EX-99.1 2 d574208dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

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Contacts:       Basil Maglaris (media)    Christopher Jakubik, CFA (investors)
      847-646-4538    847-646-5494
      news@kraftfoods.com    ir@kraftfoods.com

KRAFT FOODS GROUP REPORTS SECOND QUARTER 2013 RESULTS

 

   

Q2 EPS of $1.38 included a $0.62 gain from market-based impacts to post-employment benefit plans

 

   

2013 EPS guidance increased to approximately $3.40 from approximately $2.75 primarily reflecting market-based impacts to post-employment benefit plans

 

   

2013 Free Cash Flow1 target raised to approximately $1.2 billion from approximately $1 billion

NORTHFIELD, Ill. – August 1, 2013 – Kraft Foods Group, Inc. (NASDAQ: KRFT) today reported second quarter results that reflected continued gains from productivity and overhead savings.

“We continue to make meaningful progress on cost savings, cash flow, market share and building our brands for the long term,” said Tony Vernon, CEO of Kraft. “Our brand investments and top-line growth in the second quarter were held back by the return discipline we’re applying to marketing, promotion and innovation. We expect to see profitable growth from a stronger base going forward and greater revenue growth in subsequent quarters as more new initiatives come to market.”

Q2 FINANCIAL SUMMARY

Net revenues in the second quarter declined 1.1 percent to $4.7 billion.

 

   

Organic Net Revenues2 declined 1.2 percent from lower volume/mix of 0.9 percentage points and 0.3 percentage points due to lower pricing.

 

   

The timing of Easter shipments negatively impacted net revenue growth between 0.5 and 1.0 percentage points while product line pruning negatively impacted growth by approximately 1.0 percentage point.

 

 

1  Free Cash Flow is a non-GAAP financial measure and is defined as cash flow from operations (~$1.85 billion) less capital expenditures (~$650 million). Please see the discussion of non-GAAP financial measures at the end of this press release.
2  Organic Net Revenues is a non-GAAP financial measure. Please see the discussion of non-GAAP financial measures and the reconciliation to GAAP at the end of this press release.

 

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Operating income in the second quarter increased 53.5 percent to $1.4 billion.

 

   

Results included a $604 million benefit from market-based impacts to post-employment benefit plans driven by higher discount rates and higher asset returns. Implementation of a voluntary early retirement program triggered a mid-year remeasurement of select pension plans.

 

   

Excluding the market-based impacts to post-employment benefit plans, gains from productivity and overhead cost savings were more than offset by a combination of increased marketing expenses, the impact of lower volume and higher Restructuring Program3 costs versus the prior year quarter.

Earnings per share in the second quarter were $1.38.

 

   

Results included a $0.62 benefit from market-based impacts to post-employment benefit plans.

 

   

Second quarter results also included $0.09 per share of Restructuring Program costs.

 

   

Interest expense in the quarter was $130 million or approximately $0.14 per share, reflecting the company’s capital structure as an independent company.

Free Cash Flow was $399 million year-to-date.

 

   

Free Cash Flow continued to pace ahead of expectations due to improved working capital management.

HIGHLIGHTS BY REPORTING SEGMENT

Beverages:

 

   

Revenues declined reflecting lower prices from higher levels of promotional activity as well as lower green coffee costs versus the prior year. This more than offset improved product mix from on-demand coffee and liquid water enhancer innovations.

 

   

Operating income was lower than the prior year quarter reflecting higher marketing costs that were partially offset by favorable pricing net of commodity costs.

Cheese:

 

   

Revenues increased from a combination of higher prices, volume gains and improved product mix with significant gains in Kraft natural cheeses and Velveeta.

 

3  As previously disclosed, on Oct. 29, 2012, Kraft Foods Group’s Board of Directors approved a $650 million restructuring, related implementation and spin-off transition program (“Restructuring Program”) reflecting primarily severance, asset disposals, other manufacturing-related one-time costs and professional service fees within its finance, legal and information systems functions.

 

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Operating income declined slightly due to unfavorable pricing net of commodity costs versus an exceptionally positive prior year period.

Refrigerated Meals:

 

   

Ongoing revenue growth from Lunchables innovations and the benefits of pricing to cover higher commodity costs were more than offset by volume softness in cold cuts and the impact of Easter shipment timing on bacon volume versus the prior year.

