Mondelez 2012 Annual Report Download - page 24

Table of Contents
Discussion and Analysis
Items Affecting Comparability of Financial Results
Spin-Off of Kraft Foods Group:
On October 1, 2012, we completed the Spin-Off of Kraft Foods Group to our shareholders. On October 1, 2012, each of our
shareholders of record on September 19, 2012 received one share of Kraft Foods Group common stock for every three shares of
our Common Stock held. The distribution was structured to be tax free to our U.S. shareholders for U.S. federal income tax
purposes. See Note 2, Divestitures and Acquisitions , to the consolidated financial statements for additional information.
The divested Kraft Foods Group business is presented as a discontinued operation on the consolidated statements of earnings for
all periods presented. The Kraft Foods Group balance sheet, other comprehensive earnings and cash flows are included within our
consolidated balance sheet and consolidated statements of equity, comprehensive earnings and cash flows through October 1,
2012.
Summary results of operations for the divested Kraft Foods Group through October 1, 2012 were as follows:
The results of the Kraft Foods Group discontinued operation exclude certain corporate and business unit costs which were
allocated to Kraft Foods Group historically and are expected to continue at Mondelēz International after the Spin-Off. These costs
include primarily corporate overheads, information systems and sales force support. On a pre-tax basis, through the date of the
Spin-Off, these costs were $150 million for the nine months ended October 1, 2012, $236 million for the year ended December 31,
2011 and $209 million for the year ended December 31, 2010.
Interest expense relating to debt Kraft Foods Group incurred or assumed through October 1, 2012 has been included in the results
from discontinued operations for all periods presented and as follows:
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• During 2012, in anticipation of the Spin-Off, Kraft Foods Group and we executed a series of debt transactions in order to
adequately capitalize both companies and to secure for each investment grade credit ratings following the Spin-
Off. During 2012, Kraft Foods Group incurred approximately $10 billion of debt through direct note issuances or
exchanges of our debt for their debt. As Kraft Foods Group received cash from its note issuances, the cash was
distributed to us through the Distribution Date so that we could reduce our debt over time. We were successful in
recapitalizing both companies and secured and maintain an investment grade credit rating following the Spin-Off. See
Liquidity and Capital Resources below and Note 8, Debt and Borrowing Arrangements , to the consolidated financial
statements for more information.
Nine Months Ended
For the Years Ended December 31,
October 1, 2012
2011
2010
(in millions)
Net revenues
$
13,768
$
18,555
$
17,718
Earnings before income taxes
$
2,266
$
2,892
$
2,916
Provision for income taxes
778
1,082
1,093
Earnings and gain from discontinued operations,
net of income taxes
–
–
1,644
Earnings from discontinued operations,
net of income taxes
$
1,488
$
1,810
$
3,467
(1) On March 1, 2010, Kraft Foods Group completed the sale of the assets of the North American frozen pizza business to Nestlē USA, Inc. The earnings
through March 1, 2010 and the gain were included in discontinued operations for Kraft Foods Group for the year ended December 31, 2010.
Nine Months Ended
For the Years Ended December 31,
October 1, 2012
2011
2010
(in millions)
$6.0 billion note issuance in June 2012
$
70
$
–
$
–
$3.6 billion notes exchanged in July 2012
171
226
216
$0.4 billion debt transferred in October 2012
24
31
31
Capital leases and other
13
10
7
$
278
$
267
$
254
(1)