2014

Mondelez International Reports Second Quarter and First Half 2013 Results - Faster top-line growth in emerging markets, strong volume/mix, Power Brand gainsand increasing market shares globally drove solid underlying momentum

- Q2 and first half net revenues both increased 0.8%; Q2 and first half Organic Net Revenues(1) both grew 3.8%

- Q2 Diluted EPS was $0.34; Adjusted EPS(1) increased to $0.37, up 5.6% on a constant currency basis

- First half Diluted EPS was $0.66; Adjusted EPS increased to $0.71, up 13.4% on a constant currency basis

- Company reaffirms 2013 Organic Net Revenue growth outlook at the low end of 5-7% range and Adjusted EPS guidance of $1.55-$1.60

- Significantly increasing share repurchase authorization to $6 billion

- Raising quarterly dividend by 8%

DEERFIELD, Ill., Aug. 7, 2013 /PRNewswire/ -- Mondelez International, Inc. (NASDAQ: MDLZ) today reported second quarter and first half 2013 results. 

(Logo: http://photos.prnewswire.com/prnh/20121003/MM86695LOGO)

"Faster top-line growth in emerging markets, strong volume/mix gains and increasing market shares globally drove our first-half business performance, which was in line with the expectations we outlined earlier in the year," said Irene Rosenfeld, Chairman and CEO.  "For the second half of 2013, we expect our top-line growth to accelerate from investments in emerging markets and continued momentum on our global snacking platforms and Power Brands, despite indications of slowing category growth in key markets such as China, Brazil and Russia.  On the bottom line, we expect margins to expand through overhead leverage as well as continued aggressive focus on cost reduction efforts." 

Rosenfeld continued, "As we also announced today, our Board of Directors approved a significant increase in our share repurchase program from $1.2 billion to $6 billion through 2016, and an 8 percent increase in our quarterly dividend to $0.14 per share.  We believe the combination of strong top-line growth in emerging markets, double-digit EPS gains, higher dividends and a substantial increase in share buybacks creates a highly attractive mix that will deliver superior shareholder returns."

Second Quarter Results
Net revenues were $8.6 billion, up 0.8 percent.  Organic Net Revenues increased 3.8 percent, driven by strong volume/mix of 3.6 percentage points as well as favorable pricing of 0.2 percentage points.  As expected, the pass-through of lower coffee commodity costs tempered growth by 0.8 percentage points.  Additionally, while capacity constraints in certain key markets diminished, they still posed a 0.2 percentage point headwind. 

Power Brands continued to grow at a rate about double the company average, up 7.9 percent.  Oreo, Tuc/Club Social, belVita, Chips Ahoy! and Barni biscuits, Cadbury Dairy Milk, Milka and Lacta chocolate and Stride gum each posted double-digit increases.  

Revenues from emerging markets2 accelerated sequentially, up 9.7 percent, led by double-digit gains in each of the BRIC3 markets.  In developed markets4, growth in biscuits and chocolate was offset by the impact of lower coffee pricing and soft category trends in gum. 

Operating income was $0.9 billion, down 7.7 percent, and operating income margin was 10.1 percent. 

Adjusted Operating Income1 decreased 9.3 percent on a constant currency basis, including a negative 4.5 percentage point impact from prior year one-time items5.  The remaining differential reflected increased investments in sales capabilities and route-to-market expansion in emerging markets, particularly in Asia Pacific and EEMEA, as well as higher advertising and consumer (A&C) support in both emerging markets and Europe.  These investments are expected to drive stronger second half and 2014 revenue growth.  

Adjusted Operating Income margin was 11.4 percent, a sequential improvement from the previous quarter, but down 1.8 percentage points versus prior year.  The decline included a negative 0.6 percentage point impact from prior year one-time items5.  Incremental investments in sales capabilities, route-to-market expansion and A&C support as well as the negative impact of the devaluation of the Venezuelan bolivar on operating results, contributed to the margin decline.

Diluted EPS was $0.34.  Adjusted EPS (previously referred to as Operating EPS) was $0.37, including a negative $0.01 impact from currency.  On a constant currency basis, Adjusted EPS increased 5.6 percent, reflecting positive impacts of $0.04 from lower taxes, primarily from discrete items, and $0.02 from lower interest expense resulting from a statutory interest rate change affecting an accrued non-income tax liability.

Second Quarter Revenue Results by Region
Latin America:  Net revenues decreased 0.1 percent.  Organic Net Revenues grew 9.6 percent as pricing, primarily driven by inflationary economies such as Venezuela, was partially offset by lower volume/mix, particularly in Mexico.  Brazil increased double-digits behind strong pricing and volume/mix gains.  Power Brands grew 14 percent, led by Club Social, Oreo and belVita biscuits. Lacta chocolate was also up double-digits.

Asia Pacific:  Net revenues increased 1.5 percent.  Organic Net Revenues grew 3.3 percent, driven by higher volume/mix partially offset by lower pricing.  Organic Net Revenues for the region's emerging markets grew high-single digits, led by double-digit growth in China, India and the Philippines.  Developed markets in the region declined mid-single digits, primarily due to gum and candy softness.  Power Brands grew 15.5 percent, led by Cadbury Dairy Milk chocolate, Oreo and Chips Ahoy! biscuits, Stride gum and Tang powdered beverages.  

EEMEA:  Net revenues increased 7.7 percent.  Organic Net Revenues grew 11.3 percent, as strong volume/mix gains were partially offset by lower pricing, mostly from coffee in Eastern Europe.  Russia improved significantly with organic growth in the mid-teens behind exceptionally strong volume/mix performance, partially offset by lower pricing in coffee and chocolate.  Power Brands grew 15.6 percent, led by Cadbury Dairy Milk and Milka chocolate, Barni, Oreo and Tuc biscuits and Tang powdered beverages.

Europe:  Net revenues decreased 1.3 percent.  Organic Net Revenues increased 0.2 percent, as strong volume/mix gains, particularly in coffee, chocolate and biscuits, were largely offset by significant coffee pricing impacts and soft performance in gum and cheese.  Lower coffee revenues negatively affected the region's growth by 1.3 percentage points.  Power Brands grew 4.1 percent, led by Oreo, belVita and chocobakery biscuits, Cadbury Dairy Milk and Milka chocolate and Tassimo beverages. 

North America:  Net revenues increased 1.1 percent.  Organic Net Revenues increased 2.3 percent, with strong biscuits growth partially offset by declining gum revenues.  U.S. biscuits grew 5 percent or more for the eighth consecutive quarter, fueled by strong growth of Oreo, Chips Ahoy! and belVita.

First Half Results
Net revenues were $17.3 billion, up 0.8 percent.  Organic Net Revenues increased 3.8 percent, driven by strong volume/mix of 3.1 percentage points as well as favorable pricing of 0.7 percentage points.  As expected, lower coffee revenues tempered the company's overall top-line growth by 1.0 percentage point.  Capacity constraints in certain key markets posed a 0.3 percentage point headwind and are not expected to be material in the future.

Revenues from emerging markets were up 9.5 percent, led by double-digit gains in the BRIC markets.  In developed markets, growth in biscuits and chocolate was essentially offset by declines in gum and cheese as well as lower coffee pricing. 

Power Brands grew 7.7 percent, double the company rate.  Oreo, Chips Ahoy!, Tuc/Club Social, belVita, and Barni biscuits, Cadbury Dairy Milk and Milka chocolate, Halls candy and Stride gum each posted double-digit increases.  