 

   

Operating income declined due to a negative impact from pricing net of commodity costs versus a strong prior year period and higher marketing expenses, which were partially offset by significant productivity gains.

Grocery:

 

   

Revenues declined as top-line gains from investments in innovation behind brands such as Velveeta dinners and Planters snack nuts were more than offset by weakness in Kraft spoonable and pourable dressings and JELL-O.

 

   

Operating income declined as significantly higher marketing investments and lower volumes more than offset overhead cost savings.

International & Foodservice:

 

   

Strong revenue growth in Canada from Philadelphia cream cheese, Kraft peanut butter, Kraft Singles and natural cheese and MiO liquid water enhancers was partially offset by product line pruning in Foodservice.

 

   

Double-digit operating income growth reflected improved product mix and lower manufacturing costs driven by net productivity gains, partially offset by significant marketing investments.

OUTLOOK

“Our focus on cost and cash is providing the fuel to reinvest in our brands while delivering better-than-expected Free Cash Flow,” said Tim McLevish, CFO of Kraft.

Kraft updated its guidance for 2013, including:

 

   

Organic Net Revenue growth expected to be in line with or slightly lower than the growth of the North American food and beverage market;

 

   

EPS of approximately $3.40, including the $0.62 year-to-date benefit from market-based impacts to post-employment benefit plans, versus approximately $2.75 previously; and

 

   

Free Cash Flow of approximately $1.2 billion versus approximately $1.0 billion previously.

CONFERENCE CALL

Kraft will host a conference call to discuss its second quarter 2013 results today at 4 p.m. Central time.

 

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The call will be hosted by:

 

   

Tony Vernon, CEO

 

   

Tim McLevish, EVP and CFO

 

   

Chris Jakubik, VP, Investor Relations

Live Event Dial-in Details:

United States Dial-In: 1-888-350-0137

International Dial-In: 1-970-315-0478

Access code: 16551214

To ensure timely access, participants should dial in approximately 10 minutes before the call starts. A listen-only webcast will be available to the general public in real time on Kraft’s Web site at http://ir.kraftfoodsgroup.com.

A replay of the conference call will be available until August 14, 2013, by calling 855-859-2056 from the United States and Canada, and 404-537-3406 from other locations. The access code for the replay is 16551214. An archive of the webcast will be available for one year at http://ir.kraftfoodsgroup.com, under “Events and Webcasts.”

ABOUT KRAFT FOODS GROUP

Kraft Foods Group, Inc. (NASDAQ: KRFT) is one of North America’s largest consumer packaged food and beverage companies, with annual revenues of more than $18 billion. The company has an unrivaled portfolio of products in the beverages, cheese, refrigerated meals and grocery categories. Its iconic brands include Kraft, Maxwell House, Oscar Mayer, Philadelphia, Planters, Velveeta, Capri Sun, Lunchables and JELL-O. Kraft’s 23,000 employees in the United States and Canada have a passion for making the foods and beverages people love. Kraft Foods Group is a member of the Standard & Poor’s 500 and the NASDAQ-100 indices. For more information, visit www.kraftfoodsgroup.com and www.facebook.com/kraft.

 

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FORWARD-LOOKING STATEMENTS

This press release contains a number of forward-looking statements. The words “deliver,” “continue,” “will,” “expect” and similar expressions are intended to identify the forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding Kraft’s growth, progress, marketing and innovation, cost savings, Organic Net Revenue growth, EPS and Free Cash Flow. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, many of which are beyond Kraft’s control. Important factors that could cause actual results to differ materially from those indicated in the forward-looking statements include, but are not limited to, increased competition; continued consumer weakness and weakness in economic conditions; Kraft’s ability to differentiate its products from retailer and economy brands; Kraft’s ability to maintain its reputation and brand image; continued volatility and increases in commodity and other input costs; pricing actions; increased costs of sales; regulatory or legal changes, restrictions or actions; unanticipated expenses and business disruptions; product recalls and product liability claims; unexpected safety or manufacturing issues; Kraft’s indebtedness and its ability to pay its indebtedness; Kraft’s inability to protect its intellectual property rights; tax law changes; Kraft’s ability to achieve the benefits it expects to achieve from the spin-off and to do so in a timely and cost-effective manner; and its lack of operating history as an independent, publicly traded company. For additional information on these and other factors that could affect Kraft’s forward-looking statements, see Kraft’s risk factors, as they may be amended from time to time, set forth in its filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 29, 2012. Kraft 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

Kraft reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”).

