Company Description

Mondelez International, Inc., through its subsidiaries, manufactures and

markets snack food and beverage products. The companys portfolio includes
nine brands, including Oreo, Nabisco, and LU biscuits; Milka, Cadbury Dairy
Milk, and Cadbury chocolates; Trident gum; Jacobs coffee; and Tang
powdered beverage. In addition, its portfolio of snack foods and
refreshments includes 52 brands. Its brands span five consumer sectors,
including biscuits (including cookies, crackers, and salted snacks); chocolate;
gum and candy; beverages; and cheese and grocery. Segments Effective
January 2013, the companys operations and segments would be reorganized
into five operating segments: Asia Pacific; Eastern Europe, Middle East &
Africa; Europe; Latin America; and North America. Distribution and Marketing
the Companys products are sold to supermarket chains, wholesalers,
supercenters, club stores, mass merchandisers, distributors, convenience
stores, gasoline stations, drug stores, value stores, and other retail food
outlets. It distributes its products through direct store delivery, companyowned and satellite warehouses, distribution centers, and other facilities. The
company also uses the services of independent sales offices and agents in
some of its international locations.
Foreign Operations
The Company sells its products to consumers in approximately 165
countries. As of December 31, 2012, it had operations in approximately 80
countries. Dispositions In 2012, the company completed the spin-off of its
former North American grocery business, Kraft Foods Group, Inc. (Kraft Foods
Group) by distributing 100% of the outstanding shares of common stock of
Kraft Foods Group to holders of its common stock. In connection with the
divestiture of Kraft Foods Group, the company divested U.S. Beverages, U.S.
Cheese, U.S. Convenient Meals, and U.S. Grocery segments. Strategy The
Companys business strategies are to unleash the power of its people;
transform snacking; revolutionize selling; drive efficiency to fuel growth; and
protect the well-being of its planet.
Research and Development
The Companys research and development expense was $462 million in
2012. Regulation Throughout the countries in which the company does
business, regulators are continually adopting new laws and implementing
new regulations that affect its business and operations, such as the
European Commissions EU Health Claim Regulation, effective December
2012, which limits the number of health claims that might be made by food

companies about their products and a major reform of the EU legal

framework related to the protection of personal data, and in the U.S., the
Food Safety Modernization Act, which provides additional food safety
authority to the FDA. Environmental Regulation As of December 31, 2012,
the companys subsidiaries were involved in one active proceeding in the
U.S. under a state equivalent of the Comprehensive Environmental
Response, Compensation, and Liability Act related to its current operations.

Financials
Mondelez is one of the worlds largest snack companies with global net
revenues of $35.3 billion and earnings from continuing operations of $2.3
billion in 2013. On October 1, 2012, following the spin-off of their North
American grocery operations to their shareholders, Mondelez changed their
name from Kraft Foods Inc. to Mondelez International, Inc. to reflect their new
standalone global snack food and beverage business and their vision to
create a more delicious world in which to live.
Mondelez manufacture and market delicious food and beverage products for
consumers in approximately 165 countries around the world. Their portfolio
includes nine billion dollar brands Oreo, Nabisco and LU biscuits; Milk,
Cadbury
Dairy
Milk and Cadbury chocolates; Trident gum; Jacobs coffee
and Tang powdered beverage. Their portfolio of snack foods and
refreshments also includes 53 brands that each generated annual revenues
of $100 million or more in 2013.
Mondelez are proud members of the NASDAQ 100 and Standard & Poors
500. Their Common Stock trades on The NASDAQ Global Select Market under
the symbol MDLZ. Mondelez have been incorporated in the Commonwealth
of Virginia since 2000.
Mondelez have also been recognized for their ongoing economic,
environmental and social contributions and this year Mondelez are listed
again on the Dow Jones Sustainability Index (DJSI) World and North
American Indices. The DJSI selects the top 10% of global companies and top
20% of North American companies based on an extensive review of financial
and sustainability programs within each industry. Mondelez also participate
in the Carbon Disclosure Project Climate and Water forums and continue to
disclose and work to reduce their carbon and water footprints. Mondelez are
honored and committed to continue this and other related work in the areas
of sustainable resources and agriculture, mindful snacking, community
partnerships and safety of their products and people.
Year over year, Mondelez International, Inc. has seen revenues remain
relatively flat ($35.0B USD to $35.3BUSD), though the company was able to

grow net income from $3.1B USD to $3.9B USD. A reduction in the
percentage of sales devoted to selling, general and administrative costs from
24.54% to 23.74% was a key component in the bottom line growth in the
face of flat revenues.