Market share performance6 was strong, with nearly 60 percent of revenues gaining or holding share.  Performance was particularly strong in biscuits, chocolate and coffee, while gum in developed markets improved in the second quarter.

Operating income was $1.7 billion, down 7.7 percent, and operating income margin was 9.8 percent. 

Adjusted Operating Income decreased 6.8 percent on a constant currency basis, including a negative 4.0 percentage point impact from prior year one-time items7.  The remaining differential reflected increased investments to support stronger growth in the second half and 2014.  These investments included improvements in sales capabilities and route-to-market expansion in emerging markets, particularly in Asia Pacific and EEMEA, as well as higher A&C support in both emerging markets and Europe.

Adjusted Operating Income margin was 10.8 percent, down 1.7 percentage points, including the negative impacts of 0.5 percentage points from prior year one-time items7 and 0.3 percentage points due to the devaluation of the Venezuelan bolivar.

Diluted EPS was $0.66.  Adjusted EPS was $0.71, including a negative $0.05 impact from currency.  On a constant currency basis, Adjusted EPS increased 13.4 percent, reflecting a positive $0.13 impact of lower taxes, primarily from discrete items, and $0.02 from lower interest expense resulting from a statutory interest rate change affecting an accrued non-income tax liability.

Outlook
"We anticipate revenue growth and margin expansion to accelerate in the second half of the year as we leverage our year-to-date volume/mix, market shares and first half growth investments, and as the headwinds from coffee pricing and capacity constraints begin to subside," said David Brearton, Executive Vice President and CFO.  "We continue to expect to deliver Organic Net Revenue growth at the low-end of our long term target range of 5 to 7 percent, despite indications in some key markets of slowing category growth.  Margins are also expected to improve in the second half, due to increased leverage from revenue growth and aggressive productivity and cost reduction efforts." 

Brearton continued, "In addition, we reaffirmed our 2013 Adjusted EPS outlook of $1.55 to $1.608.  We're accelerating our 2014 emerging market investments into 2013, offsetting the impact with a portion of the benefits from discrete tax items.  Our ability to incrementally invest in emerging markets this year, while continuing to deliver double-digit EPS growth, lays the foundation for top-line growth and margin expansion in 2014."

Return of Capital
In a separate press release issued today, the company announced that its Board of Directors approved a significant increase in its share repurchase authorization from $1.2 billion to $6 billion through 2016.  The Board of Directors also approved an 8 percent increase in the quarterly dividend to $0.14 per share.

Conference Call
Mondelez International will host a conference call for investors with accompanying slides to review its results at 5 p.m. ET today.  Access to a live audio webcast with accompanying slides and a replay of the event will be available at www.mondelezinternational.com/Investor.

About Mondelez International
Mondelez International, Inc. (NASDAQ: MDLZ) is a global snacking powerhouse, with 2012 revenue of $35 billion.  Creating delicious moments of joy in 165 countries, Mondelez International is a world leader in chocolate, biscuits, gum, candy, coffee and powdered beverages, with billion-dollar brands such as Cadbury, Cadbury Dairy Milk and Milka chocolate, Jacobs coffee, LU, Nabisco and Oreo biscuits, Tang powdered beverages and Trident gum. Mondelez International is a proud member of the Standard and Poor's 500, NASDAQ 100 and Dow Jones Sustainability Index. Visit www.mondelezinternational.com and www.facebook.com/mondelezinternational.  

End Notes

  1. Please see discussion of Non-GAAP Financial Measures at the end of this press release.
  2. Emerging markets consist of the Latin America and Eastern Europe, Middle East and Africa regions in their entirety; the Asia Pacific region, excluding Australia, New Zealand and Japan; and the following countries from the Europe region: Poland, Czech & Slovak Republics, Hungary, Bulgaria, Romania, the Baltics and the East Adriatic countries.
  3. The BRIC markets are Brazil, Russia, India and China.
  4. Developed markets include the entire North America region, the Europe region, excluding the countries included in the emerging markets definition, and Australia, New Zealand and Japan from the Asia Pacific region.
  5. Prior year one-time items in the second quarter include the gain on sale of property in Turkey (EEMEA) and proceeds from insurance settlements (Latin America and Asia Pacific).
  6. Market share performance is defined as the percentage of revenues for biscuits, chocolate, gum, candy, coffee, powdered beverage and cream cheese categories in key markets with share either increasing or flat versus the same prior year period.  Based on Global Nielsen data for measured channels for available periods in H1 2013.
  7. Prior year one-time items in the first half include the gains on sales of properties in Russia and Turkey (EEMEA), an asset impairment charge related to a trademark in Japan (Asia Pacific) and proceeds from insurance settlements (Latin America and Asia Pacific) .
  8. Adjusted EPS guidance of $1.55-$1.60 is based on 2012 average currency rates and includes the estimated impact of the write-down of the net monetary assets and the translation of operating income for the company's Venezuelan business stemming from that government's decision to devalue its currency to a fixed rate of 6.30/$US on
    February 8, 2013.

Forward-Looking Statements
This press release contains a number of forward-looking statements.  Words, and variations of words, such as "reaffirm," "will," "expect," "continue," "achieve," "growth," "gains," "commitment," "believe," "accelerate," "subside," "estimate," "deliver," "outlook," "guidance," "momentum" and similar expressions are intended to identify our forward-looking statements, including, but not limited to, statements about: our future revenues and margin expansion; shareholder returns, including future dividends and share buybacks; and our Outlook, in particular, our performance and results for the second half of 2013, 2013 Organic Net Revenue growth and 2013 Adjusted EPS.  These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from those indicated in our forward-looking statements.  Such factors include, but are not limited to, continued volatility of commodity and other input costs, pricing actions, continued global economic weakness, risks from operating globally 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.  Mondelez 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").  We use certain non-GAAP financial measures to budget, make operating and strategic decisions and evaluate our performance. We disclose non-GAAP financial measures so that you have the same financial data that we use to assist you in making comparisons to our historical operating results and analyzing our underlying performance. 

Our non-GAAP financial measures and corresponding metrics reflect how we evaluate our operating results currently and provide improved comparability of operating results.  As new events or circumstances arise, these definitions could change over time:

  • "Organic Net Revenues" is defined as net revenues excluding the impacts of acquisitions, divestitures (including businesses under a sales agreement), Integration Program costs, accounting calendar changes and foreign currency rate fluctuations.
  • "Adjusted Gross Profit" is defined as gross profit excluding the impact of pension costs related to obligations transferred in the Spin-Off, the 2012-2014 Restructuring Program, the Integration Program and other acquisition integration costs and the operating results of divestitures (including businesses under sales agreements).  We also evaluate growth in our Adjusted Gross Profit on a constant currency basis.
  • "Adjusted Operating Income" and "Adjusted Segment Operating Income" are defined as operating income (or segment operating income) excluding the impact of Spin-Off Costs, pension costs related to the obligations transferred in the Spin-Off, the 2012-2014 Restructuring Program, the Integration Program and other acquisition integration costs, gains / losses from divestitures or acquisitions, acquisition-related costs and the operating results of divestitures (including businesses under sales agreements).  We also evaluate growth in our Adjusted Operating Income and Adjusted Segment Operating Income on a constant currency basis.
  • "Adjusted EPS"  (previously referred to as "Operating EPS") is defined as diluted EPS attributable to Mondelez International from continuing operations excluding the impact of Spin-Off Costs, pension costs related to the obligations transferred in the Spin-Off, the 2012-2014 Restructuring Program, the Integration Program and other acquisition integration costs, gains / losses from divestitures or acquisitions, acquisition-related costs and net earnings from divestitures (including businesses under sales agreements), and including an interest expense adjustment related to the Spin-Off  transaction.  We also evaluate growth in our Adjusted EPS on a constant currency basis.

