Mondelez 2012 Annual Report Download - page 7

Table of Contents
In order to implement the Spin-Off, we entered into certain agreements with Kraft Foods Group to effect our legal and structural
separation; govern the relationship between us; and allocate various assets, liabilities and obligations between us, including,
among other things, employee benefits, intellectual property and tax-related assets and liabilities (see Note 14, Income Taxes , for
additional information on the current and deferred tax assets and liabilities transferred or retained in the Spin-Off). In addition to
executing the Spin-Off in the manner provided in the agreements, in November 2012, pursuant to these agreements, we paid Kraft
Foods Group $163 million related to targeted cash flows (together with the $247 million of cash divested on the Distribution Date,
totaling $410 million of cash transferred to Kraft Foods Group in connection with the Spin-Off). To facilitate the management,
including final payment and resolution, of certain obligations, Kraft Foods Group retained certain of our North American net trade
payables and receivables. We also retained approximately $140 million of workers’ compensation liabilities for claims incurred by
Kraft Foods Group employees prior to the Spin-
Off. In November 2012, we paid Kraft Foods Group $95 million to cash settle the net
trade payables and receivables. As of December 31, 2012, we also have a $55 million receivable from Kraft Foods Group related to
the cash settlement of stock awards held by our respective employees at the time of the Spin-Off as further described in Note 11,
Stock Plans , to the consolidated financial statements.
Our results from continuing operations include one-time Spin-Off transaction, transition and financing and related costs (“Spin-Off
Costs”) we have incurred to date. We recorded Spin-Off Costs of $1,053 million, or $0.39 per diluted share in 2012 and $46 million,
or $0.02 per diluted share, in 2011. We expect to incur Spin-Off Costs of approximately $100 million in 2013 related primarily to
human resource, customer service and logistics and information systems and processes as well as legal costs associated with
revising intellectual property and other long-term agreements.
Refer to Note 2, Divestitures and Acquisitions , to the consolidated financial statements, for additional information on the Spin-
Off of
Kraft Foods Group .
Cadbury Acquisition:
In 2010, we acquired all the outstanding shares of Cadbury Limited (“Cadbury”) in an acquisition valued at $18,547 million, or
$17,503 million net of cash and cash equivalents. In 2010, we incurred acquisition-related transaction costs of $218 million
(recorded in selling, general and administrative expense) and acquisition-related financing fees of $96 million (recorded in interest
and other expenses, net).
As a condition of the acquisition, the EU Commission required that we divest certain Cadbury confectionery operations in Poland
and Romania. The divestitures were completed in the third quarter of 2010 and generated $342 million of sale proceeds. The
impact of these divestitures was reflected as adjustments within the Cadbury final purchase accounting.
During 2010, Cadbury contributed net revenues of $9,143 million and net earnings of $530 million from February 2, 2010 through
December 31, 2010. See Note 2, Divestitures and Acquisitions , to our consolidated financial statements for additional information
on the Cadbury acquisition.
Customers
As a percentage of our net revenues from continuing operations, our five largest customers accounted for 15.6% of net revenues in
2012 compared with 15.5% in 2011 and 15.1% in 2010. Also, our ten largest customers accounted for 24.1% of net revenues in
2012 compared with 22.7% in 2011 and 23.2% in 2010. No single customer accounted for 10% or more of our net revenues from
continuing operations.
Seasonality
Demand for some of our products may be influenced by holidays, changes in seasons or other annual events. However, overall
sales of our products are generally evenly balanced throughout the year due to the offsetting nature of demands for our products
within our diversified product portfolio.
Competition
We face competition in all aspects of our business. Competitors include large national and international companies and numerous
local and regional companies. Some competitors have different profit objectives and some international competitors are less
susceptible to currency exchange rates. We compete primarily on the basis of product quality, brand recognition, brand loyalty,
service, marketing, advertising and price. Moreover, improving our market position or introducing a new product requires substantial
research, development, advertising and promotional expenditures.
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