Kraft’s top-line measure is Organic Net Revenues, which Kraft defines as net revenues excluding the impact of transactions with Mondelēz International, Inc., acquisitions, divestitures (including the termination of a full line of business due to the loss of a licensing or distribution arrangement, and the complete exit of business out of a foreign country), currency and the 53rd week of shipments in 2011. Organic Net Revenues is a non-GAAP financial measure that management believes better reflects the underlying growth from the ongoing activities of Kraft’s business and provides improved comparability of results.

 

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Kraft uses Free Cash Flow, which Kraft defines as cash flow from operations less capital expenditures. Free Cash Flow is a non-GAAP financial measure that management believes better reflects the cash available to invest in growth and product development and is a better measure of Kraft’s ability to generate cash while maintaining its fixed assets.

See the attached schedules for supplemental financial data and corresponding reconciliations of the non-GAAP financial measures referred to above to the most comparable GAAP financial measures for the three months ended June 29, 2013 and June 30, 2012. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Kraft’s results prepared in accordance with GAAP. In addition, the non-GAAP measures Kraft uses may differ from non-GAAP measures used by other companies, and other companies may not define the non-GAAP measures Kraft uses in the same way.

# # #

 

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Schedule 1

Kraft Foods Group, Inc.

Condensed Consolidated Statements of Earnings

For the Three Months Ended

(in millions of dollars, except per share data) (Unaudited)

 

     June 29,
2013
    June 30,
2012
    % Change
Fav  / (Unfav)
 

Net revenues

   $ 4,735      $ 4,786        (1.1 )% 

Cost of sales 1,2

     2,780        3,150        13.3
  

 

 

   

 

 

   

Gross profit

     1,955        1,636        19.5

Selling, general and administrative expenses 1,2

     535        687        22.1

Asset impairment and exit costs 1

     22        38        42.1
  

 

 

   

 

 

   

Operating income

     1,398        911        53.5

Interest and other expense, net

     (130     (21     (100.0+ )% 

Royalty income from Mondelēz International

     —          16        (100.0 )% 
  

 

 

   

 

 

   

Earnings before income taxes

     1,268        906        40.0

Provision for income taxes

     439        303        (44.9 )% 

Effective tax rate

     34.6     33.4  
  

 

 

   

 

 

   

Net earnings

   $ 829      $ 603        37.5
  

 

 

   

 

 

   

Per share data 3 :

      

Basic earnings per share

   $ 1.39      $ 1.02        36.3
  

 

 

   

 

 

   

Diluted earnings per share

   $ 1.38      $ 1.02        35.3
  

 

 

   

 

 

   

Weighted-average common shares outstanding:

      

Basic

     594        591        (0.5 )% 

Diluted

     599        591        (1.4 )% 

 

1 

In the second quarter of 2013, Kraft recorded $82 million of Restructuring Program costs. This was comprised of $22 million within asset impairment and exit costs; implementation costs of $50 million within cost of sales ($26 million) and selling, general and administrative expenses ($24 million); and spin-off transition costs of $10 million within selling, general and administrative expenses. In the second quarter of 2012, Kraft recorded $61 million of Restructuring Program costs. Kraft recorded restructuring costs of $38 million within asset impairment and exit costs, and implementation costs of $23 million within cost of sales ($20 million) and selling, general and administrative expenses ($3 million). No spin-off transition costs were incurred.

 

2 

In the second quarter of 2013, Kraft recorded $604 million of income related to market-based impacts of certain post-employment benefit plans. This income was recorded in cost of sales ($350 million) and selling, general and administrative expenses ($254 million). There were no market-based impacts on these post-employment benefit plans in the second quarter of 2012.

 

3 

Basic and diluted earnings per share and the average number of common shares outstanding were retrospectively restated for the three months ended June 30, 2012, for the number of Kraft Foods Group shares outstanding immediately following its spin-off from Mondelēz International, Inc. on October 1, 2012.

