EX-99.1 2 d433291dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

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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
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

 

Mondelēz International

  $ 12,909      $ 589      $ 13,498            (2.4 )%      2.1         0.6 pp      1.5 pp 
 

 

 

   

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

 

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               
 

 

 

   

 

 

   

 

 

             

Mondelēz North America

  $ 6,133      $ —        $ 6,133               

Mondelēz Europe

    3,099        —          3,099               

Mondelēz Developing Markets

    3,994        —          3,994               
 

 

 

   

 

 

   

 

 

             

Mondelēz International

  $ 13,226      $ —        $ 13,226               
 

 

 

   

 

 

   

 

 

             


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
 

Segment Operating Income:

                   

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
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

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  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Mondelēz International

  $ 1,698      $ 112      $ (7   $ 14      $ (63   $ (226   $ (69   $ 193      $ 1,652        (2.7 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

(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. 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     
  

 

 

   

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

     —       
  

 

 

   

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  
  

 

 

   

Diluted EPS Attributable to Mondelēz International for the Three Months Ended September 30, 2012 (GAAP)

   $ 0.36        (30.8 )% 
  

 

 

   

 

(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)
 

2012

                       

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

                       

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
  

 

 

   

 

 

   

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
  

 

 

   

 

 

   

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 )% 
  

 

 

   

 

 

   

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  
  

 

 

   

 

 

   

Net earnings

   $ 2,512      $ 2,705        (7.1 )% 

Noncontrolling interest

     18        8        (100.0+ )% 
  

 

 

   

 

 

   

Net earnings attributable to Mondelēz International

   $ 2,494      $ 2,697        (7.5 )% 
  

 

 

   

 

 

   

Per share data:

      

Basic earnings per share attributable to Mondelēz International

   $ 1.40      $ 1.53        (8.5 )% 
  

 

 

   

 

 

   

Diluted earnings per share attributable to Mondelēz International

   $ 1.40      $ 1.52        (7.9 )% 
  

 

 

   

 

 

   

Average shares outstanding:

      

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

                         

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

 

Mondelēz International

  $ 39,288      $ —        $ —        $ 1,473      $ 40,761            (1.0 )%      3.9         0.2 pp      3.7 pp 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

 

2011

                     

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               
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

             

Mondelēz North America

  $ 18,387      $ (91   $ —        $ —        $ 18,296               

Mondelēz Europe

    9,640        —          (269     —          9,371               

Mondelēz Developing Markets

    11,650        —          (92     —          11,558               
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

             

Mondelēz International

  $ 39,677      $ (91   $ (361   $ —        $ 39,225               
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

             

 

(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
 

Segment Operating Income:

                         

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)%   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

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  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

Mondelēz International

  $ 5,150      $ 352      $ (7   $ (15   $ (51   $ (64   $ (21   $ (147   $ (365   $ (238   $ 628      $ 5,222        1.4%    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

(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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effective tax rate

    16.4                 20.5

Net earnings

    659        (482     (5     452        11        14        16        665   

Noncontrolling interest

    7        —          —          —          —          —          —          7   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effective tax rate

    25.6                 21.9

Net earnings

    2,512        (1,506     68        654        44        42        84        1,898   

Noncontrolling interest

    18        —          —          —          —          —          —          18   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings attributable to Mondelēz

  $ 2,494      $ (1,506   $ 68      $ 654      $ 44      $ 42      $ 84      $ 1,880   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

    1,698        (765     112        23        —          1,068   

% NR

    12.8             12.2

Interest and other expense, net

    425        (66     —          —          (78     281   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings from operations

    1,273        (699     112        23        78        787   

Provision for income taxes

    346        (280     1        9        29        105   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effective tax rate

    27.2             13.3

Net earnings

    927        (419     111        14        49        682   

Noncontrolling interest

    5        —          —          —          —          5   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings attributable to Mondelēz

  $ 922      $ (419   $ 111      $ 14      $ 49      $ 677   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings from operations

    3,838        (2,277     352        68        233        2,214   

Provision for income taxes

    1,133        (850     7        26        88        404   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effective tax rate

    29.5             18.2

Net earnings

    2,705        (1,427     345        42        145        1,810   

Noncontrolling interest

    8        —          —          —          —          8   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings attributable to Mondelēz

  $ 2,697      $ (1,427   $ 345      $ 42      $ 145      $ 1,802   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    1,652        (814     (14     226        18        23        1,091        57        1,148        (2.7 )%      2.2     7.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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      
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

Operating income

    1,698        (765     112        —          —          23        1,068        —          1,068         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

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 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    5,222        (2,544     64        365        69        68        3,244        138        3,382        1.4     4.8     9.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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      
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

Operating income

    5,150        (2,475     352        —          —          68        3,095        —          3,095         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

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
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mondelēz International

  $ 12,909      $ (4,583   $ 8,326      $ 580      $ 8,906        (2.4 )%      (5.1 )%      1.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

Mondelēz International

  $ 13,226      $ (4,448   $ 8,778        —        $ 8,778         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

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)
 

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
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mondelēz International

  $ 39,288      $ (13,768   $ 25,520      $ —        $ 1,433      $ 26,953        (1.0 )%      (2.3 )%      4.6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

September 30, 2011

                 

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         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

Mondelēz International

  $ 39,677      $ (13,546