Europe
11,628
-
(2,892)
-
267
9,003
2,892
-
91
2,983
11,986
32.6%
2.9%
0.7%
2.3%
Kraft Foods Developing Markets
13,613
-
(4,753)
1
15
8,876
4,753
(105)
(302)
4,346
13,222
71.1%
11.8%
5.1%
9.5%
Kraft Foods
49,207
$
(21)
$
(9,143)
$
1
$
31
$
40,075
$
9,143
$
(105)
$
(246)
$
8,792
$
48,867
$
27.0%
3.7%
2.9%
3.5%
2009
Kraft Foods North America
22,030
$
(80)
$
-
$
-
$
-
$
21,950
$
1,452
$
-
$
-
$
1,452
$
23,402
$
Kraft Foods Europe
8,768
(15)
-
-
-
8,753
2,961
-
-
2,961
11,714
Kraft Foods Developing Markets
7,956
(14)
-
-
-
7,942
4,341
(207)
-
4,134
12,076
Kraft Foods
38,754
$
(109)
$
-
$
-
$
-
$
38,645
$
8,754
$
(207)
$
-
$
8,547
$
47,192
$
(1)
Net Revenues to Combined Organic Net Revenues
For the Twelve Months Ended December 31,
($ in millions, except percentages) (Unaudited)
Add back:
% Change
Kraft Foods acquired Cadbury plc on February 2, 2010. Cadbury data, shown above, is for February
through December 2010 and 2009, adjusted from IFRS to U.S. GAAP and translated to US$ from local countries' currencies.
Cadbury 2009 data is presented on a combined company, pro forma basis.
|
 30
GAAP to Non-GAAP Reconciliation
As Reported
(GAAP)
Impact of
Divestitures
(1)
Impact of
Acquisitions
(2)
Impact of
Accounting
Calendar
Changes
Impact of
Currency
Organic
(Non-GAAP)
As Reported
(GAAP)
Organic
(Non-GAAP)
2011
Kraft Foods North America
12,254
$
(91)
$
(117)
$
-
$
(92)
$
11,954
$
3.4%
3.1%
Kraft Foods Europe
6,541
-
(201)
(226)
(364)
5,750
18.9%
5.4%
Kraft Foods Developing Markets
7,656
-
(379)
(90)
(352)
6,835
23.1%
11.6%
Kraft Foods
26,451
$
(91)
$
(697)
$
(316)
$
(808)
$
24,539
$
12.2%
5.9%
2010
Kraft Foods North America
11,849
$
(258)
$
-
$
-
$
-
$
11,591
$
Kraft Foods Europe
5,502
-
-
(45)
-
5,457
Kraft Foods Developing Markets
6,220
(80)
-
(18)
-
6,122
Kraft Foods
23,571
$
(338)
$
-
$
(63)
$
-
$
23,170
$
(1)
Impact of divestitures includes Starbucks CPG business.
(2)
Impact of acquisitions reflects the incremental January 2011 operating results from
our Cadbury acquisition. Net Revenues to Organic Net Revenues
For the Six Months Ended June 30,
($ in millions, except percentages) (Unaudited)
% Change |
 31
GAAP to Non-GAAP Reconciliation
As Reported
(GAAP)
Impact of
Divestitures
Impact of
Acquisitions
(2)
Impact of
Accounting
Calendar
Changes
Impact of
Currency
Organic
(Non-GAAP)
As Reported
(GAAP)
Organic
(Non-GAAP)
2011
Biscuits
5,776
$
-
$
-
$
(99)
$
(128)
$
5,549
$
10.0%
6.9%
Confectionery
Chocolate
4,513
-
(285)
(43)
(259)
3,926
26.2%
9.4%
Gum & Candy
2,710
-
(379)
15
(131)
2,215
24.3%
1.6%
Other Confectionery
178
-
(5)
(3)
(6)
164
(37.1)%
(14.6)%
7,401
-
(669)
(31)
(396)
6,305
22.5%
5.8%
Snacks
(1)
13,177
$
-
$
(669)
$
(130)
$
(524)
$
11,854
$
16.7%
6.3%
2010
Biscuits
5,252
$
-
$
-
$
(59)
$
-
$
5,193
$
Confectionery
Chocolate
3,577
11
-
-
-
3,588
Gum & Candy
2,180
-
-
-
-
2,180
Other Confectionery
283
(91)
-
-
-
192
6,040
(80)
-
-
-
5,960
Snacks
(1)
11,292
$
(80)
$
-
$
(59)
$
-
$
11,153
$
(1)
Snacks is defined as the combination of the Biscuits sector, which includes cookies,
crackers and salted snacks, and the Confectionery sector, which includes
chocolate, gum & candy and other confectionery. (2)
Impact of acquisitions reflects the incremental January 2011 operating results from
our Cadbury acquisition. Net Revenues to Organic Net Revenues by Consumer
Sector For the Six Months Ended June 30,
($ in millions, except percentages) (Unaudited)
Kraft Foods
% Change |
 32
GAAP to Non-GAAP Reconciliation
As Reported
(GAAP)
Integration
Program
Costs
(1)
Acquisition-
Related
Costs
(2)
and Financing
Fees
(3)
U.S. Health
Care Legislation
Impact on
Deferred Taxes
Operating
(Non-GAAP)
As Reported
EPS Growth
from
Continuing
Operations
(GAAP)
Operating
EPS Growth
(Non-GAAP)
2010
Diluted EPS
-
Continuing operations
1.44
$
0.29
$
0.21
$
0.08
$
2.02
$
(23.8)%
4.7%
-
Discontinued operations
0.95
-
Net earnings attributable to Kraft Foods
2.39
$
2009
Diluted EPS
-
Continuing operations
1.89
$
-
$
0.04
$
1.93
$
-
Discontinued operations
0.14
-
Net earnings attributable to Kraft Foods
2.03
$
(1)
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.
(2)
Acquisition-related costs include transaction advisory fees, UK stamp taxes and
the impact of the Cadbury inventory revaluation. (3)
Acquisition-related financing fees include hedging and foreign currency impacts
associated with the Cadbury acquisition and other fees associated with the
Cadbury bridge facility. % Growth
Diluted Earnings per Share to Operating EPS
For the Twelve Months Ended December 31,
(Unaudited) |