Currency
in
As of:
Millions of US Dollars

Dec
31
2010
Restat
ed

Dec
31
2011
Restat
ed

Dec
31
2012
Restat
ed

Dec
31
2013

31,489 35,810 35,015 35,299

.0
.0
.0
.0

Revenues

31,48
9.0

TOTAL REVENUES

35,81
0.0

35,01
5.0

35,29
9.0

19,617 22,710 21,939 22,189

.0
.0
.0
.0

Cost Of Goods Sold

11,87
2.0

13,10
0.0

13,07
6.0

13,11
0.0

Selling General & Admin Expenses, Total

8,276.
0

8,815.
0

8,591.
0

8,381.
0

Depreciation & Amortization, Total

210.0

225.0

217.0

217.0

GROSS PROFIT

OTHER
TOTAL

OPERATING

EXPENSES, 8,486. 9,040. 8,808. 8,598.

0
0
0
0

OPERATING INCOME

Interest Expense

NET INTEREST EXPENSE

3,386. 4,060. 4,268. 4,512.

0
0
0
0
1,540.
0

1,540.
0

1,177.
0

1,017.
0

1,540. 1,540. 1,177. 1,017.

0
0
0
0

Currency Exchange Gains (Loss)

11.0

37.0

7.0

-27.0

Other Non-Operating Income (Expenses)

10.0

-115.0

-84.0

82.0

EBT, EXCLUDING UNUSUAL ITEMS

1,867. 2,442. 3,014. 3,550.

0
0
0
0

Merger & Restructuring Charges

1,141.
0

-516.0

-294.0

-514.0

Gain (Loss) On Sale Of Investments

--

--

107.0

30.0

Other Unusual Items, Total

--

-46.0

1,053.
0

-674.0

Other Unusual Items

--

-46.0

1,053.
0

-674.0

726.0

1,880. 1,774. 2,392.

0
0
0

Income Tax Expense

54.0

116.0

168.0

60.0

Minority Interest In Earnings

-25.0

-20.0

-27.0

-20.0

Earnings From Continuing Operations

672.0

1,764.
0

1,606.
0

2,332.
0

EBT, INCLUDING UNUSUAL ITEMS

EARNINGS FROM
OPERATIONS

DISCOUNTINUED 3,467. 1,810. 1,488. 1,603.

0
0
0
0
4,114. 3,554. 3,067. 3,915.
0
0
0
0

NET INCOME
NET
INCOME
TO
INCLUDING EXTRA ITEMS

COMMON 4,114. 3,554. 3,067. 3,915.

0
0
0
0

NET
INCOME
TO
EXCLUDING EXTRA ITEMS

COMMON

647.0

1,744. 1,579. 2,312.

0
0
0

Significant Highlights
Net revenues increased 0.8% to $35.3 billion in 2013 and decreased
2.2% to $35.0 billion in 2012.
Organic Net Revenues increased 3.9% to $35.9 billion in 2013 and
increased 4.4% to $36.3 billion in 2012. Organic Net Revenues is a
non-GAAP financial measure Mondelez use to evaluate their underlying
results (see the definition of Organic Net Revenues and their
reconciliation
with
net
revenues
within Non-GAAP
Financial
Measures appearing later in this section). Organic Net Revenues
excludes the impact of currency, acquisitions, divestitures and
accounting calendar changes.
Diluted EPS attributable to Mondelez International increased 28.1% to

$2.19 in 2013 and decreased 14.9% to $1.71 in 2012. Excluding the

results of discontinued operations, their diluted EPS attributable to
Mondelez International from continuing operations increased 46.6% to
$1.29 in 2013 and decreased 11.1% to $0.88 in 2012.
Adjusted EPS increased 7.1% to $1.51 in 2013 and increased 0.7% to
$1.41 in 2012. On a constant currency basis, Adjusted EPS increased
13.5% to $1.60 in 2013 and increased 5.0% to $1.47 in 2012. Adjusted
EPS is a non-GAAP financial measure Mondelez use to evaluate their
underlying results (see the definition of Adjusted EPS and their
reconciliation with diluted EPS within Non-GAAP Financial Measures
appearing later in this section). Adjusted EPS includes diluted EPS
attributable to Mondelez International from continuing operations and
excludes the following items discussed below: Spin-Off Costs and
related costs, 2012-2014 Restructuring Program costs, Integration
Program costs and other acquisition integration costs, a benefit from
the resolution of a Cadbury acquisition-related indemnification, the
loss on debt extinguishment and related expenses, net gain on
acquisition and divestitures, acquisition-related costs and net earnings
from divestitures. Mondelez also evaluate Adjusted EPS on a constant
currency basis.
On February 6, 2014, Mondelez completed a cash tender offer and
retired $1.6 billion of their long-term U.S. dollar debt. In connection
with retiring this debt, during the first quarter of 2014, Mondelez
recorded a $495 million loss on debt extinguishment and related
expenses related to the amount Mondelez paid to retire the debt in
excess of its carrying value and from recognizing unamortized
discounts and deferred financing costs in earnings at the time of the
debt extinguishment.
On January 16, 2014, Mondelez issued $3.0 billion of U.S. dollar notes
that generated approximately $3.0 billion of net cash proceeds, which
were used in part to fund the February 2014 tender offer and for other
general corporate purposes. In January 2014, Mondelez also recorded
approximately $18 million of discounts and deferred financing costs,
which will be amortized into interest expense over the life of the notes.
On December 18, 2013, Mondelez completed a cash tender offer and
retired $3.4 billion of their long-term U.S. dollar debt. Mondelez
recorded a $612 million loss on debt extinguishment and related
expenses related to the amount Mondelez paid to retire the debt in
excess of its carrying value and from recognizing unamortized
discounts and deferred financing costs in earnings at the time of the
debt extinguishment.

