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Items Impacting Income Taxes
The consolidated financial statements present the taxes of our stand alone business and contain certain taxes transferred to us
at separation in accordance with the Tax Indemnity Agreement. This agreement provides for the transfer to us of taxes related to
an entity that was part of Cadbury’sconfectionery business and therefore not part of our historical consolidated financial statements.
The consolidated financial statements also reflect that the Tax Indemnity Agreement requires Cadbury to indemnify us for these
taxes. These taxes and the associated indemnity may change over time as estimates of the amounts change. Changes in estimates
will be reflected when facts change and those changes in estimates will be reflected in our Consolidated Statements of Operations
at the time of the estimate change. In addition, pursuant to the terms of the Tax Indemnity Agreement,if we breach certain covenants
or other obligations or we are involved in certain change-in-control transactions, Cadbury may not be required to indemnify us
for any of these unrecognized tax benefits that are subsequently realized.
Kraft acquired Cadbury on February 2, 2010 and, therefore, assumes responsibility for Cadbury’s indemnity obligations under
the terms of the Tax Indemnity Agreement.
Refer to Note 12 of the Notes to our Audited Consolidated Financial Statements for further information regarding the tax
impact of the separation.
Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
For the periods prior to May 7, 2008, our consolidated financial statements have been prepared on a “carve-out” basis from
Cadbury’s consolidated financial statements using historical results of operations, assets and liabilities attributable to Cadbury’s
Americas Beverages business and including allocations of expenses from Cadbury. The historical Cadbury’s Americas Beverages
information is our predecessor financial information. We eliminate from our financial results all intercompany transactions between
entities included in the combination and the intercompany transactions with our equity method investees. On May 7, 2008, we
became an independent company.
Consolidated Operations
The following table sets forth our consolidated results of operation for the years ended December 31, 2009 and 2008 (dollars
in millions).
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Depreciation and amortization
Impairment of goodwill and intangible assets
Restructuring costs
Other operating (income) expense, net
Income (loss) from operations
Interest expense
Interest income
Loss on early extinguishment of debt
Other income, net
Income (loss) before provision for income taxes and equity in
earnings of unconsolidated subsidiaries
Provision for income taxes
Income (loss) before equity in earnings of unconsolidated
subsidiaries
Equity in earnings of unconsolidated subsidiaries, net of tax
Net income (loss)
For the Year Ended December 31,
2009
Dollars
$ 5,531
2,234
3,297
2,135
117
—
—
(40)
1,085
243
(4)
—
(22)
868
315
553
2
$ 555
Percent
100.0%
40.4
59.6
38.6
2.1
—
—
(0.7)
19.6
4.4
(0.1)
—
(0.4)
15.7
5.7
10.0
—
10.0%
2008
Dollars
$ 5,710
2,590
3,120
2,075
113
1,039
57
4
(168)
257
(32)
—
(18)
(375)
(61)
(314)
2
$(312)
Percent
100.0 %
45.4
54.6
36.3
2.0
18.2
1.0
0.1
(3.0)
4.5
(0.6)
—
(0.3)
(6.6)
(1.1)
(5.5)
—
(5.5)%
Percentage
Change
(3.1)%
(13.7)
5.7
2.9
3.5
NM
NM
NM
745.8
(5.4)
(87.5)
NM
22.2
331.5
616.4
276.1
NM
277.9 %
32