 

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Schedule 2

Kraft Foods Group, Inc.

Reconciliation of GAAP to Non-GAAP Information

Net Revenues

For the Three Months Ended

(in millions of dollars) (Unaudited)

 

     Reported
(GAAP)
     Impact of
Currency
     Sales to
Mondelēz
International
    Organic
(Non-GAAP)
          % Change          Organic Growth Drivers  
                         
                    Reported
(GAAP)
    Organic
(Non-GAAP)
          Vol / Mix     Price  

June 29, 2013

                             

Beverages

   $ 753       $ —         $ —        $ 753              (3.2 )%      (3.2 )%           1.4 pp      (4.6 )pp 

Cheese

     945         —           (20     925              5.0     2.8          1.2 pp      1.6 pp 

Refrigerated Meals

     897         —           —          897              (0.7 )%      (0.7 )%           (2.8 )pp      2.1 pp 

Grocery

     1,138         —           (3     1,135              (6.4 )%      (6.7 )%           (5.1 )pp      (1.6 )pp 

International & Foodservice

     1,002         8         (18     992              1.3     3.1          2.3 pp      0.8 pp 
  

 

 

    

 

 

    

 

 

   

 

 

         

 

 

   

 

 

        

 

 

   

 

 

 

Kraft Foods Group, Inc.

   $ 4,735       $ 8       $ (41   $ 4,702              (1.1 )%      (1.2 )%           (0.9 )pp      (0.3 )pp 
  

 

 

    

 

 

    

 

 

   

 

 

       

 

 

   

 

 

      

 

 

   

 

 

 

June 30, 2012

                         

Beverages

   $ 778       $ —         $ —        $ 778                  

Cheese

     900         —           —          900                  

Refrigerated Meals

     903         —           —          903                  

Grocery

     1,216         —           —          1,216                  

International & Foodservice

     989         —           (27     962                  
  

 

 

    

 

 

    

 

 

   

 

 

                

Kraft Foods Group, Inc.

   $ 4,786       $ —         $ (27   $ 4,759                  
  

 

 

    

 

 

    

 

 

   

 

 

                

 

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Schedule 3

Kraft Foods Group, Inc.

Operating Income

For the Three Months Ended

(in millions of dollars) (Unaudited)

 

     Reported (GAAP)     % Change
Fav / (Unfav)
 
     June 29,
2013
    June 30,
2012
   

Operating Income:

      

Beverages

   $ 126      $ 135        (6.7 )% 

Cheese

     150        157        (4.5 )% 

Refrigerated Meals

     104        131        (20.6 )% 

Grocery

     304        409        (25.7 )% 

International & Foodservice

     168        126        33.3

Unrealized gains / (losses) on hedging activities

     2        5     

Certain post-employment benefit plan income / (costs)

     567        (42  

General corporate expenses

     (23     (10  
  

 

 

   

 

 

   

Kraft Foods Group, Inc.

   $ 1,398      $ 911        53.5
  

 

 

   

 

 

   

Note:  In the second quarter of 2013, Kraft recorded Restructuring Program costs within segment operating income and general corporate expenses as follows: Beverages ($10 million); Cheese ($29 million); Refrigerated Meals ($11 million); Grocery ($14 million); International & Foodservice ($8 million); and General corporate expenses ($10 million). In the second quarter of 2012, Kraft recorded Restructuring Program costs within segment operating income as follows: Beverages ($11 million); Cheese ($26 million); Refrigerated Meals ($6 million); Grocery ($9 million); and International & Foodservice ($9 million). In the second quarter of 2013, Kraft also recorded $604 million of income related to market-based impacts on certain post-employment benefit plans. There were no market-based impacts on these post-employment benefit plans in the second quarter of 2012.

 

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Schedule 4

Kraft Foods Group, Inc.

