Mondelez 2013 Annual Report Download - page 21

Table of Contents
These facilities are located by segment as follows:
Item 3. Legal Proceedings.
We routinely are involved in legal proceedings, claims, and governmental inspections or investigations (“Legal Matters”) arising in
the ordinary course of our business.
A compliant and ethical corporate culture, which includes adhering to laws and industry regulations in all jurisdictions in which we
do business, is integral to our success. Accordingly, after we acquired Cadbury in February 2010 we began reviewing and
adjusting, as needed, Cadbury’s operations in light of applicable standards as well as our policies and practices. We initially
focused on such high priority areas as food safety, the Foreign Corrupt Practices Act (“FCPA”) and antitrust. Based upon Cadbury’
s
pre-acquisition policies and compliance programs and our post-acquisition reviews, our preliminary findings indicated that
Cadbury’s overall state of compliance was sound. Nonetheless, through our reviews, we determined that in certain jurisdictions,
including India, there appeared to be facts and circumstances warranting further investigation. We are continuing our investigations
in certain jurisdictions, including in India, and we continue to cooperate with governmental authorities.
As we previously disclosed, on February 1, 2011, we received a subpoena from the SEC in connection with an investigation under
the FCPA, primarily related to a facility in India that we acquired in the Cadbury acquisition. The subpoena primarily requests
information regarding dealings with Indian governmental agencies and officials to obtain approvals related to the operation of that
facility. We are continuing to cooperate with the U.S. and Indian governments in their investigations of these matters, including
through preliminary meetings with the U.S. government to discuss potential conclusion of the investigation.
On February 28, 2013, Cadbury India Limited, a subsidiary of Mondelēz International, and other parties received a show cause
notice from the Indian Department of Central Excise Authority. The notice calls upon the parties to demonstrate why the Authority
should not collect approximately $46 million of unpaid excise tax as well as approximately $46 million of penalties and interest
related to production at the same Indian facility. We believe that the decision to claim the excise tax benefit is valid and we are
contesting the show cause notice through the administrative and judicial process.
As we previously disclosed, on March 1, 2011, Starbucks took control of the Starbucks packaged coffee business (“Starbucks CPG
business”) in grocery stores and other channels. Starbucks did so without our authorization and in what we contended was a
violation and breach of our license and supply agreement with Starbucks related to the Starbucks CPG business. Following an
initial decision in November 2013, on December 13, 2013, the independent arbitrator in our dispute with Starbucks issued a
decision and Final Award that Kraft Foods Global, Inc. (now Kraft Foods Group), the named party in the proceeding, had proven
that it was entitled to recover and that Starbucks must pay $2,764 million in total cash compensation for Starbucks’ unilateral
termination of the agreement. The award included compensation for 135% of the determined fair market value of the agreement for
improper termination as well as prejudgment interest of $521 million and Kraft Foods Group’s attorney’s fees, which the parties
agreed would equal $15 million. Starbucks has paid all of the amount owed pursuant to the ruling. Under the Separation and
Distribution Agreement between Kraft Foods Group and us, Kraft Foods Group directed the recovery awarded in the arbitration
proceeding to us.
While we cannot predict with certainty the results of Legal Matters in which we are currently involved, we do not expect that the
ultimate costs to resolve any of these Legal Matters, individually or in the aggregate, will have a material effect on our financial
results.
Item 4. Mine Safety Disclosures
Not applicable.
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Number of
Number of
Manufacturing
Distribution
Facilities
Facilities
Latin America
21
4
Asia Pacific
32
70
EEMEA
27
13
Europe
74
38
North America
17
95
Total
171
220