We believe that the presentation of these non-GAAP financial measures, when considered together with our U.S. GAAP financial measures and the reconciliations to the corresponding U.S. GAAP financial measures, provides you with a more complete understanding of the factors and trends affecting our business than could be obtained absent these disclosures.   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 deemed to be significantly different from the non-GAAP financial measures, and reconciling information is not available without unreasonable effort, the company has not provided that information with regard to the non-GAAP financial measures in the company's Outlook. 

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 six months ended June 30, 2013 and 2012. 

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), general corporate expenses (which are a component of selling, general and administrative expenses), amortization of intangibles, gains and losses from divestitures and acquisitions, and acquisition-related costs (which are a component of selling, general and administrative expenses) for all periods presented.  The company excludes the unrealized gains and losses on hedging activities from segment operating income in order to provide better transparency of our segment operating results.  Once realized, the gains and losses on hedging activities are recorded within segment operating results.  We exclude general corporate expenses, amortization of intangibles, gains and losses on divestitures and acquisitions and acquisition-related costs from segment operating income in order to provide better transparency of our segment operating results.

 

Mondelez International Inc. and Subsidiaries

                            Condensed Consolidated Statements of Earnings

Schedule 1

For the Three Months Ended June 30, 

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








As Reported/Revised (GAAP) 



2013

2012

% Change
Fav / (Unfav)






Net revenues

$8,595

$8,527

0.8%






Cost of sales

5,364

5,316

(0.9)%







Gross profit

3,231

3,211

0.6%







Gross profit margin

37.6%

37.7%







Selling, general and administrative expenses

2,269

2,194

(3.4)%






Asset impairment and exit costs

48

27

(77.8)%






Gains on divestitures, net

(6)

-

100.0%






Amortization of intangibles

55

53

(3.8)%







Operating income

865

937

(7.7)%







Operating income margin

10.1%

11.0%







Interest and other expense, net

235

344

31.7%







Earnings from continuing operations before income taxes

630

593

6.2%






(Benefit)/Provision for income taxes

13

103

87.4%






Effective tax rate

2.1%

 

17.4%








Earnings from continuing operations

$      617

$      490

25.9%






Earnings from discontinued operations, net of income taxes

-

544

(100.0)%







Net earnings

$      617

$   1,034

(40.3)%






Noncontrolling interest

1

5

80.0%







Net earnings attributable to Mondelez International

$      616

$   1,029

(40.1)%






Per share data:





Basic earnings per share attributable to Mondelez International:




-  Continuing operations

$     0.34

$     0.27

25.9%


-  Discontinued operations

-

0.31

(100.0)%


Net earnings attributable to Mondelez International

$     0.34

$     0.58

(41.4)%







Diluted earnings per share attributable to Mondelez International:




-  Continuing operations

$     0.34

$     0.27

25.9%


-  Discontinued operations

-

0.31

(100.0)%


Net earnings attributable to Mondelez International

$     0.34

$     0.58

(41.4)%






Average shares outstanding:





Basic

1,788

1,777

(0.6)%


Diluted

1,803

1,786

(1.0)%

 

 



Mondelez International, Inc. and Subsidiaries


                            Reconciliation of GAAP to Non-GAAP Measures

Schedule 2


Net Revenues


For the Three Months Ended June 30,


($ in millions)  (Unaudited)






























As Reported/Revised (GAAP)

Impact of Divestitures

Impact of

Acquisitions (1)

Impact of Currency

Organic

(Non-GAAP)




2013


















Latin America

$   1,339

$                -

$             -

$    129

$       1,468




Asia Pacific

1,240

-

-

22

1,262




Eastern Europe, Middle East & Africa

1,039

(1)

(24)

38

1,052




Europe

3,273

-

-

(29)

3,244




North America

1,704

-

-

3

1,707













Mondelez International

$   8,595

$               (1)

$          (24)

$    163

$       8,733






















2012


















Latin America

$   1,340

$                -

$             -

$         -

$       1,340




Asia Pacific

1,222

-

-

-

1,222




Eastern Europe, Middle East & Africa

965

(20)

-

-

945




Europe

3,315

(78)

-

-

3,237




North America

1,685

(17)

-

-

1,668













Mondelez International

$   8,527

$           (115)

$             -

$         -

$       8,412




























Organic Growth Drivers








Vol / Mix

Price


% Change


















Latin America

(0.1)%

              -   pp

          -   pp

    9.7 pp

9.6%

(2.0)pp

11.6pp


Asia Pacific

1.5%

-

-

1.8

3.3%

3.5

(0.2)


Eastern Europe, Middle East & Africa

7.7%

2.1

(2.6)

4.1

11.3%

12.3

(1.0)


Europe

(1.3)%

2.4

-

(0.9)

0.2%

3.8

(3.6)


North America

1.1%

1.1

-

0.1

2.3%

3.2

(0.9)











Mondelez International

0.8%

            1.4 pp

       (0.3)pp

    1.9 pp

3.8%

3.6pp

0.2pp



















(1)

On February 22, 2013, the company acquired the remaining interest in a biscuit operation in Morocco, which is now a wholly-owned subsidiary within the EEMEA segment.

 

 

 



 Mondelez International, Inc. and Subsidiaries


                         Reconciliation of GAAP to Non-GAAP Measures

Schedule 3


Operating Income


For the Three Months Ended June 30,


($ in millions)  (Unaudited)








































% Change



As Reported/Revised (GAAP)

Integration

Program and

other Acquisition

Integration costs (1)

Spin-Off Costs

and Related

Adjustments (2)

2012-2014

Restructuring

Program costs (3)

Operating Income from Divestitures

Gains on Divestitures, net (4)

As Adjusted

(Non-GAAP)

Impact of Currency

As Adjusted

Constant

FX (Non-GAAP)

As Reported (GAAP)

As Adjusted

(Non-GAAP)

As

Adjusted 

Constant

FX (Non-GAAP)


2013




























Latin America

$      162

$                      4

$                  -

$                     -

$             -

$             -

$          166

$      22

$          188

(21.4)%

(23.5)%

(13.4)%


Asia Pacific

129

8

-

-

-

-

137

4

141

(14.0)%

(13.8)%

(11.3)%


Eastern Europe, Middle East & Africa

112

28

-

3

-

-

143

6

149

(20.6)%

(0.7)%

3.5%


Europe

369

12

-

20

-

-

401

(7)

394

(14.6)%

(7.6)%

(9.2)%


North America

194

1

-

31

-

-

226

(1)

225

5.4%

0.4%

-


Unrealized G/(L) on Hedging Activities

24

-

-

-

-

-

24

-

24

4.3%

4.3%

4.3%


General corporate expenses

(76)

-

15

1

-

-

(60)

(3)

(63)

47.9%

(42.9)%

(50.0)%


Amortization of intangibles

(55)

-

-

-

-

-

(55)

1

(54)

(3.8)%

(3.8)%

(1.9)%


Gains on divestitures, net

6

-

-

-

-

(6)