Condensed Consolidated Statements of Earnings

For the Six Months Ended

(in millions of dollars, except per share data) (Unaudited)

 

     June 29,
2013
    June 30,
2012
    % Change
Fav / (Unfav)
 

Net revenues

   $ 9,281      $ 9,239        0.5

Cost of sales 1,2

     5,823        6,154        5.4
  

 

 

   

 

 

   

Gross profit

     3,458        3,085        12.1

Selling, general and administrative expenses 1,2

     1,167        1,357        14.0

Asset impairment and exit costs 1

     84        76        (10.5 )% 
  

 

 

   

 

 

   

Operating income

     2,207        1,652        33.6

Interest and other expense, net

     (253     (23     (100.0+ )% 

Royalty income from Mondelēz International

     —          28        (100.0 )% 
  

 

 

   

 

 

   

Earnings before income taxes

     1,954        1,657        17.9

Provision for income taxes

     669        571        (17.2 )% 

Effective tax rate

     34.2     34.5  
  

 

 

   

 

 

   

Net earnings

   $ 1,285      $ 1,086        18.3
  

 

 

   

 

 

   

Per share data 3 :

      

Basic earnings per share

   $ 2.16      $ 1.84        17.4
  

 

 

   

 

 

   

Diluted earnings per share

   $ 2.14      $ 1.84        16.3
  

 

 

   

 

 

   

Average shares outstanding:

      

Basic

     593        591        (0.3 )% 

Diluted

     598        591        (1.2 )% 

 

1 

In the six months ended June 29, 2013, Kraft recorded $201 million of Restructuring Program costs. This was comprised of $84 million within asset impairment and exit costs; implementation costs of $94 million within cost of sales ($50 million) and selling, general and administrative expenses ($44 million); and spin-off transition costs of $23 million within selling, general and administrative expenses. In the six months ended June 30, 2012, Kraft recorded $116 million of Restructuring Program costs. Kraft recorded restructuring costs of $76 million within asset impairment and exit costs, and implementation costs of $40 million within cost of sales ($36 million) and selling, general and administrative expenses ($4 million). No spin-off transition costs were incurred.

 

2 

In the six months ended June 29, 2013, Kraft recorded $604 million of income related to market-based impacts of certain post-employment benefit plans. This income was recorded in cost of sales ($350 million) and selling, general and administrative expenses ($254 million). There were no market-based impacts on these post-employment benefit plans in the six months ended June 30, 2012.

 

3 

Basic and diluted earnings per share and the average number of common shares outstanding were retrospectively restated for the six months ended June 30, 2012, for the number of Kraft Foods Group shares outstanding immediately following its spin-off from Mondelēz International, Inc. on October 1, 2012.

 

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Schedule 5

Kraft Foods Group, Inc.

Reconciliation of GAAP to Non-GAAP Information

Net Revenues

For the Six Months Ended

(in millions of dollars) (Unaudited)

 

     Reported
(GAAP)
     Impact of
Currency
     Sales to
Mondelēz
International
    Organic
(Non-GAAP)
          % Change          Organic Growth Drivers  
                         
                    Reported
(GAAP)
    Organic
(Non-GAAP)
          Vol / Mix     Price  

June 29, 2013

                             

Beverages

   $ 1,474       $ —         $ —        $ 1,474              (0.8 )%      (0.8 )%           4.2 pp      (5.0 )pp 

Cheese

     1,941         —           (33     1,908              5.9     4.1          3.7 pp      0.4 pp 

Refrigerated Meals

     1,723         —           —          1,723              0.8     0.8          (1.6 )pp      2.4 pp 

Grocery

     2,216         —           (5     2,211              (3.5 )%      (3.7 )%           (3.7 )pp      —     

International & Foodservice

     1,927         13         (34     1,906              0.6     2.4          2.2 pp      0.2 pp 
  

 

 

    

 

 

    

 

 

   

 

 

         

 

 

   

 

 

        

 

 

   

 

 

 

Kraft Foods Group, Inc.

   $ 9,281       $ 13       $ (72   $ 9,222              0.5     0.4          0.7 pp      (0.3 )pp 
  

 

 

    

 

 

    

 

 

   

 

 

       

 

 

   

 

 

      

 

 

   

 

 

 

June 30, 2012

                         

Beverages

   $ 1,486       $ —         $ —        $ 1,486                  

Cheese

     1,832         —           —          1,832                  

Refrigerated Meals

     1,710         —           —          1,710                  

Grocery

     2,296         —           —          2,296                  

International & Foodservice

     1,915         —           (54     1,861                  
  

 

 

    

 

 

    

 

 

   

 

 

                

Kraft Foods Group, Inc.

