Kraft 2013 Annual Report Download - page 33

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31
Other Businesses
For the Years Ended
December 28,
2013 December 29,
2012 $ Change % Change
(in millions)
Net revenues $ 1,835 $ 1,903 $ (68) (3.6)%
Organic Net Revenues(1) 1,771 1,808 (37) (2.0)%
Segment operating income 227 180 47 26.1 %
For the Years Ended
December 29,
2012 December 31,
2011 $ Change % Change
(in millions)
Net revenues $ 1,903 $ 1,988 $ (85) (4.3)%
Organic Net Revenues(1) 1,811 1,868 (57) (3.1)%
Segment operating income 180 182 (2) (1.1)%
(1) See the Non-GAAP Financial Measures section at the end of this item.
2013 compared with 2012:
Net revenues decreased 3.6%, which includes the impacts of lower sales to International (1.1 pp) and
unfavorable foreign currency (0.5 pp). Organic Net Revenues decreased 2.0%, due to unfavorable volume/mix
(3.5 pp, including a negative impact of approximately 6.2 pp from product line pruning), partially offset by higher
net pricing (1.5 pp). Unfavorable volume/mix was due primarily to Foodservice product line pruning, partially offset
by higher shipments in other international businesses. Higher net pricing was driven primarily by commodity cost-
driven pricing in Foodservice.
Segment operating income increased 26.1%, driven primarily by favorable pricing net of commodity costs, lower
manufacturing costs driven by net productivity, lower marketing spending, and favorable volume/mix due to growth
in other international businesses.
2012 compared with 2011:
Net revenues decreased 4.3%, which includes the impact of the 53rd week of shipments in 2011 (1.0 pp). Organic
Net Revenues decreased 3.1%, due primarily to unfavorable volume/mix (6.3 pp, including a negative impact of
approximately 4.4 pp from product line pruning), partially offset by higher net pricing (3.2 pp). Unfavorable volume/
mix was due primarily to Foodservice product line pruning. Higher net pricing was driven primarily by commodity
cost-driven pricing in Foodservice and other international businesses.
Segment operating income decreased 1.1%, due primarily to unfavorable volume/mix, costs incurred for the
Restructuring Program, and higher manufacturing costs despite net productivity, partially offset by favorable net
pricing.
Critical Accounting Policies
Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements includes a summary of
the significant accounting policies we used to prepare our consolidated financial statements. We have discussed
the selection and disclosure of our critical accounting policies and estimates with our Audit Committee. The
following is a review of the more significant assumptions and estimates, as well as the accounting policies we used
to prepare our consolidated financial statements.
Principles of Consolidation:
The consolidated financial statements include Kraft Foods Group, as well as our wholly owned and majority owned
subsidiaries. All intercompany transactions are eliminated.
Prior to the Spin-Off on October 1, 2012, our financial statements were prepared on a stand-alone basis and were
derived from the consolidated financial statements and accounting records of International. Our financial
statements included certain expenses of International that were allocated to us for certain functions,