Mondelez 2014 Annual Report Download - page 64

Table of Contents
Venezuela. As prescribed by U.S. GAAP for highly inflationary economies, we have been accounting for the results of our
Venezuelan subsidiaries using the U.S. dollar as the functional currency since January 1, 2010.
On February 8, 2013, the Venezuelan government announced the devaluation of the official Venezuelan bolivar exchange rate from
4.30 bolivars to 6.30 bolivars to the U.S. dollar and the elimination of the second-tier, government-regulated SITME exchange rate
previously applied to value certain types of transactions. In connection with the announced changes, we recorded a $54 million
currency remeasurement loss related to the devaluation of our net monetary assets in Venezuela within selling, general and
administrative expenses in our Latin America segment during the three months ended March 31, 2013.
On January 24, 2014, the Venezuelan government announced the expansion of the auction-based currency transaction program
referred to as SICAD or SICAD I and new profit margin controls. The application of the SICAD I rate was extended to include
foreign investments and significant operating activities, including contracts for leasing and services, use and exploitation of patents
and trademarks, payments of royalties and contracts for technology import and technical assistance. As of December 31, 2014, the
SICAD I exchange rate for the food segment auctions in which we participate was 11.50 bolivars to the U.S. dollar.
Additionally, on March 24, 2014, the Venezuelan government launched a new market-based currency exchange market, SICAD II.
SICAD II may be used voluntarily to exchange bolivars into U.S. dollars. As of December 31, 2014, the SICAD II exchange rate was
49.99 bolivars to the U.S. dollar.
Our Venezuelan operations produce a wide range of biscuit, cheese & grocery, confectionery and beverage products. Based on the
currency exchange developments this year, we reviewed our domestic and international sourcing of goods and services and the
exchange rates we believe will be applicable. We evaluated the level of primarily raw material imports that we believe would
continue to be sourced in exchange for U.S. dollars converted at the official 6.30 exchange rate. Our remaining imported goods and
services would primarily be valued at the SICAD I exchange rate. Imports that do not currently qualify for either the official rate or
SICAD I rate may be sourced at the SICAD II rate.
We believe the SICAD I rate is the most appropriate rate to use as it is most representative of the various exchange rates at which
U.S. dollars are currently available to our entire Venezuelan business. While some of our net monetary assets or liabilities qualify
for settlement at the official exchange rate, other operations do not, and we have utilized both the SICAD I and SICAD II auction
processes. In addition, there is significant uncertainty about our ability to secure approval for transactions and the limited availability
of U.S. dollars offered at the official rate. As such, we believe it is more economically representative to use the SICAD I rate than
the official rate to value our net monetary assets and translate future operating results.
As of March 31, 2014, we began to apply the SICAD I exchange rate to remeasure our bolivar-denominated net monetary assets,
and we began translating our Venezuelan operating results at the new rate in the second quarter of 2014. On March 31, 2014, we
recognized a $142 million currency remeasurement loss within selling, general and administrative expenses of our Latin America
segment as a result of revaluing our bolivar-
denominated net monetary assets from the official exchange rate of 6.30 bolivars to the
U.S. dollar to the then-prevailing SICAD I exchange rate of 10.70 bolivars to the U.S. dollar. As of December 31, 2014, the SICAD I
exchange rate for the food segment auctions in which we participate was 11.50 bolivars to the U.S. dollar. Through December 31,
2014, we recognized $25 million of additional remeasurement charges related primarily to changes in the SICAD I rate.
The following table sets forth net revenues for our Venezuelan operations for the year ended December 31, 2014 (measured at the
6.30 official rate in the first quarter and at the SICAD I rate subsequent to the March 31, 2014 remeasurement), and cash, net
monetary assets and net assets of our Venezuelan subsidiaries as of December 31, 2014 (translated at the SICAD I last exchange
rate for food segment auctions in which we participate, which was 11.50 bolivars to the U.S. dollar):
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Venezuela operations
For the Year Ended December 31, 2014
Net revenues
$760 million or 2.2% of consolidated net revenues
As of December 31, 2014
Cash
$278 million
Net monetary assets
$236 million
Net assets
$500 million