 On December 11, 2013, Mondelez issued 2.4 billion of Eurodenominated notes, or approximately $3.3 billion in U.S. dollars as of
December 31,
2013.
Mondelez
received
net
proceeds
of 2,381 million, or $3,239 million in U.S. dollars, which were used to
partially fund the December 2013 tender offer. Mondelez also recorded
approximately $27 million of discounts and deferred financing costs,
which will be amortized into interest expense over the life of the notes.
During 2013, their Board of Directors authorized the repurchase of
$7.7 billion of their Common Stock under a share repurchase program.
During 2013, Mondelez repurchased $2.7 billion, or 82.8 million shares
of Common Stock at an average cost of $33.09 per share. The
repurchases include $1.5 billion of shares acquired through an
accelerated share repurchase program Mondelez initiated in December
2013. All share repurchases were funded through available cash,
including cash from the resolution of the Starbucks arbitration
described below, and commercial paper issuances. As of December 31,
2013, Mondelez have $5.0 billion in remaining share repurchase
capacity.
In December 2013, a dispute over a license and supply agreement
between Starbucks Coffee Company (Starbucks) and Kraft Foods
Group was resolved when an independent arbitrator issued a decision
and Final Award that resulted in Starbucks paying $2.8 billion for its
unilateral termination of the agreement. The dispute arose within the
Kraft Foods Group discontinued operation and was directed to
Mondelez International as part of the Spin-Off recapitalization plans.
The net $1.6 billion after-tax gain on the resolution of the arbitration
was recorded in earnings from discontinued operations in the fourth
quarter of 2013. See Item 3, Legal Proceedings , and Notes
2, Divestitures
and
Acquisition ,
and
12, Commitments
and
Contingencies , for additional information.
On October 1, 2013, $1 billion of their 5.125% U.S. dollar notes and
$800 million of their 5.250% U.S. dollar notes matured. The notes and
accrued interest to date were paid with cash on hand and the issuance
of commercial paper.
In August 2013, Mondelez resolved an outstanding Cadbury-acquisition
related indemnification and recorded a favorable pre-tax earnings
impact of $385 million ($363 million net of tax). See Items affecting
Comparability of Financial Results and Note 12, Commitments and
Contingencies , for more information.
On May 8, 2013, $1 billion of their 2.625% U.S. dollar notes matured.

The notes and accrued interest to date were paid with cash on hand
and the issuance of commercial paper.
On February 11, 2013, $750 million of their 6.00% U.S. dollar notes
matured and were paid with cash on hand.
In February 2013, Mondelez recorded a $54 million unfavorable foreign
currency charge related to the devaluation of their net monetary
assets in Venezuela. Mondelez also incurred net unfavorable
devaluation-related foreign currency impacts within their pre-tax
earnings of $67 million during the year ended December 31, 2013
related to translating the earnings of their Venezuelan subsidiary to
the U.S. dollar at the new exchange rate. As of December 31, 2013,
their net monetary assets denominated in the Venezuelan bolivar were
$257 million. Should the bolivar be devalued further, it would result in
a charge to their net earnings in the period of devaluation
Supply Chain
The five key elements of the transformation program of Mondelez after it
split from Kraft, and the financial results the Mondelez expects to achieve
from the transformation strategy are shown below. Those improvements are
also expected to increase the company's operating income percent by a
whopping 5 percentage points by 2016, from roughly 14% currently to 19%,
an increase of about 30%.

As can be seen in the chart below, Mondelez plans to expand its

manufacturing capacity by 24% by 2016, and another 28% by 2020, a
substantial increase.