Mondelez 2014 Annual Report Download - page 30

Table of Contents
Total selling, general and administrative expenses decreased $222 million from 2013, due to a number of factors noted in the table
above, including in part, a favorable currency impact, lower Integration Program costs, value-added tax (“VAT”)-related settlements
in 2014, lower Spin-Off Costs, 2013 business divestitures and a gain on a sale of property in 2014. Items that increased selling,
general and administrative expenses included a 2013 benefit received related to the resolution of a Cadbury acquisition
indemnification, increased devaluation charges related to our net monetary assets in Venezuela, costs incurred for the 2014-2018
Restructuring Program, costs incurred in 2014 related to the JDE coffee transactions, gains on property sales in 2013 and higher
2012-2014 Restructuring Program costs.
Excluding the factors noted above, selling, general and administrative expenses decreased $313 million from 2013, driven primarily
by lower overhead costs and lower advertising and consumer promotion costs. Overhead costs fell as a result of continued cost
reduction efforts. Advertising and consumer promotion costs were lower due primarily to savings from consolidating media
providers, reductions in non-working media costs and efficiencies gained by shifting spending to lower-cost, digital media outlets,
while we increased our spending on our Power Brands and maintained working media spending.
The change in unrealized gains / (losses) decreased operating income by $174 million in 2014. In 2014, the net unrealized losses
on primarily commodity hedging activity were $112 million, as compared to net unrealized gains of $62 million in 2013 related to
currency and commodity hedging activity. In 2013, we recorded pre-tax gains of $68 million related to sales of properties in India
and Europe. In 2014, we recorded a benefit of $84 million related to VAT-related settlements in Latin America. In 2014, we
recorded a pre-
tax gain of $7 million related to the sale of a property in Europe. The acquisition of a biscuit operation in Morocco on
February 22, 2013 added $3 million in incremental operating income in 2014 for the period prior to the anniversary of the
acquisition.
Unfavorable currency impacts decreased operating income by $287 million, due primarily to the devaluation of the Venezuelan
bolivar in 2013 and 2014 and the strength of the U.S. dollar relative to several currencies, including the Argentinean peso, Brazilian
real, Russian ruble and Ukrainian hryvnya, partially offset by the strength of the British pound sterling relative to the U.S. dollar.
Operating income margin decreased from 11.2% in 2013 to 9.5% in 2014. The decrease in operating income margin was driven
primarily by costs incurred for the 2014-2018 Restructuring Program, the year-over-year negative impact of the benefit from the
resolution of the Cadbury acquisition-related indemnification recorded in 2013, higher costs for the 2012-2014 Restructuring
Program, the impact from the devaluation of our net monetary assets in Venezuela and costs incurred related to the JDE coffee
transactions, partially offset by lower Integration Program costs. Adjusted Operating Income margin increased from 12.1% in 2013
to 12.9% in 2014. The increase in Adjusted Operating Income margin was driven primarily by lower overhead costs from continued
cost reduction efforts and lower advertising and consumer promotion costs due primarily to current year productivity initiatives,
partially offset by a decline in gross profit margin due entirely to the unfavorable impact of unrealized gains / (losses) on currency
and commodity hedging activities.
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