   $ 9,239       $ —         $ (54   $ 9,185                  
  

 

 

    

 

 

    

 

 

   

 

 

                

 

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Schedule 6

Kraft Foods Group, Inc.

Operating Income

For the Six Months Ended

(in millions of dollars) (Unaudited)

 

     Reported (GAAP)     % Change
Fav / (Unfav)
 
     June 29,
2013
    June 30,
2012
   

Operating Income:

      

Beverages

   $ 251      $ 233        7.7

Cheese

     322        324        (0.6 )% 

Refrigerated Meals

     201        224        (10.3 )% 

Grocery

     632        748        (15.5 )% 

International & Foodservice

     292        227        28.6

Unrealized gains / (losses) on hedging activities

     (3     6     

Certain post-employment benefit plan Income / (costs)

     568        (99  

General corporate expenses

     (56     (11  
  

 

 

   

 

 

   

Kraft Foods Group, Inc.

   $ 2,207      $ 1,652        33.6
  

 

 

   

 

 

   

Note: In the six months ended June 29, 2013, Kraft recorded Restructuring Program costs within segment operating income and general corporate expenses as follows: Beverages ($32 million); Cheese ($63 million); Refrigerated Meals ($26 million); Grocery ($37 million); International & Foodservice ($20 million); and General corporate expenses ($23 million). In the six months ended June 30, 2012, Kraft recorded Restructuring Program costs within segment operating income as follows: Beverages ($17 million); Cheese ($45 million); Refrigerated Meals ($12 million); Grocery ($22 million); and International & Foodservice ($20 million). In the six months ended June 29, 2013, Kraft also recorded income of $604 million related to market-based impacts on certain post-employment benefit plans. There were no market-based impacts on these post-employment benefit plans in the six months ended June 30, 2012.

 

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Schedule 7

Kraft Foods Group, Inc.

Condensed Consolidated Balance Sheets

(in millions of dollars) (Unaudited)

 

     June 29,
2013
    December 29,
2012
 

ASSETS

    

Cash and cash equivalents

   $ 1,164      $ 1,255   

Receivables (net of allowances of $26 in 2013 and $28 in 2012)

     1,223        1,089   

Inventories, net

     1,898        1,928   

Deferred income taxes

     418        420   

Other current assets

     116        131   
  

 

 

   

 

 

 

Total current assets

     4,819        4,823   

Property, plant and equipment, net

     4,028        4,204   

Goodwill

     11,275        11,346   

Intangible assets, net

     2,631        2,631   

Other assets

     311        325   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 23,064      $ 23,329   
  

 

 

   

 

 

 

LIABILITIES

    

Current portion of long-term debt

   $ 3      $ 5   

Accounts payable

     1,444        1,556   

Accrued marketing

     621        740   

Accrued employment costs

     141        194   

Other current liabilities

     1,073        1,111   
  

 

 

   

 

 

 

Total current liabilities

     3,282        3,606   

Long-term debt

     9,967        9,966   

Deferred income taxes

     521        288   

Accrued pension costs

     1,055        1,990   

Accrued postretirement health care costs

     3,501        3,502   

Other liabilities

     438        405   
  

 

 

   

 

 

 

TOTAL LIABILITIES

     18,764        19,757   

EQUITY

    

Common Stock, no par value (595,910,581 shares issued in 2013 and 592,783,696 in 2012)

     —          —     

Additional paid-in capital

     4,354        4,240   

Retained earnings / (deficit)

     481        (206

Accumulated other comprehensive losses

     (509     (460

Treasury stock, at cost

     (26     (2
  

 

 

   

 

 

 

TOTAL EQUITY

     4,300        3,572   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 23,064      $ 23,329   
  

 

 

   

 

 

 

 

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LOGO

Schedule 8

Kraft Foods Group, Inc.

Reconciliation of GAAP to Non-GAAP Information

Free Cash Flow

For the Six Months Ended

(in millions of dollars) (Unaudited)

 

     June 29, 2013  

Net earnings

   $ 1,285   

Depreciation

     204   

Receivables, net

     (111

Inventories, net

     16   

Accounts payable

     (62

Other

     (721
  

 

 

 

Operating cash flow

     611   

Capital expenditures

     (212
  

 

 

 

Free cash flow

   $ 399   
  

 

 

 

 

14