-

-

-

100.0%

-

-


Acquisition-related costs

-

-

-

-

-

-

-

-

-

-

-

-
















Mondelēz International

$      865

$                    53

$               15

$                  55

$             -

$           (6)

$          982

$      22

$       1,004

(7.7)%

(11.3)%

(9.3)%






























2012




























Latin America

$      206

$                      6

$                  -

$                    5

$             -

$             -

$          217

$         -

$          217





Asia Pacific

150

9

-

-

-

-

159

-

159





Eastern Europe, Middle East & Africa

141

2

-

-

1

-

144

-

144





Europe

432

18

-

-

(16)

-

434

-

434





North America

184

(2)

22

23

(2)

-

225

-

225





Unrealized G/(L) on Hedging Activities

23

-

-

-

-

-

23

-

23





General corporate expenses

(146)

2

101

1

-

-

(42)

-

(42)





Amortization of intangibles

(53)

-

-

-

-

-

(53)

-

(53)





Gains on divestitures, net

-

-

-

-

-

-

-

-

-





Acquisition-related costs

-

-

-

-

-

-

-

-

-



















Mondelez International

$      937

$                    35

$             123

$                  29

$          (17)

$             -

$       1,107

$         -

$       1,107
































(1)

Integration Program costs are defined as the costs associated with combining the Mondelez International and Cadbury businesses, and are separate from those costs associated with the acquisition.

(2)

Spin-Off Costs represent 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 related adjustments include the pension adjustment defined as the estimated benefit plan expense associated with certain benefit plan obligations transferred to Kraft Foods Group in the Spin-Off.

(3)

Restructuring Program costs represent restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing-related costs.

(4)

During the three months ended June 30, 2013, the company completed two divestitures, a salty snack business in Turkey and a confectionery business in South Africa.  A pre-tax gain of $6 million was recorded in connection with these divestitures.

 

 




Mondelez International, Inc. and Subsidiaries



                        Reconciliation of GAAP to Non-GAAP Measures

Schedule 4



Partial Condensed Consolidated Statements of Earnings



For the Three Months Ended June 30,



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


















As Reported/ Revised (GAAP)

Integration

Program and

other Acquisition

Integration costs (1)

Spin-Off

Costs (2)

Spin-Off

Pension

Adjustment (2)

Spin-Off

Interest

 Adjustment (2)

2012-2014 Restructuring Program Costs (3)

Net Earnings from Divestitures

Gains on Divestitures, net (4)

As

Adjusted

(Non-GAAP)















2013















Operating income

865

53

15

-

-

55

-

(6)

982

















Operating income margin

10.1%








11.4%
















Interest and other expense, net

235

-

-

-

-

-

-

-

235

















Earnings from continuing operations before income taxes

630

53

15

-

-

55

-

(6)

747
















Provision for income taxes

13

11

(1)

-

-

15

-

39

77
















Effective tax rate

2.1%








10.3%

















Earnings from continuing operations

$       617

$                    42

$     16

$                -

$                -

$               40

$              -

$          (45)

$          670
















Noncontrolling interest

1

-

-

-

-

-

-

-

1

















Net earnings attributable to Mondelez International from continuing operations

$       616

$                    42

$     16

$                -

$                -

$               40

$              -

$          (45)

$          669
















Per share data:













Diluted earnings per share attributable to Mondelez International:













-  Continuing operations

$      0.34

$                 0.02

$  0.01

$                -

$                -

$            0.02

$              -

$       (0.02)

$         0.37
















Average shares outstanding:













Diluted

1,803




































2012















Operating income

937

35

100

23

-

29

(17)

-

1,107













-




Operating income margin

11.0%








13.2%
















Interest and other expense, net

344

-

(28)

-

(36)

-

-

-

280

















Earnings from continuing operations before income taxes

593

35

128

23

36

29

(17)

-

827
















Provision for income taxes

103

2

39

9

13

10

(4)

-

172
















Effective tax rate

17.4%








20.8%

















Earnings from continuing operations

490

33

89

14

23

19

(13)

-

655
















Noncontrolling interest

5

-

-

-

-

-

-

-

5

















Net earnings attributable to Mondelez International from continuing operations

$       485

$                    33

$     89

$             14

$             23

$               19

$           (13)

$             -

$          650
















Per share data:













Diluted earnings per share attributable to Mondelez International:













-  Continuing operations

$      0.27

$                 0.02

$  0.05

$          0.01

$          0.01

$            0.01

$        (0.01)

$           -

$         0.36
















Average shares outstanding:













Diluted

1,786






















(1)

Integration Program costs are defined as the costs associated with combining the Mondelez International and Cadbury businesses, and are separate from those costs associated with the acquisition. 

(2)

Spin-Off Costs represent 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 Mondelez International business. Spin-Off related adjustments include: (a) a pension adjustment defined as the estimated benefit plan expense associated with certain benefit plan obligations transferred to Kraft Foods Group in the Spin-Off; and (b) an interest adjustment defined as the interest expense associated with the assumed reduction of the $6 billion of our debt on January 1, 2012, from the utilization of funds received from Kraft Foods Group in 2012 in connection with our Spin-Off capitalization plan. Note during the year ended December 31, 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 paid on January 1, 2012 to ensure consistency of our assumption and related results.

(3)

Restructuring Program costs represent restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing-related costs.

(4)

During the three months ended June 30, 2013, the company completed two divestitures, a salty snack business in Turkey and a confectionery business in South Africa. A pre-tax gain of $6 million (or an after-tax gain of $45 million) was recorded in connection with these divestitures.

 



Mondelez International Inc. and Subsidiaries


Reconciliation of GAAP to Non-GAAP Measures

Schedule 5


Operating Income


For the Three Months Ended June 30,


($ in millions, except percentages) (Unaudited)






















































































2013


2012





As Reported (GAAP)


Integration

Program and

other Acquisition

Integration costs (1)


Spin-Off Costs

and Related

Adjustments (2)


2012-2014

Restructuring

Program costs (3)


Gains on

Divestitures,

net (4)


As Adjusted      (Non-GAAP)


As Revised (GAAP)


Integration

Program and

other Acquisition

Integration costs (1)


Spin-Off Costs and Related Adjustments (2)


2012-2014

Restructuring

Program costs (3)


Operating Income from Divestitures


As Adjusted      (Non-GAAP)


Mondelez International



























Operating Income


$           865


$                 53


$                15


$                55


$         (6)


$            982


$           937


$                 35


$              123


$                29


$             (17)


$         1,107



Growth vs. Prior Year


(7.7)%










(11.3)%










































Operating Income Margin


10.1%










11.4%


11.0%










13.2%
























































Latin America



























Segment Operating Income


$           162


$                   4


$                   -


$                   -


$           -


$            166


$           206


$                      6


$                    -


$                   5


$                    -


$            217



Growth vs. Prior Year


(21.4)%










(23.5)%










































Segment Operating Income Margin


12.1%










12.4%


15.4%










16.2%
























































Asia Pacific



























Segment Operating Income


$           129


$                      8


$                      -


$                      -


$              -


$            137


$           150


$                      9


$                    -


$                    -


$                    -


$            159



Growth vs. Prior Year


(14.0)%










(13.8)%










































Segment Operating Income Margin


10.4%










11.0%


12.3%










13.0%
























































Eastern Europe, Middle East & Africa



























Segment Operating Income


$           112


$                    28


$                      -


$                     3


$              -


$            143


$           141


$                      2


$                    -


$                    -


$                   1


$            144



Growth vs. Prior Year


(20.6)%










(0.7)%










































Segment Operating Income Margin


10.8%










13.8%


14.6%










15.2%
























































Europe



























Segment Operating Income


$           369


$                    12


$                      -


$                   20


$              -


$            401


$           432


$                    18


$                    -


$                    -


$                (16)


$            434



Growth vs. Prior Year


(14.6)%










(7.6)%










































Segment Operating Income Margin


11.3%










12.3%


13.0%










13.4%
























































North America



























Segment Operating Income


$           194


$                      1


$                      -


$                   31


$              -


$            226


$           184


$                     (2)


$                 22


$                 23


$                  (2)


$            225



Growth vs. Prior Year


5.4%










0.4%










































Segment Operating Income Margin


11.4%










13.3%


10.9%










13.5%


















































































(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 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 related adjustments include the pension adjustment defined as the estimated benefit plan expense associated with certain benefit plan obligations transferred to Kraft Foods Group in the Spin-Off.

(3)

Restructuring Program costs represent restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing-related costs.

(4)

During the three months ended June 30, 2013, the company completed two divestitures, a salty snack business in Turkey and a confectionery business in South Africa.  A pre-tax gain of $6 million was recorded in connection with these divestitures.

 

 



Mondelez International Inc. and Subsidiaries


                           Reconciliation of GAAP to Non-GAAP Measures

Schedule 6


Gross Profit


For the Three Months Ended June 30,


($ in millions)  (Unaudited)


































% Growth



As Reported/Revised (GAAP)

Integration

Program and

other Acquisition

Integration costs (1)

Spin-Off Costs

and Related

Adjustments (2)

Impact of Divestitures

As

Adjusted
(Non-GAAP)

Impact of Currency

As

Adjusted

Constant

FX (Non-GAAP)

As Reported (GAAP)

As

Adjusted 

(Non-GAAP)

As

Adjusted

Constant

FX  (Non-GAAP)


2013












Net Revenues

$ 8,595

$                   -

$               -

$       (1)

$    8,594



















Gross Profit

$ 3,231

$                 20

$               -

$       (1)

$    3,250

$   57

$       3,307

0.6%

1.7%

3.5%














Gross Profit Margin

37.6%




37.8%



















2012












Net Revenues

$ 8,527

$                   -

$               -

$    (115)

$    8,412



















Gross Profit

$ 3,211

$                   3

$            11

$      (29)

$    3,196



















Gross Profit Margin

37.7%




38.0%


















(1)

Integration Program costs are defined as the costs associated with combining the Mondelez International and Cadbury businesses, and are separate from those costs associated with the acquisition.

(2)

Spin-Off Costs represent 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 Mondelez International business.  Spin-Off related adjustments include the pension adjustment defined as the estimated benefit plan expense associated with certain benefit plan obligations transferred to Kraft Foods Group in the Spin-Off.

 


Mondelez International Inc. and Subsidiaries

                                             Reconciliation of GAAP to Non-GAAP Measures

Schedule 7

Diluted EPS

(Unaudited)














Diluted EPS

% Growth







Diluted EPS Attributable to Mondelez International for the Three





Months Ended June 30, 2012 (GAAP)


$         0.58



Discontinued operations, net of income taxes


0.31



Diluted EPS Attributable to Mondelez International from continuing




operations for the Three Months Ended June 30, 2012 (GAAP)


0.27



Integration Program and other acquisition integration costs (1)


0.02



Spin-Off Costs (2)


0.05



Spin-Off related adjustments (3)


0.02



2012-2014 Restructuring Program costs (4)


0.01



Net earnings from divestitures


(0.01)



Adjusted EPS for the Three Months Ended 





June 30, 2012 (Non-GAAP)


0.36



Decrease in operations


(0.03)



Gain on sale of property in 2012


(0.01)



Lower interest and other expense, net


0.02



Change in taxes


0.04



Adjusted EPS for the Three Months Ended 





June 30, 2013 (constant currency)


0.38

5.6%


Unfavorable foreign currency (5)


(0.01)



Adjusted EPS for the Three Months Ended 





June 30, 2013 (Non-GAAP)


0.37

2.8%


Integration Program and other acquisition integration costs (1)


(0.02)



Spin-Off Costs (2)


(0.01)



2012-2014 Restructuring Program costs (4)


(0.02)



Net earnings from divestitures


-



Gains on divestitures, net (6)


0.02



Diluted EPS Attributable to Mondelez International from continuing 




operations for the Three Months Ended June 30, 2013 (GAAP)


$         0.34

25.9%





















(1)

Integration Program costs are defined as the costs associated with combining the Mondelez International and Cadbury businesses, and are separate from those costs associated with the acquisition.  Integration Program costs were $52 million, or $42 million after-tax including certain tax costs associated with the integration of Cadbury, for the three months ended June 30, 2013, as compared to $35 million, or $33 million after-tax for the three months ended June 30, 2012.  We also incurred $1 million of integration costs during the three months ended June 30, 2013, associated with the acquisition of the biscuit operation in Morocco.

(2)

Spin-Off Costs represent 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 Mondelez International business.  Spin-Off Costs for the three months ended June 30, 2013 were $15 million, or $16 million after-tax, as compared to $128 million or $89 million after-tax for the three months ended June 30, 2012.

(3)

Spin-Off related adjustments include; (a) pension adjustment defined as the estimated benefit plan expense associated with certain benefit plan obligations transferred to Kraft Foods Group in the Spin-Off; and (b) interest adjustment defined as the interest expense associated with the assumed reduction of the $6 billion of our debt on January 1, 2012, from the utilization of funds received from Kraft Foods Group in 2012 in connection with our Spin-Off capitalization plan. Note during the year ended December 31, 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 paid on January 1, 2012 to ensure consistency of our assumption and related results.

(4)

Restructuring Program costs represent restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing-related costs.  Restructuring Program costs for the three months ended June 30, 2013, were $55 million, or $40 million after-tax as compared to $29 million, or $19 million after-tax for the three months ended June 30, 2012.

(5)

Includes the favorable foreign currency impact on Mondelez International foreign denominated debt and interest expense due to the strength of the U.S. dollar.

(6)

During the three months ended June 30, 2013, the company completed two divestitures, a salty snack business in Turkey and a confectionery business in South Africa.  A pre-tax gain of $6 million (or an after-tax gain of $45 million) was recorded in connection with these divestitures.


 

Mondelez International Inc. and Subsidiaries

                        Condensed Consolidated Statements of Earnings

Schedule 8

For the Six Months Ended June 30, 

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








As Reported/Revised (GAAP) 



2013

2012

% Change
Fav / (Unfav)






Net revenues

$17,339

$17,194

0.8%






Cost of sales

10,866

10,788

(0.7)%







Gross profit

6,473

6,406

1.0%







Gross profit margin

37.3%

37.3%







Selling, general and administrative expenses

4,599

4,386

(4.9)%






Asset impairment and exit costs

92

71

(29.6)%






Gains on acquisition and divestitures, net

(28)

-

100.0%






Acquisition Related Costs

2

-

(100.0)%






Amortization of intangibles

109

109

-







Operating income

1,699

1,840

(7.7)%







Operating income margin

9.8%

10.7%







Interest and other expense, net

514

831

38.1%







Earnings from continuing operations before income taxes

1,185

1,009

17.4%






(Benefit)/Provision for income taxes

(6)

180

100.0+%






Effective tax rate

-0.5%

17.8%








Earnings from continuing operations

$     1,191

$        829

43.7%






Earnings from discontinued operations, net of income taxes

-

1,024

(100.0)%







Net earnings

$     1,191

$     1,853

(35.7)%






Noncontrolling interest

7

11

36.4%







Net earnings attributable to Mondelez International

$     1,184

$     1,842

(35.7)%






Per share data:





Basic earnings per share attributable to Mondelez International:





-  Continuing operations

$       0.66

$       0.46

43.5%


-  Discontinued operations

-

0.58

(100.0)%


Net earnings attributable to Mondelez International

$       0.66

$       1.04

(36.5)%







Diluted earnings per share attributable to Mondelez International:





-  Continuing operations

$       0.66

$       0.46

43.5%


-  Discontinued operations

-

0.57

(100.0)%


Net earnings attributable to Mondelez International

$       0.66

$       1.03

(35.9)%






Average shares outstanding:





Basic

1,786

1,775

(0.6)%


Diluted

1,800

1,785

(0.8)%

 



Mondelez International, Inc. and Subsidiaries


                      Reconciliation of GAAP to Non-GAAP Measures

Schedule 9


Net Revenues


For the Six Months Ended June 30,


($ in millions)  (Unaudited)






























As Reported/Revised (GAAP)

Impact of Divestitures

Impact of

Acquisitions (1)

Impact of Currency

Organic

(Non-GAAP)




2013


















Latin America

$    2,737

$            -

$             -

$    274

$       3,011




Asia Pacific

2,607

-

-

52

2,659




Eastern Europe, Middle East & Africa

1,902

(20)

(36)

66

1,912




Europe

6,731

-

-

(37)

6,694




North America

3,362

-

-

5

3,367













Mondelez International

$  17,339

$         (20)

$          (36)

$    360

$     17,643






















2012


















Latin America

$    2,710

$            -

$             -

$         -

$       2,710




Asia Pacific

2,542

-

-

-

2,542




Eastern Europe, Middle East & Africa

1,814

(42)

-

-

1,772




Europe

6,809

(127)

-

-

6,682




North America

3,319

(30)

-

-

3,289













Mondelez International

$  17,194

$       (199)

$             -

$         -

$     16,995




























Organic Growth Drivers








Vol / Mix

Price


% Change


















Latin America

1.0%

         -   pp

          -   pp

10.1pp

11.1%

0.6pp

10.5pp


Asia Pacific

2.6%

-

-

2.0

4.6%

3.8

0.8


Eastern Europe, Middle East & Africa

4.9%

1.3

(2.0)

3.7

7.9%

10.0

(2.1)


Europe

(1.1)%

1.8

-

(0.5)

0.2%

2.6

(2.4)


North America

1.3%

0.9

-

0.2

2.4%

2.1

0.3











Mondelez International

0.8%

1.1pp

(0.2)pp

2.1pp

3.8%

3.1pp

0.7pp



















(1)

On February 22, 2013, the company acquired the remaining interest in a biscuit operation in Morocco, which is now a wholly-owned subsidiary within the EEMEA segment.

 



Mondelez International, Inc. and Subsidiaries



Reconciliation of GAAP to Non-GAAP Measures

Schedule 10


Operating Income



For the Six Months Ended June 30,



($ in millions)  (Unaudited)












































% Change



As Reported/Revised (GAAP)

Integration

Program and

other Acquisition

Integration costs (1)

Spin-Off Costs

and Related

Adjustments (2)

2012-2014 Restructuring Program costs (3)

Operating Income from Divestitures

Gains on

Acquisition and

Divestitures, net (4)

Acquisition-related costs

As

Adjusted

(Non-GAAP)

Impact of Currency

As

Adjusted

Constant

FX (Non-GAAP)

As Reported (GAAP)

As

Adjusted
(Non-GAAP)

As

Adjusted

Constant

FX (Non-GAAP)


2013






























Latin America

$       254

$                      8

$                  -

$                 -

$             -

$                       -

$              -

$          262

$      98

$          360

(31.2)%

(32.6)%

(7.5)%


Asia Pacific

318

12

-

-

-

-

-

330

7

337

(2.8)%

(4.6)%

(2.6)%


Eastern Europe, Middle East & Africa

173

31

-

4

7

-

-

215

11

226

(38.0)%

(25.3)%

(21.5)%


Europe

775

21

-

41

-

-

-

837

(8)

829

(9.7)%

(3.6)%

(4.5)%


North America

364

1

-

53

-

-

-

418

-

418

9.6%

(0.2)%

(0.2)%


Unrealized G/(L) on Hedging Activities

43

-

-

-

-

-

-

43

-

43

4.9%

4.9%

4.9%


General corporate expenses

(145)

1

24

1

-

-

-

(119)

(4)

(123)

43.6%

(3.5)%

(7.0)%


Amortization of intangibles

(109)

-

-

-

-

-

-

(109)

2

(107)

-

-

1.8%


Gains on acquisition and divestitures, net

28

-

-

-

-

(28)

-

-

-

-

100.0%

-

-


Acquisition-related costs

(2)

-

-

-

-

-

2

-

-

-

(100.0)%

-

-

















Mondelez International

$    1,699

$                    74

$               24

$              99

$            7

$                   (28)

$             2

$       1,877

$    106

$       1,983

(7.7)%

(11.8)%

(6.8)%
































2012






























Latin America

$       369

$                    15

$                  -

$                5

$             -

$                       -

$              -

$          389

$         -

$          389





Asia Pacific

327

19

-

-

-

-

-

346

-

346





Eastern Europe, Middle East & Africa

279

4

-

-

5

-

-

288

-

288





Europe

858

37

-

-

(27)

-

-

868

-

868





North America

332

1

45

46

(5)

-

-

419

-

419





Unrealized G/(L) on Hedging Activities

41

-

-

-

-

-

-

41

-

41





General corporate expenses

(257)

2

140

-

-

-

-

(115)

-

(115)





Amortization of intangibles

(109)

-

-

-

-

-

-

(109)

-

(109)





Gains on acquisition and divestitures, net

-

-

-

-

-

-

-

-

-

-





Acquisition-related costs

-

-

-

-

-

-

-

-

-

-




















Mondelez International

$    1,840

$                    78

$             185

$              51

$          (27)

$                       -

$              -

$       2,127

$         -

$       2,127


































(1)

Integration Program costs are defined as the costs associated with combining the Mondelez International and Cadbury businesses, and are separate from those costs associated with the acquisition.

(2)

Spin-Off Costs represent 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 Mondelez International business.  Spin-Off related adjustments include the pension adjustment defined as the estimated benefit plan expense associated with certain benefit plan obligations transferred to Kraft Foods Group in the Spin-Off. 

(3)

Restructuring Program costs represent restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing-related costs.

(4)

On February 22, 2013, the company acquired the remaining interest in a biscuit operation in Morocco, which is now a wholly-owned subsidiary within the EEMEA segment.  A pre-tax gain of $22 million was recorded in connection with the acquisition.  In addition, during the three months ended June 30, 2013, the company completed two divestitures, a salty snack business in Turkey and a confectionery business in South Africa.  A pre-tax gain of $6 million was recorded in connection with these divestitures.


 




Mondelez International, Inc. and Subsidiaries



                      Reconciliation of GAAP to Non-GAAP Measures

Schedule 11



Partial Condensed Consolidated Statements of Earnings



For the Six Months Ended June 30,



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



















As Reported/Revised (GAAP)

Integration

Program and

other Acquisition

Integration costs (1)

Spin-Off

Costs (2)

Spin-Off

Pension

Adjustment (2)

Spin-Off

Interest

Adjustment (2)

2012-2014 Restructuring Program Costs (3)

Net Earnings from Divestitures

Gains on

Acquisition and

Divestitures, net (4)

Acquisition-related costs

As Adjusted

(Non-GAAP)
















2013
















Operating income

1,699

74

24

-

-

99

7

(28)

2

1,877


















Operating income margin

9.8%









10.8%

















Interest and other expense, net

514

-

-

-

-

-

-

-

(5)

509


















Earnings from continuing operations before income taxes

1,185

74

24

-

-

99

7

(28)

7

1,368

















Provision for income taxes

(6)

15

10

-

-

26

2

39

(7)

79

















Effective tax rate

(0.5)%









5.8%


















Earnings from continuing operations

$    1,191

$                    59

$     14

$                -

$                -

$               73

$                   5

$               (67)

$            14

$       1,289

















Noncontrolling interest

7

-

-

-

-

-

-

-

-

7


















Net earnings attributable to Mondelez International from continuing operations

$    1,184

$                    59

$     14

$                -

$                -

$               73

$                   5

$               (67)

$            14

$       1,282

















Per share data:














Diluted earnings per share attributable to Mondelez International:














-  Continuing operations

$      0.66

$                 0.03

$  0.01

$                -

$                -

$            0.04

$                    -

$             (0.04)

$         0.01

$         0.71

















Average shares outstanding:














Diluted

1,800





















































2012
















Operating income

1,840

78

139

46

-

51

(27)

-

-

2,127


















Operating income margin

10.7%









12.5%

















Interest and other expense, net

831

-

(162)

-

(109)

-

-

-

-

560


















Earnings from continuing operations before income taxes

1,009

78

301

46

109

51

(27)

-

-

1,567

















Provision for income taxes

180

5

99

18

40

18

(6)

-

-

354

















Effective tax rate

17.8%









22.6%


















Earnings from continuing operations

$       829

$                    73

$   202

$             28

$             69

$               33

$                (21)

$                   -

$              -

$       1,213

















Noncontrolling interest

11

-

-

-

-

-

-

-

-

11


















Net earnings attributable to Mondelez International from continuing operations

$       818

$                    73

$   202

$             28

$             69

$               33

$                (21)

$                   -

$              -

$       1,202

















Per share data:














Diluted earnings per share attributable to Mondelez International:














-  Continuing operations

$      0.46

$                 0.04

$  0.11

$          0.01

$          0.04

$            0.02

$             (0.01)

$                 -

$              -

$         0.67

















Average shares outstanding:














Diluted

1,785
























(1)

Integration Program costs are defined as the costs associated with combining the Mondelez International and Cadbury businesses, and are separate from those costs associated with the acquisition.

(2)

Spin-Off Costs represent 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 Mondelez International business. Spin-Off related adjustments include: (a) a pension adjustment defined as the estimated benefit plan expense associated with certain benefit plan obligations transferred to Kraft Foods Group in the Spin-Off; and (b) an interest adjustment defined as the interest expense associated with the assumed reduction of the $6 billion of our debt on January 1, 2012, from the utilization of funds received from Kraft Foods Group in 2012 in connection with our Spin-Off capitalization plan.  Note during the year ended December 31, 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 paid on January 1, 2012 to ensure consistency of our assumption and related results.

(3)

Restructuring Program costs represent restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing-related costs.

(4)

On February 22, 2013, the company acquired the remaining interest in a biscuit operation in Morocco, which is now a wholly-owned subsidiary within the EEMEA segment. A pre-tax gain of $22 million was recorded in connection with the acquisition.  In addition, during the three months ended June 30, 2013, the company completed two divestitures, a salty snack business in Turkey and a confectionery business in South Africa.  A pre-tax gain of $6 million (or an after-tax gain of $45 million) was recorded in connection with these divestitures.

 

 





Mondelez International Inc. and Subsidiaries




                          Reconciliation of GAAP to Non-GAAP Measures

Schedule 12




Operating Income




For the Six Months Ended June 30,




($ in millions, except percentages) (Unaudited)





























































2013




2012




As

Reported (GAAP)

Integration

Program and

other Acquisition

Integration costs (1)

Spin-Off Costs

and Related

Adjustments (2)

2012-2014

Restructuring

Program costs (3)

Operating Income from Divestitures

Gains on

Acquisition and

Divestitures, net (4)

Acquisition-related costs

As

Adjusted 

(Non-GAAP)


As

Revised (GAAP)


Integration

Program and

other Acquisition

Integration costs (1)

Spin-Off Costs

and Related

Adjustments (2)

2012-2014

Restructuring

Program costs (3)

Operating Income from Divestitures

As

Adjusted

(Non-GAAP)


Mondelez International



















Operating Income

$        1,699

$                 74

$            24

$               99

$         7

$               (28)

$          2

$       1,877


$      1,840


$                 78

$          185

$               51

$       (27)

$       2,127



Growth vs. Prior Year

(7.7)%







(11.8)%






























Operating Income Margin

9.8%







10.8%


10.7%






12.5%








































Latin America



















Segment Operating Income

$          254

$                   8

$               -

$                  -

$          -

$                   -

$           -

$          262


$        369


$                    15

$                  -

$                    5

$             -

$          389



Growth vs. Prior Year

(31.2)%







(32.6)%






























Segment Operating Income Margin

9.3%







9.6%


13.6%






14.4%








































Asia Pacific



















Segment Operating Income

$          318

$                    12

$                  -

$                     -

$             -

$                      -

$              -

$          330


$        327


$                    19

$                  -

$                     -

$             -

$          346



Growth vs. Prior Year

(2.8)%







(4.6)%






























Segment Operating Income Margin

12.2%







12.7%


12.9%






13.6%








































Eastern Europe, Middle East & Africa



















Segment Operating Income

$          173

$                    31

$                  -

$                    4

$            7

$                      -

$              -

$          215


$        279


$                      4

$                  -

$                     -

$            5

$          288



Growth vs. Prior Year

(38.0)%







(25.3)%






























Segment Operating Income Margin

9.1%







11.4%


15.4%






16.3%








































Europe



















Segment Operating Income

$          775

$                    21

$                  -

$                  41

$             -

$                      -

$              -

$          837


$        858


$                    37

$                  -

$                     -

$          (27)

$          868



Growth vs. Prior Year

(9.7)%







(3.6)%






























Segment Operating Income Margin

11.5%







12.4%


12.6%






13.0%








































North America



















Segment Operating Income

$          364

$                      1

$                  -

$                  53

$             -

$                      -

$              -

$          418


$        332


$                      1

$               45

$                  46

$           (5)

$          419



Growth vs. Prior Year

9.6%







(0.2)%






























Segment Operating Income Margin

10.8%







12.4%


10.0%






12.7%


























































(1)

Integration Program costs are defined as the costs associated with combining the Mondelez International and Cadbury businesses, and are separate from those costs associated with the acquisition.

(2)

Spin-Off Costs represent 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 Mondelēe International business.  Spin-Off related adjustments include the pension adjustment defined as the estimated benefit plan expense associated with certain benefit plan obligations transferred to Kraft Foods Group in the Spin-Off.

(3)

Restructuring Program costs represent restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing-related costs.

(4)

On February 22, 2013, the company acquired the remaining interest in a biscuit operation in Morocco, which is now a wholly-owned subsidiary within the EEMEA segment.  A pre-tax gain of $22 million was recorded in connection with the acquisition.  In addition, during the three months ended June 30, 2013, the company completed two divestitures, a salty snack business in Turkey and a confectionery business in South Africa.  A pre-tax gain of $6 million was recorded in connection with these divestitures.

 

 


Mondelez International Inc. and Subsidiaries

                            Reconciliation of GAAP to Non-GAAP Measures

Schedule 13

Gross Profit

For the Six Months Ended June 30,

($ in millions)  (Unaudited)





































% Growth



As Reported/Revised (GAAP)

Integration

Program and

other Acquisition

Integration costs (1)

Spin-Off Costs

and Related

Adjustments (2)

2012-2014

Restructuring

Program costs (3)

Impact of Divestitures

As

Adjusted
(Non-GAAP)

Impact of Currency

As

Adjusted

Constant

FX (Non-GAAP)

As Reported (GAAP)

As

Adjusted 

(Non-GAAP)

As

Adjusted

Constant

FX  (Non-GAAP)


2013













Net Revenues

$17,339

$                   -

$               -

$                  -

$      (20)

$  17,319




















Gross Profit

$  6,473

$                 25

$               -

$                  -

$       (3)

$    6,495

$ 126

$       6,621

1.0%

1.7%

3.7%















Gross Profit Margin

37.3%





37.5%




















2012













Net Revenues

$17,194

$                   -

$               -

$                  -

$    (199)

$  16,995




















Gross Profit

$  6,406

$                   8

$            22

$                (1)

$      (50)

$    6,385




















Gross Profit Margin

37.3%





37.6%



















(1)

Integration Program costs are defined as the costs associated with combining the Mondelez International and Cadbury businesses, and are separate from those costs associated with the acquisition.

(2)

Spin-Off Costs represent 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 Mondelez International business.  Spin-Off related adjustments include the pension adjustment defined as the estimated benefit plan expense associated with certain benefit plan obligations transferred to Kraft Foods Group in the Spin-Off.

(3)

Restructuring Program costs represent restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing-related costs.

 

 


Mondelez International Inc. and Subsidiaries


Reconciliation of GAAP to Non-GAAP Information

Schedule 14

Diluted EPS


(Unaudited)















Diluted EPS

% Growth







Diluted EPS Attributable to Mondelez International for the Six





Months Ended June 30, 2012 (GAAP)


$         1.03



Discontinued operations, net of income taxes


0.57



Diluted EPS Attributable to Mondelez International from continuing



operations for the Six Months Ended June 30, 2012 (GAAP)


0.46



Integration Program and other acquisition integration costs (1)


0.04



Spin-Off Costs (2)


0.11



Spin-Off related adjustments (3)


0.05



2012-2014 Restructuring Program costs (4)


0.02



Net earnings from divestitures


(0.01)



Adjusted EPS for the Six Months Ended 





June 30, 2012 (Non-GAAP)


0.67



Decrease in operations


(0.04)



Gain on sale of property in 2012


(0.03)



Intangible asset impairment charge in 2012


0.01



Lower interest and other expense, net


0.02



Changes in taxes


0.13



Adjusted EPS for the Six Months Ended 





June 30, 2013 (Constant Currency)


0.76

13.4%


Unfavorable foreign currency (5)


(0.05)



Adjusted EPS for the Six Months Ended 





June 30, 2013 (Non-GAAP)


0.71

6.0%


Integration Program and other acquisition integration costs (1)


(0.03)



Spin-Off Costs (2)


(0.01)



2012-2014 Restructuring Program costs (4)


(0.04)



Net earnings from divestitures


-



Gains on acquisition and divestitures, net (6)


0.04



Acquisition-related costs


(0.01)



Diluted EPS Attributable to Mondelez International from continuing



operations for the Six Months Ended June 30, 2013 (GAAP)


$         0.66

43.5%






(1)

Integration Program costs are defined as the costs associated with combining the Mondelez International and Cadbury businesses, and are separate from those costs associated with the acquisition. Integration Program costs were $73 million, or $59 million after-tax including certain tax costs associated with the integration of Cadbury, for the six months ended June 30, 2013, as compared to $78 million, or $73 million after-tax for the six months ended June 30, 2012.  We also incurred $1 million of integraton costs during the six months ended June 30, 2013, associated with the acquisition of the biscuit operation in Morocco.

(2)

Spin-Off Costs represent 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 Mondelez International business. Spin-Off Costs for the six months ended June 30, 2013 were $24 million, or $14 million after-tax, as compared to $301 million or $202 million after-tax for the six months ended June 30, 2012.

(3)

Spin-Off related adjustments include; (a) pension adjustment defined as the estimated benefit plan expense associated with certain benefit plan obligations transferred to Kraft Foods Group in the Spin-Off; and (b) interest adjustment defined as the interest expense associated with the assumed reduction of the $6 billion of our debt on January 1, 2012, from the utilization of funds received from Kraft Foods Group in 2012 in connection with our Spin-Off capitalization plan. Note during the year ended December 31, 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 paid on January 1, 2012 to ensure consistency of our assumption and related results.

(4)

Restructuring Program costs represent restructuring and related implementation costs reflecting primarily severance, asset disposals and other manufacturing-related costs. Restructuring Program costs for the six months ended June 30, 2013, were $99 million, or $73 million after-tax as compared to $51 million, or $33 million after-tax for the six months ended June 30, 2012.

(5)

Includes the favorable foreign currency impact on Mondelez International foreign denominated debt and interest expense due to the strength of the U.S. dollar.

(6)

On February 22, 2013, the company acquired the remaining interest in a biscuit operation in Morocco, which is now a wholly-owned subsidiary within the EEMEA segment. A pre-tax gain of $28 million was recorded in connection with the acquisition.  In addition, during the three months ended June 30, 2013, the company completed two divestitures, a salty snack business in Turkey and a confectionery business in South Africa.  A pre-tax gain of $6 million (or an after-tax gain of $45 million) was recorded in connection with these divestitures.

 

 

Mondelez International Inc. and Subsidiaries

                               Condensed Consolidated Balance Sheets

Schedule 15

($ in millions)  (Unaudited)





June 30,

December 31,


2013

2012

ASSETS



Cash and cash equivalents

$            2,476

$            4,475

Receivables, net

5,989

6,129

Inventories, net

3,937

3,741

Other current assets

1,336

1,277

Property, plant and equipment, net

9,703

10,010

Goodwill

25,181

25,801

Intangible assets, net

21,869

22,552

Other assets

1,332

1,493




      TOTAL ASSETS

$          71,823

$          75,478




LIABILITIES AND EQUITY



Short-term borrowings

$               756

$               274

Current portion of long-term debt

2,319

3,577

Accounts payable

4,316

4,642

Other current liabilities

5,742

6,380

Long-term debt

14,986

15,574

Deferred income taxes

6,084

6,302

Accrued pension costs

2,720

2,885

Accrued postretirement health care costs

458

451

Other liabilities

2,893

3,038




      TOTAL LIABILITIES

40,274

43,123




      TOTAL EQUITY

31,549

32,355




      TOTAL LIABILITIES AND EQUITY

$          71,823

$          75,478

 

 

SOURCE Mondelez International, Inc.



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